UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☑						Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended April ~~4, 2021~~3, 2022



☐						Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to

Commission file number 1-3215

Johnson & Johnson

(Exact name of registrant as specified in its charter)


New Jersey						22-1024240
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One Johnson & Johnson Plaza

New Brunswick, New Jersey 08933

(Address of principal executive offices)

Registrant’s telephone number, including area code (732) 524-0400

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 ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, Par Value $1.00	JNJ	New York Stock Exchange
~~0.250% Notes Due January 2022~~	~~JNJ22~~	~~New York Stock Exchange~~
0.650% Notes Due May 2024	JNJ24C	New York Stock Exchange
5.50% Notes Due November 2024	JNJ24BP	New York Stock Exchange
1.150% Notes Due November 2028	JNJ28	New York Stock Exchange
1.650% Notes Due May 2035	JNJ35	New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On April ~~23, 2021, 2,633,396,003~~22, 2022, 2,631,401,804 shares of Common Stock, $1.00 par value, were outstanding.

JOHNSON & JOHNSON AND SUBSIDIARIES

TABLE OF CONTENTS


									Page
									No.
Part I — Financial Information									1

Item 1. Financial Statements (unaudited)									1

Consolidated Balance Sheets — April 3, 202 42 and January 2 , 202 1 ~~and~~ ~~January~~3 ~~, 20~~212									1

Consolidated Statements of Earnings for the Fiscal First Quarter s Ended April ~~4, 2021~~ 3, 202 2 and ~~March 29, 2020~~April 4 , 202 1									2



Consolidated Statements of Comprehensive Income for the Fiscal First Quarter s Ended April ~~4, 2021~~3 , 202 2 and ~~March 29, 2020~~April 4 , 202 1									3

Consolidated Statements of Equity for the Fiscal First Quarter s Ended April ~~4, 2021~~3 , 202 2 and ~~March 29, 2020~~April 4 , 202 1									4

Consolidated Statements of Cash Flows for the Fiscal Three Months Ended April ~~4, 2021~~ 3, 202 2 and ~~March 29, 2020~~April 4 , 202 1									5

Notes to Consolidated Financial Statements									6



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations									4142

Item 3. Quantitative and Qualitative Disclosures About Market Risk									5253

Item 4. Controls and Procedures									5354

Part II — Other Information									5354

Item 1 - Legal Proceedings									5354

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds									5355

Item 6 - Exhibits									5456

Signatures									5557

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and Johnson & Johnson's other publicly available documents contain “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Management and representatives of Johnson & Johnson and its subsidiaries (the Company) also may from time to time make forward-looking statements. Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans, objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates,” and other words of similar meaning in conjunction with, among other things: discussions of future operations, expected operating results, financial performance; impact of planned acquisitions and dispositions; impact and timing of restructuring initiatives including associated cost savings and other benefits; the Company's strategy for growth; product development activities; regulatory approvals; market position and expenditures.

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to uncertainties, risks and changes that are difficult to predict and many of which are outside of the Company's control. Investors should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, the Company’s actual results and financial condition could vary materially from expectations and projections expressed or implied in its forward-looking statements. Investors are therefore cautioned not to rely on these forward-looking statements. Risks and uncertainties include, but are not limited to:

Risks Related to Product Development, Market Success and Competition

•Challenges and uncertainties inherent in innovation and development of new and improved products and technologies on which the Company’s continued growth and success depend, including uncertainty of clinical outcomes, additional analysis of existing clinical data, obtaining regulatory approvals, health plan coverage and customer access, and initial and continued commercial success;

•Challenges to the Company’s ability to obtain and protect adequate patent and other intellectual property rights for new and existing products and technologies in the United States and other important markets;

•The impact of patent expirations, typically followed by the introduction of competing ~~biosimilars and generics~~generic, biosimilar or other products and resulting revenue and market share losses;

•Increasingly aggressive and frequent challenges to the Company’s patents by competitors and others seeking to launch competing generic, biosimilar or other products and increased receptivity of courts, the United States Patent and Trademark Office and other decision makers to such challenges, potentially resulting in loss of market exclusivity and rapid decline in sales for the relevant product sooner than expected;

•Competition in research and development of new and improved products, processes and technologies, which can result in product and process obsolescence;

•Competition to reach agreement with third parties for collaboration, licensing, development and marketing agreements for products and technologies;

•Competition based on cost-effectiveness, product performance, technological advances and patents attained by competitors; and

•Allegations that the Company’s products infringe the patents and other intellectual property rights of third parties, which could adversely affect the Company’s ability to sell the products in question and require the payment of money damages and future royalties.

Risks Related to Product Liability, Litigation and Regulatory Activity

•Product efficacy or safety concerns, whether or not based on scientific evidence, potentially resulting in product withdrawals, recalls, regulatory action on the part of the United States Food and Drug Administration (or international counterparts), declining sales, reputational damage, increased litigation expense and share price impact;

•~~Impact,~~The impact, including declining sales and reputational damage, of significant litigation or government action adverse to the Company, including product liability claims and allegations related to pharmaceutical marketing practices and contracting strategies;

•~~Impact~~The impact of an adverse judgment or settlement and the adequacy of reserves related to legal proceedings, including patent litigation, product liability, personal injury claims, securities class actions, government investigations, employment and other legal proceedings;

•Increased scrutiny of the ~~health care~~healthcare industry by government agencies and state attorneys general resulting in investigations and prosecutions, which carry the risk of significant civil and criminal penalties, including, but not limited to, debarment from government business;

•Failure to meet compliance obligations in ~~the McNEIL-PPC, Inc. Consent Decree or any other~~ compliance agreements with governments or government agencies, which could result in significant sanctions;

•Potential changes to applicable laws and regulations affecting United States and international operations, including relating to: approval of new products; licensing and patent rights; sales and promotion of ~~health care~~healthcare products; access to, and reimbursement and pricing for, ~~health care~~healthcare products and services; environmental ~~protection~~protection; and sourcing of raw materials;

•Compliance with local regulations and laws that may restrict the Company’s ability to manufacture or sell its products in relevant markets, including requirements to comply with medical device reporting regulations and other requirements such as the European ~~Union's~~Union’s Medical Devices Regulation;

•Changes in domestic and international tax laws and regulations, ~~including changes related to the Tax Cuts and Jobs Act in the United States,~~ increasing audit scrutiny by tax authorities around the world and exposures to additional tax liabilities potentially in excess of existing reserves; and

•~~Issuance~~The issuance of new or revised accounting standards by the Financial Accounting Standards Board and regulations by the Securities and Exchange Commission.

Risks Related to the Company’s Strategic Initiatives, ~~and~~ Healthcare Market Trends and the Planned Separation of the Company’s Consumer Health Business

•Pricing pressures resulting from trends toward ~~health care~~healthcare cost containment, including the continued consolidation among ~~health care~~healthcare providers and other market participants, trends toward managed care, the shift toward governments increasingly becoming the primary payers of ~~health care~~healthcare expenses, significant new entrants to the ~~health care~~healthcare markets seeking to reduce costs and government pressure on companies to voluntarily reduce costs and price increases;

•Restricted spending patterns of individual, institutional and governmental purchasers of ~~health care~~healthcare products and services due to economic hardship and budgetary constraints;

•Challenges to the Company’s ability to realize its strategy for growth including through externally sourced innovations, such as development collaborations, strategic acquisitions, licensing and marketing agreements, and the potential heightened costs of any such external arrangements due to competitive pressures;

•The potential that the expected strategic benefits and opportunities from any planned or completed acquisition or divestiture by the Company may not be realized or may take longer to realize than expected; ~~and~~

•The potential that the expected benefits and opportunities related to past and ongoing restructuring actions may not be realized or may take longer to realize than ~~expected.~~expected;

•The Company’s ability to consummate the planned separation of the Company’s Consumer Health business on a timely basis or at all;

•The Company’s ability to successfully separate the Company’s Consumer Health business and realize the anticipated benefits from the planned separation; and

•The New Consumer Health Company’s ability to succeed as a standalone publicly traded company.

Risks Related to Economic Conditions, Financial Markets and Operating Internationally

•The risks associated with global operations on the Company and its customers and suppliers, including foreign governments in countries in which the Company ~~operates.~~operates;

•~~Impact~~The impact of inflation and fluctuations in interest rates and currency exchange rates and the potential effect of such fluctuations on revenues, expenses and resulting margins;

•Potential changes in export/import and trade laws, regulations and policies of the United States and other countries, including any increased trade restrictions or tariffs and potential drug reimportation legislation;

•The impact on international operations from financial instability in international economies, sovereign risk, possible imposition of governmental controls and restrictive economic policies, and unstable international governments and legal systems;

•The impact of global public health crises and pandemics, including the ~~outbreak of the~~ novel coronavirus (COVID-19) pandemic;

•Changes to global climate, extreme weather and natural disasters that could affect demand for the ~~Company's~~Company’s products and services, cause disruptions in manufacturing and distribution networks, alter the availability of goods and services within the supply chain, and affect the overall design and integrity of the ~~Company's~~Company’s products and operations; and

•The impact of armed conflicts and terrorist attacks in the United States and other parts of the world, including social and economic disruptions and instability of financial and other markets.

Risks Related to Supply Chain and Operations

•Difficulties and delays in manufacturing, internally, through ~~third party~~third-party providers or otherwise within the supply chain, that may lead to voluntary or involuntary business interruptions or shutdowns, product shortages, withdrawals or suspensions of products from the market, and potential regulatory action;

•Interruptions and breaches of the ~~Company's~~Company’s information technology systems or those of the ~~Company's~~Company’s vendors, which could result in reputational, competitive, operational or other business harm as well as financial costs and regulatory action;

•Reliance on global supply chains and production and distribution processes that are complex and subject to increasing regulatory requirements that may adversely affect supply, sourcing and pricing of materials used in the Company’s products; and

•The potential that the expected benefits and opportunities related to restructuring actions contemplated for the global supply chain may not be realized or may take longer to realize than expected, including due to any required approvals from applicable regulatory authorities. ~~Disruptions associated with the announced global supply chain actions may adversely affect supply and sourcing of materials used in the Company's products.~~

Investors also should carefully read the Risk Factors described in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended January ~~3, 2021,~~2, 2022, for a description of certain risks that could, among other things, cause the Company’s actual results to differ materially from those expressed in its forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.

Table of Content

Part I — FINANCIAL INFORMATION

Item 1 — FINANCIAL STATEMENTS

JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in Millions Except Share and Per Share Data)


		April 4, 2021		January 3, 2021		April 3, 2022		January 2, 2022
ASSETS	ASSETS				ASSETS
Current assets:	Current assets:				Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	12,671	13,985	Cash and cash equivalents	$	10,463	14,487
Marketable securities	Marketable securities	11,948		11,200	Marketable securities	19,925		17,121
Accounts receivable, trade, less allowances for doubtful accounts and credit losses $270 (2020, $293)		14,938		13,576
Accounts receivable, trade, less allowances for doubtful accounts and credit losses $234 (2021, $230)					Accounts receivable, trade, less allowances for doubtful accounts and credit losses $234 (2021, $230)	15,594		15,283
Inventories (Note 2)	Inventories (Note 2)	9,952		9,344	Inventories (Note 2)	10,990		10,387
Prepaid expenses and other	Prepaid expenses and other	3,024		3,132	Prepaid expenses and other	3,452		3,701

Total current assets	Total current assets	52,533		51,237	Total current assets	60,424		60,979
Property, plant and equipment at cost	Property, plant and equipment at cost	46,430		46,804	Property, plant and equipment at cost	47,702		47,679
Less: accumulated depreciation	Less: accumulated depreciation	(28,063)		(28,038)	Less: accumulated depreciation	(29,001)		(28,717)
Property, plant and equipment, net	Property, plant and equipment, net	18,367		18,766	Property, plant and equipment, net	18,701		18,962
Intangible assets, net (Note 3)	Intangible assets, net (Note 3)	51,110		53,402	Intangible assets, net (Note 3)	44,420		46,392
Goodwill (Note 3)	Goodwill (Note 3)	35,688		36,393	Goodwill (Note 3)	34,935		35,246
Deferred taxes on income (Note 5)	Deferred taxes on income (Note 5)	8,321		8,534	Deferred taxes on income (Note 5)	9,936		10,223
Other assets	Other assets	6,538		6,562	Other assets	9,939		10,216
Total assets	Total assets	$	172,557	174,894	Total assets	$	178,355	182,018
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:				Current liabilities:
Loans and notes payable	Loans and notes payable	$	3,350	2,631	Loans and notes payable	$	4,297	3,766
Accounts payable	Accounts payable	8,503		9,505	Accounts payable	9,309		11,055
Accrued liabilities	Accrued liabilities	13,223		13,968	Accrued liabilities	13,006		13,612
Accrued rebates, returns and promotions	Accrued rebates, returns and promotions	11,919		11,513	Accrued rebates, returns and promotions	12,972		12,095
Accrued compensation and employee related obligations	Accrued compensation and employee related obligations	2,060		3,484	Accrued compensation and employee related obligations	2,098		3,586
Accrued taxes on income (Note 5)	Accrued taxes on income (Note 5)	1,877		1,392	Accrued taxes on income (Note 5)	1,708		1,112
Total current liabilities	Total current liabilities	40,932		42,493	Total current liabilities	43,390		45,226
Long-term debt (Note 4)	Long-term debt (Note 4)	30,263		32,635	Long-term debt (Note 4)	28,851		29,985
Deferred taxes on income (Note 5)	Deferred taxes on income (Note 5)	6,507		7,214	Deferred taxes on income (Note 5)	6,424		7,487
Employee related obligations (Note 6)	Employee related obligations (Note 6)	10,512		10,771	Employee related obligations (Note 6)	8,739		8,898
Long-term taxes payable (Note 5)	Long-term taxes payable (Note 5)	6,568		6,559	Long-term taxes payable (Note 5)	5,745		5,713
Other liabilities	Other liabilities	11,941		11,944	Other liabilities	10,497		10,686
Total liabilities	Total liabilities	$	106,723	111,616	Total liabilities	$	103,646	107,995
Commitments and Contingencies (Note 11)	Commitments and Contingencies (Note 11)	0		0	Commitments and Contingencies (Note 11)	0		0
Shareholders’ equity:	Shareholders’ equity:				Shareholders’ equity:
Common stock — par value $1.00 per share (authorized 4,320,000,000 shares; issued 3,119,843,000 shares)	Common stock — par value $1.00 per share (authorized 4,320,000,000 shares; issued 3,119,843,000 shares)	$	3,120	3,120	Common stock — par value $1.00 per share (authorized 4,320,000,000 shares; issued 3,119,843,000 shares)	$	3,120	3,120
Accumulated other comprehensive income (loss) (Note 7)	Accumulated other comprehensive income (loss) (Note 7)	(15,328)		(15,242)	Accumulated other comprehensive income (loss) (Note 7)	(13,757)		(13,058)
Retained earnings	Retained earnings	116,508		113,890	Retained earnings	124,380		123,060
Less: common stock held in treasury, at cost (487,141,000 and 487,331,000 shares)		38,466		38,490
Less: common stock held in treasury, at cost (490,459,000 and 490,878,000 shares)					Less: common stock held in treasury, at cost (490,459,000 and 490,878,000 shares)	39,034		39,099
Total shareholders’ equity	Total shareholders’ equity	65,834		63,278	Total shareholders’ equity	74,709		74,023
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	172,557	174,894	Total liabilities and shareholders' equity	$	178,355	182,018

See Notes to Consolidated Financial Statements

Table of Content

JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited; Dollars & Shares in Millions Except Per Share Amounts)


		Fiscal First Quarter Ended									Fiscal First Quarter Ended
		April 4, 2021		Percent to Sales		March 29, 2020		Percent to Sales			April 3, 2022		Percent to Sales		April 4, 2021		Percent to Sales
Sales to customers (Note 9)	Sales to customers (Note 9)	$	22,321	100.0	%	$	20,691	100.0	%	Sales to customers (Note 9)	$	23,426	100.0	%	$	22,321	100.0	%
Cost of products sold	Cost of products sold	7,063		31.7		7,062		34.1		Cost of products sold	7,598		32.4		7,063		31.7
Gross profit	Gross profit	15,258		68.3		13,629		65.9		Gross profit	15,828		67.6		15,258		68.3
Selling, marketing and administrative expenses	Selling, marketing and administrative expenses	5,432		24.3		5,203		25.1		Selling, marketing and administrative expenses	5,938		25.4		5,432		24.3
Research and development expense	Research and development expense	3,178		14.2		2,580		12.5		Research and development expense	3,462		14.8		3,178		14.2

In-process research and development										In-process research and development	610		2.6		—		—
Interest income	Interest income	(15)		(0.1)		(67)		(0.3)		Interest income	(22)		(0.1)		(15)		(0.1)
Interest expense, net of portion capitalized	Interest expense, net of portion capitalized	63		0.3		25		0.1		Interest expense, net of portion capitalized	10		0.0		63		0.3
Other (income) expense, net	Other (income) expense, net	(882)		(3.9)		(679)		(3.3)		Other (income) expense, net	(102)		(0.4)		(882)		(3.9)
Restructuring (Note 12)	Restructuring (Note 12)	53		0.2		58		0.3		Restructuring (Note 12)	70		0.3		53		0.2
Earnings before provision for taxes on income	Earnings before provision for taxes on income	7,429		33.3		6,509		31.5		Earnings before provision for taxes on income	5,862		25.0		7,429		33.3
Provision for taxes on income (Note 5)	Provision for taxes on income (Note 5)	1,232		5.5		713		3.5		Provision for taxes on income (Note 5)	713		3.0		1,232		5.5
NET EARNINGS	NET EARNINGS	$	6,197	27.8	%	$	5,796	28.0	%	NET EARNINGS	$	5,149	22.0	%	$	6,197	27.8	%

NET EARNINGS PER SHARE (Note 8)	NET EARNINGS PER SHARE (Note 8)									NET EARNINGS PER SHARE (Note 8)
Basic	Basic	$	2.35			$	2.20			Basic	$	1.96			$	2.35
Diluted	Diluted	$	2.32			$	2.17			Diluted	$	1.93			$	2.32

AVG. SHARES OUTSTANDING	AVG. SHARES OUTSTANDING									AVG. SHARES OUTSTANDING
Basic	Basic	2,631.6				2,633.7				Basic	2,629.2				2,631.6
Diluted	Diluted	2,672.7				2,671.0				Diluted	2,666.5				2,672.7

See Notes to Consolidated Financial Statements

Table of Content

JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; Dollars in Millions)


		Fiscal First Quarter Ended			Fiscal First Quarter Ended
		April 4, 2021		March 29, 2020			April 3, 2022		April 4, 2021

Net earnings	Net earnings	$	6,197	5,796		Net earnings	$	5,149	6,197

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax					Other comprehensive income (loss), net of tax
Foreign currency translation	Foreign currency translation	276		(1,519)		Foreign currency translation	(554)		276

Securities:	Securities:					Securities:
Unrealized holding gain (loss) arising during period	Unrealized holding gain (loss) arising during period	0		2		Unrealized holding gain (loss) arising during period	(13)		—
Reclassifications to earnings	Reclassifications to earnings	0		0		Reclassifications to earnings	—		—

Net change	Net change	0		2		Net change	(13)		—

Employee benefit plans:	Employee benefit plans:					Employee benefit plans:
Prior service cost amortization during period	Prior service cost amortization during period	(41)		(6)		Prior service cost amortization during period	(53)		(41)
Gain (loss) amortization during period	Gain (loss) amortization during period	274		201		Gain (loss) amortization during period	217		274

Net change	Net change	233		195		Net change	164		233

Derivatives & hedges:	Derivatives & hedges:					Derivatives & hedges:
Unrealized gain (loss) arising during period	Unrealized gain (loss) arising during period	(522)		832		Unrealized gain (loss) arising during period	(195)		(522)
Reclassifications to earnings	Reclassifications to earnings	(73)		138		Reclassifications to earnings	(101)		(73)
Net change	Net change	(595)		970		Net change	(296)		(595)

Other comprehensive income (loss)	Other comprehensive income (loss)	(86)		(352)		Other comprehensive income (loss)	(699)		(86)

Comprehensive income	Comprehensive income	$	6,111	5,444		Comprehensive income	$	4,450	6,111

See Notes to Consolidated Financial Statements


The tax effects in other comprehensive income for the fiscal first quarter were as follows for ~~2021~~2022 and ~~2020,~~2021, respectively: Foreign Currency Translation: ~~$319~~$145 million and ~~$46~~$319 million; Securities: $1$3 million in ~~2020;~~2022; Employee Benefit Plans: ~~$66~~$19 million and ~~$56~~$66 million; Derivatives & Hedges: ~~$157~~$78 million and ~~$256~~$157 million.

Table of Content

JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited; Dollars in Millions)

Fiscal First Quarter Ended April ~~4, 2021~~3, 2022

Total Retained
Earnings Accumulated
Other
Comprehensive
Income Common Stock
Issued Amount Treasury
Stock
Amount
Balance, January 3, 2021 $ 63,278 113,890 (15,242) 3,120 (38,490)
Net earnings 6,197 6,197 — — —
Cash dividends paid ($1.01 per share) (2,659) (2,659) — — —
Employee compensation and stock option plans 542 (920) — — 1,462
Repurchase of common stock (1,438) — — (1,438)
Other comprehensive income (loss), net of tax (86) (86) — —
Balance, April 4, 2021 $ 65,834 116,508 (15,328) 3,120 (38,466)


	Total		Retained Earnings	Accumulated Other Comprehensive Income	Common Stock Issued Amount	Treasury Stock Amount
Balance, January 2, 2022	$	74,023	123,060	(13,058)	3,120	(39,099)
Net earnings	5,149		5,149	—	—	—
Cash dividends paid ($1.06 per share)	(2,787)		(2,787)	—	—	—
Employee compensation and stock option plans	600		(1,042)	—	—	1,642
Repurchase of common stock	(1,577)		—	—	—	(1,577)

Other comprehensive income (loss), net of tax	(699)		—	(699)	—	—
Balance, April 3, 2022	$	74,709	124,380	(13,757)	3,120	(39,034)

~~Fiscal First Quarter Ended March 29, 2020~~

Total Retained
Earnings Accumulated
Other
Comprehensive
Income Common Stock
Issued Amount Treasury
Stock
Amount
Balance, December 29, 2019 $ 59,471 110,659 (15,891) 3,120 (38,417)
Net earnings 5,796 5,796 — — —
Cash dividends paid ($0.95 per share) (2,505) (2,505) — — —
Employee compensation and stock option plans 595 (1,049) — — 1,644
Repurchase of common stock (1,711) — — — (1,711)
Other comprehensive income (loss), net of tax (352) — (352) — —
Balance, March 29, 2020 $ 61,294 112,901 (16,243) 3,120 (38,484)

Fiscal First Quarter Ended April 4, 2021


	Total		Retained Earnings	Accumulated Other Comprehensive Income	Common Stock Issued Amount	Treasury Stock Amount
Balance, January 3, 2021	$	63,278	113,890	(15,242)	3,120	(38,490)

Net earnings	6,197		6,197	—	—	—
Cash dividends paid ($1.01 per share)	(2,659)		(2,659)	—	—	—
Employee compensation and stock option plans	542		(920)	—	—	1,462
Repurchase of common stock	(1,438)		—	—	—	(1,438)

Other comprehensive income (loss), net of tax	(86)		—	(86)	—	—
Balance, April 4, 2021	$	65,834	116,508	(15,328)	3,120	(38,466)

See Notes to Consolidated Financial Statements

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JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; Dollars in Millions)


		Fiscal Three Months Ended				Fiscal Three Months Ended
		April 4, 2021		March 29, 2020		April 3, 2022		April 4, 2021
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES				CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	Net earnings	$	6,197	5,796	Net earnings	$	5,149	6,197
Adjustments to reconcile net earnings to cash flows from operating activities:	Adjustments to reconcile net earnings to cash flows from operating activities:				Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization of property and intangibles	Depreciation and amortization of property and intangibles	1,894		1,747	Depreciation and amortization of property and intangibles	1,769		1,894
Stock based compensation	Stock based compensation	307		263	Stock based compensation	278		307

Asset write-downs	Asset write-downs	14		11	Asset write-downs	610		14
Contingent consideration reversal		0		(983)

Net gain on sale of assets/businesses	Net gain on sale of assets/businesses	(580)		0	Net gain on sale of assets/businesses	(168)		(580)

Deferred tax provision	Deferred tax provision	(730)		54	Deferred tax provision	(926)		(730)
Credit losses and accounts receivable allowances	Credit losses and accounts receivable allowances	(13)		22	Credit losses and accounts receivable allowances	6		(13)
Changes in assets and liabilities, net of effects from acquisitions and divestitures:	Changes in assets and liabilities, net of effects from acquisitions and divestitures:				Changes in assets and liabilities, net of effects from acquisitions and divestitures:
Increase in accounts receivable	Increase in accounts receivable	(1,604)		(812)	Increase in accounts receivable	(427)		(1,604)
Increase in inventories	Increase in inventories	(695)		(159)	Increase in inventories	(600)		(695)
Decrease in accounts payable and accrued liabilities	Decrease in accounts payable and accrued liabilities	(2,336)		(2,523)	Decrease in accounts payable and accrued liabilities	(2,817)		(2,336)
Decrease in other current and non-current assets	Decrease in other current and non-current assets	2,522		271	Decrease in other current and non-current assets	995		2,522
Decrease in other current and non-current liabilities		(902)		(329)
Increase/(Decrease) in other current and non-current liabilities					Increase/(Decrease) in other current and non-current liabilities	110		(902)

NET CASH FLOWS FROM OPERATING ACTIVITIES	NET CASH FLOWS FROM OPERATING ACTIVITIES	4,074		3,358	NET CASH FLOWS FROM OPERATING ACTIVITIES	3,979		4,074

CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES				CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment	Additions to property, plant and equipment	(677)		(625)	Additions to property, plant and equipment	(607)		(677)
Proceeds from the disposal of assets/businesses, net (Note 10)	Proceeds from the disposal of assets/businesses, net (Note 10)	603		17	Proceeds from the disposal of assets/businesses, net (Note 10)	248		603
Acquisitions, net of cash acquired (Note 10)	Acquisitions, net of cash acquired (Note 10)	0		(939)	Acquisitions, net of cash acquired (Note 10)	(252)		—
Purchases of investments	Purchases of investments	(5,994)		(2,064)	Purchases of investments	(9,018)		(5,994)
Sales of investments	Sales of investments	5,233		1,544	Sales of investments	6,303		5,233
Credit support agreements activity, net	Credit support agreements activity, net	751		1,743	Credit support agreements activity, net	(249)		751
Other (primarily licenses and milestones)	Other (primarily licenses and milestones)	(101)		(257)	Other (primarily licenses and milestones)	(59)		(101)

NET CASH USED BY INVESTING ACTIVITIES	NET CASH USED BY INVESTING ACTIVITIES	(185)		(581)	NET CASH USED BY INVESTING ACTIVITIES	(3,634)		(185)

CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES				CASH FLOWS FROM FINANCING ACTIVITIES
Dividends to shareholders	Dividends to shareholders	(2,659)		(2,505)	Dividends to shareholders	(2,787)		(2,659)
Repurchase of common stock	Repurchase of common stock	(1,438)		(1,711)	Repurchase of common stock	(1,577)		(1,438)
Proceeds from short-term debt	Proceeds from short-term debt	23		10	Proceeds from short-term debt	3,019		23
Repayment of short-term debt	Repayment of short-term debt	(475)		(18)	Repayment of short-term debt	(856)		(475)
Proceeds from long-term debt, net of issuance costs	Proceeds from long-term debt, net of issuance costs	1		0	Proceeds from long-term debt, net of issuance costs	—		1
Repayment of long-term debt	Repayment of long-term debt	(1,001)		(11)	Repayment of long-term debt	(2,132)		(1,001)
Proceeds from the exercise of stock options/employee withholding tax on stock awards, net	Proceeds from the exercise of stock options/employee withholding tax on stock awards, net	236		332	Proceeds from the exercise of stock options/employee withholding tax on stock awards, net	321		236
Credit support agreements activity, net	Credit support agreements activity, net	212		0	Credit support agreements activity, net	(235)		212
Other	Other	(24)		(412)	Other	(138)		(24)

NET CASH USED BY FINANCING ACTIVITIES	NET CASH USED BY FINANCING ACTIVITIES	(5,125)		(4,315)	NET CASH USED BY FINANCING ACTIVITIES	(4,385)		(5,125)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(78)		(237)	Effect of exchange rate changes on cash and cash equivalents	16		(78)
Decrease in cash and cash equivalents	Decrease in cash and cash equivalents	(1,314)		(1,775)	Decrease in cash and cash equivalents	(4,024)		(1,314)
Cash and Cash equivalents, beginning of period	Cash and Cash equivalents, beginning of period	13,985		17,305	Cash and Cash equivalents, beginning of period	14,487		13,985
CASH AND CASH EQUIVALENTS, END OF PERIOD	CASH AND CASH EQUIVALENTS, END OF PERIOD	$	12,671	15,530	CASH AND CASH EQUIVALENTS, END OF PERIOD	$	10,463	12,671

Acquisitions	Acquisitions				Acquisitions
Fair value of assets acquired	Fair value of assets acquired	$	0	1,136	Fair value of assets acquired	$	255	—
Fair value of liabilities assumed and noncontrolling interests	Fair value of liabilities assumed and noncontrolling interests	0		(197)	Fair value of liabilities assumed and noncontrolling interests	(3)		—
Net cash paid for acquisitions	Net cash paid for acquisitions	$	0	939	Net cash paid for acquisitions	$	252	—

See Notes to Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements of Johnson & Johnson and its subsidiaries (the Company) and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January ~~3, 2021.~~2, 2022. The unaudited interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the periods presented.

Columns and rows within tables may not add due to rounding. Percentages have been calculated using actual, non-rounded figures.

Use of Estimates

The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors including, but not limited to: the magnitude and duration of COVID-19, the extent to which it will impact worldwide macroeconomic conditions including interest rates, inflation, employment rates and health insurance coverage, the speed of the anticipated recovery, and governmental and business reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts COVID-19 as of April ~~4, 2021~~3, 2022 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts and credit losses, inventory and related reserves, accrued rebates and associated reserves, and the carrying value of the goodwill and other long-lived assets along with the Company’s on-going vaccine development and distribution efforts. While there was not a material impact to the Company’s consolidated financial statements as of and for the quarter ended April ~~4, 2021,~~3, 2022, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

New Accounting Standards

The Company assesses the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board on the Company's financial statements as well as material updates to previous assessments, if any, from the Company’s Annual Report on Form 10-K for the fiscal year ended January ~~3, 2021.~~2, 2022. There were no new material accounting standards issued in the fiscal first quarter of ~~2021~~2022 that impacted the Company.

Recently Adopted Accounting Standards

There were no new material accounting standards adopted in the fiscal first quarter of ~~2021.~~2022.

Reclassification

Certain prior period amounts have been reclassified to conform to current year presentation.

NOTE 2 — INVENTORIES


(Dollars in Millions)	(Dollars in Millions)	April 4, 2021		January 3, 2021	(Dollars in Millions)	April 3, 2022		January 2, 2022
Raw materials and supplies	Raw materials and supplies	$	1,557	1,410	Raw materials and supplies	$	1,679	1,592
Goods in process	Goods in process	2,034		2,040	Goods in process	2,629		2,287
Finished goods	Finished goods	6,361		5,894	Finished goods	6,682		6,508
Total inventories	Total inventories	$	9,952	9,344	Total inventories	$	10,990	10,387

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NOTE 3 — INTANGIBLE ASSETS AND GOODWILL

Intangible assets that have finite useful lives are amortized over their estimated useful lives. The latest annual impairment assessment of goodwill and indefinite lived intangible assets was completed in the fiscal fourth quarter of ~~2020.~~2021. Future impairment tests for goodwill and indefinite lived intangible assets will be performed annually in the fiscal fourth quarter, or sooner, if warranted.


(Dollars in Millions)	(Dollars in Millions)	April 4, 2021		January 3, 2021	(Dollars in Millions)	April 3, 2022		January 2, 2022
Intangible assets with definite lives:	Intangible assets with definite lives:				Intangible assets with definite lives:
Patents and trademarks — gross	Patents and trademarks — gross	$	39,505	39,990	Patents and trademarks — gross	$	37,960	38,572
Less accumulated amortization	Less accumulated amortization	18,006		17,618	Less accumulated amortization	(20,492)		(20,088)
Patents and trademarks — net	Patents and trademarks — net	21,499		22,372	Patents and trademarks — net	17,468		18,484
Customer relationships and other intangibles — gross	Customer relationships and other intangibles — gross	22,793		22,898	Customer relationships and other intangibles — gross	22,910		23,011
Less accumulated amortization	Less accumulated amortization	11,031		10,912	Less accumulated amortization	(12,147)		(11,925)
Customer relationships and other intangibles — net*		11,762		11,986
Customer relationships and other intangibles — net(1)					Customer relationships and other intangibles — net(1)	10,763		11,086
Intangible assets with indefinite lives:	Intangible assets with indefinite lives:				Intangible assets with indefinite lives:
Trademarks	Trademarks	7,061		7,195	Trademarks	6,947		6,985
Purchased in-process research and development(2)	Purchased in-process research and development(2)	10,788		11,849	Purchased in-process research and development(2)	9,242		9,837
Total intangible assets with indefinite lives	Total intangible assets with indefinite lives	17,849		19,044	Total intangible assets with indefinite lives	16,189		16,822
Total intangible assets — net	Total intangible assets — net	$	51,110	53,402	Total intangible assets — net	$	44,420	46,392

*(1)The majority is comprised of customer relationships

(2)In the fiscal first quarter of 2022, the Company recorded an intangible asset impairment charge of approximately$0.6 billion related to an in-process research and development asset, bermekimab (JnJ-77474462), an investigational drug for the treatment of Atopic Dermatitis (AD) and Hidradenitis Suppurativa (HS). Additional information regarding efficacy of the AD indication became available which led the Company to the decision to terminate the development of bermekimab for AD. The Company acquired all rights to bermekimab from XBiotech, Inc.in the fiscal year 2020.

Goodwill as of April ~~4, 2021~~3, 2022 was allocated by segment of business as follows:

(Dollars in Millions) Consumer Health Pharmaceutical Medical Devices Total
Goodwill at January 3, 2021 $ 10,336 11,009 15,048 36,393
Goodwill, related to acquisitions and divestitures 0 0 0 0
Currency translation/Other (310) (262) (133) (705)
Goodwill at April 4, 2021 $ 10,026 10,747 14,915 35,688


(Dollars in Millions)	Consumer Health		Pharmaceutical	MedTech	Total
Goodwill at January 2, 2022	$	9,810	10,580	14,856	35,246
Goodwill, related to acquisitions	—		—	73	73

Currency translation/Other	(195)		(170)	(19)	(384)
Goodwill at April 3, 2022	$	9,615	10,410	14,910	34,935

The weighted average amortization period for patents and trademarks is 12 years. The weighted average amortization period for customer relationships and other intangible assets is 21 years. The amortization expense of amortizable intangible assets included in cost of products sold was ~~$1.2~~$1.1 billion and ~~$1.1~~$1.2 billion for the fiscal first quarters ended April 3, 2022 and April 4, 2021, ~~and March 29, 2020,~~ respectively. Intangible asset write-downs are included in Other (income) expense, net.

The estimated amortization expense for approved products, before tax, for the five succeeding years is approximately:


(Dollars in Millions)	(Dollars in Millions)					(Dollars in Millions)
2021		2022	2023	2024	2025
2022						2022	2023	2024	2025	2026
$4,600	$4,600	4,400	4,300	4,100	3,300	$4,600	4,600	4,400	3,600	3,000

See Note 10 to the Consolidated Financial Statements for additional details related to acquisitions and divestitures.

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NOTE 4 — FAIR VALUE MEASUREMENTS

The Company uses forward foreign exchange contracts to manage its exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of future intercompany product and third-party purchases of materials denominated in a foreign currency. The Company uses cross currency interest rate swaps to manage currency risk primarily related to borrowings. Both types of derivatives are designated as cash flow hedges.

~~Table of Content~~

Additionally, the Company uses interest rate swaps as an instrument to manage interest rate risk related to fixed rate borrowings. These derivatives are designated as fair value hedges. The Company uses cross currency interest rate swaps and forward foreign exchange contracts designated as net investment hedges. Additionally, the Company uses forward foreign exchange contracts to offset its exposure to certain foreign currency assets and liabilities. These forward foreign exchange contracts are not designated as hedges, and therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency assets and liabilities.

The Company does not enter into derivative financial instruments for trading or speculative purposes, or that contain credit risk related contingent features. The Company maintains credit support agreements (CSA) with certain derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements. As of April ~~4, 2021,~~3, 2022, the cumulative amount of cash collateral paid by the Company under the CSA amounted to ~~$102 million~~$1.1 billion net, ~~primarily~~ related to net investment and cash flow hedges. On an ongoing basis, the Company monitors counter-party credit ratings. The Company considers credit non-performance risk to be low, because the Company primarily enters into agreements with commercial institutions that have at least an investment grade credit rating. Refer to the table on significant financial assets and liabilities measured at fair value contained in this footnote for receivables and payables with these commercial institutions. As of April ~~4, 2021,~~3, 2022, the Company had notional amounts outstanding for forward foreign exchange contracts, ~~and~~ cross currency interest rate swaps and interest rate swaps of ~~$41.2~~$42.5 billion, $37.4 billion and ~~$31.2~~$10.0 billion, respectively. As of January ~~3, 2021,~~2, 2022, the Company had notional amounts outstanding for forward foreign exchange contracts, ~~and~~ cross currency interest rate swaps and interest rate swaps of ~~$37.8~~$45.8 billion, $37.4 billion and ~~$30.6~~$10.0 billion respectively.

All derivative instruments are recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether the derivative is designated as part of a hedge transaction, and if so, the type of hedge transaction.

The designation as a cash flow hedge is made at the entrance date of the derivative contract. At inception, all derivatives are expected to be highly effective. Foreign exchange contracts designated as cash flow hedges are accounted for under the forward method and all gains/losses associated with these contracts will be recognized in the income statement when the hedged item impacts earnings. Changes in the fair value of these derivatives are recorded in accumulated other comprehensive income until the underlying transaction affects earnings and are then reclassified to earnings in the same account as the hedged transaction.

Gains and losses associated with interest rate swaps and changes in fair value of hedged debt attributable to changes in interest rates are recorded to interest expense in the period in which they occur. Gains and losses on net investment hedges are accounted for through the currency translation account within accumulated other comprehensive income. The portion excluded from effectiveness testing is recorded through interest (income) expense using the spot method. On an ongoing basis, the Company assesses whether each derivative continues to be highly effective in offsetting changes of hedged items. If and when a derivative is no longer expected to be highly effective, hedge accounting is discontinued.

The Company designated its Euro denominated notes issued in May 2016 with due dates ranging from 2022 to 2035 as a net investment hedge of the Company's investments in certain of its international subsidiaries that use the Euro as their functional currency in order to reduce the volatility caused by changes in exchange rates.

As of April ~~4, 2021,~~3, 2022, the balance of deferred net ~~gain~~loss on derivatives included in accumulated other comprehensive income was ~~$57~~$632 million after-tax. For additional information, see the Consolidated Statements of Comprehensive Income and Note 7. The Company expects that substantially all of the amounts related to forward foreign exchange contracts will be reclassified into earnings over the next 12 months as a result of transactions that are expected to occur over that period. The maximum length of time over which the Company is hedging transaction exposure is 18 months, excluding interest rate contracts and net investment hedge contracts. The amount ultimately realized in earnings may differ as foreign exchange rates change. Realized gains and losses are ultimately determined by actual exchange rates at maturity of the derivative.

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The following table is a summary of the activity related to derivatives and hedges for the fiscal first quarters ended in ~~2021~~2022 and ~~2020,~~2021, net of tax:

~~Table of Content~~


		April 4, 2021						March 29, 2020						April 3, 2022						April 4, 2021
(Dollars in Millions)	(Dollars in Millions)	Sales		Cost of Products Sold	R&D Expense	Interest (Income) Expense	Other (Income) Expense	Sales	Cost of Products Sold	R&D Expense	Interest (Income) Expense	Other (Income) Expense	(Dollars in Millions)	Sales		Cost of Products Sold	R&D Expense	Interest (Income) Expense	Other (Income) Expense	Sales	Cost of Products Sold	R&D Expense	Interest (Income) Expense	Other (Income) Expense

The effects of fair value, net investment and cash flow hedging:	The effects of fair value, net investment and cash flow hedging:												The effects of fair value, net investment and cash flow hedging:

Gain (Loss) on fair value hedging relationship:													Gain (Loss) on fair value hedging relationship:
Interest rate swaps contracts:													Interest rate swaps contracts:
Hedged items													Hedged items	$	—	—	—	(531)	—	—	—	—	—	—
Derivatives designated as hedging instruments													Derivatives designated as hedging instruments	—		—	—	531	—	—	—	—	—	—

Gain (Loss) on net investment hedging relationship:	Gain (Loss) on net investment hedging relationship:												Gain (Loss) on net investment hedging relationship:
Cross currency interest rate swaps contracts:	Cross currency interest rate swaps contracts:												Cross currency interest rate swaps contracts:
Amount of gain or (loss) recognized in income on derivative amount excluded from effectiveness testing	Amount of gain or (loss) recognized in income on derivative amount excluded from effectiveness testing	0		0	0	40	0	0	0	0	40	0	Amount of gain or (loss) recognized in income on derivative amount excluded from effectiveness testing	—		—	—	45	—	—	—	—	40	—
Amount of gain or (loss) recognized in AOCI	Amount of gain or (loss) recognized in AOCI	0		0	0	40	0	0	0	0	40	0	Amount of gain or (loss) recognized in AOCI	—		—	—	45	—	—	—	—	40	—

Gain (Loss) on cash flow hedging relationship:	Gain (Loss) on cash flow hedging relationship:												Gain (Loss) on cash flow hedging relationship:
Forward foreign exchange contracts:	Forward foreign exchange contracts:												Forward foreign exchange contracts:
Amount of gain or (loss) reclassified from AOCI into income	Amount of gain or (loss) reclassified from AOCI into income	17		34	(113)	0	3	9	(173)	(110)	0	(2)	Amount of gain or (loss) reclassified from AOCI into income	(17)		(52)	23	—	(18)	17	34	(113)	—	3

Amount of gain or (loss) recognized in AOCI	Amount of gain or (loss) recognized in AOCI	(3)		(193)	(76)	0	17	11	302	(110)	0	(36)	Amount of gain or (loss) recognized in AOCI	22		(94)	33	—	(73)	(3)	(193)	(76)	—	17

Cross currency interest rate swaps contracts:	Cross currency interest rate swaps contracts:												Cross currency interest rate swaps contracts:
Amount of gain or (loss) reclassified from AOCI into income	Amount of gain or (loss) reclassified from AOCI into income	0		0	0	92	0	0	0	0	98	0	Amount of gain or (loss) reclassified from AOCI into income	—		—	—	120	—	—	0	—	92	—

Amount of gain or (loss) recognized in AOCI	Amount of gain or (loss) recognized in AOCI	$	0	0	0	(307)	0	0	0	0	625	0	Amount of gain or (loss) recognized in AOCI	$	—	—	—	(128)	—	—	—	—	(307)	—

~~Table of Content~~

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As of April 3, 2022, and January 2, 2022, the following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustment for fair value hedges

Line item in the Consolidated Balance Sheet in which the hedged item is included

Carrying Amount of the Hedged Liability

Cumulative Amount of Fair Value Hedging Gain/ (Loss) Included in the Carrying Amount of the Hedged Liability

(Dollars in Millions)

April 3, 2022

January 2, 2022

April 3, 2022

January 2, 2022

Long-term Debt

9,313

9,793

(694)

(142)

The following table is the effect of derivatives not designated as hedging instruments for the fiscal first quarters ~~2021~~ended 2022 and ~~2020:~~2021:

Gain/(Loss)
Recognized In
Income on Derivative
(Dollars in Millions) Location of Gain /(Loss) Recognized in Income on Derivative Fiscal First Quarter Ended
Derivatives Not Designated as Hedging Instruments April 4, 2021 March 29, 2020
Foreign Exchange Contracts Other (income) expense $ (16) 89

Gain/(Loss)
Recognized In
Income on Derivative

(Dollars in Millions)

Location of Gain /(Loss) Recognized in Income on Derivative

Fiscal First Quarter Ended

Derivatives Not Designated as Hedging Instruments

April 3, 2022

April 4, 2021

Foreign Exchange Contracts

Other (income) expense

(16)

The following table is the effect of net investment hedges for the fiscal first quarters ended in ~~2021~~2022 and ~~2020~~2021:


		Gain/(Loss) Recognized In Accumulated OCI			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income Into Income	Gain/(Loss) Reclassified From Accumulated OCI Into Income			Gain/(Loss) Recognized In Accumulated OCI			Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income Into Income	Gain/(Loss) Reclassified From Accumulated OCI Into Income
(Dollars in Millions)	(Dollars in Millions)	April 4, 2021		March 29, 2020		April 4, 2021	March 29, 2020	(Dollars in Millions)	April 3, 2022		April 4, 2021		April 3, 2022	April 4, 2021
Debt	Debt	$	209	46	Interest (income) expense	0	0	Debt	$	68	209	Interest (income) expense	—	—
Cross Currency interest rate swaps	Cross Currency interest rate swaps	$	361	827	Interest (income) expense	0	0	Cross Currency interest rate swaps	$	560	361	Interest (income) expense	—	—

The Company holds equity investments with readily determinable fair values and equity investments without readily determinable fair values. The Company has elected to measure equity investments that do not have readily determinable fair

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values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The following table is a summary of the activity related to equity investments:


(Dollars in Millions)	(Dollars in Millions)	January 3, 2021				April 4, 2021		(Dollars in Millions)	January 2, 2022				April 3, 2022
		Carrying Value		Changes in Fair Value Reflected in Net Income (1)	Sales/ Purchases/Other (2)	Carrying Value	Non Current Other Assets		Carrying Value		Changes in Fair Value Reflected in Net Income (1)	Sales/ Purchases/Other (2)	Carrying Value	Non Current Other Assets
Equity Investments with readily determinable value	Equity Investments with readily determinable value	$	1,481	(36)	7	1,452	1,452	Equity Investments with readily determinable value	$	1,884	(402)	(30)	1,452	1,452

Equity Investments without readily determinable value	Equity Investments without readily determinable value	$	738	(55)	81	764	764	Equity Investments without readily determinable value	$	500	(5)	10	505	505

(1) Recorded in Other Income/Expense

(2) Other includes impact of currency

For equity investments without readily determinable market values, ~~$55~~there was a decrease of $5 million ~~of the decrease~~ in the fair value reflected in net income ~~were the~~as a result of impairments.

Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement determined using assumptions that market participants would use in pricing an asset or liability. In accordance with ASC 820, a three-level hierarchy was established to prioritize the inputs used in measuring fair value. The levels within the hierarchy are described below with Level 1 inputs having the highest priority and Level 3 inputs having the lowest.

~~Table of Content~~

The fair value of a derivative financial instrument (i.e., forward foreign exchange contracts, interest rate contracts) is the aggregation by currency of all future cash flows discounted to its present value at the prevailing market interest rates and subsequently converted to the U.S. Dollar at the current spot foreign exchange rate. The Company does not believe that fair values of these derivative instruments materially differ from the amounts that could be realized upon settlement or maturity, or that the changes in fair value will have a material effect on the Company’s results of operations, cash flows or financial position. The Company also holds equity investments which are classified as Level 1 and debt securities which are classified as Level 2. The Company holds acquisition related contingent liabilities based upon certain regulatory and commercial events, which are classified as Level 3, whose values are determined using discounted cash flow methodologies or similar techniques for which the determination of fair value requires significant judgment or estimations.

The following three levels of inputs are used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets and liabilities.

Level 2 — Significant other observable inputs.

Level 3 — Significant unobservable inputs.

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The Company’s significant financial assets and liabilities measured at fair value as of April ~~4, 2021~~3, 2022 and January ~~3, 2021~~2, 2022 were as follows:


		April 4, 2021					January 3, 2021		April 3, 2022					January 2, 2022
(Dollars in Millions)	(Dollars in Millions)	Level 1		Level 2	Level 3	Total	Total(1)	(Dollars in Millions)	Level 1		Level 2	Level 3	Total	Total(1)
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:							Derivatives designated as hedging instruments:
Assets:	Assets:							Assets:
Forward foreign exchange contracts	Forward foreign exchange contracts	$	0	561	0	561	849	Forward foreign exchange contracts	$	—	742	—	742	540
Interest rate contracts (2)	Interest rate contracts (2)	0		522	0	522	240	Interest rate contracts (2)	—		975	—	975	796

Total	Total	0		1,083	0	1,083	1,089	Total	—		1,717	—	1,717	1,336
Liabilities:	Liabilities:							Liabilities:
Forward foreign exchange contracts	Forward foreign exchange contracts	0		565	0	565	702	Forward foreign exchange contracts	—		1,058	—	1,058	881
Interest rate contracts (2)	Interest rate contracts (2)	0		540	0	540	1,569	Interest rate contracts (2)	—		1,652	—	1,652	979

Total	Total	0		1,105	0	1,105	2,271	Total	—		2,710	—	2,710	1,860
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:							Derivatives not designated as hedging instruments:
Assets:	Assets:							Assets:
Forward foreign exchange contracts	Forward foreign exchange contracts	0		51	0	51	49	Forward foreign exchange contracts	—		36	—	36	24
Liabilities:	Liabilities:							Liabilities:
Forward foreign exchange contracts	Forward foreign exchange contracts	0		43	0	43	38	Forward foreign exchange contracts	—		68	—	68	28
Other Investments:	Other Investments:							Other Investments:
Equity investments (3)	Equity investments (3)	1,452		0	0	1,452	1,481	Equity investments (3)	1,452		—	—	1,452	1,884
Debt securities(4)	Debt securities(4)	0		14,493	0	14,493	14,042	Debt securities (4)	—		19,583	—	19,583	19,727
Other Liabilities	Other Liabilities							Other Liabilities
Contingent consideration (5)	Contingent consideration (5)	$	0	0	600	600	633	Contingent consideration (5)	$	—	—	486	486	533


Gross to Net Derivative Reconciliation	Gross to Net Derivative Reconciliation	April 4, 2021		January 3, 2021	Gross to Net Derivative Reconciliation	April 3, 2022		January 2, 2022
(Dollars in Millions)	(Dollars in Millions)				(Dollars in Millions)
Total Gross Assets	Total Gross Assets	$	1,134	1,138	Total Gross Assets	$	1,753	1,360
Credit Support Agreement (CSA)	Credit Support Agreement (CSA)	(1,028)		(1,107)	Credit Support Agreement (CSA)	(1,655)		(1,285)
Total Net Asset	Total Net Asset	106		31	Total Net Asset	98		75

Total Gross Liabilities	Total Gross Liabilities	1,148		2,309	Total Gross Liabilities	2,778		1,888
Credit Support Agreement (CSA)	Credit Support Agreement (CSA)	(1,130)		(2,172)	Credit Support Agreement (CSA)	(2,709)		(1,855)
Total Net Liabilities	Total Net Liabilities	$	18	137	Total Net Liabilities	$	69	33

1112

Table of Content

Summarized information about changes in liabilities for contingent consideration is as follows:


		April 4, 2021		March 29, 2020			April 3, 2022		April 4, 2021
(Dollars in Millions)	(Dollars in Millions)					(Dollars in Millions)
Beginning Balance	Beginning Balance	$	633	$	1,715	Beginning Balance	$	533	$	633
Changes in estimated fair value (6)	Changes in estimated fair value (6)	15		(977)		Changes in estimated fair value (6)	(47)		15
Additions	Additions	0		106		Additions	—		—
Payments	Payments	(48)		(60)		Payments	—		(48)
Ending Balance	Ending Balance	$	600	$	784	Ending Balance	$	486	$	600

(1)~~2020~~2021 assets and liabilities are all classified as Level 2 with the exception of equity investments of ~~$1,481~~$1,884 million, which are classified as Level 1 and contingent consideration of ~~$633~~$533 million, classified as Level 3.

(2) Includes cross currency interest rate swaps and interest rate swaps.

(3) Classified as non-current other assets.

(4) Classified within cash equivalents and current marketable securities.

(5) Includes ~~$589~~$469 million and ~~$594~~$520 million, classified as non-current other liabilities as of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, respectively. Includes ~~$11~~$17 million and ~~$39~~$13 million classified as current liabilities as of April ~~4, 2021~~3, 2022 and January ~~3, 2021,~~2, 2022, respectively.

(6) Ongoing fair value adjustment amounts are primarily recorded in Research and Development expense.

The Company recorded a contingent consideration reversal of $983 million in 2020 related to the timing of certain developmental milestones associated with the Auris Health acquisition. The reversal of the contingent consideration was recorded in Other income and expense, net.

~~Table of Content~~

The Company's cash, cash equivalents and current marketable securities as of April ~~4, 2021~~3, 2022 comprised:


(Dollars in Millions)	(Dollars in Millions)	Carrying Amount		Unrecognized Gain	Unrecognized Loss	Estimated Fair Value	Cash & Cash Equivalents	Current Marketable Securities	(Dollars in Millions)	Carrying Amount		Gain/( Loss)	Estimated Fair Value	Cash & Cash Equivalents	Current Marketable Securities
Cash	Cash	$	2,247	0	0	2,247	2,247		Cash	$	3,128	—	3,128	3,128	—

Non-U.S. sovereign securities(1)	Non-U.S. sovereign securities(1)	400		0	0	400	0	400	Non-U.S. sovereign securities(1)	329		—	329	—	329
U.S. reverse repurchase agreements	U.S. reverse repurchase agreements	1,199		0	0	1,199	1,199	0	U.S. reverse repurchase agreements	1,449		—	1,449	1,449	—
Other reverse repurchase agreements		0		0	0	0	0

Corporate debt securities(1)	Corporate debt securities(1)	3,239		0	0	3,239	1,890	1,349	Corporate debt securities(1)	3,557		(6)	3,551	540	3,017
Money market funds	Money market funds	2,094		0	0	2,094	2,094		Money market funds	1,579		—	1,579	1,579	—
Time deposits(1)	Time deposits(1)	947		0	0	947	947		Time deposits(1)	763		—	763	763	—
Subtotal	Subtotal	10,126		0	0	10,126	8,377	1,749	Subtotal	10,805		(6)	10,799	7,459	3,346

				Unrealized Gain	Unrealized Loss							Unrealized Loss
U.S. Gov't securities	U.S. Gov't securities	14,228		1	0	14,229	4,268	9,961	U.S. Gov't securities	19,354		(19)	19,335	2,968	16,367
Other sovereign securities	Other sovereign securities	8		0	0	8	1	7	Other sovereign securities	3		—	3	—	3
Corporate debt securities	Corporate debt securities	256		0	0	256	25	231	Corporate debt securities	246		(1)	245	36	209
Subtotal available for sale debt(2)	Subtotal available for sale debt(2)	$	14,492	1	0	14,493	4,294	10,199	Subtotal available for sale debt(2)	$	19,603	(20)	19,583	3,004	16,579
Total cash, cash equivalents and current marketable securities	Total cash, cash equivalents and current marketable securities	$	24,618	1	0	24,619	12,671	11,948	Total cash, cash equivalents and current marketable securities	$	30,408	(26)	30,382	10,463	19,925

(1) Held to maturity investments are reported at amortized cost and gains or losses are reported in earnings.

(2) Available for sale debt securities are reported at fair value with unrealized gains and losses reported net of taxes in other comprehensive income.

Table of Content

As of the fiscal year ended January ~~3, 2021~~2, 2022 the carrying amount was approximately the same as the estimated fair value.

Fair value of government securities and obligations and corporate debt securities was estimated using quoted broker prices and significant other observable inputs.

The Company classifies all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months from the date of purchase as current marketable securities. Available for sale securities with stated maturities of greater than one year from the date of purchase are available to fund current operations and are classified as cash equivalents and current marketable securities.

The contractual maturities of the available for sale securities as of April ~~4, 2021~~3, 2022 are as follows:


(Dollars in Millions)	(Dollars in Millions)	Cost Basis		Fair Value	(Dollars in Millions)	Cost Basis		Fair Value
Due within one year	Due within one year	$	14,486	14,487	Due within one year	$	19,585	19,564
Due after one year through five years	Due after one year through five years	6		6	Due after one year through five years	19		19
Due after five years through ten years	Due after five years through ten years	0		0	Due after five years through ten years	—		—
Total debt securities	Total debt securities	$	14,492	14,493	Total debt securities	$	19,604	19,583

1314

Table of Content

Financial Instruments not measured at Fair Value:

The following financial liabilities are held at carrying amount on the consolidated balance sheet as of April ~~4, 2021:~~3, 2022:


(Dollars in Millions)	(Dollars in Millions)	Carrying Amount		Estimated Fair Value	(Dollars in Millions)	Carrying Amount		Estimated Fair Value

Financial Liabilities	Financial Liabilities				Financial Liabilities

Current Debt	Current Debt	$	3,350	3,380	Current Debt	$	4,297	4,298

Non-Current Debt	Non-Current Debt				Non-Current Debt
6.73% Debentures due 2023	6.73% Debentures due 2023	250		292	6.73% Debentures due 2023	250		266
3.375% Notes due 2023	3.375% Notes due 2023	802		868	3.375% Notes due 2023	802		820
2.05% Notes due 2023		499		515
0.650% Notes due 2024 (750MM Euro 1.1757)		880		904
5.50% Notes due 2024 (500 MM GBP 1.3799)		687		808

0.650% Notes due 2024 (750MM Euro 1.1311)					0.650% Notes due 2024 (750MM Euro 1.1311)	824		829
5.50% Notes due 2024 (500 MM GBP 1.3485)					5.50% Notes due 2024 (500 MM GBP 1.3485)	654		713
2.625% Notes due 2025	2.625% Notes due 2025	749		797	2.625% Notes due 2025	749		762

0.55% Notes due 2025	0.55% Notes due 2025	996		982	0.55% Notes due 2025	950		886
2.45% Notes due 2026	2.45% Notes due 2026	1,994		2,115	2.45% Notes due 2026	1,995		1,981
2.95% Notes due 2027	2.95% Notes due 2027	997		1,084	2.95% Notes due 2027	930		934

0.95% Notes due 2027	0.95% Notes due 2027	1,494		1,445	0.95% Notes due 2027	1,436		1,307
2.90% Notes due 2028	2.90% Notes due 2028	1,495		1,616	2.90% Notes due 2028	1,496		1,489
1.150% Notes due 2028 (750MM Euro 1.1757)		876		955
1.150% Notes due 2028 (750MM Euro 1.1311)					1.150% Notes due 2028 (750MM Euro 1.1311)	826		829
6.95% Notes due 2029	6.95% Notes due 2029	297		416	6.95% Notes due 2029	298		379

1.30% Notes due 2030	1.30% Notes due 2030	1,743		1,642	1.30% Notes due 2030	1,672		1,486
4.95% Debentures due 2033	4.95% Debentures due 2033	498		639	4.95% Debentures due 2033	498		590
4.375% Notes due 2033	4.375% Notes due 2033	855		1,046	4.375% Notes due 2033	855		959
1.650% Notes due 2035 (1.5B Euro 1.1757)		1,749		2,035
1.650% Notes due 2035 (1.5B Euro 1.1311)					1.650% Notes due 2035 (1.5B Euro 1.1311)	1,654		1,687
3.55% Notes due 2036	3.55% Notes due 2036	990		1,117	3.55% Notes due 2036	917		947
5.95% Notes due 2037	5.95% Notes due 2037	992		1,422	5.95% Notes due 2037	993		1,288
3.625% Notes due 2037	3.625% Notes due 2037	1,488		1,694	3.625% Notes due 2037	1,416		1,463
3.40% Notes due 2038	3.40% Notes due 2038	991		1,097	3.40% Notes due 2038	992		999
5.85% Debentures due 2038	5.85% Debentures due 2038	696		992	5.85% Debentures due 2038	697		901
4.50% Debentures due 2040	4.50% Debentures due 2040	539		676	4.50% Debentures due 2040	540		617

2.10% Notes due 2040	2.10% Notes due 2040	986		907	2.10% Notes due 2040	914		777
4.85% Notes due 2041	4.85% Notes due 2041	297		385	4.85% Notes due 2041	297		342
4.50% Notes due 2043	4.50% Notes due 2043	496		628	4.50% Notes due 2043	496		565
3.70% Notes due 2046	3.70% Notes due 2046	1,974		2,257	3.70% Notes due 2046	1,975		2,097
3.75% Notes due 2047	3.75% Notes due 2047	992		1,146	3.75% Notes due 2047	906		969
3.50% Notes due 2048	3.50% Notes due 2048	742		827	3.50% Notes due 2048	743		766
2.25% Notes due 2050	2.25% Notes due 2050	984		883	2.25% Notes due 2050	914		759
2.45% Notes due 2060	2.45% Notes due 2060	1,228		1,104	2.45% Notes due 2060	1,155		942
Other	Other	7		6	Other	7		7
Total Non-Current Debt	Total Non-Current Debt	$	30,263	33,300	Total Non-Current Debt	$	28,851	29,356

The weighted average effective interest rate on non-current debt is ~~2.98%~~3.04%.

The excess of the estimated fair value over the carrying value of debt was ~~$5.4~~$3.2 billion at January ~~4, 2021.~~2, 2022.

~~Table of Content~~

The current debt balance as of April ~~4, 2021~~3, 2022 includes ~~$0.3~~$3.8 billion of commercial paper which has a weighted average interest rate of ~~0.12%~~0.37% and a weighted average maturity of ~~two~~approximately three months.

Table of Content

Fair value of the non-current debt was estimated using market prices, which were corroborated by quoted broker prices and significant other observable inputs.

NOTE 5 — INCOME TAXES

The worldwide effective income tax rates for the fiscal first quarters of 2022 and 2021 were 12.2% and ~~2020 were~~ 16.6% an~~d 11.0%~~, respectively. ~~In 2019, Switzerland enacted the Federal Act on Tax Reform and AHV Financing (TRAF), which became effective on January 1, 2020. More information on the provisions of TRAF can be found~~This decrease in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021. During the fiscal first quarter of 2020, the final canton where the Company maintains significant operations enacted TRAF legislation and, accordingly, the Company recorded an estimated deferred tax benefit of approximately $0.3 billion for the remeasurement of existing deferred tax liabilities offset by a related $0.2 billion increase in U.S. GILTI deferred taxes (1.3% net benefit to the effective tax rate).

~~In the first fiscal quarter of 2020, the Company reversed a contingent consideration liability related to the 2019 Auris Health acquisition that benefited the effective~~consolidated tax rate ~~by 1.9% (for additional details see Note 18~~is primarily due to ~~the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021).~~

~~Additionally, the Company had more~~lower income in higher tax jurisdictions, ~~relative to lower tax jurisdictions, as~~primarily in the U.S., compared to the same period in the prior year. This lower income in the first fiscal ~~year.~~ quarter of 2022 was caused by a mark to market adjustment to the Company’s investment portfolio and the impairment of the bermekimab AD IPR&D (for further information see Note 3 of the Consolidated Financial Statements), both at the U.S. statutory rate. The impact of the income mix was partially offset by incremental tax costs directly related to the planned separation of the Company’s Consumer Health business.

The Company also had ~~additional~~ tax benefits received from stock-based compensation that were either exercised or vested during each of the fiscal first quarters. Additionally, the Company’s effective tax rate benefited from the impact of certain provisions of the Tax Cuts and Jobs Act of 2017 that became effective in fiscal year 2022.

As of April ~~4, 2021,~~3, 2022, the Company had approximately $3.3 billion of liabilities from unrecognized tax benefits. The Company conducts business and files tax returns in numerous countries and currently has tax audits in progress in a number of jurisdictions. With respect to the United States, the IRS has completed its audit for the tax years through ~~2012.~~2012 and is currently auditing tax years 2013 through 2016. In other major jurisdictions where the Company conducts business, the years that remain open to tax audit go back to the year ~~2006.~~2008. The Company believes it is possible that tax audits may be completed over the next twelve months by taxing authorities in some jurisdictions outside of the United States. However, the Company is not able to provide a reasonably reliable estimate of the timing of any other future tax payments relating to uncertain tax positions.

~~Table of Content~~

NOTE 6 — PENSIONS AND OTHER BENEFIT PLANS

Components of Net Periodic Benefit Cost

Net periodic benefit costs for the Company’s defined benefit retirement plans and other benefit plans include the following components:


		Fiscal First Quarter Ended					Fiscal First Quarter Ended
		Retirement Plans			Other Benefit Plans			Retirement Plans		Other Benefit Plans
(Dollars in Millions)	(Dollars in Millions)	April 4, 2021		March 29, 2020	April 4, 2021	March 29, 2020			(Dollars in Millions)	April 3, 2022		April 4, 2021	April 3, 2022	April 4, 2021
Service cost	Service cost	$	353	326	77	72			Service cost	$	321	353	80	77
Interest cost	Interest cost	193		240	20	33			Interest cost	230		193	26	20
Expected return on plan assets	Expected return on plan assets	(680)		(614)	(2)	(2)			Expected return on plan assets	(699)		(680)	(2)	(2)
Amortization of prior service cost/(credit)	Amortization of prior service cost/(credit)	(45)		0	(8)	(8)			Amortization of prior service cost/(credit)	(46)		(45)	(1)	(8)

Recognized actuarial losses	Recognized actuarial losses	314		223	38	36			Recognized actuarial losses	162		314	30	38
Curtailments and settlements	Curtailments and settlements	1		19	0	0			Curtailments and settlements	1		1	—	—
Net periodic benefit cost		$	136	194	125	131
Net periodic benefit cost/(credit)									Net periodic benefit cost/(credit)	$	(31)	136	133	125

The service cost component of net periodic benefit cost is presented in the same line items on the Consolidated Statement of Earnings where other employee compensation costs are ~~reported.~~reported, including Cost of products sold, Research and development expense, and Selling, marketing and administrative expenses. All other components of net periodic benefit cost are presented as part of Other (income) expense, net on the Consolidated Statement of Earnings.

Company Contributions

For the ~~Three Months Ended~~fiscal three months ended April ~~4, 2021,~~3, 2022, the Company contributed ~~$24~~$29 million and ~~$10~~$5 million to its U.S. and international retirement plans, respectively. The Company plans to continue to fund its U.S. defined benefit plans to comply with the Pension Protection Act of 2006. International plans are funded in accordance with local regulations.

Table of Content

NOTE 7 — ACCUMULATED OTHER COMPREHENSIVE INCOME

Components of other comprehensive income (loss) consist of the following:


		Foreign		Gain/(Loss)	Employee	Gain/(Loss)	Total Accumulated		Foreign		Gain/(Loss)	Employee	Gain/(Loss)	Total Accumulated
		Currency		On	Benefit	On Derivatives	Other Comprehensive		Currency		On	Benefit	On Derivatives	Other Comprehensive
(Dollars in Millions)	(Dollars in Millions)	Translation		Securities	Plans	& Hedges	Income (Loss)	(Dollars in Millions)	Translation		Securities	Plans	& Hedges	Income (Loss)
January 3, 2021		$	(8,938)	1	(6,957)	652	(15,242)
January 2, 2022								January 2, 2022	$	(10,017)	(3)	(2,702)	(336)	(13,058)
Net change	Net change	276		0	233	(595)	(86)	Net change	(554)		(13)	164	(296)	(699)

April 4, 2021		$	(8,662)	1	(6,724)	57	(15,328)
April 3, 2022								April 3, 2022	$	(10,571)	(16)	(2,538)	(632)	(13,757)

Amounts in accumulated other comprehensive income are presented net of the related tax impact. Foreign currency translation is not adjusted for income taxes where it relates to permanent investments in international subsidiaries. For additional details on comprehensive income see the Consolidated Statements of Comprehensive Income.

Details on reclassifications out of Accumulated Other Comprehensive Income:

Gain/(Loss) On Securities - reclassifications released to Other (income) expense, net.

Employee Benefit Plans - reclassifications are included in net periodic benefit cost. See Note 6 for additional details.

Gain/(Loss) On Derivatives & Hedges - reclassifications to earnings are recorded in the same account as the underlying transaction. See Note 4 for additional details.

1617

Table of Content

NOTE 8 — EARNINGS PER SHARE

The following is a reconciliation of basic net earnings per share to diluted net earnings per share:


		Fiscal First Quarter Ended			Fiscal First Quarter Ended
(Shares in Millions)	(Shares in Millions)	April 4, 2021		March 29, 2020		(Shares in Millions)	April 3, 2022		April 4, 2021
Basic net earnings per share	Basic net earnings per share	$	2.35	2.20		Basic net earnings per share	$	1.96	2.35
Average shares outstanding — basic	Average shares outstanding — basic	2,631.6		2,633.7		Average shares outstanding — basic	2,629.2		2,631.6
Potential shares exercisable under stock option plans	Potential shares exercisable under stock option plans	128.4		126.0		Potential shares exercisable under stock option plans	140.1		128.4
Less: shares which could be repurchased under treasury stock method	Less: shares which could be repurchased under treasury stock method	(87.3)		(89.4)		Less: shares which could be repurchased under treasury stock method	(102.8)		(87.3)
Convertible debt shares		0		0.7

Average shares outstanding — diluted	Average shares outstanding — diluted	2,672.7		2,671.0		Average shares outstanding — diluted	2,666.5		2,672.7
Diluted net earnings per share	Diluted net earnings per share	$	2.32	2.17		Diluted net earnings per share	$	1.93	2.32

The diluted net earnings per share calculation for the fiscal first quarter ended April 3, 2022 included all shares related to stock options, as the exercise price of all options was less than the average market value of the Company’s stock.

The diluted net earnings per share calculation for the fiscal first quarter ended April 4, 2021 excluded 9 million shares related to stock options, as the exercise price of these options was greater than ~~their~~the average market ~~value. In~~value of the ~~fiscal first quarter ended April 4, 2021, the Company did not have convertible debt.~~

The diluted net earnings per share calculation for the fiscal first quarter ended March 29, 2020 excluded 10 million shares related to stock options, as the exercise price of these options was greater than their average market value. The diluted net earnings per share calculation for the fiscal first quarter ended March 29, 2020 included the dilutive effect of convertible debt that was offset by the related reduction in interest expense.Company's stock.

1718

Table of Content

NOTE 9 — SEGMENTS OF BUSINESS AND GEOGRAPHIC AREAS

SALES BY SEGMENT OF BUSINESS

Fiscal First Quarter Ended
(Dollars in Millions) April 4,
2021 March 29,
2020 Percent
Change
Consumer Health
OTC
     U.S. $ 599 689 (13.0) %
     International 575 659 (12.8)
     Worldwide 1,175 1,348 (12.9)
Skin Health/Beauty
     U.S. 634 659 (3.9)
     International 529 458 15.7
     Worldwide 1,163 1,117 4.1
Oral Care
     U.S. 163 176 (7.2)
     International 254 219 16.0
     Worldwide 417 395 5.7
Baby Care
     U.S. 96 92 4.2
     International 293 269 8.9
     Worldwide 389 361 7.7
Women's Health
     U.S. 3 4 (25.8)
     International 219 228 (3.9)
     Worldwide 222 232 (4.3)
Wound Care/Other
     U.S. 115 119 (3.0)
     International 61 52 17.6
     Worldwide 177 171 3.3
TOTAL Consumer Health
     U.S. 1,611 1,740 (7.4)
     International 1,932 1,885 2.5
     Worldwide 3,543 3,625 (2.3)

~~Table of Content~~


PHARMACEUTICAL
Immunology
						Fiscal First Quarter Ended
(Dollars in Millions)					(Dollars in Millions)	April 3, 2022		April 4, 2021	Percent Change

CONSUMER HEALTH					CONSUMER HEALTH
OTC(1)					OTC(1)
U.S.	U.S.	2,413	2,410	0.1	U.S.	$	670	599	11.8	%
International	International	1,501	1,228	22.3	International	791		673	17.5
Worldwide	Worldwide	3,914	3,638	7.6	Worldwide	1,461		1,273	14.8
REMICADE®
U.S.		489	625	(21.7)
U.S. Exports		57	110	(48.4)
International		232	256	(9.4)
Worldwide		777	990	(21.5)
SIMPONI / SIMPONI ARIA®
Skin Health/Beauty					Skin Health/Beauty
U.S.	U.S.	255	272	(5.9)	U.S.	544		634	(14.2)
International	International	307	258	18.9	International	468		529	(11.6)
Worldwide	Worldwide	562	529	6.2	Worldwide	1,012		1,163	(13.0)
STELARA®
Oral Care					Oral Care
U.S.	U.S.	1,331	1,217	9.4	U.S.	143		163	(12.6)
International	International	817	603	35.6	International	223		254	(12.0)
Worldwide	Worldwide	2,148	1,819	18.1	Worldwide	366		417	(12.2)
TREMFYA®
Baby Care					Baby Care
U.S.	U.S.	274	187	46.3	U.S.	85		96	(11.5)
International	International	143	109	32.0	International	270		293	(7.7)
Worldwide	Worldwide	418	296	41.0	Worldwide	355		389	(8.6)
OTHER IMMUNOLOGY
Women's Health					Women's Health
U.S.	U.S.	7	0	*	U.S.	3		3	7.2
International	International	2	3	(38.4)	International	224		219	2.5
Worldwide	Worldwide	8	3	*	Worldwide	228		222	2.6

Infectious Diseases
Wound Care/Other					Wound Care/Other
U.S.	U.S.	512	436	17.4	U.S.	112		115	(3.3)
International	International	494	483	2.3	International	52		61	(15.3)
Worldwide	Worldwide	1,007	920	9.5	Worldwide	164		177	(7.4)
COVID-19 vaccine
U.S.		100	0	*
International		0	0	—
Worldwide		100	0	*
EDURANT® / rilpivirine
U.S.		10	12	(12.3)
International		233	212	9.8
Worldwide		243	224	8.6
PREZISTA® / PREZCOBIX® / REZOLSTA® / SYMTUZA®
TOTAL CONSUMER HEALTH					TOTAL CONSUMER HEALTH
U.S.	U.S.	380	396	(3.8)	U.S.	1,557		1,611	(3.4)
International	International	166	184	(9.9)	International	2,029		2,030	0.0
Worldwide	Worldwide	546	579	(5.8)	Worldwide	3,586		3,641	(1.5)

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OTHER INFECTIOUS DISEASES
PHARMACEUTICAL					PHARMACEUTICAL
Immunology					Immunology
U.S.					U.S.	2,501	2,413	3.7
International					International	1,617	1,501	7.7
Worldwide					Worldwide	4,119	3,914	5.2
REMICADE					REMICADE
U.S.					U.S.	358	489	(26.8)
U.S. Exports					U.S. Exports	80	57	40.5
International					International	225	232	(2.6)
Worldwide					Worldwide	663	777	(14.7)
SIMPONI / SIMPONI ARIA					SIMPONI / SIMPONI ARIA
U.S.					U.S.	287	255	12.5
International					International	283	307	(7.6)
Worldwide					Worldwide	571	562	1.5
STELARA					STELARA
U.S.					U.S.	1,379	1,331	3.6
International					International	909	817	11.2
Worldwide					Worldwide	2,288	2,148	6.5��
TREMFYA					TREMFYA
U.S.					U.S.	391	274	42.7
International					International	199	143	38.8
Worldwide					Worldwide	590	418	41.3
OTHER IMMUNOLOGY					OTHER IMMUNOLOGY
U.S.	U.S.	21	29	(27.0)	U.S.	6	7	(3.2)
International	International	96	87	9.7	International	0	2	*
Worldwide	Worldwide	117	116	0.6	Worldwide	6	8	(22.0)

Neuroscience
Infectious Diseases					Infectious Diseases
U.S.	U.S.	771	748	3.2	U.S.	461	512	(10.0)
International	International	949	910	4.3	International	836	485	72.3
Worldwide	Worldwide	1,721	1,658	3.8	Worldwide	1,297	998	30.0
CONCERTA® / methylphenidate
COVID-19 VACCINE					COVID-19 VACCINE
U.S.	U.S.	47	52	(9.6)	U.S.	75	100	(24.9)
International	International	123	118	4.5	International	382	0	*
Worldwide	Worldwide	171	171	0.2	Worldwide	457	100	*
INVEGA SUSTENNA® / XEPLION® / INVEGA TRINZA® / TREVICTA®
EDURANT / rilpivirine					EDURANT / rilpivirine
U.S.	U.S.	589	544	8.3	U.S.	9	10	(12.6)
International	International	376	339	11.0	International	239	233	2.5
Worldwide	Worldwide	965	883	9.4	Worldwide	248	243	1.8
RISPERDAL CONSTA®
U.S.		67	76	(11.8)
International		89	94	(4.8)
Worldwide		157	170	(7.9)
OTHER NEUROSCIENCE
PREZISTA / PREZCOBIX / REZOLSTA / SYMTUZA					PREZISTA / PREZCOBIX / REZOLSTA / SYMTUZA
U.S.	U.S.	67	75	(9.8)	U.S.	369	380	(3.1)
International	International	361	360	0.2	International	132	166	(20.3)
Worldwide	Worldwide	428	435	(1.5)	Worldwide	501	546	(8.3)

Oncology
U.S.		1,377	1,175	17.2
International		2,193	1,839	19.3
Worldwide		3,570	3,013	18.5
DARZALEX®
U.S.		691	463	49.2
International		674	474	42.2
Worldwide		1,365	937	45.6
ERLEADA®
U.S.		171	119	44.0
International		90	24	*
Worldwide		261	143	82.8
IMBRUVICA®
U.S.		444	432	2.8
International		680	599	13.5
Worldwide		1,125	1,031	9.0
ZYTIGA® / abiraterone acetate
U.S.		50	139	(64.2)
International		588	552	6.6
Worldwide		638	690	(7.6)

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OTHER ONCOLOGY(1)
OTHER INFECTIOUS DISEASES(1)					OTHER INFECTIOUS DISEASES(1)
U.S.	U.S.	21	22	(5.1)	U.S.	8	21	(62.5)
International	International	161	190	(15.3)	International	83	87	(3.8)
Worldwide	Worldwide	182	212	(14.2)	Worldwide	91	108	(15.3)

Pulmonary Hypertension
Neuroscience					Neuroscience
U.S.	U.S.	573	486	18.0	U.S.	843	771	9.3
International	International	288	260	10.8	International	898	943	(4.8)
Worldwide	Worldwide	861	745	15.5	Worldwide	1,741	1,715	1.5
OPSUMIT®
CONCERTA / methylphenidate					CONCERTA / methylphenidate
U.S.	U.S.	272	229	18.5	U.S.	35	47	(26.5)
International	International	179	160	11.5	International	122	123	(1.3)
Worldwide	Worldwide	450	389	15.6	Worldwide	157	171	(8.3)
UPTRAVI®
INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA					INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA
U.S.	U.S.	259	212	21.9	U.S.	661	589	12.2
International	International	46	38	23.0	International	387	376	3.0
Worldwide	Worldwide	305	250	22.0	Worldwide	1,048	965	8.6
OTHER PULMONARY HYPERTENSION
RISPERDAL CONSTA					RISPERDAL CONSTA
U.S.					U.S.	63	67	(6.4)
International					International	66	89	(26.1)
Worldwide					Worldwide	129	157	(17.6)
OTHER NEUROSCIENCE(1)					OTHER NEUROSCIENCE(1)
U.S.	U.S.	42	44	(3.5)	U.S.	84	67	25.5
International	International	63	62	1.4	International	323	355	(8.9)
Worldwide	Worldwide	105	106	(0.6)	Worldwide	408	422	(3.5)

Cardiovascular / Metabolism / Other
Oncology					Oncology
U.S.	U.S.	799	806	(0.9)	U.S.	1,582	1,377	14.9
International	International	328	354	(7.2)	International	2,369	2,193	8.0
Worldwide	Worldwide	1,127	1,160	(2.8)	Worldwide	3,950	3,570	10.6
XARELTO®
DARZALEX					DARZALEX
U.S.	U.S.	589	527	11.7	U.S.	953	691	37.9
International	International	0	0	0	International	903	674	34.0
Worldwide	Worldwide	589	527	11.7	Worldwide	1,856	1,365	36.0
INVOKANA® / INVOKAMET®
ERLEADA					ERLEADA
U.S.	U.S.	87	117	(26.1)	U.S.	206	171	20.3
International	International	63	58	9.2	International	194	90	*
Worldwide	Worldwide	150	175	(14.4)	Worldwide	400	261	53.0
PROCRIT® / EPREX®
IMBRUVICA					IMBRUVICA
U.S.	U.S.	62	76	(18.3)	U.S.	370	444	(16.7)
International	International	64	79	(18.1)	International	668	680	(1.8)
Worldwide	Worldwide	127	155	(18.2)	Worldwide	1,038	1,125	(7.7)
OTHER
ZYTIGA / abiraterone acetate					ZYTIGA / abiraterone acetate
U.S.	U.S.	60	85	(28.8)	U.S.	19	50	(62.1)
International	International	201	217	(7.7)	International	520	588	(11.6)
Worldwide	Worldwide	261	302	(13.6)	Worldwide	539	638	(15.6)

TOTAL PHARMACEUTICAL
U.S.		6,446	6,061	6.4
International		5,753	5,073	13.4
Worldwide		12,199	11,134	9.6

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MEDICAL DEVICES
OTHER ONCOLOGY					OTHER ONCOLOGY
U.S.					U.S.	34	21	63.1
International					International	84	161	(47.7)
Worldwide					Worldwide	118	182	(35.1)

Pulmonary Hypertension					Pulmonary Hypertension
U.S.					U.S.	572	573	(0.2)
International					International	279	288	(2.9)
Worldwide					Worldwide	852	861	(1.1)
OPSUMIT					OPSUMIT
U.S.					U.S.	273	272	0.5
International					International	170	179	(4.8)
Worldwide					Worldwide	443	450	(1.6)
UPTRAVI					UPTRAVI
U.S.					U.S.	269	259	3.9
International					International	56	46	20.9
Worldwide					Worldwide	325	305	6.5
OTHER PULMONARY HYPERTENSION					OTHER PULMONARY HYPERTENSION
U.S.					U.S.	30	42	(29.0)
International					International	53	63	(15.2)
Worldwide					Worldwide	83	105	(20.8)

Cardiovascular / Metabolism / Other					Cardiovascular / Metabolism / Other
U.S.					U.S.	672	799	(15.8)
International					International	238	245	(3.0)
Worldwide					Worldwide	910	1,044	(12.8)
XARELTO					XARELTO
U.S.					U.S.	508	589	(13.8)
International					International	—	—	—
Worldwide					Worldwide	508	589	(13.8)
INVOKANA / INVOKAMET					INVOKANA / INVOKAMET
U.S.					U.S.	60	87	(30.7)
International					International	68	63	7.5
Worldwide					Worldwide	128	150	(14.6)

Interventional Solutions
U.S.		434	365	19.0
International		514	362	42.0
Worldwide		949	727	30.4
Orthopaedics
U.S.		1,249	1,250	(0.1)
International		864	788	9.7
Worldwide		2,113	2,038	3.7
HIPS
U.S.		210	206	2.4
International		146	132	11.2
Worldwide		357	337	5.8
KNEES
U.S.		185	214	(13.5)
International		132	130	2.0
Worldwide		317	343	(7.6)
TRAUMA
U.S.		450	407	10.7
International		282	247	14.4
Worldwide		733	654	12.1
SPINE, SPORTS & OTHER
U.S.		403	423	(4.8)
International		303	280	8.4
Worldwide		706	703	0.4
Surgery
U.S.		898	844	6.5
International		1,474	1,257	17.3
Worldwide		2,372	2,100	12.9
ADVANCED
U.S.		405	381	6.5
International		713	567	25.7
Worldwide		1,118	948	18.0
GENERAL
U.S.		493	463	6.5
International		761	690	10.3
Worldwide		1,254	1,153	8.8
Vision
U.S.		472	439	7.4
International		673	628	7.3
Worldwide		1,145	1,067	7.3
CONTACT LENSES / OTHER
OTHER(1,2)					OTHER(1,2)
U.S.	U.S.	371	346	7.2	U.S.	104	122	(14.9)
International	International	486	467	4.0	International	170	182	(6.6)
Worldwide	Worldwide	857	814	5.3	Worldwide	274	305	(10.0)

TOTAL PHARMACEUTICAL					TOTAL PHARMACEUTICAL
U.S.					U.S.	6,632	6,446	2.9
International					International	6,237	5,655	10.3
Worldwide					Worldwide	12,869	12,101	6.3

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SURGICAL
MEDTECH(3)							MEDTECH(3)

Interventional Solutions							Interventional Solutions
U.S.							U.S.	494	434	13.8
International							International	597	514	16.2
Worldwide							Worldwide	1,092	949	15.1
Orthopaedics							Orthopaedics
U.S.							U.S.	1,289	1,249	3.2
International							International	899	864	4.1
Worldwide							Worldwide	2,188	2,113	3.5
HIPS							HIPS
U.S.							U.S.	225	209	7.3
International							International	164	146	12.2
Worldwide							Worldwide	389	356	9.3
KNEES							KNEES
U.S.							U.S.	201	185	8.6
International							International	138	132	4.1
Worldwide							Worldwide	339	317	6.7
TRAUMA							TRAUMA
U.S.							U.S.	475	450	5.5
International							International	273	282	(3.3)
Worldwide							Worldwide	748	733	2.1
SPINE, SPORTS & OTHER							SPINE, SPORTS & OTHER
U.S.							U.S.	387	404	(4.1)
International							International	324	303	7.0
Worldwide							Worldwide	712	707	0.6
Surgery							Surgery
U.S.							U.S.	921	898	2.5
International							International	1,513	1,474	2.7
Worldwide							Worldwide	2,434	2,372	2.6
ADVANCED							ADVANCED
U.S.							U.S.	417	405	3.0
International							International	729	713	2.2
Worldwide							Worldwide	1,146	1,118	2.5
GENERAL							GENERAL
U.S.							U.S.	504	493	2.1
International							International	784	761	3.1
Worldwide							Worldwide	1,288	1,254	2.7
Vision							Vision
U.S.							U.S.	521	472	10.4
International							International	736	673	9.4
Worldwide							Worldwide	1,257	1,145	9.8
CONTACT LENSES / OTHER							CONTACT LENSES / OTHER
U.S.	U.S.	101		93	8.2		U.S.	400	371	7.7
International	International	187		160	17.0		International	511	486	5.1
Worldwide	Worldwide	288		253	13.7		Worldwide	910	857	6.2

TOTAL MEDICAL DEVICES
U.S.		3,054		2,898	5.4
International		3,525		3,034	16.2
Worldwide		6,579		5,932	10.9

WORLDWIDE
U.S.		11,111		10,699	3.9
International		11,210		9,992	12.2
Worldwide		$	22,321	20,691	7.9	%

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SURGICAL
U.S.	121		101	20.2
International	226		187	20.5
Worldwide	347		288	20.4

TOTAL MEDTECH
U.S.	3,225		3,054	5.6
International	3,746		3,525	6.3
Worldwide	6,971		6,579	5.9

WORLDWIDE
U.S.	11,414		11,111	2.7
International	12,012		11,210	7.2
Worldwide	$	23,426	22,321	5.0	%

*Percentage greater than 100% or not meaningful

(1) In the fiscal first quarter of 2021, approximately $0.1 billion of certain international OTC products, primarily in China, were reclassified from the Pharmaceutical segment to the Consumer Health segment based on operational changes

(2) Inclusive of ~~VELCADE~~PROCRIT / EPREX® which was previously disclosed separately

(3) Previously referred to as Medical Devices

EARNINGS BEFORE PROVISION FOR TAXES BY ~~SEGMENT~~SEGMENT*


		Fiscal First Quarter Ended				Fiscal First Quarter Ended
(Dollars in Millions)	(Dollars in Millions)	April 4, 2021		March 29, 2020	Percent Change		(Dollars in Millions)	April 3, 2022		April 4, 2021	Percent Change
Consumer Health (1)	Consumer Health (1)	$	788	770	2.3%		Consumer Health (1)	$	686	842	(18.5)%
Pharmaceutical(2)	Pharmaceutical(2)	5,223		3,834	36.2		Pharmaceutical(2)	3,924		5,169	(24.1)
Medical Devices(3)		1,629		2,025	(19.6)
MedTech(3)							MedTech(3)	1,477		1,629	(9.3)
Segment earnings before provision for taxes	Segment earnings before provision for taxes	7,640		6,629	15.3		Segment earnings before provision for taxes	6,087		7,640	(20.3)
Less: Expense not allocated to segments (4)	Less: Expense not allocated to segments (4)	211		120			Less: Expense not allocated to segments (4)	123		211
Less: Consumer Health separation costs							Less: Consumer Health separation costs	102		—
Worldwide income before tax	Worldwide income before tax	$	7,429	6,509	14.1%		Worldwide income before tax	$	5,862	7,429	(21.1)%

*Fiscal first quarter 2021 earnings before provision for taxes has been reclassified as certain international OTC products, primarily in China, were reclassified from the Pharmaceutical segment to the Consumer Health segment based on operational changes

(1) Consumer Health includes:

•~~Includes~~Intangible amortization expense of $0.1 billion in both the fiscal first quarter of ~~2021~~2022 and ~~2020.~~2021

(2) Pharmaceutical includes:

•~~Includes divestiture~~Divestiture gains of $0.6 billion in the fiscal first quarter of 2021 related to two brands outside the U.S.

•~~Includes an unrealized loss on securities~~Intangible amortization expense of ~~$0.3~~$0.8 billion and $0.9 billion in the fiscal first quarter of ~~2020.~~2022 and 2021, respectively

•~~Includes litigation expense~~In the fiscal first quarter of ~~$0.1~~2022, the Company recorded an intangible asset impairment charge of approximately $0.6 billion related to an in-process research and development asset, bermekimab (JnJ-77474462), an investigational drug for the treatment of Atopic Dermatitis (AD) and Hidradenitis Suppurativa (HS). Additional information regarding efficacy of the AD indication became available which led the Company to the decision to terminate the development of bermekimab for AD.

•A loss of $0.4 billion related to the change in the fair value of securities in the fiscal first quarter of ~~2020.~~

•~~Includes amortization expense of $0.9 billion and $0.8 billion in the fiscal first quarter of 2021 and 2020, respectively.~~2022

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accounts in the Company's consolidated balance sheet upon execution of each agreement. Additionally, the Company has entered into certain vaccine development cost sharing arrangements with government related organizations. The Company continues to evaluate the global demand for the COVID-19 vaccine and its related supply.

(3) ~~Medical Devices~~MedTech includes:

•Includes a contingent consideration reversal of $1.0 billion in the fiscal first quarter of 2020 related to the timing of certain developmental milestones associated with the Auris Health acquisition.

•~~Includes a~~A restructuring related charge of $0.1 billion in both the fiscal first quarter of ~~2021~~2022 and ~~2020, respectively.~~2021

•~~Includes~~Intangible amortization expense of $0.3 billion ~~and $0.2 billion~~ in both the fiscal first quarter of ~~2021~~2022 and ~~2020, respectively.~~2021

(4) Amounts not allocated to segments include interest income/expense and general corporate income/expense.

~~Table of Content~~

SALES BY GEOGRAPHIC AREA


		Fiscal First Quarter Ended					Fiscal First Quarter Ended
(Dollars in Millions)	(Dollars in Millions)	April 4, 2021		March 29, 2020	Percent Change			(Dollars in Millions)	April 3, 2022		April 4, 2021	Percent Change
United States	United States	$	11,111	10,699	3.9	%		United States	$	11,414	11,111	2.7	%
Europe	Europe	5,414		4,827	12.1			Europe	6,024		5,414	11.3
Western Hemisphere, excluding U.S.	Western Hemisphere, excluding U.S.	1,424		1,502	(5.1)			Western Hemisphere, excluding U.S.	1,482		1,424	4.1
Asia-Pacific, Africa	Asia-Pacific, Africa	4,372		3,663	19.4			Asia-Pacific, Africa	4,506		4,372	3.1
Total	Total	$	22,321	20,691	7.9	%		Total	$	23,426	22,321	5.0	%

NOTE 10— ACQUISITIONS AND DIVESTITURES

InThere were no material acquisitions in the fiscal first quarter of 2022.

During the first fiscal quarter of 2021, in separate transactions, the Company divested two brands outside the U.S. within the Pharmaceutical segment. The Company recognized a pre-tax gain recorded in Other (income) expense, net, of approximately $0.6 billion.

During the fiscal first quarter of 2020, the Company completed the acquisition of all rights to the investigational compound bermekimab, which has multiple dermatological indications, along with certain employees from XBiotech Inc., for a purchase price of $0.8 billion. The fair value of the acquisition was allocated primarily to non-amortizable intangible assets, primarily IPR&D, for $0.8 billion. XBiotech may be eligible to receive additional payments upon the receipt of certain commercialization authorizations. The transaction was accounted for as a business combination and included in the Pharmaceutical segment. Additionally, the Company completed the acquisition of all outstanding shares in Verb Surgical Inc., a company with world-class robotics and data science capabilities, including those shares previously held by Verily. The transaction was accounted for as a business combination and included in the Medical Devices segment. The fair value of the acquisition was allocated primarily to non-amortizable intangible assets, primarily IPR&D, for $0.4 billion, goodwill for $0.2 billion, other assets of $0.2 billion and liabilities assumed of $0.3 billion. The fair value of the Company's previously held equity investment in Verb Surgical Inc. was $0.4 billion.

NOTE 11 — LEGAL PROCEEDINGS

Johnson & Johnson and certain of its subsidiaries are involved in various lawsuits and claims regarding product liability; intellectual property; commercial; ~~supplier~~ indemnification and other matters; governmental investigations; and other legal proceedings that arise from time to time in the ordinary course of their business. ~~Due to the ongoing impacts of the COVID-19 pandemic, certain trials have been rescheduled or delayed. The Company continues to monitor its legal proceedings as the situation evolves.~~

The Company records accruals for loss contingencies associated with these legal matters when it is probable that a liability will be incurred, and the amount of the loss can be reasonably estimated. As of April ~~4, 2021,~~3, 2022, the Company has determined that the liabilities associated with certain litigation matters are probable and can be reasonably estimated. The Company has accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ASC 450-20-25. For these and other litigation and regulatory matters discussed below for which a loss is probable or reasonably possible, the Company is unable to estimate the possible loss or range of loss beyond the amounts accrued. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. The ability to make such estimates and judgments can be affected by various factors including, among other things, whether damages sought in the proceedings are unsubstantiated or indeterminate; scientific and legal discovery has not commenced or is not complete; proceedings are in early stages; matters present legal uncertainties; there are significant facts in dispute; procedural or jurisdictional issues; the uncertainty and unpredictability of the number of potential claims; ability to achieve comprehensive multi-party settlements; complexity of related cross-claims and counterclaims; and/or there are numerous parties involved. To the extent adverse awards, judgments or verdicts have been rendered against the Company, the Company does not record an accrual until a loss is determined to be probable and can be reasonably estimated.

In the ~~Company's~~Company’s opinion, based on its examination of these matters, its experience to date and discussions with counsel, the ultimate outcome of legal proceedings, net of liabilities accrued in the ~~Company's~~Company’s balance sheet, is not expected to have a material adverse effect on the ~~Company's~~Company’s financial position. However, the resolution of, or increase in accruals for, one or more

~~Table of Content~~

of these matters in any reporting period may have a material adverse effect on the ~~Company's~~Company’s results of operations and cash flows for that period.

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PRODUCT LIABILITY

Johnson & Johnson and certain of its subsidiaries are involved in numerous product liability claims and lawsuits involving multiple products. Claimants in these cases seek substantial compensatory and, where available, punitive damages. While the Company believes it has substantial defenses, it is not feasible to predict the ultimate outcome of litigation. From time to time, even if it has substantial defenses, the Company considers isolated settlements based on a variety of circumstances. The Company has established accruals for product liability claims and lawsuits in compliance with ASC 450-20 based on currently available information, which in some cases may be limited. The Company accrues an estimate of the legal defense costs needed to defend each matter when those costs are probable and can be reasonably estimated. For certain of these matters, the Company has accrued additional amounts such as estimated costs associated with settlements, damages and other losses. Product liability accruals can represent projected product liability for thousands of claims around the world, each in different litigation environments and with different fact patterns. Changes to the accruals may be required in the future as additional information becomes available.

The most significant of these cases include: the DePuy ~~ASR™~~ASR XL Acetabular System and DePuy ~~ASR™~~ASR Hip Resurfacing System; the PINNACLE® Acetabular Cup System; pelvic meshes; ~~RISPERDAL~~®~~; XARELTO~~®;RISPERDAL; XARELTO; body powders containing talc, primarily ~~JOHNSONS~~®JOHNSON’S Baby Powder; ~~INVOKANA~~®;INVOKANA; and ETHICON PHYSIOMESH® Flexible Composite Mesh. As of April ~~4, 2021,~~3, 2022, in the United States there were approximately ~~300~~230 plaintiffs with direct claims in pending lawsuits regarding injuries allegedly due to the DePuy ~~ASR™~~ASR XL Acetabular System and DePuy ~~ASR™~~ASR Hip Resurfacing System; ~~7,000~~3,900 with respect to the PINNACLE® Acetabular Cup System; ~~12,200~~9,800 with respect to pelvic meshes; ~~9,200~~8,600 with respect to ~~RISPERDAL~~®~~; 10,200~~RISPERDAL; 4,300 with respect to ~~XARELTO~~®~~; 28,900~~XARELTO; 40,400 with respect to body powders containing talc; ~~300~~80 with respect to ~~INVOKANA~~®;INVOKANA; and ~~4,400~~4,800 with respect to ETHICON PHYSIOMESH® Flexible Composite Mesh.

~~In August 2010, DePuy Orthopaedics, Inc. (DePuy) announced a worldwide voluntary recall of its ASR~~™ ~~XL Acetabular System and DePuy ASR~~™ ~~Hip Resurfacing System used in hip replacement surgery. Claims for personal injury have been made against DePuy and Johnson & Johnson.~~ The number of pending lawsuits is expected to fluctuate as certain lawsuits are settled or dismissed and additional lawsuits are filed.

In August 2010, DePuy Orthopaedics, Inc. (DePuy) announced a worldwide voluntary recall of its ASR XL Acetabular System and DePuy ASR Hip Resurfacing System (ASR Hip) used in hip replacement surgery. Claims for personal injury have been made against DePuy and Johnson & Johnson. Cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Northern District of Ohio. Litigation has also been filed in countries outside of the United States, primarily in the United Kingdom, Canada, Australia, Ireland, Germany, India and Italy. In November 2013, DePuy reached an agreement with a Court-appointed committee of lawyers representing ASR Hip ~~System~~ plaintiffs to establish a program to settle claims with eligible ASR Hip patients in the United States who had surgery to replace their ASR Hips, known as revision surgery, as of August ~~31,~~ 2013. DePuy reached additional agreements in February 2015 and March 2017, which further extended the settlement program to include ASR Hip patients who had revision surgeries after August ~~31,~~ 2013 and prior to February 15, 2017. This settlement program has resolved more than 10,000 claims, ~~therefore~~thereby bringing to resolution significant ASR Hip litigation activity in the United States. However, lawsuits in the United States remain, and the settlement program does not address litigation outside of the United States. In Australia, a class action settlement was reached that resolved the claims of the majority of ASR Hip patients in that country. In Canada, the Company has reached agreements to settle the class actions filed in that ~~country~~.country. The Company continues to receive information with respect to potential additional costs associated with this recall on a worldwide basis. The Company has established accruals for the costs associated with the United States settlement program and ~~DePuy~~ ASR™ Hip-related product liability litigation.

Claims for personal injury have also been made against DePuy Orthopaedics, Inc. and Johnson & Johnson (collectively, DePuy) relating to the PINNACLE® Acetabular Cup System used in hip replacement surgery. Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. Cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Northern District of Texas. Litigation also has been filed in some state courts and in countries outside of the United States. Several adverse verdicts have been rendered against DePuy, one of which was reversed on appeal and remanded for retrial. During the first quarter of 2019, DePuy established a United States settlement program to resolve these cases. As part of the settlement program, adverse verdicts have been settled. The Company has established an accrual for product liability litigation associated with the PINNACLE® Acetabular Cup System and the related settlement program.

Claims for personal injury have been made against Ethicon, Inc. (Ethicon) and Johnson & Johnson arising out of ~~Ethicon's~~Ethicon’s pelvic mesh devices used to treat stress urinary incontinence and pelvic organ prolapse. The Company continues to receive information with respect to potential costs and additional cases. Cases filed in federal courts in the United States had been organized as a multi-district litigation (MDL) in the United States District Court for the Southern District of West Virginia. In March 2021, the MDL Court entered an order closing the MDL. The MDL Court has remanded cases for trial to the

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jurisdictions where the case was originally filed and additional pelvic mesh lawsuits have been filed, and remain, outside of the MDL. The Company has settled or otherwise resolved athe majority of the United States cases and the estimated costs associated with these settlements and the remaining cases are reflected in the ~~Company's~~Company’s accruals. In addition, class actions and individual

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personal injury cases or claims seeking damages for alleged injury resulting from ~~Ethicon's~~Ethicon’s pelvic mesh devices have been commenced in various countries outside of the United States, including claims and cases in the United Kingdom, the Netherlands and class actions in Israel, Australia and ~~Canada,.~~Canada. In November 2019, the Federal Court of Australia issued a judgment regarding its findings with respect to liability in relation to the three Lead Applicants and generally in relation to the design, manufacture, pre and post-market assessments and testing, and supply and promotion of the devices in Australia used to treat stress urinary incontinence and pelvic organ prolapse. In March 2020, the Court issued a decision and entered damages awards to the three Lead Applicants. The Company appealed the decision to the intermediate appellate court, the Full Court. The appeal was heard in February 2021 and, in March 2021, the Full Court entered a judgment dismissing the appeal. An application for special leave to the High Court of Australia was filed in April 2021, and the High Court heard oral argument on the application in November 2021. ~~With respect~~Special leave was refused. While this brings an end to ~~class members other than~~ the ~~Lead Applicants, the Federal Court~~appellate process, there will ~~conduct~~now be an individual case assessment process ~~that will require proof of use~~for the remaining group member claims. In March 2022, the Court appointed a barrister to prepare a written report and ~~causally related loss, although~~recommendation on the form and mechanism of the individual case assessment process, due by August 2022, with a court hearing on those findings later that ~~process has not yet been decided.~~month. The class actions in Canada were discontinued in 2020 as a result of a settlement of a group of ~~cases.~~cases and an agreement to resolve the Israeli class action was reached in May 2021. The parties in the Israeli class action are currently finalizing the terms of the settlement. A motion to approve the settlement is expected to be filed with the Court by May 2022. The Company has established accruals with respect to product liability litigation associated with ~~Ethicon's~~Ethicon’s pelvic mesh products.

Following a June 2016 worldwide market withdrawal of ETHICON PHYSIOMESH® Flexible Composite Mesh (Physiomesh), claims for personal injury have been made against Ethicon, Inc. (Ethicon) and Johnson & Johnson alleging personal injury arising out of the use of this hernia mesh device. Cases filed in federal courts in the United States have been organized as a multi-district litigation (MDL) in the United States District Court for the Northern District of Georgia. A multi-county litigation (MCL) also has been formed in New Jersey state court and assigned to Atlantic County for cases pending in New Jersey. In addition to the matters in the MDL and MCL, there are additional lawsuits pending in the United States District Court for the Southern District of Ohio, which are part of the MDL for polypropylene mesh devices manufactured by C.R. Bard, Inc., one multi-plaintiff lawsuit pending in Oklahoma state court and lawsuits pending outside the United States. ~~Discovery is proceeding~~In May 2021, Ethicon and lead counsel for the plaintiffs entered into a term sheet to resolve approximately 3,600 Physiomesh cases (covering approximately 4,300 plaintiffs) pending in ~~these~~the MDL and MCL at that time. A master settlement agreement (MSA) was entered into in September 2021 and includes 3,729 cases in the MDL and ~~certain~~MCL. All deadlines and trial settings in those proceedings are currently stayed pending the completion of the settlement agreement. The deadline for issuance of Individual Allocation amounts by the Special Master was March 2022. Plaintiffs requested an extension of the deadline. Post-settlement cases in the Physiomesh MDL and MCL are ~~in preparation for trials.~~subject to docket control orders requiring early expert reports and discovery requirements. As of April 2022, there are approximately 105 active cases subject to these orders which are being reviewed and evaluated.

Claims have also been filed against Ethicon and Johnson & Johnson alleging personal injuries arising from the PROCEED® Mesh and PROCEED® Ventral Patch hernia mesh products.In March 2019, the New Jersey Supreme Court entered an order consolidating these cases pending in New Jersey as an MCL in Atlantic County Superior Court. Additional cases have been filed in various federal and state courts in the ~~US,~~United States, and in jurisdictions outside the ~~US.~~United States. Discovery is underway in ~~these cases.~~the MCL proceedings.

Ethicon and Johnson & Johnson also have been subject to claims for personal injuries arising from the ~~PROLENE™~~PROLENE Polypropylene Hernia ~~System (PHS).~~System. In ~~September 2019, plaintiffs’ attorney filed an application with~~January 2020, the New Jersey Supreme Court ~~seeking centralized management of 107 PHS cases. The New Jersey Supreme Court granted plaintiffs application in January 2020 and those cases have also been transferred to~~created an MCL in Atlantic County Superior ~~Court. There are now approximately 304 cases pending~~Court to handle such cases. Cases involving this product have also been filed in other federal and state courts in the ~~MCL and discovery is underway in a subset of these cases.~~United States.

The Company has established accruals with respect to product liability litigation associated with ETHICON PHYSIOMESH® Flexible Composite Mesh, PROCEED® Mesh and PROCEED® Ventral Patch, and ~~PROLENE™~~PROLENE Polypropylene Hernia System products.

Claims for personal injury have been made against Janssen Pharmaceuticals, Inc. and Johnson & Johnson arising out of the use of RISPERDAL,®, and related compounds, indicated for the treatment of schizophrenia, acute manic or mixed episodes associated with bipolar I disorder and irritability associated with autism. Lawsuits primarily have been filed in state courts in Pennsylvania, California, and Missouri. Other actions are pending in various courts in the United States and Canada. Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. The Company has successfully defended a number of these cases but there have been verdicts against the Company, including a verdict in October 2019 of $8.0 billion of punitive damages related to one plaintiff, which the trial judge reduced to $6.8 million in January 2020. ~~The~~In September 2021, the Company entered into a settlement in principle with the counsel representing plaintiffs in this matter and ~~plaintiff each are appealing this judgment. The Company has settled or otherwise resolved many~~in substantially all of the outstanding cases in the United ~~States cases and the~~States. The costs associated with ~~these~~this and other settlements are reflected in the ~~Company's~~Company’s accruals.

Claims for personal injury arising out of the use of XARELTO,®, an oral anticoagulant, have been made against Janssen Pharmaceuticals, Inc. (JPI); Johnson & Johnson; and JPI’s collaboration partner for XARELTO,®, Bayer Healthcare AG, and certain of its affiliates. Cases filed in federal courts in the United States have been organized as a multi-district litigation in the

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United States District Court for the Eastern District of Louisiana. In addition, cases ~~have been~~were filed in state courts across the United States. Many of these cases were consolidated into a state mass tort litigation in Philadelphia, Pennsylvania and in a coordinated proceeding in Los Angeles, California. Class action lawsuits also have been filed in Canada. In March 2019, JPI and Johnson & Johnson announced an agreement in principle to settle the XARELTO® cases in the United States; the settlement agreement was executed in May 2019, the settlement became final in December 2019, and the settlement was funded in January 2020.

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This resolved the majority of cases pending in the United States. The Company has established accruals for its costs associated with the United States settlement program and XARELTO® related product liability litigation.

~~Personal~~A significant number of personal injury claims alleging that talc causes cancer ~~have been~~were made against Johnson & Johnson Consumer Inc. and Johnson & Johnson arising out of the use of body powders containing talc, primarily JOHNSON’S® Baby Powder. The number of ~~pending~~these personal injury lawsuits, ~~continues to increase, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. Lawsuits primarily have been~~ filed in state ~~courts in Missouri, New Jersey~~ and ~~California, and suits have also been filed outside the United States. The majority of cases are pending in~~ federal ~~court, organized into a multi-district litigation (MDL)~~courts in the United States District Court for the District of New Jersey. In the MDL, the parties sought to exclude experts through Daubert motions. In April 2020, the Court issued rulings that limit the scope of testimony, including some theories and testing methods, for certain plaintiff expert witnesses and denied plaintiffs’ attempt to limit the scope of testimony of certainas well as outside of the ~~Company’s witnesses. With this ruling made, case-specific discovery has begun per the Court’s directive.~~United States, continued to increase.

In talc cases that previously have gone to trial, the Company has obtained a number of defense verdicts, but there also have been verdicts against the Company, many of which have been reversed on appeal. In June 2020, the Missouri Court of Appeals reversed in part and affirmed in part a July 2018 verdict of $4.7 billion in Ingham v. Johnson & Johnson, et al., No. ED 207476 (Mo. App.), reducing the overall award to $2.1 ~~billion and, with additional interest as of April 4, 2021, as the Company pursues further appeal, is approximately $2.5 billion (the~~ ~~Ingham~~ ~~decision).~~billion. An application for transfer of the case to the Missouri Supreme Court was subsequently ~~denied. In March~~denied and in June 2021, ~~the Company filed~~ a petition for certiorari, seeking a review of the Ingham decision by the United States Supreme ~~Court.~~Court, was denied. In ~~April~~June 2021, the ~~Plaintiffs filed their opposition~~Company paid the award, which, including interest, totaled approximately $2.5 billion. The facts and circumstances, including the terms of the award, were unique to the ~~petition.~~Ingham decision and not representative of other claims brought against the Company. The Company continues to believe that it has strong legal grounds ~~for~~to contest the ~~appeal of this verdict, as well as~~ other talc verdicts that it has appealed. Notwithstanding the Company’s confidence in the safety of its talc products, in certain circumstances the Company has settled cases.

In October 2021, Johnson & Johnson Consumer Inc. (Old JJCI) implemented a corporate restructuring (the 2021 Corporate Restructuring). As a result of that restructuring, Old JJCI ceased to exist and ~~may settle cases.~~three new entities were created: (a) LTL Management LLC, a North Carolina limited liability company (LTL or Debtor); (b) Royalty A&M LLC, a North Carolina limited liability company and a direct subsidiary of LTL (RAM); and (c) the Debtor’s direct parent, Johnson & Johnson Consumer Inc., a New Jersey company (New JJCI). The Debtor received certain of Old JJCI’s assets and became solely responsible for the talc-related liabilities of Old JJCI, including all liabilities related in any way to injury or damage, or alleged injury or damage, sustained or incurred in the purchase or use of, or exposure to, talc, including talc contained in any product, or to the risk of, or responsibility for, any such damage or injury, except for any liabilities for which the exclusive remedy is provided under a workers’ compensation statute or act (the Talc-Related Liabilities).

In October 2021, notwithstanding the Company’s confidence in the safety of its talc products, the Debtor filed a voluntary petition with the United States Bankruptcy Court for the Western District of North Carolina, Charlotte Division, seeking relief under chapter 11 of the Bankruptcy Code (the LTL Bankruptcy Case). As a result of the LTL Bankruptcy Case, the North Carolina Bankruptcy Court entered a temporary restraining order staying all litigation against LTL and Old JJCI. On November 15, 2021, the North Carolina Bankruptcy Court confirmed the scope of the stay, issuing a Preliminary Injunction (PI) prohibiting and enjoining the commencement and prosecution of talc-related claims against LTL, Old JJCI, New JJCI, Johnson & Johnson, other of their corporate affiliates, identified retailers, insurance companies, and certain other parties (the Protected Parties). The LTL Bankruptcy Case was transferred to the United States Bankruptcy Court for the District of New Jersey in November 2021, and that court extended the PI through the end of February 2022. Claimants filed motions to dismiss the LTL Bankruptcy Case and, following a multiple day hearing, the New Jersey Bankruptcy Court denied those motions by order issued in March 2022. The New Jersey Bankruptcy Court simultaneously issued another order extending the stay as to the Protected Parties. The claimants subsequently filed notices of appeal as to the denial of the motions to dismiss and the extension of the stay, and also asked the New Jersey Bankruptcy Court for leave to pursue direct appeals to the Third Circuit Court of Appeals, which was granted. In April 2022, claimants filed a request with Third Circuit Court of Appeals to hear the case, and LTL filed its opposition to the request. While the New Jersey Bankruptcy Court’s order effectively stays all of the Company’s talc-related personal injury litigation, LTL has agreed to lift the stay on a small number of appeals where appeal bonds have been filed.

The Company has agreed to provide funding to LTL for the payment of amounts the New Jersey Bankruptcy Court determines are owed by LTL and the establishment of a $2 billion trust in furtherance of this purpose. The Company has established ~~an accrual~~a reserve for ~~defense costs and reserves for the resolution of certain cases and claims, including the~~ ~~Ingham~~ ~~decision currently on appeal~~,approximately $2 billion in connection with ~~product liability litigation associated with body powders containing talc.~~the aforementioned trust. After and as a result of the filing of the LTL Bankruptcy Case, the Company de-consolidated LTL, which is a related party. The impact of the de-consolidation is not material to the Company. The parties have not yet reached a resolution of all talc matters in the LTL Bankruptcy Case, and the Company is unable to estimate the possible loss or range of loss beyond the amount accrued.

In February 2019, the Company’s talc supplier, Imerys Talc America, Inc. and two of its affiliates, Imerys Talc Vermont, Inc. and Imerys Talc Canada, Inc. (collectively, Imerys) filed a voluntary petition under chapter 11 ~~petition commencing a reorganization under~~of the United States Code (the Bankruptcy ~~Code~~Code) in the United States Bankruptcy Court for the District of Delaware (Imerys Bankruptcy). The Imerys Bankruptcy relates to ~~Imerys’~~Imerys’s potential liability for personal injury from exposure to talcum powder sold by ~~Imerys (Talc Claims).~~Imerys. In its

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bankruptcy, ~~filing,~~ Imerys ~~noted certain claims it~~ alleges it has claims against the Company for indemnification and rights to joint insurance proceeds. The Company previously proposed to resolve Imerys' (and the Company’s) obligations arising out of the Talc Claims by agreeing to assume the defense of litigation of all Talc Claims involving the Company's products, waiving the Company’s indemnification claims against Imerys, and lifting the automatic stay to enable the Talc Claims to proceed outside the bankruptcy forum with the Company agreeing to settle or pay any judgment against Imerys. In May 2020, Imerys, its parent Imerys S.A., the Tort Claimants’ Committee (TCC), and the ~~asbestos claimants’ committee (Plan~~Future Claimants’ Representative (FCR) (collectively, the Plan Proponents) filed their Plan of Reorganization (the Plan) and the Disclosure Statement related thereto agreeing to put its North American operations up for auction which was subsequently amended. The Company has objected to the Disclosure Statement and intends to object to the Plan of Reorganization as currently structured. Additionally, in June 2020, Cyprus Mines Corporation and its parent (Cyprus), which had owned certain Imerys talc mines, filed an adversary proceeding against the Company as well as Imerys seeking a declaration of indemnity under certain contractual agreements. The Company denies such indemnification is owed and filed a motion to dismiss the adversary complaint arguing, among other things, that the Court does not have subject matter jurisdiction over Cyprus’s claims against the Company.thereto. The Plan Proponents have since filed numerous amendments to the Plan and Disclosure ~~Statement to which the Company objected.~~Statement. A hearing on the Plan Proponent’s Disclosure Statement was held in January 2021, and the Court entered an order approving the Disclosure Statement, ~~for the Ninth Amended Joint Chapter 11 Plan of Reorganization of Imerys Talc America, Inc. and its Debtor Affiliates,~~ allowing ~~Debtors~~ Imerys to proceed with soliciting votes on the Plan. In March 2021, the Company voted to reject the ~~Debtors’~~ Plan and opted out of the consensual releases in the Plan. ~~Discovery~~In April 2021, the Plan Proponents announced the Plan had received the requisite number of accepting votes to confirm the Plan. The Company challenged certain improprieties with respect to portions of the vote and sought to disqualify those votes. In October 2021, the Bankruptcy Court issued a ruling deeming thousands of votes as withdrawn as improperly voted. In October 2021, Imerys cancelled the confirmation hearing on the Plan. Imerys, the TCC, the FCR, and certain of Imerys’s insurers (the Mediation Parties) have since agreed to engage in mediation.

In July 2021, Imerys commenced an adversary proceeding against the Company in the Imerys Bankruptcy (the Imerys adversary proceeding). The Imerys adversary proceeding sought, among other things, certain declarations with respect to the ~~Debtors’ Plan~~indemnification obligations allegedly owed by the Company to Imerys. The TCC and FCR simultaneously filed a motion for temporary restraining order and preliminary injunction seeking to enjoin the Company from undergoing a corporate restructuring that would separate the Company’s talc liabilities from its other assets. The Bankruptcy Court denied the motion. The Company thereafter filed a motion to dismiss the adversary proceeding. The Bankruptcy Court has not yet decided the motion to dismiss. In October 2021, the Company filed a Notice of Bankruptcy Filing and Stay of Proceedings clarifying that the automatic stay arising upon the filing of the LTL Bankruptcy Case should apply to the Imerys adversary proceeding.

In June 2020, Cyprus Mines Corporation and its parent (together, Cyprus), which had owned certain Imerys talc mines, filed an adversary proceeding against the Company and Imerys in the Imerys Bankruptcy seeking a declaration of indemnity rights under certain contractual agreements (the Cyprus adversary proceeding). The Company denies such indemnification is ~~ongoing~~owed, and filed a motion to dismiss the ~~Confirmation Hearing is set for August 2021. Relatedly, in~~adversary complaint. In February 2021, Cyprus filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code and ~~Cyprus~~ filed its Disclosure Statement and Plan. ~~Also,~~The Plan contemplates a settlement with Imerys and talc claimants where Cyprus would make a monetary contribution to a trust established under the Imerys Plan in exchange for an injunction against Talc Claims asserted against it. Cyprus has not yet sought approval of its Disclosure Statement and Plan. Cyprus, along with the TCC and FCR appointed in the Cyprus chapter 11 case, have agreed to participate in the mediation with the Mediation Parties. In October 2021, the Company filed a Notice of Bankruptcy Filing and Stay of Proceedings clarifying that the automatic stay arising upon the filing of the LTL Bankruptcy Case should apply to the Cyprus adversary proceeding.

In February 2021, several of the Company’s insurers involved in coverage litigation in New Jersey State Court (the ~~“Coverage Action”)~~Coverage Action) filed a motion in the Imerys Bankruptcy Court proceeding seeking a determination that the automatic stay does not apply to the Coverage Action and, in the alternative, seeking relief from the automatic stay to allow them to continue to litigate their claims in the Coverage Action. In March 2021, the Company filed a limited response and reservation of rights with respect to the motion. The Court entered an agreed order modifying the stay to allow the litigation in the Coverage Action to continue. In October 2021, LTL filed a Notice of Bankruptcy Filing and Stay of Proceedings clarifying that the automatic stay arising upon the filing of the LTL Bankruptcy Case should apply to the Coverage Action. In March 2022, the New Jersey Bankruptcy Court ruled that the stay applied to the Coverage Action.

In February 2018, a securities class action lawsuit was filed against Johnson & Johnson and certain named officers in the United States District Court for the District of New Jersey, alleging that Johnson & Johnson violated the federal securities laws by failing to disclose alleged asbestos contamination in body powders containing talc, primarily ~~JOHNSON'S~~®JOHNSON’S Baby Powder, and that purchasers of Johnson & Johnson’s shares suffered losses as a result. Plaintiff is seeking damages. In April 2019, the Company moved to dismiss the complaint and briefing on the motion was complete as of August 2019. In December 2019, the

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Court denied, in part, the motion to dismiss. In March 2020, ~~Defendants~~the Company answered the complaint. In ~~March~~April 2021, briefing on Plaintiffs’ motion for class certification was completed. ~~Discovery is ongoing.~~In July 2021, the Company filed a notice of supplemental authority in opposition to Plaintiff’s motion for class certification, and Plaintiff filed a response. In December 2021, the Company filed a motion to supplement the class certification record, and in January 2022, Plaintiff responded. In March 2022, LTL asked the New Jersey Bankruptcy Court to stay the securities class action.

In June 2019, a shareholder filed a complaint initiating a summary proceeding in New Jersey state court for a books and records inspection. In August 2019, Johnson & Johnson responded to the books and records complaint and filed a cross motion to dismiss. In September 2019, Plaintiff replied and the Court heard oral argument. ~~The~~In February 2022, the Court ~~has not yet ruled in the books and records action.~~ granted Johnson & Johnson’s cross motion to dismiss.

In October 2019, December 2019, and January 2020, four shareholders filed four separate derivative lawsuits against Johnson & Johnson as the nominal defendant and its current directors and certain officers as defendants in the United States District Court for the District of New Jersey, alleging a breach of fiduciary duties related to the alleged asbestos contamination in body powders containing talc, primarily JOHNSON’S® Baby Powder, and that Johnson & Johnson has suffered damages as a result of those alleged breaches. In February 2020, the four cases were consolidated into a single action under the caption In re Johnson

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& Johnson Talc Stockholder Derivative Litigation. In July 2020, a report was delivered to the Company’s Board of Directors by independent counsel retained by the Board to investigate the allegations in the derivative lawsuits and in a series of shareholder letters that the Board received raising similar ~~issues.~~issues and demanding that suit be brought against certain Directors. Four of the shareholders who sent demands are plaintiffs in the In re Johnson & Johnson Talc Stockholder Derivative Litigation. The independent counsel recommended that the Company reject the shareholder demands and take the steps that are necessary or appropriate to secure dismissal of the derivative lawsuits. The Board unanimously adopted the recommendations of the independent counsel’s report. In October 2020, the shareholders filed a consolidated complaint, and in January 2021, Johnson & Johnson moved to dismiss the consolidated complaint. In March 2021, Plaintiffs filed a motion for discovery. The Court temporarily terminated Johnson & Johnson’s motion to dismiss pending a decision on Plaintiff’s motion for discovery. In November 2021, at the Court’s request, the parties submitted supplemental briefing on Plaintiff’s motion for discovery.

In January 2019, two ERISA class action lawsuits were filed by participants in the Johnson & Johnson Savings Plan against Johnson & Johnson, its Pension and Benefits Committee, and certain named officers in the United States District Court for the District of New Jersey, alleging that the defendants breached their fiduciary duties by offering Johnson & Johnson stock as a Johnson & Johnson Savings Plan investment option when it was imprudent to do so because of failures to disclose alleged asbestos contamination in body powders containing talc, primarily JOHNSON’S® Baby Powder. Plaintiffs are seeking damages and injunctive relief. In September 2019, Defendants filed a motion to dismiss. In April 2020, the Court granted Defendants’ motion but granted leave to amend. In June 2020, Plaintiffs filed an amended complaint, and in July 2020, Defendants moved to dismiss the amended complaint. As of October 2020, briefing on Defendants’ motion was complete. In February 2021, the Court granted Defendants’ motion, and granted Plaintiffs leave to amend. In April 2021, Plaintiffs informed the Court that they did not intend to file an amended complaint, and the Court dismissed the case with prejudice. In May 2021, Plaintiffs filed a notice of appeal with the Third Circuit. In July 2021, Plaintiffs filed their opening brief in the Third Circuit and in September 2021, Defendants filed their response brief, and in October 2021, Plaintiffs filed their reply brief. In January 2022, the Third Circuit heard oral argument.

A lawsuit was brought against the Company in the Superior Court of California for the County of San Diego alleging violations of California’s Consumer Legal Remedies Act (CLRA) relating to JOHNSON’S® Baby Powder. In that lawsuit, the plaintiffs allege that Johnson & Johnson violated the CLRA by failing to provide required Proposition 65 warnings. In July 2019, the Company filed a notice of removal to the United States District Court for the Southern District of California and plaintiffs filed a second amended complaint shortly thereafter. In October 2019, the Company moved to dismiss the second amended complaint for failure to state a claim upon which relief may be granted. In response to those motions, plaintiffs filed a third amended complaint. In December 2019, the Company moved to dismiss the third amended complaint for failure to state a claim upon which relief may be granted. In April 2020, the Court granted the motion to dismiss but granted leave to amend. In May 2020, plaintiffs filed a Fourth Amended Complaint but indicated that they would be filing a motion for leave to file a fifth amended complaint. Plaintiffs filed a Fifth Amended Complaint in August 2020. The Company moved to dismiss the Fifth Amended Complaint for failure to state a claim upon which relief may be granted. In January 2021, the Court issued an Order and opinion ruling in the Company’s favor and granting the motion to dismiss with prejudice. In February 2021, Plaintiffs filed a Notice of Appeal with the Ninth Circuit.

Plaintiffs filed their opening brief in July 2021. The company filed its responsive brief in October 2021. In ~~January 2020,~~October 2021, Notice of Suggestion of Bankruptcy was filed with the Abtahi Law Group filed an action under Proposition 65 against Johnson & Johnson and Johnson & Johnson Consumer Inc. as well as a number of other alleged talcum powder manufacturers and distributors, including one California company. In that action, the plaintiff alleges contamination of talcum powder products with unsafe levels of arsenic, hexavalent chromium and lead. The plaintiff seeks civil penalties and injunctive relief. Defendants filed a motion for summary judgmentNinth Circuit. A bankruptcy stay was imposed in ~~January~~December 2021, and ~~a hearing on~~ the ~~motion was~~Court held the reply deadline in ~~April 2021. Limited informal discovery is continuing.~~abeyance. In February 2022, the Bankruptcy Court issued an order extending the stay.

In addition, the Company has received ~~preliminary~~ inquiries, subpoenas, and ~~subpoenas~~requests to produce documents regarding talc matters ~~from Senator Murray, a member of the Senate Committee on Health, Education, Labor and Pensions, the Department of Justice~~ and the ~~U.S. Congressional Subcommittee on Economic and Consumer Policy.~~LTL Bankruptcy Case from various governmental authorities. The Company has produced documents ~~as required in response~~and responded to inquiries, and will continue to cooperate with government inquiries.

Claims for personal injury have been made against a number of Johnson & Johnson companies, including Janssen Pharmaceuticals, Inc. and Johnson & Johnson, arising out of the use of INVOKANA,®, a prescription medication indicated to improve glycemic control in adults with Type 2 diabetes. In December 2016, lawsuits filed in federal courts in the United States were organized as a multi-district litigation in the United States District Court for the District of New Jersey. Cases have also been filed in state courts. Class action lawsuits have been filed in Canada. Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. The Company has settled or otherwise resolved many of the cases and claims in the United States and the costs associated with these settlements are reflected in the ~~Company's~~Company’s accruals.

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Claims for personal injury have been made against a number of Johnson & Johnson companies, including Janssen Pharmaceuticals, Inc. and Johnson & Johnson, arising out of the use of ELMIRON,®, a prescription medication indicated for the relief of bladder pain or discomfort associated with interstitial cystitis. These lawsuits, which allege that ELMIRON® contributes to the development of permanent retinal injury and vision loss, have been filed in both state and federal courts across the United States. In December 2020, lawsuits filed in federal courts in the United States, including ~~two~~ putative class action cases seeking medical monitoring, were organized as a multi-district litigation in the United States District Court for the District of New Jersey. Cases also have ~~also~~ been filed in various state courts. In addition, three class action lawsuits have been filed in Canada.

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Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. The Company has established accruals for defense costs associated with ELMIRON® related product liability litigation.

INTELLECTUAL PROPERTY

Certain subsidiaries of Johnson & Johnson are subject, from time to time, to legal proceedings and claims related to patent, trademark and other intellectual property matters arising out of their businesses. Many of these matters involve challenges to the coverage and/or validity of the patents on various products and allegations that certain of the Company’s products infringe the patents of third parties. Although these subsidiaries believe that they have substantial defenses to these challenges and allegations with respect to all significant patents, there can be no assurance as to the outcome of these matters. A loss in any of these cases could adversely affect the ability of these subsidiaries to sell their products, result in loss of sales due to loss of market exclusivity, require the payment of past damages and future royalties, and may result in a non-cash impairment charge for any associated intangible asset. Significant matters are described below.

~~Medical Devices~~MedTech

~~In December 2016, Dr. Ford Albritton sued Acclarent, Inc. (Acclarent) in United States District Court for the Northern District of Texas alleging that Acclarent’s RELIEVA~~® ~~Spin and RELIEVEA SpinPlus~~® products infringe U.S. Patent No. 9,011,412. Dr. Albritton also alleges breach of contract, fraud and that he is the true owner of Acclarent’s U.S. Patent No. 8,414,473. Trial is scheduled to begin in October 2021.

In November 2017, Board of Regents, The University of Texas System and TissueGen, Inc. (collectively, UT) filed a lawsuit in the United States District Court for the Western District of Texas against Ethicon, Inc. and Ethicon US, LLC (collectively, Ethicon) alleging the manufacture and sale of VICRYL® ~~Plus Antibacterial Sutures, MONOCRYL~~® ~~Plus Antibacterial Sutures, PDS~~® ~~Plus Antibacterial Sutures, STRATAFIX~~® ~~PDS~~® ~~Antibacterial Sutures and STRATAFIX~~® ~~MONOCRYL~~® Plus Antibacterial Sutures infringe plaintiffs’ United States Patent Nos. 6,596,296 (’296) and 7,033,603 (’603) directed to implantable polymer drug releasing biodegradable fibers containing a therapeutic agent.~~UT is seeking damages and an injunction.In December 2018, Ethicon filed petitions with the United States Patent and Trademark Office (USPTO), seeking Inter Partes Review (IPR) of both asserted patents.In June 2020, the USPTO denied institution of the ’296 patent IPR and granted institution of the ’603 patent IPR.UT dismissed the ’603 patent from the suit and no longer accuses PDS~~® ~~Plus Antibacterial Sutures or STRATAFIX~~® ~~PDS~~® ~~Plus Antibacterial Sutures of infringement. The previously scheduled district court trial has been postponed.~~

In August 2018, Intuitive Surgical, Inc. and Intuitive Surgical Operations, Inc. (collectively, Intuitive) filed a patent infringement suit against Auris Health, Inc. (Auris) in United States District Court for the District of Delaware. In the suit, Intuitive alleges willful infringement of U.S. Patent Nos. 6,246,200 (’200); 6,491,701 (’701); 6,522,906 (’906); 6,800,056 (’056); 8,142,447 (’447); 8,620,473 (’473); 8,801,601 (’601); and 9,452,276 (’276) based on Auris’ ~~Monarch™~~MONARCH Platform. Auris filed IPR Petitions with the U.S. Patent and Trademark Office (USPTO) regarding the ’200, ’056, ’601 ’701, ’447, ’276 and ’906 patents. Intuitive subsequently dropped the ’200, ’473 and ’701 patents from the suit. In December 2019, the USPTO instituted review of the ’601 patent and denied review of the ’056 patent. In February and March 2020, the USPTO instituted review of the ’200, ’447, ’701 and ’906 patents and denied review of the ’276 patent. In December 2020, the USPTO declared all of the challenged claims in the ’601 patent to be invalid.~~Intuitive has appealed that decision.~~ In March 2022, the U.S. Court of Appeals for the Federal Circuit affirmed the finding of invalidity of the ’601 patent. In March 2021, the USPTO ruled that the challenged claims of the ’447 and ’906 patents are not invalid. Auris has appealed that decision. ~~The District Court postponed trial until the appeal~~Auris filed a request for reexamination of the ~~invalidity decision on~~’276 patent in November 2021, and in January 2022, the ~~’601 patent~~USPTO granted the reexamination request. Trial is ~~complete.~~scheduled to begin in January 2023.

In August 2019, RSB Spine LLC (RSB Spine) filed a patent infringement suit against DePuy Synthes, Inc. in the United States District Court for the District of Delaware. In October 2019, RSB Spine amended the complaint to change the named defendants to DePuy Synthes Sales, Inc. and DePuy Synthes Products, Inc. In the suit, RSB Spine alleges willful infringement of United States Patent Nos. 6,984,234 and 9,713,537 by one or more of the following products: ~~ZERO-P-VA™ Spacer,~~

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~~ZERO-P~~®ZERO-P-VA Spacer, ZERO-P ~~NATURAL™~~Spacer, ZERO-P NATURAL Plate, SYNFIX® LR Spacer and SYNFIX® Evolution System. RSB Spine seeks monetary damages and injunctive relief. In November 2019, the suit was consolidated for pre-trial purposes with other patent infringement suits brought by RSB Spine in the United States District Court for the District of Delaware against Life Spine, Inc., Medacta USA, Inc., and Precision Spine, Inc. ~~In June 2020, the case was stayed pending IPR proceedings filed by the Consolidated Defendants involving the asserted patents.~~Trial is scheduled to begin in December 2022.

In ~~March~~October 2020, ~~Osteoplastics,~~Rasmussen Instruments, LLC (Rasmussen) filed a patent infringement suit against DePuy Synthes Products, Inc., DePuy Synthes ~~Products,~~Sales, Inc., and Medical Device Business Services, Inc.~~, and Synthes, Inc.~~ (collectively, ~~DePuy Synthes)~~DePuy) in the United States District Court for the District of ~~Delaware.~~Massachusetts. Rasmussen alleges that DePuy willfully infringes U.S. Patent Nos. 9,492,180 and 10,517,583 (’583) by making and selling the Attune Balanced Sizer. In April 2021, Rasmussen sought permission to amend its infringement contentions to allege that DePuy also willfully infringes the ~~suit, Osteoplastics alleges~~’583 patent by making and selling the Attune Balancing Blocks. Rasmussen seeks treble damages for willful infringement. Trial concluded in March 2022, with the jury returning a verdict in favor of Rasmussen, finding willful infringement of ~~U.S. Patent Nos. 8,781,557; 9,929,920; 9,330,206; 9,626,756; 9,672,617; 9,672,302;~~the ’180 patent, and ~~9,275,191 based on~~awarding damages in the ~~PROPLAN CMF~~® ~~Virtual Surgical Planning Services and~~amount of $20 million. DePuy is challenging the ~~TruMatch~~® CMF Personalize Solutions. In April 2020, Osteoplastics filed an amended complaint to substitute U.S. Patent No. 9,292,920 for U.S. Patent No. 9,929,920. Osteoplastics seeks monetary damages and injunctive relief. In June 2020, DePuy Synthes filed a motion to dismiss the complaint. In October 2020, the Court dismissed Medical Device Business Services, Inc. from the case but otherwise denied the motion.~~Trial is scheduled for October 2022.~~verdict in its post-trial motions.

Pharmaceutical

Litigation Against Filers of Abbreviated New Drug Applications (ANDAs)

The following summarizes lawsuits ~~pending~~the Company’s subsidiaries have brought against generic companies that have filed ANDAs with the U.S. FDA or undertaken similar regulatory processes outside of the United States, seeking to market generic forms of products sold by various subsidiaries of Johnson & Johnson prior to expiration of the applicable patents covering those products. These ANDAs typically include allegations of non-infringement and invalidity of the applicable patents. In the event the subsidiaries are not successful in an action, or the automatic statutory stay of the ANDAs expires before the United States District Court rulings are obtained, the third-party companies involved would have the ability, upon approval of the FDA, to introduce generic versions of their products to the market, resulting in the potential for substantial market share and revenue losses for the applicable products, and which may result in a non-cash impairment charge in any associated intangible asset. In addition, from time to time, subsidiaries may settle these types of actions and such settlements can involve the introduction of generic versions of the products at issue to the market prior to the expiration of the relevant patents. The Inter Partes Review (IPR) process with the USPTO, created under the 2011 America Invents Act, is also being used at times by generic companies in conjunction with ANDAs and lawsuits, to challenge the applicable patents. In the event the Company’s subsidiaries are not successful in an action, or the automatic statutory stay of the ANDAs expires before the United States District Court rulings are obtained, the generic companies involved would have the ability, upon approval of the U.S. FDA, to introduce generic versions of their products to the market, resulting in the potential for substantial market share and revenue

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losses for the applicable products, and which may result in a non-cash impairment charge in any associated intangible asset. In addition, from time to time, the Company’s subsidiaries may settle these types of actions and such settlements can involve the introduction of generic versions of the products at issue to the market prior to the expiration of the relevant patents.

~~ZYTIGA~~®

ZYTIGA

~~In November 2017,~~

Beginning in January 2019, Janssen Inc. and Janssen Oncology, Inc. (collectively, Janssen) initiated a Notice of Application under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Apotex Inc. (Apotex) and the Minister of Health in Canada in response to Apotex’s filing of an Abbreviated New Drug Submission (ANDS) seeking approval to market a generic version of ZYTIGA® before the expiration of Canadian Patent No. 2,661,422 (’422). The final hearing concluded in May 2019. In October 2019, the Court issued an order prohibiting the Canadian Minister of Health from approving Apotex’s ANDS until the expiration of the ’422 patent. In November 2019, Apotex filed an appeal, which was dismissed in March 2021.

~~Beginning in January 2019, Janssen~~ initiated Statements of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations in Canada against Apotex Inc. (Apotex), Pharmascience Inc. (Pharmascience) and Dr. ~~Reddy's~~Reddy’s Laboratories Ltd. and Dr. ~~Reddy's~~Reddy’s Laboratories, Inc. (collectively, DRL) in response to those parties’ filing of Abbreviated New Drug Submissions (ANDS) seeking approval to market generic versions of ZYTIGA® before the expiration of the ~~’422 patent.~~Canadian Patent No. 2,661,422 (’422). The trial in these actions concluded in November 2020, and the Court issued a decision holding the ’422 patent invalid in January 2021. In February 2021, Janssen appealed the decision.

In August 2020, Janssen initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against JAMP Pharma Corporation (Jamp) in Canada in response to Jamp’s filing of an ANDS seeking approval to market a generic version of ZYTIGA® ~~before the expiration of the ’422 patent. In March 2021, the parties entered into a confidential settlement agreement.~~XARELTO

~~In each of these Canadian actions, Janssen is seeking an order enjoining the defendants from marketing their generic versions of ZYTIGA~~® ~~before the expiration of the ’422 patent.~~

~~XARELTO~~®

InBeginning in March 2021, Janssen Pharmaceuticals, Inc. (JPI) and Bayer Pharma AG and Bayer AG (collectively, Bayer) filed patent infringement lawsuits in the United States District Court for the District of Delaware against a number of generic companies who filed ANDAs seeking approval to market generic versions of XARELTO (2.5 mg) before expiration of U.S. Patent No. 10,828,310 (’310). The following generic drug companies are named defendants: Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories, Ltd.; Lupin Limited and Lupin Pharmaceuticals, Inc.; Taro Pharmaceutical Industries Ltd. and Taro Pharmaceuticals U.S.A., Inc.; and Teva Pharmaceuticals USA, Inc. In October 2021, the court consolidated the Delaware lawsuits for all purposes, including trial. Trial for the consolidated Delaware lawsuits is scheduled to begin in May 2023.

In July 2021, JPI and Bayer filed a patent infringement lawsuit in the United States District Court for the Northern District of West Virginia against Mylan Pharmaceuticals Inc. and Mylan Inc. which filed an ANDA seeking approval to market a generic version of XARELTO (2.5 mg) before expiration of the ’310 patent. In August 2021, JPI and Bayer filed a motion before the United States Judicial Panel on Multidistrict Litigation (the MDL panel) to transfer this lawsuit to the United States District Court for the District of Delaware for coordinated and consolidated pretrial proceedings. In December 2021, the MDL panel granted the motion. No trial date has been set in this lawsuit.

In February 2022, JPI and Bayer filed a patent infringement lawsuit in the United States District Court for the District of Delaware against ~~Lupin Limited~~Micro Labs Ltd. and ~~Lupin Pharmaceuticals,~~Micro Labs USA Inc. (collectively, ~~Lupin)~~Micro) which filed an ANDA seeking approval to market a generic version of XARELTO®

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(2.5 mg) before expiration of ~~U.S. Patent No. 10,828,310 (’310).~~the ’310 patent. In ~~this lawsuit,~~March 2022, the case against Micro was consolidated for all purposes, including trial, with the consolidated Delaware lawsuits.

In each of these lawsuits, JPI and Bayer are seeking an order enjoining ~~Lupin~~defendants from marketing their generic version of XARELTO® (2.5 mg) before the expiration of the ’310 patent.

~~INVOKANA~~®~~/INVOKAMET~~®~~/INVOKAMET XR~~®In February 2022, Mylan Pharmaceuticals Inc. filed a Petition for Inter Parties Review with the United States Patent and Trademark Office, seeking to invalidate the ’310 patent.

~~Beginning~~In April 2022, Janssen Pharmaceuticals, Inc. (JPI), Bayer Intellectual Property GmbH and Bayer AG filed a patent infringement lawsuit in ~~July 2017,~~the United States District Court for the District of New Jersey against Changzhou Pharmaceutical Factory, which filed an ANDA seeking approval to market generic a version of XARELTO (10 mg, 15 mg, and 20 mg) before expiration of U.S. Patent No. 9,539,218 (’218). In this lawsuit, JPI, Bayer Intellectual Property GmbH and Bayer AG are seeking an order enjoining Changzhou from marketing its generic version of XARELTO (10 mg, 15 mg, and 20 mg) before the expiration of the ’218 patent.

INVOKANA/INVOKAMET/INVOKAMET XR

In October 2019, Janssen Pharmaceuticals, Inc., Janssen Research & Development, LLC, Cilag GmbH International and Janssen Pharmaceutica NV (collectively, Janssen) and Mitsubishi Tanabe Pharma Corporation (MTPC) filed patent infringement lawsuits in the United States District Court for the District of New Jersey against a number of generic companies that filed ANDAs seeking approval to market generic versions of INVOKANA®~~, INVOKAMET~~® ~~and/or INVOKAMET~~® ~~XR before expiration of MTPC’s United States Patent Nos. 7,943,582 (’582) and/or 8,513,202 (’202) relating to INVOKANA~~®~~, INVOKAMET~~® ~~and/or INVOKAMET~~® XR. Janssen is the exclusive licensee of the asserted patents. Named defendants include MSN Laboratories Private Ltd. and MSN Pharmaceuticals, Inc. (MSN); Zydus Pharmaceuticals (USA) Inc. (Zydus). These cases were consolidated into one action (Polymorph Main Action), which has been scheduled for trial starting in July 2021.

In July 2017, Janssen and MTPC filed a patent infringement lawsuit in the United States District Court for the District of New Jersey against Zydus which filed ANDAs seeking approval to market generic versions of INVOKANA® ~~and INVOKAMET~~® ~~before expiration of MTPC’s United States Patent No. 7,943,788 (’788), 8,222,219 (’219) and/or 8,785,403 (’403) relating to INVOKANA~~® ~~and INVOKAMET~~® (Compounds Main Action). Janssen is the exclusive licensee of the asserted patents. Trial concluded in October 2020. The Court issued a decision holding that the patents are not invalid and would be infringed by Zydus’ generic products.

In July 2019, Janssen and MTPC filed a patent infringement lawsuit in the United States District Court for the District of New Jersey against MSN, which filed an ANDA seeking approval to market a generic version of INVOKAMET XR® ~~before expiration of the ’582 patent and ’202 patent relating to INVOKAMET XR~~®. In October 2019, Janssen and MTPC initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against MSN, which filed ANDAs seeking approval to market generic versions of INVOKANA® ~~and INVOKAMET XR~~® ~~before expiration of the ’788 patent. In October 2019, Janssen and MTPC~~ initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories Ltd (DRL), who filed an ANDA seeking approval to market a generic version of INVOKAMET® before expiration of MTPC’s United States Patent No. 7,943,788 (’788) relating to INVOKAMET. In this lawsuit, Janssen and MTPC are seeking an order enjoining DRL from marketing its generic version of INVOKAMET before the expiration of the ’788 patent. In January 2021, Janssen and MTPC filed a patent infringement lawsuit in the United States District Court for the District of New Jersey against Macleods Pharmaceuticals, Ltd. and Macleods Pharma USA, Inc. (Macleods), which filed an ANDA seeking approval to market a generic version of INVOKAMET XR® before expiration of ~~the ’582 patent and ’202 patent~~MTPC’s United States Patent

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Nos. 7,943,582 (’582) and/or 8,513,202 (’202) relating to INVOKAMET XR®.XR. In February ~~2021, Janssen filed a patent infringement lawsuit in~~2022, the United States District Court for the District of New Jersey against Macleods Pharmaceuticals, Ltd. and Macleods Pharma USA, Inc. (Macleods), which filed an ANDA seeking approval to market a generic version of INVOKANA® ~~before expiration of United States Patent No. 10,617,668 relating to INVOKANA~~®~~. These lawsuits have not been consolidated with the Polymorph Main Action or Compound Main Action.~~case was dismissed by stipulation.

~~In each of these U.S. lawsuits, Janssen and MTPC are seeking an order enjoining the defendant from marketing their generic versions of INVOKANA~~®~~, INVOKAMET~~® ~~and/or, INVOKAMET XR~~® ~~before the expiration of the relevant patents.~~

In October 2020, Janssen Inc., Janssen Pharmaceutica NV and MTPC initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Sandoz Canada Inc. (Sandoz) in Canada in response to Sandoz’s filing of an ANDS seeking approval to market a generic version of INVOKANA® before the expiration of the Canadian Patent Nos. 2,799,204, 2,534,024 and 2,671,357. Janssen Inc., Janssen Pharmaceutica NV and MTPC are seeking an order enjoining Sandoz from marketing its generic version of INVOKANA® before the expiration of the relevant patents. The trial is scheduled to begin in August 2022. In February 2022, the case was discontinued.

OPSUMIT®

In May 2020, Janssen Inc. (Janssen) and Actelion Pharmaceuticals Ltd (Actelion) initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Sandoz Canada Inc. (Sandoz) in Canada in response to Sandoz’s filing of an ANDS seeking approval to market a generic version of OPSUMIT® 10 mg, before the expiration of Canadian Patent No. 2,659,770 (’770). Trial ~~is scheduled to begin~~against Sandoz concluded in ~~January~~February 2022.

In May 2020, Janssen and Actelion initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Apotex Inc. (Apotex) in Canada in response to Apotex’s filing of an ANDS seeking approval to market a generic version of OPSUMIT® 10 mg, before the expiration of the ’770 patent. Trial ~~is scheduled to begin~~against Apotex concluded in ~~February~~March 2022.

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In July 2020, Janssen and Actelion initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against JAMP Pharma Corporation (JAMP) in Canada in response to JAMP’s filing of an ANDS seeking approval to market a generic version of OPSUMIT® 10 mg before the expiration of the ’770 patent and Canadian Patent No. 2,621,273 (’273). ~~Trial is scheduled to begin in~~In April ~~2022.~~2022, the parties entered a confidential settlement agreement, and the case was discontinued.

In each of these Canadian actions, Janssen and Actelion are seeking an order enjoining the defendants from marketing their generic versions of OPSUMIT® before the expiration of the relevant patents.

INVEGA SUSTENNA®

In January 2018, Janssen Pharmaceutica NV and Janssen Pharmaceuticals, Inc. (collectively, Janssen) initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Teva Pharmaceuticals USA, Inc. (Teva), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA® before the expiration of United States Patent No. 9,439,906 (’906). Trial concluded in October ~~2020, and closing arguments were made~~2020. In October 2021, the court issued a decision in ~~March 2021.~~Janssen’s favor. Teva has appealed the decision.

In August 2019, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan Laboratories Limited (Mylan), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA® before the expiration of the ’906 patent. ~~In February 2020,~~Pursuant to an agreement by the parties, judgment in favor of Janssen was entered in December 2021. Mylan ~~filed a Petition for Inter Partes Review with the USPTO seeking to invalidate the ’906 patent. The USPTO denied the Petition in September 2020, and Mylan~~ appealed. ~~Janssen filed a motion to dismiss the appeal, which was granted in March 2021.~~

In December 2019, Janssen initiated a patent infringement lawsuit in the United States District Courts for the Districts of New Jersey and Delaware against Pharmascience Inc., Mallinckrodt PLC and Specgx LLC (collectively, Pharmascience), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA® before the expiration of the ’906 patent.

In November 2021, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against Tolmar, Inc., Tolmar Therapeutics, Inc., Tolmar Pharmaceuticals, Inc. and Tolmar Holding, Inc. (collectively, Tolmar), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent. A trial is scheduled to begin in October 2023.

In February 2022, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Accord Healthcare, Inc., Accord Healthcare, Ltd. and Intas Pharmaceuticals, Ltd. (collectively, Accord), who filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent.

In each of these U.S. lawsuits, Janssen is seeking an order enjoining the defendant from marketing a generic version of INVEGA SUSTENNA® before the expiration of the relevant patents.

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In February 2018, Janssen Inc. and Janssen Pharmaceutica NV (collectively, Janssen Canada) initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Teva Canada Limited (Teva Canada) in response to ~~Teva's~~Teva’s filing of an ANDS seeking approval to market a generic version of INVEGA SUSTENNA® before the expiration of Canadian Patent Nos. 2,309,629 (’629) and 2,655,335 (’335). Janssen subsequently discontinued the portion of the lawsuit relating to the ’629 patent. In May 2020, the Canadian Federal Court issued a Public Judgment and Reasons declaring that Teva Canada’s generic version of INVEGA SUSTENNA,®, if approved, would infringe certain claims of the ’335 patent and that the claims of the ’335 patent are not ~~invalid for obviousness.~~invalid. Teva Canada appealed.

In November 2020, Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Pharmascience Inc. in response to Pharmascience Inc.'s’s filing of an ANDS seeking approval to market a generic version of INVEGA SUSTENNA® before the expiration of the ’335 patent. A summary trial on the issue of infringement ~~is scheduled for~~took place in November 2021. In January 2022, the Court issued a decision in favor of Janssen on the issue of infringement. Pharmascience filed an appeal. In March 2022, Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Pharmascience in response to Pharmascience’s filing of an ANDS seeking approval to market a generic version of an additional strength of INVEGA SUSTENNA before the expiration of the ’335 patent. The action has been consolidated with the November 2020 action for trial, which is scheduled to begin in July 2022.

In January 2021, Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Apotex Inc. (Apotex)in response to ~~Apotex's~~Apotex’s filing of an ANDS seeking approval to market a generic version of INVEGA SUSTENNA® before the expiration of the ’335 patent. A summary trial on the issue of infringement ~~is scheduled for~~took place in December 2021. ~~The trial is scheduled to begin~~In January 2022, the Court issued a decision in ~~September 2022.~~favor of Janssen on the issue of infringement. Apotex appealed.

In each of these Canadian lawsuits, Janssen Canada is seeking an order enjoining the defendant from marketing a generic version of INVEGA SUSTENNA® before the expiration of the relevant patents.

INVEGA TRINZA®

In September 2020, Janssen Pharmaceuticals, Inc., Janssen Pharmaceutica NV, and Janssen Research & Development, ~~LCC~~LLC (collectively, Janssen) initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan Laboratories Limited, Mylan Pharmaceuticals Inc., and Mylan Institutional LLC (collectively, Mylan). Mylan filed an ANDA seeking approval to market generic versions of INVEGA TRINZA® (546 mg) before expiration of United States Patent No. 10,143,693 (’693) relating to INVEGA TRINZA®(546 mg). ~~Janssen~~Trial is ~~seeking an order enjoining Mylan from marketing a generic version of INVEGA TRINZA~~® ~~before the expiration of the relevant patent.~~scheduled to begin in October 2022.

~~IMBRUVICA~~®

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~~Beginning in January 2018, Pharmacyclics LLC (Pharmacyclics) and~~In August 2021, Janssen ~~Biotech, Inc. (JBI) filed~~initiated a patent infringement ~~lawsuits~~lawsuit in the United States District Court for the District of ~~Delaware~~New Jersey against ~~a number of generic companies that~~Mylan. Mylan filed ~~ANDAs~~an ANDA seeking approval to market generic versions of ~~IMBRUVICA~~®INVEGA TRINZA ~~140 mg capsules~~(819 mg) before expiration of ~~Pharmacyclics’~~the ’693 patent.

In October 2021, Janssen initiated a patent infringement lawsuit in the United States Patent Nos. 8,008,309, 7,514,444, 8,697,711, 8,735,403, 8,957,079, 9,181,257, 8,754,091, 8,497,277, 8,925,015, 8,476,284, 8,754,090, 8,999,999, 9,125,889, 9,801,881, 9,801,883, 9,814,721, 9,795,604, 9,296,753, 9,540,382, 9,713,617 and/or 9,725,455 relatingDistrict Court for the District of New Jersey against Mylan. Mylan filed an ANDA seeking approval to ~~IMBRUVICA~~®~~. JBI is the exclusive licensee~~market generic versions of INVEGA TRINZA (273 mg and 410 mg) before expiration of the asserted patents. The named defendants include the following generic companies: Cipla Limited and Cipla USA Inc. (collectively, Cipla); Sandoz Inc. and Lek Pharmaceuticals d.d. (collectively, Sandoz). In January 2019 and February 2019, Pharmacyclics and JBI amended their complaint against Sandoz and Cipla, respectively, to allege infringement of United States Patent Nos. 10,125,140 and 10,106,548. In May 2019, Pharmacyclics and JBI amended their complaint against Cipla to further allege infringement of United States Patent No. 10,016,435. In August 2019, Pharmacyclics and JBI amended their complaints against Cipla and Sandoz to further allege infringement of U.S. Patent Nos. 10,294,231 and 10,294,232. In August 2019, the Court granted a joint stipulation to stay the litigation against Cipla.’693 patent.

In January 2022, the court consolidated the three cases into the case filed in September 2020. In each of these consolidated cases, Janssen is seeking an order enjoining Mylan from marketing its generic versions of INVEGA TRINZAbefore expiration of the ’693 patent.

IMBRUVICA

In March 2019, Pharmacyclics LLC (Pharmacyclics) and ~~JBI~~Janssen Biotech, Inc. (JBI) filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Alvogen Pine Brook LLC and Natco Pharma Ltd. (collectively, Alvogen), which filed an ANDA seeking approval to market generic versions of IMBRUVICA® tablets, asserting infringement of United States Patent Nos. ~~7,514,444, 8,003,309, 8,476,284, 8,497,277, 8,697,711, 8,753,403, 8,754,090, 8,754,091, 8,952,015, 8,957,079, 9,181,257, 9,296,753, 9,655,857, 9,725,455, 10,010,507, 10,106,548,~~7,514,444; 8,003,309; 8,476,284; 8,497,277; 8,697,711; 8,753,403; 8,754,090; 8,754,091; 8,952,015; 8,957,079; 9,181,257; 9,296,753; 9,655,857; 9,725,455; 10,010,507; 10,106,548; and 10,125,140. In June 2019, Pharmacyclics and JBI amended their complaint against Alvogen to further allege infringement of United States Patent No. 10,213,386.

Trial ~~in the foregoing actions~~ against ~~Sandoz and~~ Alvogen took place in October 2020. In August 2021, the District Court issued a decision in favor of Pharmacyclics and Janssen finding the asserted claims against Alvogen to be infringed and not invalid. Alvogen has appealed that decision.

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In September 2021, Pharmacyclics and Janssen Inc. (Janssen Canada) initiated Statements of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Natco Pharma (Canada) Inc. (Natco) in response to Natco’s filing of two ANDSs seeking approval to market generic versions of IMBRUVICAcapsules before the expiration of Canadian Patent Nos. 2,663,116; 2,928,721; 2,800,913; 3,007,787; 3,007,788; 2,875,986; and 3,022,256. In this lawsuit, Pharmacyclics and Janssen Canada are seeking an order enjoining Natco from marketing its generic version of IMBRUVICA before the expiration of the relevant patents. The trial is scheduled to begin in July 2023.

SYMTUZA

In ~~March 2020, Pharmacyclics~~November 2021, Janssen Products, L.P. and ~~JBI filed~~Janssen Sciences Ireland Unlimited Company (collectively, Janssen) and Gilead Sciences, Inc. and Gilead Sciences Ireland UC (collectively, Gilead) initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against ~~Alvogen asserting infringement of United States Patent No. 10,478,439. In October 2020, Pharmacyclics~~Lupin Limited, Lupin Pharmaceuticals, Inc., MSN Laboratories Private Ltd., MSN Life Sciences Private Ltd., and ~~JBI amended their complaint against Alvogen to further allege infringement of U.S. Patent No. 10,653,696. In April 2021, the court entered a joint stipulation dismissing the complaint against Alvogen.~~

~~In April 2020, Pharmacyclics and JBI filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Zydus Worldwide DMCC and Cadila Healthcare Limited~~MSN Pharmaceuticals Inc. (collectively, ~~Zydus)~~Lupin), which filed an ANDA seeking approval to market a generic ~~versions~~version of ~~IMBRUVICA~~® ~~tablets, asserting infringement~~SYMTUZA before the expiration of United States Patent Nos. ~~7,514,444, 8,008,309, 8,476,284, 8,497,277, 8,697,711, 8,753,403, 8,754,090, 8,754,091, 8,952,015, 8,957,079, 9,181,257, 9,296,753, 9,655,857, 9,725,455, 10,010,507, 10,106,548, 10,125,140, 10,213,386~~10,039,718 (the ’718 patent) and ~~10,478,439. In March 2021, JBI, Pharmacyclics and Zydus entered into a confidential settlement agreement.~~

~~In each of the lawsuits, Pharmacyclics and JBI are~~10,786,518 (the ’518 patent). Janssen is seeking an order enjoining ~~the defendants~~Lupin from marketing its generic ~~versions~~version of ~~IMBRUVICA~~® SYMTUZA before the expiration of the ~~relevant~~’718 and ’518 patents.

Other Litigation

In November 2021, Janssen Pharmaceutica N.V. (Janssen) provided to Alkermes Pharma Ireland Limited, Elan Pharma International Limited, and Elan Drug Delivery, Inc. three-months’ notice of termination of a License Agreement by and among Elan Pharmaceutical Research Corp., d/b/a Nanosystems, Elan Pharma International Limited and Janssen, executed in March, 1999. In November 2021, Janssen also provided to Alkermes Pharma Ireland Limited three-months’ notice of termination of a License Agreement between Elan Pharma International Limited and Janssen executed in July 2003. In April 2022, in responses to these notices, Alkermes Pharma Ireland Limited (Alkermes) initiated arbitration in the International Institute for Conflict Prevention and Resolution.

~~UPTRAVI~~®

In April 2020, Actelion Pharmaceuticals Ltd (Actelion) and Nippon Shinyaku Co., Ltd. (Nippon Shinyaku) initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against a number of generic companies that filed ANDAs seeking approval to market generic versions of UPTRAVI® ~~before expiration of Nippon Shinyaku’s United States Patent Nos. 7,205,302; 8,791,122; and 9,284,280 relating to UPTRAVI~~®.Actelion is the exclusive licensee of the asserted patents. The defendants include Alembic Pharmaceuticals Limited and Alembic Pharmaceuticals Inc. (collectively, Alembic); and Zydus Pharmaceuticals (USA), Inc. and Zydus Worldwide DMCC (collectively, Zydus).

~~Actelion and Nippon Shinyaku are seeking an order enjoining the defendants from marketing generic versions of UPTRAVI~~® ~~before the expiration of the relevant patents.~~

GOVERNMENT PROCEEDINGS

Like other companies in the pharmaceutical, consumer health and medical devices industries, Johnson & Johnson and certain of its subsidiaries are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which they operate. Such regulation has been the basis of government investigations and litigations. The most significant litigation brought by, and investigations conducted by, government agencies are listed below. It is possible that criminal charges and substantial fines and/or civil penalties or damages could result from government investigations or litigation.

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Average Wholesale Price (AWP) Litigation

Johnson & Johnson and several of its pharmaceutical subsidiaries (the J&J AWP Defendants), along with numerous other pharmaceutical companies, were named as defendants in a series of lawsuits in state and federal courts involving allegations that the pricing and marketing of certain pharmaceutical products amounted to fraudulent and otherwise actionable conduct because, among other things, the companies allegedly reported an inflated Average Wholesale Price (AWP) for the drugs at issue. Payors alleged that they used those AWPs in calculating provider reimbursement levels. The plaintiffs in these cases included three classes of private persons or entities that paid for any portion of the purchase of the drugs at issue based on AWP, and state government entities that made Medicaid payments for the drugs at issue based on AWP. Many of these cases, both federal actions and state actions removed to federal court, were consolidated for pre-trial purposes in a multi-district litigation in the United States District Court for the District of Massachusetts, where all claims against the J&J AWP Defendants were ultimately dismissed. The J&J AWP Defendants also prevailed in a case brought by the Commonwealth of Pennsylvania. Other AWP cases have been resolved through court order or settlement. The case brought by Illinois was settled after trial. In New Jersey, a putative class action based upon AWP allegations is pending against Centocor, Inc. and Ortho Biotech Inc. (both now Janssen Biotech, Inc.), Johnson & Johnson and ALZA Corporation. All other cases have been resolved.

Opioid Litigation

Beginning in 2014 and continuing to the present, Johnson & Johnson and Janssen Pharmaceuticals, Inc. (JPI), along with other pharmaceutical companies, have been named in ~~more than 3,200~~close to 3,500 lawsuits related to the marketing of opioids, including DURAGESIC,®, NUCYNTA® and NUCYNTA® ER. The suits also raise allegations related to previously owned active pharmaceutical ingredient supplier subsidiaries, Tasmanian Alkaloids Pty, Ltd. and Noramco, Inc. (both subsidiaries were divested in 2016). The majority of the cases have been filed by state and local governments. Similar lawsuits have also been

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filed by private plaintiffs and organizations, including but not limited to the following: individual plaintiffs on behalf of children suffering from Neonatal Abstinence Syndrome; hospitals; and health insurers/payors. To date, complaints against pharmaceutical manufacturers, including Johnson & Johnson and JPI, have been filed by the state Attorneys General in Arkansas, Florida, Idaho, Illinois, Kentucky, Louisiana, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, South Dakota, Texas, Washington and West Virginia. Complaints against the manufacturers also have been filed in state or federal court by city, county and local government agencies in the following states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and ~~Wisconsin.~~Wyoming. The Government of Puerto Rico filed suit in Superior Court of San Juan.

Johnson & Johnson, JPI and other pharmaceutical companies had also received subpoenas or requests for information related to opioids marketing practices from the following state Attorneys General: Alaska, Indiana, Montana, New Hampshire, South Carolina, Tennessee, Texas and Washington. In September 2017, Johnson & Johnson and JPI were contacted by the Texas and Colorado Attorney General’s Offices on behalf of approximately 38 states regarding a multi-state Attorney General investigation.

In 2019, the trial in the matter filed by the Oklahoma Attorney General resulted in a judgment against Johnson & Johnson and JPI in the amount of $465 million. Johnson & Johnson and JPI appealed the judgment, and in November 2021, the Oklahoma Supreme Court reversed the trial court’s judgment and directed entry of judgment for Defendants. In October 2019 Johnson & Johnson and JPI announced a settlement of the first case set for trial in the MDL with two counties in Ohio. In April 2021, three California counties and the City of Oakland commenced a trial in California state court against Johnson & Johnson and JPI, and other affiliates, as well as three other pharmaceutical manufacturers. The trial concluded in October 2021, and in December 2021, the Court entered a final trial judgment in favor of Defendants on all claims. In February 2022, Plaintiffs’ motion to set aside and vacate the judgment was denied. Plaintiffs appealed the judgment, but later filed a request to dismiss the appeal after electing to participate in the national settlement agreement.

In October 2019, the Company announced a proposed agreement in principle that would include the Company paying $4 billion as settlement of these matters that had not been tried or settled. In October 2020, the Company agreed to contribute up to an additional $1 billion to an all-in settlement amount that would resolve opioid lawsuits filed and future claims by states, cities, counties and tribal governments, for a total of $5 billion which has been accrued, subject to various conditions and an agreement being finalized. This agreement is not an admission of liability or wrong-doing. In July 2021, the Company announced that the terms of the agreement to settle the state and subdivision claims had been finalized and up to one-third of the all-in settlement is expected to be paid within the next 12 months, depending upon the level of participation by the states and their subdivisions. The terms provided a period of time for states to elect to participate in the agreement and, thereafter, a period for the subdivisions of the participating states to opt-in. Based on expected participation, the Company committed in advance to proceed with the settlement in five of the participating states (New York, Texas, Florida, Nevada, and New Mexico) and with tribal governments. By late February 2022, 45 states, five territories, the District of Columbia, and the vast majority of eligible subdivisions had elected to participate in the settlement, and the Company confirmed that the level of participation was sufficient to proceed with the agreement as to all participants. The agreement was effective in April 2022 and initial payments are set for July 2022. In April 2022, the Company entered into settlement agreements with the states of Alabama and West Virginia and their participating subdivisions.

There are ~~more than 380~~approximately 100 cases ~~pending~~remaining post-settlement in various state courts. There are ~~over 2,800~~approximately 1,000 remaining federal cases coordinated in a federal Multi-District Litigation (MDL) pending in the U.S. District Court for the Northern District of Ohio. In addition, the Province of British Columbia filed suit against Johnson & Johnson and its Canadian affiliate Janssen Inc., and many other industry members, in Canada, and is seeking to have that action certified as an opt in class action on behalf of other provincial/territorial and the federal governments in Canada. Additional proposed class actions have been filed in Canada against Johnson & Johnson and Janssen Inc., and many other industry members, by and on behalf of people who used opioids (for personal injuries), municipalities and First Nations bands. In October 2019, an ~~anti-trust~~antitrust complaint was filed by private plaintiffs in federal court in Tennessee and is pending transfer to the MDL. These actions allege a variety of claims related to opioid marketing practices, including false advertising, unfair competition, public nuisance, consumer fraud violations, deceptive acts and practices, false claims and unjust enrichment. The suits generally seek penalties and/or injunctive and monetary relief and, in some of the suits, the plaintiffs are seeking joint and several liability among the defendants. An adverse judgment in any of these lawsuits could result in the imposition of large monetary penalties and significant damages including, punitive damages, cost of abatement, substantial fines, equitable remedies and other sanctions.

The trial in the matter filed by the Oklahoma Attorney General resulted in a judgment against Johnson & Johnson and JPI in the amount of $465 million. Johnson & Johnson and JPI have appealed the judgment. The Company believes that it has strong grounds to overturn this judgment. In October 2019 Johnson & Johnson and JPI announced a settlement of the first case set for trial in the MDL with two counties in Ohio. In April 2021, three California counties and the City of Oakland commenced a trial in California state court against Johnson & Johnson and JPI, and other affiliates, as well as three other pharmaceutical manufacturers. The trial is scheduled to last up to three months.

Johnson & Johnson, JPI and other pharmaceutical companies have also received subpoenas or requests for information related to opioids marketing practices from the following state Attorneys General: Alaska, Indiana, Montana, New Hampshire, South Carolina, Tennessee, Texas and Washington. In September 2017, Johnson & Johnson and JPI were contacted by the Texas and Colorado Attorney General’s Offices on behalf of approximately 38 states regarding a multi-state Attorney General investigation. In October 2019, the Company announced a proposed agreement in principle that would include the Company paying $4 billion as settlement of these matters. In October 2020, the Company agreed to contribute up to an additional $1 billion to an all-in settlement amount that would resolve opioid lawsuits filed and future claims by states, cities, counties and tribal governments, for a total of $5 billion which has been accrued, subject to various conditions and an agreement being finalized. This agreement in principle is not an admission of liability or wrong-doing and would resolve opioid lawsuits filed

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and future claims by states, cities and counties. The Company has made progress towards negotiating a final settlement with a coalition of state Attorneys General. The Company cannot predict if or when the agreement will be finalized and individual cases are ongoing.

In August 2019, Johnson & Johnson received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York for documents related to the Company’s anti-diversion policies and procedures and distribution of its opioid medications, in what the Company understands to be part of a broader investigation into manufacturers’ and distributors’ monitoring programs and reporting under the Controlled Substances Act. ~~In September 2019, Johnson & Johnson received subpoenas from the New York State Department~~

Table of Financial Services (NYDFS) as part of an industry-wide inquiry into the effect of opioid prescriptions on New York health insurance premiums. In September 2020, the Company learned that NYDFS filed a statement of charges related to this investigation.Content

From June 2017 through December 2019, the Company’s Board of Directors received a series of shareholder demand letters alleging breaches of fiduciary duties related to the marketing of opioids. The Board retained independent counsel to investigate the allegations in the demands, and inin April 2020, independent counsel delivered a report to the Board recommending that the Company reject the shareholder demands and take the steps that are necessary or appropriate to secure dismissal of related derivative litigation.The Board unanimously adopted the recommendations of the independent counsel’s report.

In November 2019, one of the shareholders who sent a demand filed a derivative complaint against Johnson & Johnson as the nominal defendant and certain current and former directors and officers as defendants in the Superior Court of New Jersey. The complaint alleges breaches of fiduciary duties related to the marketing of opioids, and that Johnson & Johnson has suffered damages as a result of those alleged breaches. ~~In May 2020, the shareholder filed an amended complaint challenging the Board’s rejection~~A series of his demand. In August 2020, Johnson & Johnson moved to dismiss the amended complaint. In February 2021, the Court held oral argument on Johnson & Johnson's motion. In August 2020, another shareholder who sent a demand filed a separate derivative complaint in the same court making similar allegations. In October 2020, the Court granted defendants’ request to reassign the second-filed case to the division where the first-filed case is pending.

~~In December 2019, two~~ additional ~~shareholders who sent demands filed two separate~~ derivative complaints making similar allegations against ~~Johnson & Johnson as~~ the ~~nominal defendant~~same and ~~certain current~~similar defendants were filed in New Jersey state and ~~former directors~~federal courts in 2019 and ~~officers as defendants in~~2020. By 2022, all but two state court cases had been voluntarily dismissed. In February 2022, the ~~United States District for the District of New Jersey. In April 2020, the two federal cases were consolidated into a single action captioned~~ ~~In re Johnson & Johnson Opioid Stockholder Derivative Litigation. In July 2020, the shareholders filed a consolidated complaint. In September 2020, Johnson & Johnson moved to dismiss the consolidated complaint, and in December 2020, the shareholders opposed~~state court granted Johnson & Johnson’s ~~motion. Johnson & Johnson filed its reply in February 2021. In July 2020, an additional~~motion to dismiss one of the two cases, and the shareholder ~~who sent a demand~~that brought the second case filed a ~~derivative~~notice of dismissal. The shareholder whose complaint ~~in the same federal court making similar allegations against the same defendants named in the consolidated action. In January 2021, pursuant to an order in the consolidated action, the third case~~ was ~~consolidated into the consolidated action. In February 2021, the Court granted the shareholders~~dismissed filed a motion ~~to voluntarily dismiss the consolidated action without prejudice.~~for reconsideration.

Other

In August 2012, DePuy Orthopaedics, Inc., DePuy, Inc. (now known as DePuy Synthes, Inc.), and Johnson & Johnson Services, Inc. (collectively DePuy) received an informal request from the United States ~~Attorney's~~Attorney’s Office for the District of Massachusetts and the Civil Division of the United States Department of Justice (the United States) for the production of materials relating to the DePuy ~~ASR™~~ASR XL Hip device. In July 2014, the United States notified the United States District Court for the District of Massachusetts that it had declined to intervene in a qui tam case filed pursuant to the False Claims Act against the companies concerning the hip devices. In February 2016, the District Court granted the companies’ motion to dismiss with prejudice, unsealed the qui tam complaint, and denied the qui tam relators’ request for leave to file a further amended complaint. The qui tam relators appealed the case to the United States Court of Appeals for the First Circuit. In July 2017, the First Circuit affirmed the District Court’s dismissal in part, reversed in part, and affirmed the decision to deny the relators’ request to file a third amended complaint. The relators’ remaining claims are now pending before the District Court. In July 2020, the Court ordered the relators to complete discovery by August 2020; the Relators have requested an extension of the August 2020 deadline that DePuy opposed and additional discovery-related motions have been filed by both parties since. In March 2021, DePuy filed its motion to strike and dismiss the relators’ second amended ~~complaint. In March 2021,~~complaint; the District Court ~~issued an order stating that if~~denied DePuy’s motion to strike and dismiss in July 2021. DePuy filed a motion for reconsideration of the District Court’s July 2021 ruling. In November 2021, the District Court granted DePuy’s motion for reconsideration and dismissed the case with prejudice. The District Court’s order was unsealed in December 2021. The Relators filed several post-dismissal motions, including a January 2022 omnibus motion for reconsideration, which the District Court denied. Following the District Court’s order dismissing the case with prejudice, DePuy filed a December 2021 motion seeking the recovery of attorneys’ fees and costs, which the District Court denied except as to costs. The Relators have appealed the District Court’s dismissal of the case to the First Circuit, and the Relators’ brief is due in May 2022.

In December 2018, Janssen Biotech, Inc., Janssen Oncology, Inc, Janssen Research & Development, LLC, and Johnson & Johnson (collectively, Janssen) were served with a qui tam complaint filed on behalf of the United States, 28 states, and the District of Columbia. The complaint, which was filed in December 2017 in United States District Court for the Northern District of California, alleges that Janssen violated the federal False Claims Act and state law when providing pricing information for ZYTIGA to the government in connection with direct government sales and government-funded drug reimbursement programs. At this time, the federal and state governments have declined to intervene. The case has been transferred to United States District Court for the District of New Jersey. Janssen’s motion to dismiss was denied ~~the court will hold a conference at which a limited period for remaining discovery will be established.~~in December 2021.

In October 2012, Johnson & Johnson was contacted by the California Attorney ~~General's~~General’s office regarding a multi-state Attorney General investigation of the marketing of surgical mesh products for hernia and urogynecological purposes by Johnson & ~~Johnson's~~Johnson’s subsidiary, Ethicon, Inc. (Ethicon). In May 2016, California and Washington filed civil complaints against Johnson & Johnson, Ethicon and Ethicon US, LLC alleging violations of their consumer protection statutes. Similar complaints were filed against the companies by the following states: Kentucky, Mississippi, West Virginia and Oregon. In April 2019, Johnson &

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Johnson and Ethicon settled the Washington case. The California case started trial in July 2019 and concluded in September 2019. The trial date for the Kentucky case was scheduled for September 2019 but has been adjourned and no new trial date has been scheduled. In October 2019, Johnson & Johnson and Ethicon settled the multi-state investigation with 41 other states and the District of Columbia. In April 2020, the Company settled the West Virginia case. In October 2020, the Company settled with the Attorney General of Oregon. In November 2020, the Company settled with the Attorney General of Mississippi. Trial in the Kentucky matter is scheduled for May 2023. The California case started trial in July 2019 and concluded in September 2019. In January 2020, the Court in California issued a statement of decision, finding in favor of the State of California, and awarded civil penalties in the amount of $344 million. In April 2020, the Court in California denied the ~~Company's~~Company’s motion for a new trial. In August 2020, the Court entered judgment with respect to the penalties of $344 million, but denied the Attorney General’s request for injunctive relief. The Company ~~is appealing~~appealed the penalty judgment. In April ~~2020,~~2022, the Court of Appeals reduced the judgment to $302 million, but otherwise denied the appeal. The Company ~~settled~~is pursuing an appeal to the ~~West Virginia case. In October 2020, the Company settled with the Attorney General~~Supreme Court of ~~Oregon. In November 2020, the Company settled with the Attorney General of Mississippi.~~California.

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In June 2014, the Mississippi Attorney General filed a complaint in Chancery Court of The First Judicial District of Hinds County, Mississippi against Johnson & Johnson and Johnson & Johnson Consumer Companies, Inc. (now known as Johnson & Johnson Consumer Inc.) ~~(JJCI)~~(collectively, JJCI). The complaint alleges that ~~defendants~~JJCI violated the Mississippi Consumer Protection Act by

failing to disclose alleged health risks associated with female ~~consumers'~~consumers’ use of talc contained in ~~JOHNSON'S~~®JOHNSON’S Baby Powder and ~~JOHNSON'S~~®JOHNSON’S Shower to Shower (a product divested in 2012) and seeks injunctive and monetary relief. ~~The matter is stayed pending interlocutory appeal of a December 2018 denial of~~ Johnson & Johnson and ~~JJCI's motion~~JJCI moved for summary ~~judgment.~~judgment on the grounds that the State’s claim was barred by preemption, which the trial court denied. The Mississippi Supreme Court granted Johnson & Johnson and ~~JJCI's~~JJCI’s request to file an interlocutory appeal of the denial of the motion for summary judgment in late 2019. InBriefing and oral argument were completed. Thereafter, the Court rejected the interlocutory appeal in April 2021 and remanded the matter to the trial court. In August 2021, JJCI filed a Petition for Writ of Certiorari in the United States Supreme Court as to the Mississippi Supreme Court’s ruling of April 2021. In December 2021 the United States Supreme Court denied the Petition for Writ of Certiorari. After the Mississippi Supreme Court ~~dismissed the Company’s interlocutory appeal and~~ remanded the ~~case back~~matter to the ~~Hinds County Chancery Court.~~trial court, the State moved for a trial setting. JJCI objected to any trial setting and in January 2022, the Court granted plaintiff’s motion for trial setting and directed the parties to consult with the Court administrator to secure a trial date. In February 2022, the trial court set the case for trial to begin in February 2023. However, given the efforts to resolve talc-related claims in the LTL Bankruptcy Case, the Company and the State agreed to a temporary stay of discovery until May 2022.

In January 2020, the State of New Mexico filed a consumer protection case alleging that the Company deceptively marketed and sold its talcum powder products by making misrepresentations about the safety of the products and the presence of carcinogens, including asbestos. The State of New Mexico filed an Amended Complaint in March 2020. The Company moved to dismiss certain of the claims in the Amended Complaint, which was granted. The Company then filed a motion for partial judgment on the pleadings in December 2020, which was denied. ~~The~~In March 2022, the New Mexico ~~Attorney General has issued requests~~court denied the Company’s motion to compel the State of New Mexico to engage in discovery of state agencies and denied the Company’s request for ~~documents~~interlocutory appeal of that decision. The Company then filed a Petition for Writ of Superintending Control and a Request for a Stay to the New Mexico Supreme Court on the issue of the State of New Mexico’s discovery obligations. In April 2022, in view of the efforts to resolve talc-related claims in the LTL Bankruptcy Case, the Company and the ~~Company anticipates~~State agreed to a 60-day stay of all matters except for the ~~document production will commence in mid-2021.~~pending writ before the New Mexico Supreme Court.

Forty-two states and the District of Columbia have commenced a joint investigation into the Company’s marketing of its talcum powder products. At this time, the multi-state group has not asserted any claims against the Company. Five states have issued Civil Investigative Demands seeking documents and other information. The Company has produced documents to Arizona, North Carolina, Texas, and Washington and entered into ~~a tolling agreement with the States and has begun to produce responsive documents.~~

In March 2016, Janssen Pharmaceuticals, Inc. (JPI) received a Civil Investigative Demand from the United States Attorney’s Office for the Southern District of New York related to JPI’s contractual relationships with pharmacy benefit managers over the period from January 1, 2006 to the present with regard to certain of JPI's pharmaceutical products. The demand was issued in connection with an investigation under the False Claims Act.confidentiality agreements. The Company has ~~provided documents in response~~not received any follow up requests from those states. In March 2022, each of the forty-two states (including Mississippi and New Mexico) agreed to enter into negotiations to determine if they would resolve their claims through the ~~demand.~~LTL Bankruptcy Case.

In July 2016, Johnson & Johnson and Janssen Products, LP were served with a qui tam complaint pursuant to the False Claims Act filed in the United States District Court for the District of New Jersey alleging the off-label promotion of two HIV products, PREZISTA® and INTELENCE,®, and anti-kickback violations in connection with the promotion of these products. The complaint was filed under seal in December 2012. The federal and state governments have declined to intervene, and the lawsuit is being prosecuted by the relators. ~~In February 2021, the~~The Court ~~stayed~~denied summary judgment on all claims in December 2021. Daubert motions were granted in part and denied in part in January 2022, and the case ~~and ordered mediation.~~is proceeding to trial.

In March 2017, Janssen Biotech, Inc. (JBI) received a Civil Investigative Demand from the United States Department of Justice regarding a False Claims Act investigation concerning management and advisory services provided to rheumatology and gastroenterology practices that purchased REMICADE® or SIMPONI ~~ARIA~~®.ARIA. In August 2019, the United States Department of Justice notified JBI that it was closing the investigation. Subsequently, the United States District Court for the District of Massachusetts unsealed a qui tam False Claims Act complaint, which was served on the Company. The Department of Justice had declined to intervene in the qui tam lawsuit in August 2019. The Company filed a motion to dismiss, which was granted in part and denied in part. Discovery is underway.

In April and September 2017, Johnson & Johnson received subpoenas from the United States Attorney for the District of Massachusetts seeking documents broadly relating to pharmaceutical copayment support programs for DARZALEX,®, OLYSIO,®, REMICADE,®, SIMPONI,®, STELARA® and ~~ZYTIGA~~®.ZYTIGA. The subpoenas also seek documents relating to Average Manufacturer Price and Best Price reporting to the Center for Medicare and Medicaid Services related to those products, as well as rebate payments to state Medicaid agencies. The Company has provided documents in response to the subpoenas.

In June 2017, Johnson & Johnson received a subpoena from the United States ~~Attorney's~~Attorney’s Office for the District of Massachusetts seeking information regarding practices pertaining to the sterilization of DePuy Synthes, Inc.(DePuy) spinal implants at three hospitals in Boston as well as interactions of employees of Company subsidiaries with physicians at these

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hospitals. Johnson & Johnson and DePuy have produced documents in response to the subpoena and are fully cooperating with the government’s investigation.

In July 2018, the Public Prosecution Service in Rio de Janeiro and representatives from the Brazilian antitrust authority CADE inspected the offices of more than 30 companies including Johnson & Johnson do Brasil Indústria e Comércio de Produtos para Saúde Ltda. The authorities appear to be investigating allegations of possible anti-competitive behavior and possible improper payments in the medical device industry. The Company continues to respond to inquiries regarding the Foreign Corrupt Practices Act from the United States Department of Justice and the United States Securities and Exchange Commission.

From time to time, the Company has received requests from a variety of United States Congressional Committees to produce information relevant to ongoing congressional inquiries. It is the policy of Johnson & Johnson to cooperate with these inquiries by producing the requested information.

GENERAL LITIGATION

In March 2018, a purported class action was filed in the Circuit Court Third Judicial District Madison County, Illinois against Johnson & Johnson Consumer, Inc. (JJCI), alleging violations of state consumer fraud statutes based on nondisclosure of alleged health risks associated with talc contained in JOHNSON'S® ~~Baby Powder. The complaint seeks damages but does not allege personal injury. In October 2020, JJCI moved to dismiss the complaint.~~

In December 2013, Janssen Ortho LLC (Janssen Ortho) sued the United States in the United States Court of International Trade (the Classification Litigation) seeking a determination that darunavir ethanolate (the active pharmaceutical ingredient in PREZISTA®) is exempt from duties upon importation into the United States. In August 2014, United States Customs and Border Protection (US CBP) issued a Penalty Notice against Janssen Ortho LLC (Janssen Ortho), assessing penalties for the alleged improper classification of darunavir ethanolate (the active pharmaceutical ingredient in PREZISTA®) in connection with its importation into the United States. In February 2020, the Court in the Classification Litigation ruled that darunavir ethanolate is eligible for duty free treatment. In April 2020, the United States appealed that ruling to the United States Court of Appeals for the Federal Circuit. In August 2020, US CBP formally rejected Janssen’s Supplemental Petition challenging the penalties assessment and demanded payment of the mitigated penalty. In October 2020, US CBP agreed to not refer the matter to the Office of Chief Counsel, pending resolution of the related Classification Litigation. In April 2021, the Federal Circuit denied the United States’ appeal in the Classification Litigation.

In March and April 2015, over 30 putative class action complaints were filed by contact lens patients in a number of courts around the United States against Johnson & Johnson Vision Care, Inc. (JJVCI) and other contact lens manufacturers, distributors, and retailers, alleging vertical and horizontal conspiracies to fix the retail prices of contact lenses. The complaints allege that the manufacturers reached agreements with each other and certain distributors and retailers concerning the prices at which some contact lenses could be sold to consumers. The plaintiffs are seeking damages and injunctive relief. All of the class action cases were transferred to the United States District Court for the Middle District of Florida in June 2015. The plaintiffs filed a consolidated class action complaint in November 2015. ~~Discovery and pre-trial motion practice are complete. No trial date has been set.~~

~~In August 2015, two third-party payors filed a purported class action~~This case was settled in ~~the United States District~~March 2022, subject to Court for the Eastern District of Louisiana against Janssen Research & Development, LLC, Janssen Ortho LLC, Janssen Pharmaceuticals, Inc., Ortho-McNeil-Janssen Pharmaceuticals, Inc. and Johnson & Johnson (as well as certain Bayer entities), alleging that the defendants improperly marketed and promoted XARELTO® as safer and more effective than less expensive alternative medications while failing to fully disclose its risks. The complaint seeks damages. In November 2020, Defendants moved to dismiss the complaint.

In September 2017, Pfizer, Inc. (Pfizer) filed an antitrust complaint against Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) in United States District Court for the Eastern District of Pennsylvania. Pfizer alleges that Janssen has violated federal antitrust laws through its contracting strategies for REMICADE®~~. The complaint seeks damages and injunctive relief. Discovery is ongoing.~~approval.

Beginning in September 2017, multiple purported class actions were filed on behalf of indirect purchasers of REMICADE® against Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) alleging that Janssen has violated federal antitrust laws through its contracting strategies for ~~REMICADE~~®.REMICADE. The cases were consolidated for pre-trial purposes as In re REMICADE® Antitrust Litigation in United States District Court for the Eastern District of Pennsylvania. ~~The consolidated complaint seeks damages and injunctive relief. Discovery is ongoing.~~This case was settled in February 2022, subject to Court approval.

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In June 2018, Walgreen Co. and Kroger Co., filed an antitrust complaint against Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) in the United States District Court for the Eastern District of Pennsylvania. The complaint alleges that Janssen has violated federal antitrust laws through its contracting strategies for ~~REMICADE~~®.REMICADE. The complaint seeks damages and injunctive relief. In March 2019, summary judgment was granted in favor of Janssen. In February 2020, the United States Court of Appeals for the Third Circuit reversed the District Court’s decision. ~~Discovery is ongoing.~~This case was settled in January 2022.

In June 2019, the United States Federal Trade Commission (FTC) issued a Civil Investigative Demand to Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) in connection with its investigation of whether Janssen’s REMICADE® contracting practices violate federal antitrust laws. The Company has produced documents and information responsive to the Civil Investigative Demand.

In February 2022, the United States Federal Trade Commission (FTC) issued Civil Investigative Demands to Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) in connection with its investigation of whether advertising practices for REMICADE violate federal law. Janssen has produced documents and information responsive to the Civil Investigative Demands.

In October 2017, certain United States service members and their families brought a complaint against a number of pharmaceutical and medical devices companies, including Johnson & Johnson and certain of its subsidiaries in United States District Court for the District of Columbia, alleging that the defendants violated the United States Anti-Terrorism Act. The complaint alleges that the defendants provided funding for terrorist organizations through their sales practices pursuant to pharmaceutical and medical device contracts with the Iraqi Ministry of Health. In July 2020, the District Court dismissed the complaint. In January ~~2021, plaintiffs appealed the District Court’s decision to~~2022, the United States Court of Appeals for the District of Columbia ~~Circuit.~~Circuit reversed the District Court’s decision. In February 2022, defendants petitioned for rehearing en banc.

In October 2018, two separate putative class actions were filed against Actelion Pharmaceutical Ltd., Actelion Pharmaceuticals U.S., Inc., and Actelion Clinical Research, Inc. (collectively Actelion) in United States District Court for the District of Maryland and United States District Court for the District of Columbia. The complaints allege that Actelion violated state and federal antitrust and unfair competition laws by allegedly refusing to supply generic pharmaceutical manufacturers with samples of TRACLEER. TRACLEER®~~. TRACLEER~~® is subject to a Risk Evaluation and Mitigation Strategy required by the Food and Drug Administration, which imposes restrictions on distribution of the product. In January 2019, the plaintiffs dismissed the District of Columbia case and filed a consolidated complaint in the United States District Court for the District of Maryland. In October

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2019, the Court granted Actelion’s motion to dismiss the amended complaint. In April 2021, the United States Court of Appeals for the Fourth Circuit reversed and remanded.

~~In December 2018, Janssen Biotech, Inc., Janssen Oncology, Inc, Janssen Research & Development, LLC, and Johnson & Johnson (collectively, Janssen) were served with a~~ ~~qui tam~~ complaint filed on behalf of the United States, 28 states, and the District of Columbia. The complaint, which was filed in December 2017 in United States District Court for the Northern District of California, alleges that Janssen violated the federal False Claims Act and state law when providing pricing information for ZYTIGA® to the government in connection with direct government sales and government-funded drug reimbursement programs. At this time, the federal and state governments have declined to intervene. The case has been transferred to United States District Court for the District of New Jersey. In September 2019, Janssen moved to dismiss the complaint. In February 2021, the judge has set a renewed schedule for the Company's motion to dismiss, with briefs to be fully submitted by early July 2021.

In April 2019, Blue Cross & Blue Shield of Louisiana and HMO Louisiana, Inc. filed a class action complaint against Janssen Biotech, Inc, Janssen Oncology, Inc, Janssen Research & Development, LLC (collectively, Janssen) and BTG International Limited in the United States District Court for the Eastern District of Virginia on behalf of indirect purchasers of ZYTIGA®~~. Several additional complaints were filed thereafter in Virginia and New Jersey.~~The indirect purchaser complaints generally allege that the defendants violated the antitrust and consumer protections laws of several states and the Sherman Act by pursuing patent litigation relating to ZYTIGA®in order to delay generic entry and seek damages. The Virginia cases have been transferred to the United States District Court for the District of New Jersey and consolidated with the New Jersey case. A consolidated amended complaint was filed in February 2021. In April 2021, Janssen moved to dismiss the Indirect Purchaser Action. In May 2020, a class action complaint was filed against Janssen Biotech Inc., Janssen Oncology, Inc., Janssen Research & Development LLC and BTG International Limited in the United States District Court for the District of New Jersey, on behalf of direct purchasers of ZYTIGA®.~~The direct purchaser complaint alleges that defendants violated the Sherman Act by pursuing patent litigation relating to ZYTIGA~~® ~~in order to delay generic entry, and seek damages and injunctive relief. In April 2021, Janssen moved to compel arbitration of the Direct Purchaser Action.~~ Discovery is ongoing.

In May 2019, a class action antitrust complaint was filed against Janssen R&D Ireland (Janssen) and Johnson & Johnson in the United States District Court for the Northern District of California. The complaint alleges that Janssen violated federal and state antitrust and consumer protection laws by agreeing to exclusivity provisions in its agreements with Gilead concerning the development and marketing of combination antiretroviral therapies (cART) to treat HIV. The complaint also alleges that Gilead entered into similar agreements with Bristol-Myers Squibb and Japan Tobacco. In March 2020, the Court granted in part and denied in part defendants’ motions to dismiss. Plaintiffs filed an amended complaint in April 2020. Defendants moved to

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dismiss the amended complaint. In July 2020, the Court granted in part and denied in part the renewed motion to dismiss. In December 2021, several insurance companies and other payers filed individual “Opt-Out” complaints containing allegations similar to the original complaint. Discovery is ongoing.

In October 2019, Innovative Health, LLC filed a complaint against Biosense Webster, Inc. (BWI) in the United States District Court for the Middle District of California. The complaint alleges that certain of BWI’s business practices and contractual terms violate the antitrust laws of the United States and the State of California by restricting competition in the sale of High Density Mapping Catheters and Ultrasound Catheters. In January 2020, BWI filed a motion to dismiss the complaint.In August 2020, the Court granted in part and denied in part BWI’s motion to dismiss. ~~Discovery is ongoing.~~In December 2021, BWI filed a motion for summary judgment. In March 2022, the Court granted BWI’s motion for summary judgment.

In November 2019, Johnson & Johnson received a demand for indemnification from Pfizer Inc. (Pfizer), pursuant to the 2006 Stock and Asset Purchase Agreement between the Company and Pfizer. Also in November 2019, Johnson & Johnson Inc. received ~~a demand for~~notice reserving rights to claim indemnification from Sanofi Consumer Health, Inc. (Sanofi), pursuant to the 2016 Asset Purchase Agreement between ~~J&J,~~Johnson & Johnson Inc. and Sanofi. In January 2020, Johnson & Johnson received a demand for indemnification from Boehringer Ingelheim Pharmaceuticals, Inc. (Boehringer Ingelheim), pursuant to the 2006 Asset Purchase Agreement among the Company, Pfizer, and Boehringer Ingelheim. The notices seek indemnification for legal claims related to over-the-counter ZANTAC® (ranitidine) products. Plaintiffs in the underlying actions allege that ZANTAC® and other over-the-counter ranitidine medications contain unsafe levels of NDMA (N-nitrosodimethylamine) and can cause and/or have caused various cancers in patients using the products, and seek injunctive and monetary relief. The Company and Johnson & Johnson Inc. have also been named in putative class actions filed in Canada with similar allegations regarding ZANTAC or ranitidine use. Johnson & Johnson Inc. was also named as a defendant along with other manufacturers in various personal injury actions in Canada related to ZANTAC products. Johnson & Johnson Inc. has provided Sanofi notice reserving rights to claim indemnification pursuant to the 2016 Asset Purchase Agreement related to the class actions and personal injury actions.

In October 2020, Fortis Advisors LLC (Fortis), in its capacity as representative of the former stockholders of Auris Health Inc. (Auris), filed a complaint against Johnson & Johnson, Ethicon Inc., and certain named officers and employees (collectively, Ethicon) in the Court of Chancery of the State of Delaware. The complaint alleges breach of contract, fraud, and other causes of action against Ethicon in connection with Ethicon’s acquisition of Auris in 2019. The complaint seeks damages and other relief. In December ~~2020, Ethicon moved~~2021, the Court granted in part and denied in part defendants’ motion to dismiss certain causes of ~~action in~~action. All claims against the ~~complaint. Oral argument on the motion to dismiss~~individual defendants were dismissed. The trial is scheduled for February 2023.

Beginning in May 2021, multiple putative class actions were filed in state and federal courts (California, Florida, New York, and New Jersey) against various Johnson & Johnson entities alleging violations of state consumer fraud statutes based on nondisclosure of alleged benzene contamination of certain Neutrogena and Aveeno sunscreen products and the affirmative promotion of those products as “safe”; and, in at least one case, alleging astrict liability manufacturing defect and failure to warn claims, asserting that the named plaintiffs suffered unspecified injuries as a result of alleged exposure to benzene. The Judicial Panel on Multi-District Litigation has consolidated all pending actions, except one product liability case and one case pending in New Jersey state court, in the United States District Court for the Southern District of Florida, Fort Lauderdale Division. In October 2021, the Company reached an agreement in principle for the settlement of a nationwide class, encompassing the claims of the consolidated actions, subject to approval by the Florida federal Court. In March 2022, the Court granted preliminary approval of the settlement.

Johnson & Johnson (subsequently substituted by Johnson & Johnson Consumer Inc. (JJCI)) along with more than 120 other companies, is a defendant in a cost recovery and contribution action brought by Occidental Chemical Corporation in June ~~2021.~~2018 in the United States District Court for the District of New Jersey, related to the clean-up of a section of the Lower Passaic River in New Jersey.

Johnson & Johnson or its subsidiaries are also parties to ~~a number of~~various proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund, and comparable state, local or foreign laws in which the primary relief sought is the cost of past and/or future remediation.

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NOTE 12— RESTRUCTURING

In the fiscal second quarter of 2018 the Company announced plans to implement a series of actions across its Global Supply Chain that are intended to focus resources and increase investments in the critical capabilities, technologies and solutions necessary to manufacture and supply its product portfolio, enhance agility and drive growth. The Global Supply Chain actions will include expanding the use of strategic collaborations and bolstering initiatives to reduce complexity, improve cost-competitiveness, enhance capabilities and optimize the Supply Chain network. In the fiscal first quarter of ~~2021,~~2022, the Company recorded a net pre-tax charge of ~~$104~~$72 million, which is included on the following lines of the Consolidated Statement of Earnings, ~~$53~~$70 million in restructuring, ~~$27~~$16 million in cost of products sold and ~~$24~~income of $14 million (from property sales) in other (income) expense, net. Total project costs of approximately ~~$1.4~~$1.8 billion have been recorded since the restructuring was announced. See the following table for additional details on the restructuring program.

In total, the Company expects the Global Supply Chain actions to generate approximately $0.6 billion to $0.8 billion in annual pre-tax cost savings that will be substantially delivered by the end of 2022. The Company expects to record pre-tax restructuring charges of approximately ~~$1.9~~$2.1 billion to $2.3 billion ~~over~~by the ~~4 to 5 year period~~completion of ~~this activity.~~the program in December 2022. These costs are associated with network optimizations, exit costs and accelerated depreciation and amortization.

The following table summarizes the severance related reserves and the associated restructuring expenses through the fiscal first quarter of ~~2021:~~2022:


(Dollars in Millions)	(Dollars in Millions)	Severance		Asset Write-offs	Other(2)	Total	(Dollars in Millions)	Severance		Asset Write-offs/Sales		Other(2)	Total
Reserve balance, January 3, 2021		$	135	0	9	144
Reserve balance, January 2, 2022							Reserve balance, January 2, 2022	$	112	—		25	137

Current year activity:	Current year activity:						Current year activity:
Charges	Charges	0		14	90	104	Charges	—		(23)		95	72
Cash payments		(5)		0	(91)	(96)
Cash settlements							Cash settlements	(10)		35	(3)	(107)	(82)
Settled non cash	Settled non cash	0		(14)	0	(14)	Settled non cash	—		(12)		—	(12)

Reserve balance, April 4, 2021(1)		$	130	0	8	138
Reserve balance, April 3, 2022(1)							Reserve balance, April 3, 2022(1)	$	102	—		13	115

(1) Cash outlays for severance are expected to be substantially paid out ~~over~~by the ~~next 18 months~~completion of the program in ~~accordance with the Company's plans and local laws.~~December 2022.

(2) Other includes project expense such as salaries for employees supporting these initiatives and consulting expenses.

(3) Represents gain on sale of assets

The Company continuously reevaluates its severance reserves related to restructuring and the timing of payments due to the planned release of associates regarding several longer-term projects. The Company believes that the existing severance reserves are sufficient to cover the Global Supply Chain plans given the period over which the actions will take place. The Company will continue to assess and make adjustments as necessary if additional amounts become probable and estimable.

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Item 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Sales to Customers

Analysis of Consolidated Sales

For the fiscal first quarter of ~~2021,~~2022, worldwide sales were ~~$22.3~~$23.4 billion, a total increase of ~~7.9%~~5.0%, which included operational growth of ~~5.5%~~7.7% and a ~~positive~~negative currency impact of ~~2.4%~~2.7% as compared to ~~2020~~2021 fiscal first quarter sales of ~~$20.7~~$22.3 billion. In the fiscal first quarter of ~~2021,~~2022, the net impact of acquisitions and divestitures on worldwide operational sales growth was a negative ~~0.5%~~0.2%.

Sales by U.S. companies were ~~$11.1~~$11.4 billion in the fiscal first quarter of ~~2021,~~2022, which represented an increase of ~~3.9%~~2.7% as compared to the prior year. In the fiscal first quarter of ~~2021,~~2022, the net impact of acquisitions and divestitures on the U.S. operational sales growth was ~~negligible.~~a negative 0.1%. Sales by international companies were ~~$11.2~~$12.0 billion, a total increase of ~~12.2%~~7.2%, which included operational growth of ~~7.3%~~12.6% and a ~~positive~~negative currency impact of ~~4.9%~~5.4%. In the fiscal first quarter of ~~2021,~~2022, the net impact of acquisitions and divestitures on the international operational sales growth was a negative ~~0.9%~~0.3%.

In the fiscal first quarter of ~~2021,~~2022, sales by companies in Europe achieved growth of ~~12.1%~~11.3%, which included operational growth of ~~4.7%~~19.5% and a ~~positive~~negative currency impact of ~~7.4%~~8.2%. Sales by companies in the Western Hemisphere, excluding the U.S., ~~experienced a decline~~achieved growth of ~~5.1%~~4.1%, ~~which included~~including operational growth of 5.1% and a negative currency impact of ~~5.1%~~1.0%. Sales by companies in the Asia-Pacific, Africa region achieved growth ~~19.4%~~3.1%, including operational growth of ~~13.7%~~6.6% and a ~~positive~~negative currency impact of ~~5.7%~~3.5%.

Note: values may have been rounded

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Analysis of Sales by Business Segments

Consumer Health

Consumer Health segment sales in the fiscal first quarter of ~~2021~~2022 were ~~$3.5~~$3.6 billion, a decrease of ~~2.3%~~1.5% as compared to the same period a year ago, including an operational ~~decline~~growth of ~~3.3% and~~0.8% offset by a ~~positive~~negative currency impact of ~~1.0%~~2.3%. U.S. Consumer Health segment sales ~~declined~~decreased by ~~7.4%~~3.4%. International Consumer Health segment sales ~~increased by 2.5%,~~were flat including operational growth of ~~0.5%~~4.1% and a ~~positive~~negative currency impact of ~~2.0%~~4.1%. In the fiscal first quarter of ~~2021,~~2022, the net impact of acquisitions and divestitures on the Consumer Health segment operational sales growth was a negative ~~0.4%.~~0.8% primarily due to the DR. CI:LABO - Sedona divestiture in Asia Pacific.

Major Consumer Health Franchise ~~Sales~~Sales* — Fiscal First Quarter Ended


(Dollars in Millions)	(Dollars in Millions)	April 4, 2021		March 29, 2020		Total Change		Operations Change		Currency Change		(Dollars in Millions)	April 3, 2022		April 4, 2021		Total Change		Operations Change		Currency Change
OTC(1)	OTC(1)	$	1,175	$	1,348	(12.9)	%	(14.8)	%	1.9	%	OTC(1)	$	1,461	$	1,273	14.8	%	17.1	%	(2.3)	%
Skin Health/Beauty	Skin Health/Beauty	1,163		1,117		4.1		2.8		1.3		Skin Health/Beauty	1,012		1,163		(13.0)		(11.0)		(2.0)
Oral Care	Oral Care	417		395		5.7		4.5		1.2		Oral Care	366		417		(12.2)		(10.2)		(2.0)
Baby Care	Baby Care	389		361		7.7		9.5		(1.8)		Baby Care	355		389		(8.6)		(6.4)		(2.2)
Women’s Health	Women’s Health	222		232		(4.3)		(2.6)		(1.7)		Women’s Health	228		222		2.6		8.3		(5.7)
Wound Care/Other	Wound Care/Other	177		171		3.3		2.2		1.1		Wound Care/Other	164		177		(7.4)		(7.2)		(0.2)
Total Consumer Health Sales	Total Consumer Health Sales	$	3,543	$	3,625	(2.3)	%	(3.3)	%	1.0	%	Total Consumer Health Sales	$	3,586	$	3,641	(1.5)	%	0.8	%	(2.3)	%

*Certain prior year amounts have been reclassified to conform to current year presentation

~~The~~(1)In the fiscal first quarter of 2021, approximately $0.1 billion of certain international OTC ~~franchise experienced an operational decline of 14.8% as compared~~products, primarily in China, were reclassified from the Pharmaceutical segment to the prior year fiscal first quarter. The results reflect negative comparisons due to prior year COVID-19 pantry loading and category declines driven by weaker Cough, Cold and Flu season due to social distancing and lockdowns. Partially offsetting declines were timing of shipments, e-commerce strength, and U.S. share gains primarily in TYLENOL® ~~, ZYRTEC~~® ~~and PEPCID~~® ~~as well as strong international sales of NICORETTE~~®.Consumer Health segment based on operational changes

The ~~Skin Health/Beauty~~OTC franchise achieved operational growth of ~~2.8%~~17.1% as compared to the prior year fiscal first quarter. Growth was ~~primarily attributable to international NEUTROGENA~~®driven by upper respiratory products, TYLENOL and ~~DABAO~~® ~~as well as worldwide AVEENO~~® ~~due~~

~~to strength~~MOTRIN and IMODIUM and PEPCID products in ~~e-commerce, new product innovations and COVID-19 related recovery. Results were partially offset by U.S. COVID-19 related market contraction in make-up wipes and competitive pressures in NEUTROGENA~~®.digestive health.

The ~~Oral Care~~Skin Health/Beauty franchise ~~achieved~~experienced an operational ~~growth~~decline of ~~4.5% as compared to the prior year fiscal first quarter primarily due to sales of LISTERINE~~® ~~mouthwash outside the U.S. related to category growth driven by increased consumer focus on oral hygiene and strong promotions partially offset by divestitures.~~

~~The Baby Care franchise achieved operational growth of 9.5%~~11.0% as compared to the prior year fiscal first quarter. ~~Growth~~The decline was ~~attributable to sales of JOHNSON'S~~® ~~products outside~~driven by external supply constraints, the DR. CI:LABO - Sedona divestiture in Asia Pacific and competitive pressures. The decline was partially offset by U.S. ~~primarily~~category recovery and strength in the Latin America and Asia Pacific ~~due~~regions.

The Oral Care franchise experienced an operational decline of 10.2% as compared to the prior year fiscal first quarter. The decline was primarily driven by strategic SKU rationalization in the U.S. and lapping prior year COVID-19 related increased ~~COVID-19~~ demand ~~coupled with AVEENO~~outside the U.S.

® ~~baby growth~~

The Baby Care franchise experienced an operational decline of 6.4% as compared to the prior year fiscal first quarter. The decline was driven by supply constraints in ~~e-commerce globally.~~the U.S. and EMEA.

The Women’s Health franchise ~~experienced an~~achieved operational ~~decline~~growth of ~~2.6%~~8.3% as compared to the prior year fiscal first quarter primarily driven by ~~internal sanitary protection and liners~~growth in EMEA due to ~~prior year COVID-19 impact comparisons primarily in Europe, partially offset by growth in napkins in Asia Pacific~~increased stocking and ~~Latin America.~~LATAM due to price increases.

The Wound Care/Other franchise ~~achieved~~experienced an operational ~~growth~~decline of ~~2.2%~~7.2% as compared to the prior year fiscal first ~~quarter. Growth~~quarter primarily driven by the professional tape divestiture along with comparison to prior year COVID-19 recovery for NEOSPORIN in the U.S. and BAND-AID® Brand Adhesive Bandages outside the U.S. This decline was ~~due to strong performance in hand hygiene primarily due to increased demand and new promotional campaigns coupled with U.S. share gains~~ partially offset by ~~prior year COVID-19 impact comparisons.~~growth of U.S. BAND-AID® Brand Adhesive Bandages.

In November 2021, the Company announced its intention to separate the Company’s Consumer Health business, with the intention to create a new, publicly traded company. The Company is targeting completion of the planned separation in 18 to 24 months after the initial announcement.

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Pharmaceutical

Pharmaceutical segment sales in the fiscal first quarter of ~~2021~~2022 were ~~$12.2~~$12.9 billion, an increase of ~~9.6%~~6.3% as compared to the same period a year ago, ~~with~~including an operational increase of ~~7.1%~~9.3% and a ~~positive~~negative currency impact of ~~2.5%~~3.0%. U.S. Pharmaceutical sales increased ~~6.4%~~2.9% as compared to the same period a year ago. International Pharmaceutical sales increased by ~~13.4%~~10.3%, including operational growth of ~~7.9%~~16.7% and a ~~positive~~negative currency impact of ~~5.5%~~6.4%. In the fiscal first quarter of ~~2021,~~2022, the net impact of acquisitions and divestitures on the Pharmaceutical segment operational sales growth was ~~a negative 0.3%.~~negligible. Adjustments to previous sales reserve estimates were negligible in the fiscal first quarter of 2022 and approximately $0.2 billion in ~~both~~the fiscal first ~~quarters~~quarter of ~~2021 and 2020.~~2021.

Major Pharmaceutical Therapeutic Area Sales** — Fiscal First Quarter Ended

(Dollars in Millions) April 4, 2021 March 29, 2020 Total
Change Operations
Change Currency
Change
Immunology $ 3,914 $ 3,638 7.6 % 5.5 % 2.1 %
     REMICADE®
777 990 (21.5) (22.2) 0.7
     SIMPONI®/ SIMPONI ARIA®
562 529 6.2 3.7 2.5
     STELARA®
2,148 1,819 18.1 15.4 2.7
     TREMFYA®
418 296 41.0 37.8 3.2
     Other Immunology 8 3 * * *
Infectious Diseases 1,007 920 9.5 7.1 2.4
     COVID-19 vaccine 100 — * * —
     EDURANT®/rilpivirine
243 224 8.6 0.2 8.4
     PREZISTA®/ PREZCOBIX®/ REZOLSTA®/ SYMTUZA®
546 579 (5.8) (5.9) 0.1
     Other Infectious Diseases 117 116 0.6 (1.2) 1.8
Neuroscience 1,721 1,658 3.8 1.6 2.2
     CONCERTA®/ methylphenidate
171 171 0.2 (3.2) 3.4
     INVEGA SUSTENNA®/ XEPLION®/ INVEGA TRINZA®/ TREVICTA®
965 883 9.4 6.9 2.5
     RISPERDAL CONSTA®
157 170 (7.9) (10.1) 2.2
     Other Neuroscience 428 435 (1.5) (2.5) 1.0
Oncology 3,570 3,013 18.5 14.6 3.9
     DARZALEX®
1,365 937 45.6 42.2 3.4
     ERLEADA®
261 143 82.8 79.7 3.1
     IMBRUVICA®
1,125 1,031 9.0 5.6 3.4
     ZYTIGA®/ abiraterone acetate
638 690 (7.6) (12.9) 5.3
     Other Oncology(1)
182 212 (14.2) (17.9) 3.7
Pulmonary Hypertension 861 745 15.5 13.7 1.8
     OPSUMIT®
450 389 15.6 13.5 2.1
     UPTRAVI®
305 250 22.0 20.9 1.1
     Other Pulmonary Hypertension 105 106 (0.6) (2.7) 2.1
Cardiovascular / Metabolism / Other 1,127 1,160 (2.8) (4.1) 1.3
     XARELTO®
589 527 11.7 11.7 —
     INVOKANA®/ INVOKAMET®
150 175 (14.4) (16.1) 1.7
     PROCRIT®/ EPREX®
127 155 (18.2) (20.3) 2.1
     Other 261 302 (13.6) (16.4) 2.8
Total Pharmaceutical Sales $ 12,199 $ 11,134 9.6 % 7.1 % 2.5 %


(Dollars in Millions)	April 3, 2022		April 4, 2021		Total Change		Operations Change		Currency Change
Immunology	$	4,119	$	3,914	5.2	%	7.5	%	(2.3)	%
REMICADE	663		777		(14.7)		(14.2)		(0.5)
SIMPONI/ SIMPONI ARIA	571		562		1.5		4.7		(3.2)
STELARA	2,288		2,148		6.5		9.0		(2.5)
TREMFYA	590		418		41.3		44.5		(3.2)
Other Immunology	6		8		(22.0)		(22.0)		0.0
Infectious Diseases	1,297		998		30.0		33.1		(3.1)
COVID-19 VACCINE	457		100		*		*		*
EDURANT/rilpivirine	248		243		1.8		9.6		(7.8)
PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA	501		546		(8.3)		(6.9)		(1.4)
Other Infectious Diseases(2)	91		108		(15.3)		(11.0)		(4.3)
Neuroscience	1,741		1,715		1.5		5.0		(3.5)
CONCERTA/ methylphenidate	157		171		(8.3)		(4.8)		(3.5)
INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA	1,048		965		8.6		11.3		(2.7)
RISPERDAL CONSTA	129		157		(17.6)		(13.9)		(3.7)
Other Neuroscience(2)	408		422		(3.5)		1.7		(5.2)
Oncology	3,950		3,570		10.6		14.9		(4.3)
DARZALEX	1,856		1,365		36.0		40.3		(4.3)
ERLEADA	400		261		53.0		57.5		(4.5)
IMBRUVICA	1,038		1,125		(7.7)		(3.9)		(3.8)
ZYTIGA/ abiraterone acetate	539		638		(15.6)		(10.1)		(5.5)
Other Oncology	118		182		(35.1)		(32.3)		(2.8)
Pulmonary Hypertension	852		861		(1.1)		1.2		(2.3)
OPSUMIT	443		450		(1.6)		1.1		(2.7)
UPTRAVI	325		305		6.5		7.7		(1.2)
Other Pulmonary Hypertension	83		105		(20.8)		(16.8)		(4.0)
Cardiovascular / Metabolism / Other	910		1,044		(12.8)		(11.9)		(0.9)
XARELTO	508		589		(13.8)		(13.8)		—
INVOKANA/ INVOKAMET	128		150		(14.6)		(13.1)		(1.5)
Other(1,2)	274		305		(10.0)		(7.5)		(2.5)
Total Pharmaceutical Sales	$	12,869	$	12,101	6.3	%	9.3	%	(3.0)	%

* Percentage greater than 100% or not meaningful

**Certain prior year amounts have been reclassified to conform to current year presentation

(1) Inclusive of ~~VELCADE~~PROCRIT / EPREX® which was previously disclosed separately

(2)

In the fiscal first quarter of 2021, approximately $0.1 billion of certain international OTC products, primarily in China, were reclassified from the Pharmaceutical segment to the Consumer Health segment based on operational changes

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Immunology products achieved operational growth of ~~5.5%~~7.5% as compared to the same period a year ago driven by continued strong uptake of STELARA® (ustekinumab) in Crohn's disease and Ulcerative Colitis partially offset by share declines in Psoriasis and Psoriatic Arthritis and strength inof TREMFYA® (guselkumab) in Psoriasis and uptake in Psoriatic Arthritis. This was partially offset by lower sales of REMICADE® (infliximab) due to biosimilar competition.

Biosimilar versions of REMICADE® have been introduced in the United States and certain markets outside the United States and additional competitors continue to enter the market. Continued infliximab biosimilar competition will result in a further reduction in sales of ~~REMICADE~~REMICADE.

®.

The latest expiring United States patent for STELARA (ustekinumab) will expire in September 2023. STELARA (ustekinumab) U.S. sales in fiscal 2021 were approximately $5.9 billion. The expiration of a product patent or loss of market exclusivity is likely to result in a reduction in sales.

Infectious disease products achieved operational growth of ~~7.1%~~33.1% as compared to the same period a year ~~ago~~ago. Growth was primarily ~~due to~~driven by the contribution of the ~~recently authorized~~ COVID-19 ~~vaccine and uptake of~~ ~~JULUCA~~®~~(dolutegravir/rilpivirine).~~vaccine. This was partially offset by lower sales of PREZISTA® and ~~PREZCOBIX~~®/PREZCOBIX/REZOLSTA® (darunavir/cobicistat) due to increased competition and loss of exclusivity of PREZISTA® in certain countries outside the U.S.

Neuroscience products achieved operational sales growth of ~~1.6%~~5.0% as compared to the same period a year ago. Growth of Paliperidone long-acting injectables ~~growth was driven by sales of~~ INVEGA ~~SUSTENNA~~®/SUSTENNA/XEPLION® (paliperidone palmitate) and INVEGA ~~TRINZA~~®/TRINZA/TREVICTA® ~~from~~ was due to patient mix, new patient starts and ~~persistence.~~persistence of treatment as well as the launch of INVEGA HAFYERA.

Oncology products achieved ~~strong~~ operational sales growth of ~~14.6%~~14.9% as compared to the same period a year ago. Contributors to the growth were strong sales of DARZALEX® (daratumumab) driven by ~~continued strong market growth,~~ share gains in all regions, continued strong market growth, and solid uptake ~~from the recent launch~~ of the subcutaneous formulation; the continued global launch uptake of ERLEADA® (apalutamide) and IMBRUVICA® (ibrutinib) growth ~~driven by market leading share and increased persistence as patients extend~~in all regions outside the ~~duration of therapy, partially offset by COVID-19 related market dynamics including new patient starts and longer-term scripts written in~~U.S. In the ~~same period a year ago. The growth was negatively impacted by declining sales of ZYTIGA~~® ~~(abiraterone acetate)~~U.S. IMBRUVICA (ibrutinib) declined due to ~~generic competition.~~competitive pressures from novel oral agents.

Pulmonary Hypertension achieved operational sales growth of ~~13.7%~~1.2% as compared to the same period a year ago. Sales growth of OPSUMIT® (macitentan) and UPTRAVI® (selexipag) were due to ~~continued~~demand and share gains ~~and~~partially offset by COVID-19 related market ~~growth.~~constraints as well as entrants in Other Pulmonary Hypertension.

Cardiovascular / Metabolism / Other products experienced an operational decline of ~~4.1%~~11.9% as compared to the same period a year ago. The decline was primarily attributable to lower sales of ~~INVOKANA~~®~~/INVOKAMET~~® ~~(canagliflozin)~~XARELTO due to ~~share erosion partially offset by strong market growth and PROCRIT~~®~~/ EPREX~~® ~~(epoetin alfa) due to biosimilar competition. Additionally, the growth of XARELTO~~® ~~(rivaroxaban) was driven by continued demand and~~ a one-time favorable prior period pricing adjustment in the ~~current~~fiscal first quarter ~~partially offset~~of 2021 and INVOKANA/INVOKAMET (canagliflozin) due to continued share erosion.

Starting in the second quarter of fiscal 2022, the Company updated its policy so that no end customer will be permitted to direct delivery of product to a location other than the billing location. The updated policy will impact contract pharmacy transactions involving non-grantee 340B covered entities for most of the Company’s drugs, subject to multiple exceptions. Both grantee and non-grantee covered entities can maintain unlimited contract pharmacy arrangements under policy exceptions. The Company will continue to offer 340B discounts to covered entities on all of its covered outpatient drugs, and it believes its policy will improve its ability to identify inappropriate duplicate discounts and diversion prohibited by ~~higher rebates.~~the 340B statute. The 340B Drug Pricing Program is a U.S. federal government program requiring drug manufacturers to provide significant discounts on covered outpatient drugs to covered entities. This policy update could have potential discount and volume implications going forward.

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~~Medical Devices~~MedTech*

The ~~Medical Devices~~MedTech segment sales in the fiscal first quarter of ~~2021~~2022 were ~~$6.6~~$7.0 billion, an increase of ~~10.9%~~5.9% as compared to the same period a year ago, which included operational growth of ~~8.0%~~8.5% and a ~~positive~~negative currency impact of ~~2.9%~~2.6%. U.S. ~~Medical Devices~~MedTech sales increased ~~5.4%~~5.6%. International ~~Medical Devices~~MedTech sales increased by ~~16.2%~~6.3%, including operational growth of ~~10.5%~~11.1% and a ~~positive~~negative currency impact of ~~5.7%~~4.8%. In the fiscal first quarter of ~~2021,~~2022, the net impact of acquisitions and divestitures on the ~~Medical Devices~~MedTech segment operational sales growth was a negative ~~0.8%~~0.1%.

Major ~~Medical Devices~~MedTech Franchise Sales — Fiscal First Quarter Ended


(Dollars in Millions)	(Dollars in Millions)	April 4, 2021		March 29, 2020		Total Change		Operations Change		Currency Change		(Dollars in Millions)	April 3, 2022		April 4, 2021		Total Change		Operations Change		Currency Change
Surgery	Surgery	$	2,372	$	2,100	12.9	%	9.6	%	3.3	%	Surgery	$	2,434	$	2,372	2.6	%	5.0	%	(2.4)	%
Advanced	Advanced	1,118		948		18.0		14.3		3.7		Advanced	1,146		1,118		2.5		4.5		(2.0)
General	General	1,254		1,153		8.8		5.8		3.0		General	1,288		1,254		2.7		5.5		(2.8)
Orthopaedics	Orthopaedics	2,113		2,038		3.7		1.2		2.5		Orthopaedics	2,188		2,113		3.5		5.6		(2.1)
Hips	Hips	357		337		5.8		3.2		2.6		Hips	389		356		9.3		11.3		(2.0)
Knees	Knees	317		343		(7.6)		(9.9)		2.3		Knees	339		317		6.7		8.8		(2.1)
Trauma	Trauma	733		654		12.1		9.5		2.6		Trauma	748		733		2.1		4.2		(2.1)
Spine, Sports & Other	Spine, Sports & Other	706		703		0.4		(2.2)		2.6		Spine, Sports & Other	712		707		0.6		2.7		(2.1)
Vision	Vision	1,145		1,067		7.3		5.4		1.9		Vision	1,257		1,145		9.8		13.9		(4.1)
Contact Lenses/Other	Contact Lenses/Other	857		814		5.3		3.5		1.8		Contact Lenses/Other	910		857		6.2		10.6		(4.4)
Surgical	Surgical	288		253		13.7		11.2		2.5		Surgical	347		288		20.4		23.8		(3.4)
Interventional Solutions	Interventional Solutions	949		727		30.4		26.4		4.0		Interventional Solutions	1,092		949		15.1		17.4		(2.3)

Total Medical Devices Sales		$	6,579	$	5,932	10.9	%	8.0	%	2.9	%
Total MedTech Sales												Total MedTech Sales	$	6,971	$	6,579	5.9	%	8.5	%	(2.6)	%

*Previously referred to as Medical Devices

The Surgery franchise achieved operational sales growth of ~~9.6%~~5.0% as compared to the prior year fiscal first quarter. The operational growth in Advanced Surgery was primarily driven by ~~market recovery. In addition, growth of Endocutters was due~~Endocutter and Biosurgery products attributable to market recovery, market expansion and ~~new products primarily in China, which was partially offset by competitive pressure in the U.S. The growth in Biosurgery and Energy products was due to~~ the success of new products. Growth of Endocutter products was offset by COVID-19 market slow down in the Asia Pacific region and ~~expansion within~~competitive pressures in the ~~China market.~~U.S. Energy products growth was flat to the prior year fiscal first quarter with market recovery and new product penetration mostly offset by COVID-19 market slow downs in Asia Pacific. The operational growth in General Surgery was primarily driven by market recovery, ~~and continued~~ strength of the Suture portfolio, ~~in Wound Closure partially offset by the impact of the Advanced Sterilization Products (ASP) divestiture in the prior year.~~and technology penetration.

The Orthopaedics franchise achieved operational sales growth of ~~1.2%~~5.6% as compared to the prior year fiscal first quarter. The operational growth in hips ~~was driven by~~reflects the market ~~procedure~~ recovery, ~~as well as leadership in~~continued strength of the ~~Anterior approach, strong market demand for~~portfolio including the ACTIS® stem and enabling technologies – ~~KINCISE™~~KINCISE and ~~VELYS™~~VELYS Hip ~~Navigation.~~Navigation and momentum in the U.S. Ambulatory Surgery Center channel. The operational ~~decline~~growth in knees was primarily driven by market recovery and uptake of new products and momentum in the ~~negative impact of COVID-19 on procedure volume and changes in channel mix.~~U.S. Ambulatory Surgery Center channel. The operational growth in Trauma was driven by global market recovery and uptake of new products. The operational ~~decline~~growth in Spine, Sports & Other was driven by ~~the negative impact from COVID-19~~recovery across most specialties, new products in Sports, Spine & VELYS Digital Solutions and a prior year China distribution channel ~~changes~~change. Growth was partially offset by ~~uptake of new products~~market softness and ~~partnerships~~competitive pressures in Spine.

The Vision franchise achieved operational sales growth of ~~5.4%~~13.9% as compared to the prior year fiscal first quarter. The Contact Lenses/Other operational growth was due to market recovery, new products and ~~channel inventory changes in~~ the U.S. ~~and Japan.~~benefit related to a current year forward buy ahead of a list price increase. The growth was partially offset by the negative impact from prior year stocking. The Surgical operational growth was primarily due to market recovery and uptake of recently launched products.

The Interventional Solutions franchise achieved operational sales growth of ~~26.4%~~17.4% as compared to the prior year fiscal first quarter driven by ~~atrial fibrillation~~the market ~~growth coupled with strength from~~recovery, success of new ~~products.~~products and commercial strategies.

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ANALYSIS OF CONSOLIDATED EARNINGS BEFORE PROVISION FOR TAXES ON INCOME

Consolidated earnings before provision for taxes on income for the fiscal first quarter of ~~2021~~2022 was ~~$7.4~~$5.9 billion representing ~~33.3%~~25.0% of sales as compared to ~~$6.5~~$7.4 billion in the fiscal first quarter of ~~2020,~~2021, representing ~~31.5%~~33.3% of sales.

Cost of Products Sold

(Dollars in billions. Percentages in chart are as a percent to total sales)

Q1 ~~2021~~2022 versus Q1 ~~2020~~2021

Cost of products ~~decreased~~increased as a percent to sales driven by:

•~~Favorable product~~ Unfavorable volume/mix ~~and translational currency~~ in the ~~Pharmaceutical business~~MedTech segment

•~~Favorable volume/mix~~Commodity inflation in the ~~Medical Devices business~~

•~~The establishment of a COVID-19 inventory reserve in the fiscal first quarter 2020 in the Medical Devices business which did not repeat in 2021.~~Consumer Health segment

The intangible asset amortization expense included in cost of products sold for the fiscal first quarters of 2022 and 2021 ~~and 2020~~ was ~~$1.2~~$1.1 billion and ~~$1.1~~$1.2 billion, respectively.

Selling, Marketing and Administrative Expenses

(Dollars in billions. Percentages in chart are as a percent to total sales)

Q1 ~~2021~~2022 versus Q1 ~~2020~~2021

Selling, Marketing and Administrative Expenses ~~decreased~~increased as a percent to sales driven by:

•~~Leveraging~~Higher brand marketing expenses in the ~~Medical Devices business resulting from the recovery of sales from the prior years impact of COVID-19~~Pharmaceutical and Consumer Health businesses

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Research and Development Expense

(Dollars in billions. Percentages in chart are as a percent to total sales)

Q1 ~~2021~~2022 versus Q1 ~~2020~~2021

Research and Development increased as a percent to sales driven by:

•~~COVID-19 vaccine expenses, net of governmental reimbursements~~

•~~Portfolio~~General portfolio progression in the Pharmaceutical business

In-Process Research and Development (IPR&D)

In the fiscal first quarter of 2022, the Company recorded an intangible asset impairment charge of approximately $0.6 billion related to an in-process research and development asset, bermekimab (JnJ-77474462), an investigational drug for the treatment of Atopic Dermatitis (AD) and Hidradenitis Suppurativa (HS). Additional information regarding efficacy of the AD indication became available which led the Company to the decision to terminate the development of bermekimab for AD. The Company acquired all rights to bermekimab from XBiotech, Inc. in the fiscal year 2020.

Interest (Income) Expense

Interest (Income) Expense in the fiscal first quarter of ~~2021~~2022 was a net interest ~~expense~~income of ~~$48~~$12 million as compared to ~~income~~interest expense of ~~$42~~$48 million in the same period a year ~~ago. This was~~ago primarily due to ~~reduced interest income resulting~~the benefit from ~~lower rates of interest earned on~~net investment hedging, a higher average cash ~~balances~~balance and a ~~higher~~lower average debt balance. The balance of cash, cash equivalents and current marketable securities was $30.4 billion at the end of the fiscal first quarter of 2022 as compared to $24.6 billion at the end of the fiscal first quarter of ~~2021 as compared to $18.0 billion at the end of the fiscal first quarter of 2020.~~2021. The Company’s debt position was ~~$33.6~~$33.1 billion as of April ~~4, 2021~~3, 2022 as compared to ~~$27.6~~$33.6 billion the same period a year ago.

Other (Income) Expense, Net*

Q1 ~~2021~~2022 versus Q1 ~~2020~~2021

Other (income) expense, net for the fiscal first quarter of ~~2021~~2022 was ~~favorable~~unfavorable by ~~$0.2~~$0.8 billion as compared to the prior year primarily due to the following:


Fiscal First Quarter	Fiscal First Quarter					Fiscal First Quarter
(Dollars in Billions)(Income)/Expense	(Dollars in Billions)(Income)/Expense	2021		2020	Change	(Dollars in Billions)(Income)/Expense	2022		2021		Change
Divestiture gains(1)		$	(0.6)	0.0	(0.6)
Contingent consideration reversal(2)		0.0		(1.0)	1.0
Litigation expense		0.0		0.1	(0.1)
Unrealized (gains)/losses on securities		0.0		0.3	(0.3)
Changes in the fair value of securities						Changes in the fair value of securities	$	0.4	0.0		0.4
Acquisition, integration and divestiture related(1)						Acquisition, integration and divestiture related(1)	0.0		(0.5)		0.5
Consumer Health separation costs						Consumer Health separation costs	0.1		0.0		0.1
Employee benefit plan related						Employee benefit plan related	(0.3)		(0.2)		(0.1)
Other	Other	(0.3)		(0.1)	(0.2)	Other	(0.3)		(0.2)		(0.1)

Total Other (Income) Expense, Net	Total Other (Income) Expense, Net	$	(0.9)	(0.7)	(0.2)	Total Other (Income) Expense, Net	$	(0.1)	$	(0.9)	$	0.8

(1) ~~Divestiture~~Primarily related to divestiture gains of two pharmaceutical brands outside the U.S. in the fiscal first quarter of 2021.

~~(2)~~ ~~Related to the timing of certain developmental milestones associated with the Auris Health acquisition.~~

*Other (income) expense, net is the account where the Company records gains and losses related to the sale and write-down of certain investments in equity securities held by Johnson & Johnson Innovation - JJDC, Inc. (JJDC), ~~unrealized~~changes in the fair value of securities, gains and losses on ~~investments,~~divestitures, gains and losses on ~~divestitures,~~sale of assets, certain transactional currency gains and losses, acquisition-related costs, litigation accruals and settlements, investment (income)/loss related to employee benefit plans, as well as royalty income.

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EARNINGS BEFORE PROVISION FOR TAXES BY SEGMENT

Income (loss) before tax by segment of business for the fiscal first quarters were as follows:


		Income Before Tax				Segment Sales				Percent of Segment Sales					Income Before Tax				Segment Sales				Percent of Segment Sales
(Dollars in Millions)	(Dollars in Millions)	April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020		April 4, 2021		March 29, 2020		(Dollars in Millions)	April 3, 2022		April 4, 2021		April 3, 2022		April 4, 2021		April 3, 2022		April 4, 2021
Consumer Health	Consumer Health	$	788	$	770	$	3,543	$	3,625	22.2	%	21.2	%	Consumer Health	$	686	$	842	$	3,586	$	3,641	19.1	%	23.1	%
Pharmaceutical	Pharmaceutical	5,223		3,834		12,199		11,134		42.8		34.4		Pharmaceutical	3,924		5,169		12,869		12,101		30.5		42.7
Medical Devices		1,629		2,025		6,579		5,932		24.8		34.1
MedTech														MedTech	1,477		1,629		6,971		6,579		21.2		24.8
Segment earnings before tax	Segment earnings before tax	7,640		6,629		22,321		20,691		34.2		32.0		Segment earnings before tax	6,087		7,640		23,426		22,321		26.0		34.2
Less: Expenses not allocated to segments (1)	Less: Expenses not allocated to segments (1)	211		120										Less: Expenses not allocated to segments (1)	123		211
Less: Consumer Health separation costs														Less: Consumer Health separation costs	102		—
Worldwide income before tax	Worldwide income before tax	$	7,429	$	6,509	$	22,321	$	20,691	33.3	%	31.5	%	Worldwide income before tax	$	5,862	$	7,429	$	23,426	$	22,321	25.0	%	33.3	%

(1) Amounts not allocated to segments include interest (income) expense and general corporate (income) expense.

Consumer Health Segment

The Consumer Health segment ~~income~~income/(loss) before tax as a percent of sales in the fiscal first quarter of ~~2021~~2022 was ~~22.2%~~19.1% versus ~~21.2%~~23.1% for the same period a year ago. The ~~increase~~decrease in the income before tax as a percent of sales in the fiscal first quarter of ~~2021~~2022 as compared to the prior year was primarily driven by the following:

•~~Supply chain efficiencies~~An increase in brand marketing expenses

~~Partially offset by:~~

•~~Increased brand marketing expense~~Commodity inflation

Pharmaceutical Segment

The Pharmaceutical segment income before tax as a percent of sales in the fiscal first quarter of ~~2021~~2022 was ~~42.8%~~30.5% versus ~~34.4%~~42.7% for the same period a year ago. The ~~increase~~decrease in the income before tax as a percent of sales for the fiscal first quarter of 2021 as compared to the prior year was primarily driven by the following:

•~~Favorable product mix~~An IPR&D charge of $0.6 billion in 2022 related to bermekimab (JnJ-77474462), an investigational drug for the treatment of AD and Hidradenitis Suppurativa (HS)

•Divestiture gains of $0.6 billion ~~related to two pharmaceutical brands outside the U.S.~~ in ~~the fiscal first quarter of 2021~~2021.

•~~Lower unrealized losses on~~Net mark-to-market loss related to the change in the fair value of securities ($~~0.0~~0.4 billion in ~~2021~~2022 vs. ~~$0.3~~$0.0 billion in ~~2020)~~2021)

•~~Lower litigation expense ($0.0 billion in 2021 vs. $0.1 billion in 2020)~~

•~~Positive translational currency~~

~~Partially offset by:~~

•Increased Research & Development investment ~~in the COVID-19 vaccine net of governmental reimbursements~~for general portfolio progression

•Higher brand marketing expenses

~~Medical Devices~~

MedTech Segment

The ~~Medical Devices~~MedTech segment income before tax as a percent of sales in the fiscal first quarter of ~~2021~~2022 was ~~24.8%~~21.2% versus ~~34.1%~~24.8% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal first quarter was primarily driven by the following:

•~~A contingent consideration reversal of approximately $1.0 billion in~~Product mix within the ~~fiscal first quarter of 2020 related to the timing of certain developmental milestones associated with the Auris Health acquisition~~

~~Partially offset by:~~

•~~Incremental inventory reserves recorded in the fiscal first quarter of 2020 associated with the impact of COVID-19, which did not repeat in the fiscal first quarter of 2021~~

•~~Overall leveraging in the fiscal first quarter of 2021 resulting from the Medical Devices sales recovery~~MedTech franchises

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Restructuring

In the fiscal second quarter of 2018, the Company announced plans to implement actions across its Global Supply Chain that are intended to enable the Company to focus resources and increase investments in critical capabilities, technologies and solutions necessary to manufacture and supply its product portfolio of the future, enhance agility and drive growth. The Company expects these supply chain actions will include expanding its use of strategic collaborations, and bolstering its

~~Table of Content~~

initiatives to reduce complexity, improving cost-competitiveness, enhancing capabilities and optimizing its network. Discussions regarding specific future actions are ongoing and are subject to all relevant consultation requirements before they are finalized. In total, the Company expects these actions to generate approximately $0.6 to $0.8 billion in annual pre-tax cost savings that will be substantially delivered by the end of 2022. The Company expects to record pre-tax restructuring charges of approximately ~~$1.9~~$2.1 to $2.3 ~~billion.~~billion by the completion of the program in December 2022. In the fiscal first quarter of 2022, the Company recorded a net pre-tax charge of $72 million, which is included on the following lines of the Consolidated Statement of Earnings, $70 million in restructuring, $16 million in cost of products sold and income of $14 million (from property sales) in other (income) expense, net. In the fiscal first quarter of 2021, the Company recorded a pre-tax charge of $104 million, which is included on the following lines of the Consolidated Statement of Earnings, $53 million in restructuring, $27 million in cost of products sold and $24 million in other (income) expense, net. In the fiscal first quarter of 2020, the Company recorded a pre-tax charge of $118 million, which is included on the following lines of the Consolidated Statement of Earnings, $58 million in restructuring, $15 million in cost of products sold and $45 million in other (income) expense, net. Restructuring charges of approximately ~~$1.4~~$1.8 billion have been recorded since the restructuring was announced.

See Note 12 to the Consolidated Financial Statements for additional details related to the restructuring.

Provision for Taxes on Income

The worldwide effective income tax rate was 12.2% in 2022 and 16.6% in 2021. During fiscal year 2022, the Company is expected to incur significant additional international tax costs related to the legal separation of the Consumer Health businesses.

For discussion related to the fiscal first quarter of ~~2021~~2022 provision for taxes refer to Note 5 to the Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

Cash and cash equivalents were ~~$12.7~~$10.5 billion at the end of the fiscal first quarter of ~~2021~~2022 as compared with ~~$14.0~~$14.5 billion at the end of fiscal year ~~2020.~~2021. The primary sources and uses of cash that contributed to the ~~$1.3~~$4.0 billion decrease were:


(Dollars In Billions)
$	~~14.0~~14.5	Q4 ~~2020~~2021 Cash and cash equivalents balance
~~4.1~~4.0		cash generated from operating activities
~~(0.2)~~(3.6)		net cash used by investing activities
~~(5.1)~~(4.4)		net cash used by financing activities
~~(0.1)~~			~~effect of exchange rate and rounding~~
$	~~12.7~~10.5	Q1 ~~2021~~2022 Cash and cash equivalents balance

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In addition, the Company had ~~$11.9~~$19.9 billion in marketable securities at the end of the fiscal first quarter of ~~2021~~2022 and ~~$11.2~~$17.1 billion at the end of fiscal year ~~2020.~~2021.

Cash flow from operations of ~~$4.1~~$4.0 billion was the result of:

~~Table of Content~~


(Dollars In Billions)
$	~~6.2~~5.1	Net Earnings
~~0.9~~1.6		non-cash expenses and other adjustments primarily for depreciation and amortization, stock-based compensation, asset write-downs and credit losses and accounts receivable allowances partially offset by the deferred tax provision and net gain on sale of assets/businesses ~~and credit losses and accounts receivable allowances~~
~~(3.2)~~			~~a decrease in accounts payable and accrued liabilities and other current and non-current liabilities~~
~~(2.3)~~(1.0)		an increase in accounts receivable and inventories

~~2.5~~ (2.8)		a decrease in accounts payable and accrued liabilities
1.0		a decrease in other current and non-current assets
0.1		an increase in other current and non-current liabilities
$	~~4.1~~4.0	Cash Flow from operations

Investing activities use of ~~$0.2~~$3.6 billion of cash was primarily used for:


(Dollars In Billions)
$	~~(0.7)~~(0.6)	additions to property, plant and equipment
~~0.6~~0.2		proceeds from the disposal of assets/businesses, net
~~(0.8)~~(0.3)		acquisitions, net of cash acquired and other
(2.7)		net purchases of investments

~~0.8~~ (0.2)		credit support agreements activity, net
~~(0.1)~~			~~Other~~
$	~~(0.2)~~(3.6)	Net cash used for investing activities

Financing activities use of ~~$5.1~~$4.4 billion of cash was primarily used for:


(Dollars In Billions)
$	~~(2.7)~~(2.8)	dividends to shareholders
~~(1.4)~~(1.6)		repurchase of common stock
~~(1.5)~~0.0			net repayment of short and long term debt
~~0.2~~0.3		proceeds from stock options exercised/employee withholding tax on stock awards, net
~~0.2~~ (0.2)		credit support agreements activity, net
~~0.1~~ (0.1)		other and rounding
$	~~(5.1)~~(4.4)	Net cash used for financing activities

The Company has access to substantial sources of funds at numerous banks worldwide. In September ~~2020,~~2021, the Company secured a new 364-day Credit Facility. Total credit available to the Company approximates $10 billion, which expires on September ~~9, 2021.~~8, 2022. Interest charged on borrowings under the credit line agreement is based on either ~~bids provided by banks, the prime rate, London Interbank Offered Rates (LIBOR),~~Term Secured Overnight Financing Rate (SOFR) ~~Swap Curve~~Reference Rate or other applicable market rates as allowed under the terms of the agreement, plus applicable margins. Commitment fees under the agreement are not material.

In the fiscal first quarter of ~~2021,~~2022, the Company's notes payable and long-term debt was in excess of cash, cash equivalents and marketable securities. As of April ~~4, 2021,~~3, 2022, the net debt position was ~~$9.0~~$2.8 billion as compared to the prior year of ~~$9.6~~$9.0 billion. Considering recent market conditions and the on-going COVID-19 crisis, the Company has re-evaluated its operating cash flows and liquidity profile and does not foresee any significant incremental risk. The Company anticipates that operating cash flows, the ability to raise funds from external sources, borrowing capacity from existing committed credit facilities and access

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to the commercial paper markets will continue to provide sufficient resources to fund operating needs, including the Company's approximate ~~$1.0~~$0.9 billion in contractual supply commitments associated with its development of the COVID-19 vaccine, the ~~talc litigation and~~ agreement ~~in principle~~ to settle opioid litigation for $5 billion and the establishment of ~~which~~ the ~~majority may be paid over~~$2 billion trust for talc related liabilities (See Note 11 to the ~~next two to three years.~~Consolidated Financial Statements for additional details). In addition, the Company monitors the global capital markets on an ongoing basis and from time to time may raise capital when market conditions are favorable. ~~Additionally, as a result of the Tax Cuts and Jobs Act (TCJA), the Company has access to its cash outside the U.S. at a significantly reduced cost.~~

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Subsequent to April ~~4, 2021,~~3, 2022, the Company paid approximately ~~$1.2~~$1.0 billion to the U.S. Treasury ~~for~~including $0.8 billion related to the current installment due on foreign undistributed earnings as part of the TCJA charge (see Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January ~~3, 2021)~~2, 2022) and ~~$0.4~~$0.2 billion primarily related to the normal estimated payment for the fiscal first quarter of ~~2021.~~2022.

Dividends

On January 4, ~~2021, the Board of Directors declared a regular cash dividend of $1.01 per share, payable on March 9, 2021 to shareholders of record as of February 23, 2021.~~

~~On April 20, 2021,~~2022, the Board of Directors declared a regular cash dividend of $1.06 per share, payable on March 8, 2022 to shareholders of record as of February 22, 2022.

On April 19, 2022, the Board of Directors declared a regular cash dividend of $1.13 per share, payable on June ~~8, 2021~~7, 2022 to shareholders of record as of May ~~25, 2021.~~24, 2022. The Company expects to continue the practice of paying regular quarterly cash dividends.

OTHER INFORMATION

New Accounting Pronouncements

Refer to Note 1 to the Consolidated Financial Statements for new accounting pronouncements.

Economic and Market Factors

COVID-19 considerations and business continuity

The Company has considered various internal and external factors in assessing the potential impact of COVID-19 on its business and financial results based upon information available at this time, as follows:

•Operating Model: The Company has a diversified business model across the healthcare industry with flexibility designed into its manufacturing, research and development clinical operations and commercial capabilities.

•Supply Chain: The Company continues to leverage its global manufacturing footprint and dual-source capabilities while closely monitoring and maintaining critical inventory at major distribution centers away from high-risk areas to ensure adequate and effective distribution.

•Business Continuity: The robust, active business continuity plans across the Company's network have been instrumental in preparing the Company for events like COVID-19 and the ability to meet the majority of patient and consumer needs remains uninterrupted.

•Workforce: The Company has put procedures in place to protect its essential workforce in manufacturing, distribution, commercial and research operations while ensuring appropriate remote working protocols have been established for other employees.

•Liquidity: The Company's high-quality credit rating allows the Company superior access to the financial capital markets for the foreseeable future.

•Domestic and Foreign Legislation: The Company will continue to assess and evaluate the on-going global legislative efforts to combat the COVID-19 impact on economies and the sectors in which it participates. Currently, the recent legislative acts put in place are not expected to have a material impact on the Company’s operations.

In fiscal 2021 and 2020, the Company entered into a series of contract manufacturing arrangements for vaccine production with third party contract manufacturing organizations. These arrangements provide the Company with future supplemental commercial capacity for vaccine production and potentially transferable rights to such production if capacity is not required. Amounts paid for services to be deliveredand contractually obligated to be paid to these contract manufacturing organizations of approximately ~~$1.0~~$0.9 billion are reflected in the prepaid expenses and other, other assets, accrued liabilities and other liabilities accounts in the Company's consolidated balance sheet upon execution of each agreement. Additionally, the Company has entered into certain vaccine development cost sharing arrangements with government related organizations. The Company continues to evaluate the global demand for the Covid-19 vaccine and its related supply.

The Company continues to evaluate and monitor both its internal and external supply arrangements, including its contract with Emergent BioSolutions and related production activities at its Bayview, Maryland facility. The Company has established a global vaccine supply network, where, in addition to its internal manufacturing site in Leiden, the Netherlands, ten other

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manufacturing sites will be involved in the production of vaccine across different countries and continents. The Company does not believe that a disruption at a vaccine manufacturing site, or the resulting delay would have a material financial impact on the Company’s consolidated financial statements or results.

Russia-Ukraine War

Although the long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time, the financial impact of the conflict in the fiscal first quarter of 2022, including accounts receivable or inventory reserves, was not material. As of both the 2021 fiscal year ending January 2, 2022, and the fiscal first quarter ending April 3, 2022, the business of the Company’s Ukraine subsidiaries represented less than 1% of the Company’s consolidated assets and revenues. As of both the 2021 fiscal year ending January 2, 2022, and the fiscal first quarter ending April 3, 2022, the business of the Company’s Russian subsidiaries represented less than 1% of the Company’s consolidated assets and represented 1% of revenues.

~~Table~~The Company continued to supply its products throughout the first quarter as patients rely on many of ~~Content~~the products for healthcare purposes. However, in early March, the Company took steps to suspend all advertising, enrollment in clinical trials, and any additional investment in Russia. Additionally, at the end of March, the Company made the decision to suspend supply of personal care products in Russia.

The Company operates in certain countries where the economic conditions continue to present significant challenges. The Company continues to monitor these situations and take appropriate actions. Inflation rates and currency exchange rates continue to have an effect on worldwide economies and, consequently, on the way the Company operates. The Company has accounted for operations in Venezuela and Argentina as highly inflationary, as the prior three-year cumulative inflation rate surpassed 100%. Beginning in the fiscal second quarter of 2022, the Company will account for operations in Turkey as highly inflationary, as the prior three-year cumulative inflation rate surpassed 100%. This ~~did~~will not have a material impact on the Company's results in the period. In the face of increasing costs, the Company strives to maintain its profit margins through cost reduction programs, productivity improvements and periodic price increases.

In June 2016, the United Kingdom (U.K.) held a referendum in which voters approved an exit from the European Union (E.U.), commonly referred to as “Brexit”. The U.K. officially exited the E.U. on January 31, 2020, however, there was a transition period to allow time to agree the terms of a new trade deal. On December 30, 2020, the U.K., E.U. and the European Atomic Energy Community (Euratom) signed the EU–UK Trade and Cooperation Agreement (TCA). Over the last few years, Brexit has created global political and economic uncertainty and has led to volatility in exchange rates and interest rates, additional cost containment by third-party payors and changes in regulations. While the UK and EU have now agreed on a future trade and cooperation agreement, it is still unclear what the ultimate financial, trade, regulatory and legal implications the withdrawal of the U.K. from the E.U. will have. However, the Company currently does not believe that these and other related effects will have a material impact on the Company’s consolidated financial position or operating results. As of April 4, 2021, and for the fiscal three months, the business of the Company’s U.K. subsidiaries represented less than 6% of the Company’s consolidated assets and less than 3% of the fiscal three months revenues.

Governments around the world consider various proposals to make changes to tax laws, ~~and regulations,~~ which may include increasing or decreasing existing statutory tax rates. In connection with various government initiatives, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in other countries. A change in statutory tax rate in any country would result in the revaluation of the Company’s deferred tax assets and liabilities related to that particular jurisdiction in the period in which the new tax law is enacted. This change would result in an expense or benefit recorded to the Company’s Consolidated Statement of Earnings. The Company closely monitors these proposals as they arise in the countries where it operates. Changes to the statutory tax rate may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted.

The Company faces various worldwide health care changes that may continue to result in pricing pressures that include health care cost containment and government legislation relating to sales, promotions and reimbursement of health care products.

Changes in the behavior and spending patterns of purchasers of ~~health care~~healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing ~~health care~~healthcare insurance coverage, as a result of the current global economic downturn, may continue to impact the Company’s businesses.

The Company also operates in an environment increasingly hostile to intellectual property rights. Firms have filed Abbreviated New Drug Applications or Biosimilar Biological Product Applications with the FDA or otherwise challenged the coverage and/or validity of the Company's patents, seeking to market generic or biosimilar forms of many of the Company’s key pharmaceutical products prior to expiration of the applicable patents covering those products. In the event the Company is not successful in defending the patent claims challenged in the resulting lawsuits, generic or biosimilar versions of the products at issue will be introduced to the market, resulting in the potential for substantial market share and revenue losses for those products, and which may result in a non-cash impairment charge in any associated intangible asset. There is also a risk that one or more competitors could launch a generic or biosimilar version of the product at issue following regulatory approval even though one or more valid patents are in place.

Item 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in its Annual Report on Form 10-K for the fiscal year ended January ~~3, 2021.~~2, 2022.

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Item 4 — CONTROLS AND PROCEDURES

Disclosure controls and procedures. At the end of the period covered by this report, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. ~~Alex Gorsky, Chairman and~~Joaquin Duato, Chief Executive ~~Officer,~~Officer; Chairman, Executive Committee and Joseph J. Wolk, Executive Vice President, Chief Financial Officer, reviewed and participated in this evaluation. Based on this evaluation, Messrs. ~~Gorsky~~Duato and Wolk concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

Internal control. During the period covered by this report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company has not experienced any material impact to its internal controls over financial reporting despite the fact that most of its employees are working remotely due to the COVID-19 pandemic. The Company proactively took actions to re-evaluate and refine its financial reporting process through additional monitoring controls to provide reasonable assurance that the financial results are reported accurately and timely. The Company continues to monitor and assess the effectiveness of the design and operation of its disclosure controls and procedures.

Part II — OTHER INFORMATION

Item 1 — LEGAL PROCEEDINGS

The information called for by this item is incorporated herein by reference to Note 11 included in Part I, Item 1, Financial Statements (unaudited) — Notes to Consolidated Financial Statements.

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Item 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information with respect to Common Stock purchases by the Company during the fiscal first quarter of ~~2021.~~2022. Common stock purchases on the open market are made as part of a systematic plan to meet the needs of the Company's compensation programs. The repurchases below also include the stock-for-stock option exercises that settled in the fiscal first quarter.

Fiscal Month Period
Total Number
of Shares Purchased(1)
Avg. Price
Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 4, 2021 through January 31, 2021 4,233,375 159.93 —
February 1, 2021 through February 28, 2021 3,722,927 163.81 —
March 1, 2021 through April 4, 2021 942,240 161.61 —
Total 8,898,542


Fiscal Month Period	Total Number of Shares Purchased(1)	Avg. Price Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 3, 2022 through January 30, 2022	918,500	170.99		—
January 31, 2022 through February 27, 2022	4,728,073	168.98		—
February 28, 2022 through April 3, 2022	3,596,956	172.58		—
Total	9,243,529

(1) During the fiscal first quarter of ~~2021,~~2022, the Company repurchased an aggregate of ~~8,898,542~~9,243,529 shares of Johnson & Johnson Common Stock in open-market transactions, all of which were purchased as part of a systematic plan to meet the needs of the Company’s compensation programs.

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Item 6 — EXHIBITS

Exhibit 31.1 Certification of Chief Executive Officer under Rule 13a-14(a) of the Securities Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Filed with this document.

Exhibit 31.2 Certification of Chief Financial Officer under Rule 13a-14(a) of the Securities Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Filed with this document.

Exhibit 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — Furnished with this document.

Exhibit 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — Furnished with this document.

Exhibit 101:


EX-101.INS						Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
EX-101.SCH						Inline XBRL Taxonomy Extension Schema
EX-101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase
EX-101.LAB						Inline XBRL Taxonomy Extension Label Linkbase
EX-101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase
EX-101.DEF						Inline XBRL Taxonomy Extension Definition Document

Exhibit 104:						Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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SIGNATURES

Pursuant to the requirements 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.


			JOHNSON & JOHNSON (Registrant)

Date: April ~~30, 2021~~29, 2022			By /s/ J. J. WOLK
			J. J. WOLK
			Executive Vice President, Chief Financial Officer (Principal Financial Officer)

Date: April ~~30, 2021~~29, 2022			By /s/ R. J. DECKER Jr.
			R. J. DECKER Jr.
			Controller (Principal Accounting Officer)

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