Exhibit 99(a)(i)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
------------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 29, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 1-3215
------------------------------
JOHNSON & JOHNSON
SAVINGS PLAN
(Full title of the Plan)
JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
Item 4. Financial Statements and Exhibits
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefits
As of December 31, 2002 and 2001
Statement of Changes in Net Assets Available for Benefits for
the Year Ended December 31, 2002
Notes to Financial Statements
Supplemental Schedule*:
Schedule H, line 4i - Schedule of Assets (Held at End of Year)
as of December 31, 2002
*Other schedules required by Section 2520.103.10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under ERISA have been omitted
because they are not applicable.
Consent of PricewaterhouseCoopers LLP, dated June 24, 2003
Certification of Plan Administrator Pursuant to Section 906 of the
Sarbanes-Oxley Act, dated June 26, 2003.
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
JOHNSON & JOHNSON SAVINGS PLAN
By: /s/ R. J. Darretta
------------------------------------
R. J. Darretta
Chairman, Pension Committee
June 26, 2003
JOHNSON & JOHNSON SAVINGS PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE
AS OF DECEMBER 31, 2002 AND 2001
AND FOR THE YEAR ENDED
DECEMBER 31, 2002
JOHNSON & JOHNSON
SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEAR ENDED DECEMBER 31, 2002
PAGE(S)
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits
As of December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 2002 3
Notes to Financial Statements 4 - 14
Supplemental Schedule*:
Schedule H, line 4i - Schedule of Assets (Held at
End of Year) as of December 31, 2002 15
Consent of PricewaterhouseCoopers LLP, dated June 24, 2003 16
Certification of Plan Administrator Pursuant to
Section 906 of the Sarbanes-Oxley Act, dated June 26, 2003 17
* Other schedules required by Section 2520.103.10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants, the Pension Committee and the Compensation & Benefits
Committee of the Johnson & Johnson Savings Plan:
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Johnson & Johnson Savings Plan (the "Plan") as of December 31, 2002 and
2001, and the changes in net assets available for benefits for the year ended
December 31, 2002 in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H, line 4i -
Schedule of Assets (Held at End of Year) as of December 31, 2002 is presented
for the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
June 19, 2003
-1-
JOHNSON & JOHNSON
SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2002 AND 2001
2002 2001
ASSETS
Interest in Master Trusts, at fair value
Interest in Johnson & Johnson Savings Plan Trust $ 3,785,110,898 $ 4,013,085,427
Interest in Johnson & Johnson Pension Trust Fund 377,035,603 357,593,390
Participant loans 49,655,577 33,808,844
Due from Johnson & Johnson 2,806,871 3,444,631
--------------- ---------------
Total assets 4,214,608,949 4,407,932,292
LIABILITIES
Accrued interest 1,853,125 2,489,642
Current portion of long-term note payable to Johnson &
Johnson 8,548,156 8,082,746
Long-term note payable to Johnson & Johnson 14,983,593 23,531,749
--------------- ---------------
Total liabilities 25,384,874 34,104,137
--------------- ---------------
Net assets available for benefits $ 4,189,224,075 $ 4,373,828,155
=============== ===============
See Notes to Financial Statements.
-2-
JOHNSON & JOHNSON
SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
ADDITIONS
Additions to net assets attributed to
Investment income
Interest $ 51,877,264
Dividends 42,064,343
Contributions
Employee contributions 298,026,518
Employer contributions 71,442,620
Asset transfers 35,107,929
---------------
Total additions 498,518,674
---------------
DEDUCTIONS
Deductions from net assets attributed to
Net depreciation in fair value of investments 506,220,052
Benefits paid to participants 165,178,543
Interest expense 2,208,788
Administrative expenses 8,057,552
Employee Stock Ownership Plan transfers 1,457,819
---------------
Total deductions 683,122,754
---------------
Net decrease (184,604,080)
---------------
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 4,373,828,155
---------------
End of year $ 4,189,224,075
===============
See Notes to Financial Statements.
-3-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
GENERAL
The Johnson & Johnson Savings Plan (the "Plan") is a participant
directed defined contribution plan which was established on June 1,
1982 for eligible salaried and non-union hourly employees of Johnson &
Johnson ("J&J" or the "Company") and certain domestic subsidiaries. The
Plan was designed to enhance the existing retirement program of
eligible employees. The funding of the Plan is made through employee
and Company contributions. The assets of the Plan are maintained in two
Master Trust accounts, the Johnson & Johnson Savings Plan Trust
("Savings Plan Trust") and the Johnson & Johnson Pension Trust Fund
("Pension Trust Fund"), and transactions therein are executed by the
trustee, State Street Trust Company ("State Street"). The Plan's
interests in the Savings Plan Trust and the Pension Trust Fund are
allocated to the Plan based upon the total of each participant's share
in these Master Trust accounts.
EMPLOYEE STOCK OWNERSHIP PLAN
Effective January 1, 1991, the Company implemented a Leveraged Employee
Stock Ownership Plan ("ESOP") to supplement its existing 401(k) plan.
The ESOP is a leveraged employee stock ownership plan and is designed
to comply with Section 4975(e)(7) and the regulations thereunder of the
Internal Revenue Code of 1986, as amended, and is subject to the
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended. The ESOP is used to fund an additional 25% match of
employee contributions (referred to herein as the "ESOP contribution").
Additionally, the Company may elect to fund the employer 50% match of
employee directed contributions with ESOP leveraged shares.
Initial funding for the ESOP was made through an advance from J&J of
$100 million, which was used to purchase 1,554,800 shares of J&J common
stock on the open market (which equates to 12,438,400 shares when
adjusted for subsequent stock splits). Of these shares, 1,217,133 and
1,985,939 (adjusted for stock splits) remain unallocated as of December
31, 2002 and 2001, respectively. As of December 31, 2002 and 2001, the
net assets of the unallocated portion are $46,586,500 and $99,705,191,
respectively, while the net assets of the allocated portion are
$450,949,249 and $469,503,721, respectively. Shares are allocated to
Plan participants under a formula set forth in the ESOP note agreement
(see Note 8) relating to the advance from J&J.
Each participant is entitled to exercise voting rights attributable to
the shares allocated to his or her account. The Company is entitled to
exercise voting rights attributable to unallocated shares.
CONTRIBUTIONS
In general, full-time salaried employees and certain non-union hourly,
part-time and temporary employees can contribute to the Plan, as there
is no service requirement for employee contributions.
-4-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
Contributions are made to the Plan by participants through payroll
deductions and by the Company on behalf of the participants.
Participating employees may contribute a minimum of 3% up to a maximum
of 35% of eligible pay, as defined by the Plan, beginning January 1,
2002. Previously, the maximum contribution was 20% of eligible pay.
Contributions can be pre-tax, post-tax or a combination of both.
Pre-tax contributions may not exceed the smaller of (i) 35% of a
participant's base salary for 2002 or 20% for 2001 or (ii) $11,000 for
2002 or $10,500 for 2001. The maximum contributions to a participant's
account, including participant pre-tax and post-tax contributions and
the employer match is $40,000 for 2002 and $35,000 for 2001.
Effective July 1, 2002, participants age 50 and over are eligible to
contribute extra pre-tax contributions above the annual IRS limitations
up to $1,000 in 2002. Participants can elect an amount to be
contributed from each paycheck as their catch-up contribution. This
amount will be in addition to the pre-tax and post-tax contribution
percentages that participants have elected.
After one year of service, participants receive an employer matching
contribution equal to 75% of the first 6%, of a participants'
contributions. The Company match is composed of cash (50%) and shares
of Johnson & Johnson common stock (25%), defined as the ESOP
contribution.
All contributions, with the exception of the ESOP contribution, are
invested in any of the nine investment funds as selected by the
participating employees. Beginning in April of 2002, participants have
the option to elect that the Company stock matching contribution be
made as a cash contribution thus being diversified from ESOP into any
of the other investment funds chosen by the participant. ESOP shares
are released from the unallocated portion of the ESOP each February
following the payment of the loan (see Note 8), in accordance with the
ESOP Trust Agreement. Shares released, in accordance with the ESOP note
agreement, may be more or less than shares earned by participants.
INVESTMENTS
Participants may invest in one or more of the nine investment funds
offered by the Plan. The investment mix chosen by the participant will
apply to employee and Company matching contributions. Rollover
contributions are invested at the election of the participant.
Beginning in 2002, participants may transfer all or a portion of their
accumulated Company stock contribution into the Plan's other investment
funds.
In the third quarter of 1998, Johnson & Johnson incorporated a
"dividend pass-through" feature into the Plan. Up through 2001, the
pass-through was distributed to each participant via check. Effective
January 1, 2002, dividends are automatically reinvested in the J&J
Stock Fund unless specific elections are made to receive payment via
check. For participants who had their dividends reinvested in the J&J
Stock Fund, they had an opportunity in early 2002 to receive those 2001
dividends in cash. The eligibility to receive a dividend pass-through
is contingent on the ownership of shares in the Johnson & Johnson Stock
Fund, which does not include shares owned in the Employee Stock
Ownership Plan Trust Fund. The 2002 dividend pass-through amount paid
to participants of $1,568,022 is reflected as benefits paid to
participants in the Statement of Changes in Net Assets Available for
Benefits.
All other dividend and interest income is reinvested, by the Trustee.
-5-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
VESTING
A participant's interest in their account, including participant
contributions, Company contributions and earnings thereon, will be at
all times fully vested. As a result, there are no forfeitures under the
Plan.
PAYMENT OF BENEFITS
Benefits are paid to participants upon termination of employment,
long-term disability or retirement. Participants can elect to defer
payment until age 70 1/2 if account balances are greater than $5,000.
Distributions are paid either in a lump sum payment, or installment
payments made on a monthly, quarterly, or annual basis. Installment
payments are made over a period of years selected by the participant.
A participant's account may be distributed to their beneficiaries in
lump sum, in installments, or maintained in the Trust upon the
participant's death only if the beneficiary is a spouse. Otherwise, it
is paid to the beneficiary in a lump sum.
Participants are allowed to withdraw their post-tax contributions and
earnings thereon, at any time. Participants may withdraw pre-tax
contributions only upon meeting certain hardship conditions. The
benefits to which participants are entitled is the amount provided by
contributions (Company and participant) and investment earnings
thereon, including net realized and unrealized gains and losses which
have been allocated to the participant's account balance. Participants
have the option of receiving all or part of their balance in the
Johnson & Johnson Common Stock Fund as either cash or in shares of
Johnson & Johnson common stock (plus cash for fractional shares) for
distributions other than a hardship.
ADMINISTRATIVE EXPENSES
All third party administrative expenses are paid by the Plan, except
the cost of entering into new investment vehicles which are primarily
paid by the Company.
PARTICIPANT LOANS
Participants may borrow up to a maximum of 50% of their account
balance. The minimum loan amount is $1,000 and the maximum amount of
outstanding loans cannot exceed $50,000. Loans bear an interest rate of
prime plus 1%, are repayable within one to five years and are secured
by the balance in the participant's account. Principal and interest is
paid ratably through payroll deductions for active employees. Loans
must be paid within two months following retirement or termination of
employment with the Company. If the loan is not repaid in full, the
unpaid balance, plus accrued interest, will be deducted from the
participant's account balance and reported to the IRS as a
distribution.
TERMINATION
Although it has not expressed an intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event
of a partial or full Plan termination, all Plan funds must be used
exclusively for the benefit of the Plan participants.
-6-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual
method of accounting in accordance with generally accepted accounting
principles in the United States of America.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's interest in the Savings and Pension Master Trusts are stated
at fair value. Generally, they represent securities traded on a
national securities exchange, which are valued at the last reported
sales price on the last business day of the year. Benefit responsive
guaranteed and synthetic investment contracts are recorded at contract
value, which approximates fair value (Note 5).
As the investment funds contain various underlying assets such as stock
and short-term investments, the participant's fund balance is reported
in units of participation, which allows for immediate transfers in and
out of the fund. The purchase or redemption price of the units is
determined by the trustee, based on the current market value of the
underlying assets of the funds. The fund's net asset value is the value
of a single unit, which is computed by adding the value of the fund's
investments, cash and other assets, and subtracting liabilities, then
dividing the result by the number of units outstanding.
Purchases and sales of securities are recorded on a trade-date basis.
Gains and losses on the sale of investment securities are determined on
the average cost method. Dividend income is recorded on the ex-dividend
date. Interest income is recorded as earned on an accrual basis.
NET APPRECIATION (DEPRECIATION)
The Plan presents in the Statement of Changes in Net Assets Available
for Benefits the net appreciation (depreciation) in the fair value of
investments, which consists of unrealized appreciation (depreciation)
of the underlying investments and realized gains and losses on sales of
investments.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect the
reported amounts of net assets available for benefits at the date of
the financial statements and the changes in net assets available for
benefits during the reporting period and when applicable disclosures of
contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
-7-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
RISK AND UNCERTAINTIES
The Plan provides for various investment options in funds, which can
invest in a combination of equity, fixed income securities and other
investments. Investments are exposed to various risks, such as interest
rate, market and credit. Due to the level of risk associated with
certain investments, it is at least reasonably possible that changes in
risks in the near term would materially affect participant's account
balances and the amounts reported in the Statement of Net Assets
Available for Benefits and the Statement of Changes in Net Assets
Available for Benefits.
3. INVESTMENTS
The following investments in both the Savings Plan Trust and Pension
Trust Fund represent 5% or more of the Plan's net assets.
AS OF DECEMBER 31,
2002 2001
Johnson & Johnson Stock Fund $ 1,568,857,008 $ 1,663,605,667
Diversified Equity Fund 689,385,756 974,855,347
Fixed Interest Fund 883,842,038 685,666,437
Employee Stock Ownership Plan Trust Fund* 497,535,749 569,208,912
Balanced Fund 226,840,071 238,508,436
*Non-participant directed
During 2002 the Plan's investments, including gains and losses on
investments bought and sold as well as held during the year,
(depreciated)/appreciated in value as follows:
Equities $ (273,943,018)
Bonds 2,905,849
Common stock (200,815,102)
Other (34,367,781)
---------------
Net depreciation $ (506,220,052)
===============
-8-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
4. NON-PARTICIPANT DIRECTED INVESTMENTS
Beginning in 2002, the ESOP includes participant directed and
non-participant directed investments. In 2001, the ESOP was fully
non-participant directed. Information about the ESOP's net assets and
the significant components of the changes in net assets related to this
fund is as follows:
AS OF DECEMBER 31,
2002 2001
Net assets
J&J common stock $ 497,535,749 $ 569,208,912
=============== ===============
FOR THE
YEAR ENDED
DECEMBER 31,
2002
Changes in net assets
Contributions $ 2,806,871
Investment income 7,854,163
Net depreciation in fair value (57,266,110)
Benefits paid to participants (12,939,408)
Transfers to participant-directed investments (9,919,891)
Interest expense (2,208,788)
---------------
$ (71,673,163)
===============
5. GUARANTEED AND SYNTHETIC INVESTMENT CONTRACTS
Investments in guaranteed and synthetic investment contracts in the
Fixed Interest Fund of the Savings Plan Trust are recorded at their
contract values. This represents cost plus accrued interest of
guaranteed investment contracts and fair value of the collateral plus
the benefit responsive wrap value for synthetics, as the contracts are
fully benefit-responsive. Participants may ordinarily direct the
withdrawal or transfer of all or a portion of their investment at
contract value. There are currently no reserves against contract values
for credit risk of the contract issuers or otherwise.
The average yield of the Fixed Interest Fund was approximately 5.71%
and 6.67% for 2002 and 2001, respectively. The crediting interest rate
was approximately 5.80% for 2002 and 6.75% for 2001. The crediting
interest rate of the Fixed Interest Fund is the annual return of the
fund before plan expenses, while the average yield includes
administrative expenses. The crediting interest rate for the investment
contracts is either agreed to in advance with the issuer or varies
based on an agreed to formula, but cannot be less than zero. The fair
value of guaranteed and synthetic investment contracts at December 31,
2002 and 2001 was $872,124,535 and $634,444,020, respectively in the
aggregate.
-9-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
6. INVESTMENTS IN SAVINGS PLAN TRUST AND PENSION TRUST FUNDS
As of December 31, 2002 and 2001 the investments in the U.S. Government
Securities, Fixed Interest, J&J Stock, Diversified Equity, Small Cap,
Russell 3000 and ESOP Funds are included in the Savings Plan Trust. The
Plan holds approximately 99.08% and 99.05% of the Trust's net assets as
of December 31, 2002 and 2001, respectively.
The Trust's net assets, income, and expenses are allocated to the Plan
based on the total of each participant's share in the Trust. The
following table represents the value of investments for the Savings
Plan Trust:
AS OF DECEMBER 31,
2002 2001
Investments at fair value
Cash $ 46,899,619 $ 89,783,856
U.S. Government Securities 50,232,862 38,561,815
Corporate debt 7,109,175 5,133,792
Common stocks 2,673,806,548 3,159,612,972
Other equities 166,832,677 123,312,530
Investments at contract value
Deposits in group annuity contracts & synthetics 872,124,535 634,444,020
--------------- ---------------
Total Master Trust investments 3,817,005,416 4,050,848,985
Receivables 5,456,869 6,490,611
Liabilities (2,143,681) (5,889,435)
--------------- ---------------
Net assets held in Master Trust, at fair value $ 3,820,318,604 $ 4,051,450,161
=============== ===============
-10-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
The net investment (loss)/income of the Savings Plan Trust was composed
of the following:
FOR THE
YEAR ENDED
DECEMBER 31,
2002
Net (depreciation)/appreciation in fair value of investments
Corporate debt $ 2,232,658
Common stocks (422,549,595)
Other equities (44,061,108)
---------------
(464,378,045)
---------------
Interest 46,386,220
Dividends 39,673,934
---------------
Net investment loss $ (378,317,891)
===============
As of December 31, 2002 and 2001, the investments in the Intermediate
Bond, Balanced, and International Equity Funds are included in the
Pension Trust Fund. The Plan holds approximately 10.2% and 11.0% of the
Fund's net assets as of December 31, 2002 and 2001, respectively.
The Trust's net assets, income and expenses are allocated to the Plan
based on the total of each participant's share in the Trust. The
following table represents the total value of investments for the
Pension Trust Fund:
AS OF DECEMBER 31,
2002 2001
Investments at fair value
Cash $ 538,889,775 $ 86,884,137
U.S. Government securities 357,318,806 381,983,148
Corporate debt 307,506,360 298,014,173
Preferred stocks 10,450,249 9,110,893
Common stocks 1,477,495,733 1,761,878,459
Equities and other 1,128,435,886 746,220,730
--------------- ---------------
3,820,096,809 3,284,091,540
Receivables 138,929,799 100,699,522
Liabilities (246,197,215) (137,287,399)
--------------- ---------------
Net assets held in Master Trust, at fair value $ 3,712,829,393 $ 3,247,503,663
=============== ===============
-11-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
The net investment (loss)/income of the Pension Trust Fund was composed
of the following:
FOR THE
YEAR ENDED
DECEMBER 31,
2002
Net (depreciation)/appreciation in fair value of investments
Cash $ 139,163
U.S. Government securities 5,308,002
Corporate debt 8,276,403
Preferred stocks 707,736
Common stocks (295,773,793)
Equities and other (160,652,995)
---------------
(441,995,484)
---------------
Interest 28,394,721
Dividends 26,027,531
---------------
Net investment loss $ (387,573,232)
===============
7. TAX STATUS
The Internal Revenue Service has determined and informed the Company by
a letter dated December 23, 2002, that the Plan, the Savings Plan
Trust, and the Pension Trust Fund are designed in accordance with
applicable sections of the Internal Revenue Code (IRC). Although the
Plan has been amended since receiving the determination letter, the
Plan administrator believes that the Plan is designed and is currently
being operated in compliance with applicable requirements of the IRC.
8. INDEBTEDNESS AND RELATED PARTY TRANSACTIONS
In connection with the formation of the Plan's ESOP feature, the Plan
borrowed $100 million from Johnson & Johnson for the purpose of
purchasing J&J common stock. The note bears interest at 9% and is
payable through February 15, 2005. The Company is obligated to make
contributions in cash to the ESOP which, when aggregated with the
ESOP's dividends and interest earnings, equal the amount necessary to
enable the ESOP to make its regularly scheduled payments of principal
and interest due on the term loan.
-12-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
Aggregate principal maturities for the next three years are as follows:
2003 $ 8,548,156
2004 9,064,538
2005 5,919,055
------------
$ 23,531,749
============
In the event of Plan termination or of termination of the ESOP portion
of the Plan, any unallocated shares shall be sold to the Company or on
the open market. The proceeds of such sale shall be used to satisfy the
outstanding principal and interest. The Company has no rights on the
allocated ESOP shares.
9. ASSETS TRANSFERS
In February 2002, the assets of the Innovasive Devices 401(k) Plan and
the DePuy Cash Accumulation Plan were transferred into the Plan. In
July 2002, the assets of the Atrionix 401(k) Plan were transferred into
the Plan. Assets from the Integ, Inc. 401(k) Profit Sharing Plan were
transferred into the Plan in October 2002 and the assets of the LNX,
Inc. 401(k) Plan were transferred into the Plan in December 2002. In
October 2001, the assets of the Centocor Qualified Savings and
Retirement Plan were transferred into the Plan. In December 2001, the
assets of the Horizon Health Services Employee Savings and Retirement
Plan and Indigo Medical, Incorporated 401(k) Plan were transferred into
the Plan.
10. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
DECEMBER 31,
2002 2001
Net assets available for benefits per the financial
statements $ 4,189,224,075 $ 4,373,828,155
Amounts allocated to withdrawing participants (503,822) -
--------------- ----------------
Net assets available for benefits per the Form 5500 $ 4,188,720,253 $ 4,373,828,155
=============== ================
-13-
JOHNSON & JOHNSON
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED
DECEMBER 31,
2002
Benefits paid to participants per the financial statements $ 165,178,543
Add: Amounts allocated to withdrawing participants at
December 31, 2002 503,822
Less: Amounts allocated to withdrawing participants at
December 31, 2001 -
---------------
Benefits paid to participants per the Form 5500 $ 165,682,365
===============
Amounts allocated to the withdrawing participants are recorded on the
Form 5500 for benefit claims that have been processed and approved for
payment prior to December 31, 2002 and 2001 but not yet paid as of that
date.
-14-
JOHNSON & JOHNSON
SAVINGS PLAN
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2002
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, LESSOR, RATE OF INTEREST, COLLATERAL, CURRENT
OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
Interest in Johnson & Johnson Savings Plan Trust $ - $ 3,785,110,898
Interest in Johnson & Johnson Pension Trust Fund - 377,035,603
*Participant loans - 49,655,577
* Represents parties-in-interest transactions.
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CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-40294) of Johnson & Johnson of our report dated
June 19, 2003 relating to the financial statements and financial statement
schedule of the Johnson & Johnson Savings Plan, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 24, 2003
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CERTIFICATION OF PLAN ADMINISTRATOR
PURSUANT TO SECTION 906 OF SARBANES-OXLEY
Reference is made to the following Savings Plans (the
"Plans"), which are administered by the Pension Committee of
the Company:
(a) Johnson & Johnson Savings Plan
(b) Johnson & Johnson Retirement Savings Plan
(c) Johnson & Johnson Savings Plan For Union Represented
Employees
(d) Alza Corporation Tax Deferral Investment Plan
The undersigned, Robert J. Darretta, the Chairman of the Pension Committee of
Johnson & Johnson, a New Jersey corporation (the "Company"), pursuant to 18
U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, hereby certifies that to the best of his knowledge:
(1) Each of the Annual Reports on Form 11-K for the Plans for the
fiscal year ended December 29, 2002 (the "Reports") fully
complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934; and
(2) The information contained in each Report fairly presents, in
all material respects, the financial condition and results of
operations of the respective Plan.
/s/ R. J. Darretta
---------------------------
R. J. Darretta
Chairman, Pension Committee
Dated: June 26, 2003
This certification accompanies this Report on Form 11-K pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required
by such Act, be deemed filed by the Company for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended. A signed original of this
certification statement has been provided to the Company and will be retained by
the Company and furnished to the Securities and Exchange Commission upon
request.
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