For the fiscal year ended December 28, 2008 | Commission file number 1-3215 |
New Jersey
|
22-1024240
|
|
(State of incorporation) |
(I.R.S. Employer Identification
No.)
|
|
One Johnson & Johnson Plaza
New Brunswick, New Jersey |
08933
|
|
(Address of principal executive offices) |
(Zip Code)
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock, Par Value $1.00 |
New York Stock Exchange
|
Parts I, II and III:
|
Portions of registrants annual report to shareholders for fiscal year 2008 (the Annual Report). | |
Parts I and III:
|
Portions of registrants proxy statement for its 2009 annual meeting of shareholders filed within 120 days after the close of the registrants fiscal year (the Proxy Statement). |
11
Table of Contents
2
Table of Contents
3
Table of Contents
Available
Information
Square Feet
(in
7,629
6,221
7,703
21,553
4
Table of Contents
Square Feet
Number of
(in
61
7,973
35
7,239
16
3,018
35
3,323
147
21,553
5
Table of Contents
51
49
59
49
54
48
50
56
52
60
(a)
Mr. D. J. Caruso joined the Company in 1999 when the
Company acquired Centocor, Inc. At the time of that acquisition,
he had been Senior Vice President, Finance of Centocor.
Mr. Caruso was named Vice President, Finance of
Ortho-McNeil Pharmaceutical, Inc. in 2001 and Vice President,
Group Finance of the Companys Medical Devices and
Diagnostics Group in 2003. In 2005, Mr. Caruso was named
Vice President of the Companys Group Finance organization.
Mr. Caruso became a Member of the Executive Committee and
Vice President, Finance and Chief Financial Officer in 2007.
(b)
Mr. D. M. Casey, Jr., joined the Company in 1985 and
held various positions before becoming President of
Johnson & Johnson Merck Consumer
Pharmaceuticals Co. in 1997. In 2001, he was named President of
Personal Products Company Division of Johnson &
Johnson Consumer Companies, Inc. In 2002, Mr. Casey became
the Group President of Johnson & Johnson Vision Care,
Inc., and in 2004 was named Company Group Chairman, Vision Care.
In 2006, he was named Company Group Chairman of the LifeScan
franchise. In 2008, he became a Member of the Executive
Committee and Worldwide Chairman, Comprehensive Care Group.
(c)
Mr. R. C. Deyo joined the Company in 1985 and became Associate
General Counsel in 1991. He became a Member of the Executive
Committee and Vice President, Administration in 1996 and Vice
President, General Counsel in 2004.
(d)
Ms. K. I. Foster-Cheek joined the Company in 2003 as
Vice President, Human Resources for the Johnson & Johnson
consumer products companies. In 2004, she was named Vice
President, Human Resources for the Consumer & Personal Care
Group and was named a member of the Human Resources Leadership
Team and the Consumer & Personal Care Group Operating
Committee. Ms. Foster-Cheek became a Member of the Executive
Committee and Vice President, Human Resources for the Company in
2005. Prior to joining the Company, Ms. Foster-Cheek served
in various human resources management positions with Pfizer Inc.
for 13 years, most recently supporting its pharmaceutical
businesses in Japan, Asia, Africa, Middle East and Latin America.
(e)
Ms. C. A. Goggins joined the Company in 1981 and held
various positions before becoming President of Personal Products
Company in 1994. She was named President of Johnson &
Johnson Consumer Companies, Inc. in 1995 and Company Group
Chairman, North America, Johnson & Johnson Consumer
Products in 1998. Ms. Goggins became a Member of the
Executive Committee and Worldwide Chairman, Consumer &
Personal Care Group in 2001, now known as the Consumer Group.
6
Table of Contents
(f)
Mr. A. Gorsky joined the Company in 2008 as Company Group
Chairman and Worldwide Franchise Chairman for Ethicon, Inc.
Previously, he was head of the North American pharmaceuticals
business at Novartis Pharmaceuticals Corporation from 2004 to
2008. Prior to Novartis, Mr. Gorsky served in various
management positions at Johnson & Johnson, including
Company Group Chairman for the Companys pharmaceutical
business in Europe, Middle East and Africa and President of
Janssen Pharmaceutica Inc. (U.S.). In January 2009, he became a
Member of the Executive Committee and Worldwide Chairman,
Surgical Care Group.
(g)
Ms. S. S. McCoy joined the Company in 1982 as an Associate
Scientist in Research & Development for Personal
Products Company. She was named Vice President,
Research & Development for the Personal Products
Worldwide Division of McNEIL-PPC, Inc. in 1995, and Vice
President, Marketing for its Skin Care franchise in 2000. In
2002, Ms. McCoy became Global President for its Baby and
Wound Care franchise. She was named Company Group Chairman and
Worldwide Franchise Chairman of Ethicon, Inc. in 2005. In 2008
she became a Member of the Executive Committee and Worldwide
Chairman, Surgical Care Group. In January 2009, she became
Worldwide Chairman, Pharmaceuticals Group.
(h)
Ms. C. A. Poon joined the Company in 2000 as a Company
Group Chairman in the Pharmaceuticals Group. She became a Member
of the Executive Committee and Worldwide Chairman,
Pharmaceuticals Group in 2001, was named Worldwide Chairman,
Medicines & Nutritionals in 2003 and was appointed
Vice Chairman of the Companys Board of Directors in 2005.
She was again named Worldwide Chairman, Pharmaceuticals Group in
2008. Prior to joining the Company, Ms. Poon served in
various management positions at Bristol-Myers Squibb Company for
15 years, most recently as President of International
Medicines
(1998-2000)
and President of Medical Devices
(1997-1998).
Ms. Poon plans to retire from the Company in March 2009.
(i)
Mr. N. J. Valeriani joined the Company in 1978 and held
various positions before becoming President of Ethicon
Endo-Surgery, Inc. in 1997. In 2001 he was named Company Group
Chairman for Ethicon Endo-Surgery with additional responsibility
for the Johnson & Johnson Medical Products Medical
Devices and Diagnostics business in Canada. He became Worldwide
Franchise Chairman for the DePuy Franchise in 2002.
Mr. Valeriani became a Member of the Executive Committee
and Vice President, Human Resources in 2003. In 2004 he assumed
additional responsibilities as Worldwide Chairman, Diagnostics.
In 2005, Mr. Valeriani was appointed Worldwide Chairman,
Cardiovascular Devices and Diagnostics and relinquished his
Human Resources responsibilities. He became Worldwide Chairman,
Medical Devices and Diagnostics Group in 2006. In 2008
Mr. Valeriani became Vice President, Office of Strategy
& Growth.
Item
5.
MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
7
Table of Contents
Total Number
of Shares
Remaining
Purchased as
Maximum Number
Part of
of Shares that
Total Number
Avg. Price
Publicly Announced
May Yet Be Purchased
of Shares
Paid Per
Plans or
Under the Plans
Purchased
(1)
Share
Programs
or
Programs
(2)
6,329,500
$
65.78
6,329,500
5,472,700
$
60.50
4,757,600
2,240,500
$
57.80
14,042,700
11,087,100
(3)
32,224,373
(1)
During the fiscal fourth quarter of 2008, the Company
repurchased an aggregate of 11,087,100 shares of the
Companys Common Stock pursuant to the repurchase program
that was publicly announced on July 9, 2007 and an
aggregate of 2,955,600 shares in open-market transactions
outside of the program.
(2)
As of December 28, 2008, based on the closing price of the
Companys Common Stock on the New York Stock Exchange on
December 26, 2008 of $58.56 per share.
(3)
As of December 28, 2008, an aggregate of 124,850,500 shares were
purchased for a total of $8.1 billion since the inception
of the repurchase program announced on July 9, 2007.
Item
7.
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
8
Table of Contents
Item
9.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Item 9A.
CONTROLS
AND PROCEDURES
Item 9B.
OTHER
INFORMATION
9
Table of Contents
Item
12.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
10
Table of Contents
Number of Securities to
Weighted Average
Number of Securities
be Issued Upon Exercise of
Exercise Price of
Remaining Available for
Outstanding Options,
Outstanding Options,
Future Issuance Under
Plan Category
Warrants and Rights
Warrants and Rights
Equity Compensation
Plans
(4)
236,800,102
$
52.76
167,603,561
956,844
36.11
237,756,946
52.69
167,603,561
(1)
Included in this category are the following equity compensation
plans, which have been approved by the Companys
shareholders: 1995 Stock Option Plan, 2000 Stock Compensation
Plan and 2005 Long-Term Incentive Plan.
(2)
Included in this category are 835,744 shares of Common
Stock of the Company issuable under various equity compensation
plans which were assumed by the Company upon acquisition of the
following companies: ALZA Corporation, Scios Inc.,
Innovasive Devices, Inc., Inverness Medical
Technology, Inc. and Centocor, Inc. 596,296 of the
shares listed as issuable in this category were issued under
plans that were approved by the shareholders of these companies
prior to the acquisition and the assumption of these plans by
the Company. At the time of each of these acquisitions, options
to acquire equity of the acquired company were replaced by
options to acquire the Common Stock of the Company. No stock
options or equity awards of any type have been made under any of
these plans since the assumption of these plans by the Company,
and no further stock options or other equity awards of any type
will be made under any of these plans in the future.
(3)
Also included in this category are 121,100 shares of Common
Stock of the Company issuable upon the exercise of outstanding
stock options under the Companys 1997 Stock Option
Plan for Non-Employee Directors.
(4)
This column excludes shares reflected under the column
Number of Securities to be Issued Upon Exercise of
Outstanding Options, Warrants and Rights.
Item
13.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Item
14.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Table of Contents
12
Table of Contents
Balance at
Balance at
Beginning of
End of
Period
Accruals
Payments/ Other
Period
$
1,802
5,578
(5,572
)
1,808
648
402
(256
)
794
578
2,991
(3,213
)
356
$
3,028
8,971
(9,041
)
2,958
193
101
(27
)
267
71
905
(897
)
79
$
3,292
$
9,977
(2
)
$
(9,965
)
$
3,304
$
1,691
5,243
(5,132
)
1,802
599
395
(346
)
648
457
2,908
(2,787
)
578
$
2,747
8,546
(8,265
)
3,028
160
42
(9
)
193
62
1,022
(1,013
)
71
$
2,969
9,610
(9,287
)
3,292
$
1,565
5,017
(4,891
)
1,691
535
210
(146
)
599
388
2,284
(2,215
)
457
$
2,488
7,511
(7,252
)
2,747
164
17
(21
)
160
57
867
(862
)
62
$
2,709
8,395
(8,135
)
2,969
(1)
Includes reserve for customer rebates of $721 million,
$710 million and $558 million at December 28, 2008,
December 30, 2007 and December 31, 2006, respectively.
(2)
Includes $171 million adjustment related to previously
estimated accrued sales reserve.
13
Table of Contents
By
Chairman, Board of Directors,
Chief Executive Officer, and Director (Principal Executive
Officer)
February 9, 2009
Vice Chairman, Board of Directors, and Director
February 9, 2009
Chief Financial Officer (Principal Financial Officer)
February 9, 2009
Controller (Principal Accounting Officer)
February 9, 2009
Director
February 9, 2009
Director
February 9, 2009
Director
February 9, 2009
14
Table of Contents
Director
February 9, 2009
Director
February 9, 2009
Director
February 9, 2009
Director
February 9, 2009
Director
February 9, 2009
Director
February 9, 2009
15
Table of Contents
FINANCIAL STATEMENT SCHEDULE
16
Table of Contents
Reg.
S-K
Exhibit Table
Description
3
(a)(i)
Restated Certificate of Incorporation dated April 26,
1990 Incorporated herein by reference to
Exhibit 3(a) of the Registrants
Form 10-K
Annual Report for the year ended December 30, 1990.
3
(a)(ii)
Certificate of Amendment to the Restated Certificate of
Incorporation of the Company dated May 20, 1992
Incorporated herein by reference to Exhibit 3(a) of the
Registrants
Form 10-K
Annual Report for the year ended January 3, 1993.
3
(a)(iii)
Certificate of Amendment to the Restated Certificate of
Incorporation of the Company dated May 21, 1996
Incorporated herein by reference to Exhibit 3(a)(iii) of
the Registrants
Form 10-K
Annual Report for the year ended December 29, 1996.
3
(a)(iv)
Certificate of Amendment to the Restated Certificate of
Incorporation of the Company effective May 22,
2001 Incorporated herein by reference to
Exhibit 3 of the Registrants
Form 10-Q
Quarterly Report for the quarter ended July 1, 2001.
3
(a)(v)
Certificate of Amendment to the Restated Certificate of
Incorporation of the Company effective April 27,
2006 Incorporated herein by reference to
Exhibit 3(i) of the Registrants Form 10-Q Quarterly
Report for the quarter ended April 2, 2006.
3
(b)
By-Laws of the Company, as amended effective February 9,
2009 Incorporated herein by reference to
Exhibit 3.1 the Registrants
Form 8-K
Current Report filed February 13, 2009.
4
(a)
Upon the request of the Securities and Exchange Commission, the
Registrant will furnish a copy of all instruments defining the
rights of holders of long term debt of the Registrant.
10
(a)
Stock Option Plan for Non-Employee Directors
Incorporated herein by reference to Exhibit 10(a) of the
Registrants
Form 10-K
Annual Report for the year ended December 29, 1996.*
10
(b)
2000 Stock Option Plan (as amended) Incorporated
herein by reference to Exhibit 10(b) of the
Registrants
Form 10-K
Annual Report for the year ended December 29, 2002.*
10
(c)
1995 Stock Option Plan (as amended) Incorporated
herein by reference to Exhibit 10(b) of the
Registrants
Form 10-K
Annual Report for the year ended January 3, 1999.*
10
(d)
2005 Long-Term Incentive Plan Incorporated
herein by reference to Exhibit 4 of the Registrants
S-8
Registration Statement filed with the Commission on May 10,
2005 (file
no. 333-124785).*
10
(e)
Form of Stock Option Certificate and Restricted Shares to
Non-Employee Directors Certificate under the 2005 Long-Term
Incentive Plan Incorporated herein by reference to
Exhibit 10.1 of the Registrants
Form 10-Q
Quarterly Report for the quarter ended July 3, 2005.*
10
(f)
Form of Restricted Stock Unit Certificate under the 2005
Long-Term Incentive Plan Incorporated herein by
reference to Exhibit 10.1 of the Registrants
Form 10-Q
Quarterly Report for the quarter ended October 2, 2005.*
10
(g)
Executive Bonus Plan Incorporated herein by
reference to Exhibit 4 of the Registrants
Form S-8
Registration Statement filed with the Commission on
November 8, 2005 (file
no. 333-129542).*
10
(h)
Executive Incentive Plan (as amended) Incorporated
herein by reference to Exhibit 10(f) of the
Registrants
Form 10-K
Annual Report for the year ended December 31, 2000.*
10
(i)
Domestic Deferred Compensation (Certificate of Extra
Compensation) Plan (as amended) Incorporated herein
by reference to Exhibit 10(g) of the Registrants
Form 10-K
Annual Report for the year ended December 28, 2003.*
10
(j)
Amendments to the Certificate of Extra Compensation Plan
effective as of January 1, 2009 Filed with this
document.*
10
(k)
Deferred Fee Plan for Non-Employee Directors (as amended)
Incorporated herein by reference to Exhibit 10(h) of the
Registrants
Form 10-K
Annual Report for the year ended January 2, 2005.*
17
Table of Contents
Reg.
S-K
Exhibit Table
Description
10
(l)
Amendments to the Deferred Fee Plan for Directors effective as
of January 1, 2009 Filed with this document.*
10
(m)
Executive Income Deferral Plan (as amended)
Incorporated herein by reference to Exhibit 10(i) of the
Registrants
Form 10-K
Annual Report for the year ended December 28, 2003.*
10
(n)
Amendments to the Executive Income Deferral Plan effective as of
January 1, 2009 Filed with this document.*
10
(o)
Excess Savings Plan Incorporated herein by reference
to Exhibit 10(j) of the Registrants
Form 10-K
Annual Report for the year ended December 29, 1996.*
10
(p)
Amendments to the Johnson & Johnson Excess Savings Plan
effective as of January 1, 2009 Filed with this
document.*
10
(q)
Excess Benefit Plan (Supplemental Retirement Plan)
Incorporated herein by reference to Exhibit 10(h) of the
Registrants Form
10-K
Annual
Report for the year ended January 3, 1993.*
10
(r)
Amendments to the Excess Benefit Plan of Johnson & Johnson
and Affiliated Companies effective as of January 1, 2009
Filed with this document.*
10
(s)
Executive Life Insurance Plan Incorporated herein by
reference to Exhibit 10(i) of the Registrants Form
10-K
Annual
Report for the year ended January 3, 1993.*
10
(t)
Stock Option Gain Deferral Plan Incorporated herein
by reference to Exhibit 10(m) of the Registrants
Form 10-K
Annual Report for the year ended January 2, 2000.*
10
(u)
Estate Preservation Plan Incorporated herein by
reference to Exhibit 10(n) of the Registrants
Form 10-K
Annual Report for the year ended January 2, 2000.*
10
(v)
Summary of compensation arrangements for Named Executive
Officers and Directors Filed with this
document.*
10
(w)
Severance Arrangement for Alex Gorsky Filed with
this document.*
12
Statement of Computation of Ratio of Earnings to Fixed Charges
Filed with this document.
13
Pages 34 through 71 of the Companys
Annual Report to Shareholders for fiscal year 2008 (only those
portions of the Annual Report incorporated by reference in this
report are deemed filed) Filed with this
document.
21
Subsidiaries Filed with this document.
23
Consent of Independent Registered Public Accounting
Firm Filed with this document.
31
(a)
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act Filed
with this document.
31
(b)
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act Filed
with this document.
32
(a)
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act Furnished
with this document.
32
(b)
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act Furnished
with this document.
99
Cautionary Statement Pursuant to Private Securities Litigation
Reform Act of 1995 Safe Harbor for
Forward-Looking Statements Filed with this document.
*
Management contract or compensatory plan.
18
SEVENTEENTH: Notwithstanding any other provision of the Plan to the contrary, the terms of this Article SEVENTEENTH shall apply to the payment of the Formula Value of the Employees 409A Shares. For purposes of this Plan, the term 409A Shares shall mean CLC Shares that are awarded or vested after December 31, 2004 (the 409A Shares). This Article SEVENTEENTH is intended to ensure that the terms of the Plan comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other guidance issued thereunder (Section 409A). |
(a) | Payment of 409A Shares . The Formula Value of an Employees 409A Shares shall be payable only upon the occurrence of a 409A Payment Event. Subject to the limitations applicable to Specified Employees set forth in this Article SEVENTEENTH, the Company shall pay the Formula Value of the Employees 409A Shares in a single lump sum within the 90-day period beginning on the date of the 409A Payment Event. The Employee shall have no influence on any determination as to the tax year in which the payment is made. | ||
(b) | 409A Payment Event . For purposes of this Plan, the term 409A Payment Event shall mean the date on which one of the following occurs with respect to an Employee (or a date related to the occurrence of one of the following): |
i) | Separation from Service (within the meaning of Treasury Regulations Section 1.409A-1(h) and other applicable rules under Section 409A); | ||
ii) | Death; or | ||
iii) | Disability (within the meaning of Section 409A(a)(2)(C) of the Internal Revenue Code of 1986, as amended, (the Code) and the regulations thereunder). |
With respect to an Employee who is placed on long-term disability as provided in Article THIRD, above, the Company shall determine whether a Separation from Service has occurred with respect to the Employee based on the facts and circumstances for purposes of establishing the time of payment for the Employees 409A Shares. The Companys determination shall be made initially within 60 days of the date the Employee is placed on long-term disability, and each anniversary of such date thereafter. | |||
(c) | No Deferral of Payment . An Employee may not elect to defer receipt of any portion of the Formula Value of his/her 409A Shares or to receive such amounts in the form of installment payments. An Employees election to defer receipt of any portion of his/her CEC holdings or to be paid in installments pursuant to the provisions of Articles FOURTH and SEVENTH, above, shall be effective solely with respect to the portion of the Formula Value of the Employees CLC Shares that were awarded and vested before January 1, 2005 (the Grandfathered Shares). |
(d) | Limitations Applicable to Specified Employees . No portion of the Formula Value of a Specified Employees 409A Shares shall be paid before the expiration of the six-month period specified in Code Section 409A(a)(2)(B)(i) and the regulations thereunder. This delay shall not affect the payment of any portion of the Formula Value of a Specified Employees Grandfathered Shares. For purposes of this Plan, Specified Employee shall mean a key employee (within the meaning of Code Section 416(i) without regard to paragraph (5) thereof) who is one of the top 50 highest paid officers of the Company on the applicable determination date pursuant to procedures adopted by the Company. For purposes of identifying Specified Employees under this Article SEVENTEENTH, compensation shall be determined under the safe harbor definition set forth in Treasury Regulation Section 1.415(d)-2(d)(3) and shall exclude all compensation permitted under Treasury Regulation Section 1.415(c)-2(g)(ii). | ||
(e) | Payment Upon Termination of the Plan . Upon termination of the Plan pursuant to Article SIXTEENTH hereof with respect to all Employees and the termination of all other arrangements sponsored by the Company that would be aggregated with the Plan under Section 409A, the Company shall have the right, in its sole discretion, and notwithstanding any elections made by an Employee, to pay the Formula Value of an Employees 409A Shares in a lump sum to the extent permitted under Section 409A and the regulations and guidance thereunder. All payments made under this Article SEVENTEENTH upon termination of the Plan shall be made no earlier than the thirteenth (13 th ) month and no later than the twenty-fourth (24 th ) month after the termination of the Plan. The Company may not accelerate payments pursuant to this Article SEVENTEENTH if the termination of the Plan is proximate to a downturn in the Companys financial health. If the Company exercises its discretion to accelerate payments under this Article SEVENTEENTH, the Company shall not adopt any new arrangement that would have been aggregated with the Plan under Section 409A within three (3) years following the date of the Plans termination. | ||
(f) | Provisions Intended to Ensure Compliance with Code Section 409A . This Article SEVENTEENTH and any other provision of this Plan that applies to 409A Shares, including the rights of the Company or an Employee with respect to the 409A Shares, shall be limited to those terms permitted under Section 409A. Any terms not permitted under Section 409A shall be automatically modified and limited to the extent necessary to comply with Section 409A, but only to the extent such modification or limitation is permitted under Section 409A. | ||
Notwithstanding any other provision to the contrary, effective as of October 3, 2004, the Company may, in its discretion, require or permit on an elective basis a change in the payment terms applicable to an Employees 409A Shares in accordance with, and to the fullest extent permitted by, applicable guidance under Section 409A, including, but not limited to, IRS Notice 2005-1, Proposed Treasury Regulations Section 1.409A, Preamble Section XI.C, and IRS Notice 2007-86, provided that such election (i) is made on or before December 31, 2008, (ii) applies only to amounts that would not otherwise be payable in the year of the election, and (iii) does not cause an amount to be paid in the year of the election that would not otherwise be payable in that year. | |||
(g) | Provisions Not Applicable to Grandfathered Shares . This Article SEVENTEENTH shall in no event apply to any portion of the Formula Value of an Employees Grandfathered Shares. No amendment or change to this Plan or any other change (including an exercise of discretion) with respect to the Grandfathered Shares made after October 3, 2004, shall be effective if such amendment or change would constitute a material modification within the meaning of Section 409A. |
DATED: December 16, 2008 |
MANAGEMENT COMPENSATION COMMITTEE
OF JOHNSON & JOHNSON |
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NAME: | /s/ W. C. Weldon | ||
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TITLE: | (Chairman) | ||
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NAME: | /s/ D. J. Caruso | ||
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TITLE: | (Member) | ||
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NAME: | /s/ K. Foster-Cheek | ||
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TITLE: | (Member) | ||
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NAME: | /s/ C. A. Poon | ||
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TITLE: | (Member) |
(a) | Payment of Accounts . Notwithstanding any other provision of the Plan to the contrary, effective as of January 1, 2009, the value of a participants deferred compensation account shall be payable solely in a single lump sum within the 90-day period beginning on the participants Completion Date or date of death, if earlier. The participant shall have no influence on any determination as to the tax year in which the payment is made. | ||
(b) | No Deferral of Payment . Effective as of January 1, 2009, a participant may not elect to defer receipt of any portion of his deferred compensation account or to receive such amounts in the form of installment payments. A participants election to defer receipt of any portion of his deferred compensation account or to be paid in installments pursuant to the provisions of Section 10, above, shall be null and void as of January 1, 2009. | ||
(c) | Provisions Intended to Ensure Compliance with Section 409A . This Section 18 and any other provision of this Plan that applies to deferrals, including the rights of the Company or a participant with respect to the deferrals, shall be limited to those terms permitted under Section 409A. Any terms not permitted under Section 409A shall be automatically modified and limited to the extent necessary to comply with Section 409A, but only to the extent such modification or limitation is permitted under Section 409A. | ||
(d) | Payment Upon Termination of the Plan . Upon termination of the Plan pursuant to this Section 18 with respect to all participants and the termination of all other arrangements sponsored by the Company that would be aggregated with the Plan under Section 409A, the Company shall have the right, in its sole discretion, to pay to each participant the value of his deferred compensation account in a lump sum to the extent permitted under Section 409A. All payments made under this Section 18 upon termination of the Plan shall be made no earlier than the thirteenth (13 th ) month and no later than the twenty-fourth (24 th ) month after the termination of the Plan. The Company may not accelerate payments pursuant to this Section 18 if the termination of the Plan is proximate to a downturn in the Companys financial health. If the Company exercises its discretion to accelerate payments under this Section 18, the Company shall not adopt any new arrangement that would have been aggregated with the Plan under Section 409A within three (3) years following the date of the Plans termination. |
DATED: December 16, 2008 |
MANAGEMENT COMPENSATION COMMITTEE
OF JOHNSON & JOHNSON |
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NAME: |
/s/ W. C. Weldon
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TITLE: | (Chairman) | ||
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||||
|
NAME: |
/s/ D. J. Caruso
|
||
|
TITLE: | (Member) | ||
|
||||
|
NAME: |
/s/ K. Foster-Cheek
|
||
|
TITLE: | (Member) | ||
|
||||
|
NAME: |
/s/ C. A. Poon
|
||
|
TITLE: | (Member) |
(a) | Creation of 409A Accounts . Effective as of January 1, 2005, each participants Income Deferral Account shall be divided into two separate accounts as follows: (i) a 409A Account, which shall consist of all 409A Deferrals and the earnings thereon; and (ii) a Grandfathered Account, which shall consist of all Deferred Awards credited to a participants Income Deferral Account before January 1, 2005 (the Grandfathered Deferrals). Except as specifically provided in this Section 13, all references in this Plan to Income Deferral Accounts shall include the 409A Account and the Grandfathered Account, and all references to Deferred Awards shall include the 409A Deferrals and the Grandfathered Deferrals. | ||
(b) | Election of 409 Deferrals : No participant may elect to defer any portion of any dividend equivalents that are payable under the Companys CEC Plan on or after January 1, 2009. Effective as of January 1, 2005, each participant may elect (i) to defer any non-performance-based compensation, incentive payment, or dividend equivalent monies for services performed during a taxable year, provided such election is made on or before the end of the taxable year preceding the year in which services are rendered; and (ii) to defer any performance based compensation (as defined in Treasury Regulations Section 1.409A-1(e)) on or before the date that is six months before the end of the performance period, provided that in no event may such election be made after such compensation has become readily ascertainable. The Company shall establish procedures applicable to the form and timing of such deferral elections in accordance with the provisions of this Section 13(b). | ||
(c) | Payment of 409A Accounts . The value of a participants 409A Account shall be payable only upon the occurrence of a 409A Payment Event. The Company shall pay the value of a participants 409A Account in a single lump sum as soon as practicable after the later of (i) the expiration of the six-month period specified in Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended, (the Code) and the regulations thereunder, and (ii) January 15 of the year immediately following the year of the 409A Payment Event. The participant shall have no influence on any determination as to the tax year in which the payment is made. |
(d) | 409A Payment Event . For purposes of this Plan, the term 409A Payment Event shall mean the date on which one of the following occurs with respect to a participant (or a date related to the occurrence of one of the following): |
i) | Separation from Service (within the meaning of Treasury Regulations Section 1.409A-1(h) and other applicable rules under Section 409A); | ||
ii) | Death; or | ||
iii) | Disability (within the meaning of Code Section 409A(a)(2)(C) and the regulations thereunder). |
With respect to a participant who is placed on long-term disability, the Company shall determine whether a Separation from Service has occurred with respect to the participant based on the facts and circumstances for purposes of establishing the time of payment for the participants 409A Account. The Companys determination shall be made initially within 60 days of the date the participant is placed on long-term disability, and each anniversary of such date thereafter. | |||
(e) | No Deferral of Payment . A participant may not elect to defer receipt of any portion of his 409A Account or to receive such amounts in the form of installment payments. A participants election to defer receipt of any portion of his Income Deferral Account or to be paid in installments pursuant to the provisions of Section 7, above, shall be effective solely with respect to the participants Grandfathered Account and shall in no event apply to his 409A Account. | ||
(f) | Provisions Intended to Ensure Compliance with Section 409A . This Section 13 and any other provision of this Plan that applies to 409A Deferrals and 409A Accounts, including the rights of the Company or a participant with respect to the 409A Deferrals and 409A Accounts, shall be limited to those terms permitted under Section 409A. Any terms not permitted under Section 409A shall be automatically modified and limited to the extent necessary to comply with Section 409A, but only to the extent such modification or limitation is permitted under Section 409A. | ||
Notwithstanding any other provision to the contrary, effective as of October 3, 2004, the Company may, in its discretion, require or permit on an elective basis a change in the payment terms applicable to a participants 409A Account in accordance with, and to the fullest extent permitted by, applicable guidance under Section 409A, including, but not limited to, IRS Notice 2005-1, Proposed Treasury Regulations Section 1.409A, Preamble Section XI.C, and IRS Notice 2007-86, provided that such election (i) is made on or before December 31, 2008, (ii) applies only to amounts that would not otherwise be payable in the year of the election, and (iii) does not cause an amount to be paid in the year of the election that would not otherwise be payable in that year. |
(g) | Provisions Not Applicable to Grandfathered Deferrals and Grandfathered Accounts . This Section 13 shall in no event apply to any portion of a participants Grandfather Deferrals or Grandfathered Account. No amendment or change to this Plan or any other change (including an exercise of discretion) with respect to the Grandfathered Deferrals or Grandfathered Accounts made after October 3, 2004, shall be effective if such amendment or change would constitute a material modification within the meaning of Section 409A. |
DATED: December 16, 2008 |
MANAGEMENT COMPENSATION COMMITTEE
OF JOHNSON & JOHNSON |
|||
|
||||
|
NAME: |
/s/ W. C. Weldon
|
||
|
TITLE: | (Chairman) | ||
|
||||
|
NAME: |
/s/ D. J. Caruso
|
||
|
TITLE: | (Member) | ||
|
||||
|
NAME: |
/s/ K. Foster-Cheek
|
||
|
TITLE: | (Member) | ||
|
NAME: |
/s/ C. A. Poon
|
||
|
TITLE: | (Member) |
1. | Section 409A Requirements . Notwithstanding any other provision of the Plan to the contrary, effective as of January 1, 2009, the terms of this 409A Addendum shall apply to the payment of a participants Excess Savings Account. This 409A Addendum is intended to ensure that the terms of the Plan comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other guidance issued thereunder (Section 409A). The provisions of this 409A Addendum and any other section of the Plan that applies to the payment of benefits on or after January 1, 2009, shall be limited to those terms permitted under Section 409A. Any terms of the Plan that are not permitted under Section 409A shall be automatically modified and limited to the extent necessary to comply with Section 409A, but only to the extent such modification or limitation is permitted under Section 409A. | ||
2. | 409A Payment Event . No payment shall be made to, or in respect of, any participant under this Plan prior to the occurrence of a 409A Payment Event. For purposes of this Plan, the term 409A Payment Event shall mean the date on which one of the following occurs with respect to a participant (or a date related to the occurrence of one of the following): |
a. | Separation from Service (within the meaning of Treasury Regulations Section 1.409A-1(h) and other applicable rules under Section 409A); | ||
b. | Death; | ||
c. | Disability (within the meaning of Code Section 409A(a)(2)(C) and the regulations thereunder); |
3. | Payment of Excess Savings Accounts General . Upon the occurrence of a 409A Payment Event, the value of a participants Excess Savings Account shall be paid in a single lump sum within the 90-day period beginning on the date of the 409A Payment Event. In no event shall a participant have any influence on any determination as to the tax year in which a payment is made under this Section 3. | ||
4. | Payment of Excess Savings Account Grandfathered Payment Election . Notwithstanding any other provision of the Plan to the contrary, if a participant has an Effective Grandfathered Payment Election in place and his 409A Payment Event occurs after the participant attains age 55, the value of a participants Excess Savings Account shall be paid in the form and at the time so elected by the participant. For purposes of this Plan, an Effective Grandfathered Payment Election is an election by a participant to defer receipt of his Excess Savings Account and/or to receive payment of his Excess Savings Account in the form of installment payments that (i) was submitted on or before December 15, 2008; (ii) was made in accordance with the Plans rules and procedures in place at the time of such election, including but not limited to, the form and timing of such election; and (iii) was made at least 12 months before the participants 409A Payment Event. The payment commencement date of a participants Excess Savings Account under this Section 4 shall be within the 90-day period beginning on the date of the first scheduled payment pursuant to the participants Effective Grandfathered Payment Election. In no event shall a participant have any influence on any determination as to the tax year in which a payment is made under this Section 4. The Company shall have the sole and discretionary authority to determine whether a participant has made an Effective Grandfathered Payment Election, including the effective date of such election. A participants Effective Grandfathered Payment Election shall be irrevocable as of December 15, 2008, and shall apply to the total value of a participants Excess Savings Account. |
5. | Death of Participant Before Commencement of Benefits . If a participant dies before his Excess Savings Account is paid, the value of the participants Excess Savings Account shall be paid to the participants beneficiary as soon practicable within the 90-day period beginning on the date of the participants death. |
6. | No Deferral of Payment . Except as provided in Section 4 of this 409A Addendum with respect to a participants Effective Grandfathered Payment Election, a participant may not elect to defer receipt of any portion of his benefit under the Plan. | ||
7. | Delayed Payment Rules for Specified Employees . Notwithstanding anything herein to the contrary, no portion of a Specified Employees Excess Savings Account that was earned or vested after December 31, 2004, and the earnings thereon (the 409A Amount) shall be payable before the expiration of the six-month period specified in Code Section 409A(a)(2)(B)(i) and the regulations thereunder. For purposes of this Plan, Specified Employee shall mean a key employee (within the meaning of Code Section 416(i) without regard to paragraph (5) thereof) who is one of the top 50 highest paid officers of the Company on the applicable determination date pursuant to procedures adopted by the Company. For purposes of identifying Specified Employees under this 409A Addendum, compensation shall be determined under the safe harbor definition set forth in Treasury Regulation Section 1.415(d)-2(d)(3) and shall exclude all compensation permitted under Treasury Regulation Section 1.415(c)-2(g)(ii). Any amount that would have been paid to a Specified Employee but for the six-month delay imposed by this Section 7 of the 409A Addendum shall be paid in a single lump sum to the participant during the seventh month after the participants 409A Payment Event. | ||
8. | Designated Payment Date . A payment shall be treated as being made on the designated payment date if it is actually made on the designated payment date or on a later date that is either in the same calendar year as the designated payment date or, if later, by the 15th day of the third calendar month following the designated payment date. In addition, a payment shall be treated as made on the designated payment date if it is made no more than 30 days before the designated payment date. Notwithstanding the foregoing, a participant shall in no way be permitted, either directly or indirectly, to designate the taxable year of a payment under this Plan. |
9. | Payment Upon Plan Termination . The Company may terminate the Plan at any time. Upon termination of the Plan with respect to all participants and the termination of all other arrangements sponsored by the Company that would be aggregated with the Plan under Section 409A, the Company shall have the right, in its sole discretion, and notwithstanding any elections made by a participant, to pay to each participant the value of his 409A Amount in a lump sum to the extent permitted under Section 409A. All payments made under this Section 9 of the 409A Addendum upon termination of the Plan shall be made no earlier than the 13 th month and no later than the 24 th month after the termination of the Plan. The Company may not accelerate payments pursuant to this Section 9 of the 409A Addendum if the termination of the Plan is proximate to a downturn in the Companys financial health. If the Company exercises its discretion to accelerate payments under this Section 9 of the 409A Addendum, the Company shall not adopt any new arrangement that would have been aggregated with the Plan under Section 409A within three years following the date of the Plans termination. |
DATED: December 23, 2008
|
PENSION COMMITTEE | |||
|
OF JOHNSON & JOHNSON | |||
|
||||
|
NAME: |
/s/ K. Foster-Cheek
|
||
|
K. FOSTER-CHEEK | |||
|
TITLE: | (Chair) | ||
|
||||
|
NAME: | /s/ D. J. Caruso | ||
|
||||
|
D. J. CARUSO | |||
|
TITLE: | (Member) | ||
|
||||
|
NAME: | /s/ E. Dlugacz | ||
|
||||
|
E. DLUGACZ | |||
|
TITLE: | (Member) | ||
|
||||
|
NAME: | /s/ J. A. Papa | ||
|
||||
|
J. A. PAPA | |||
|
TITLE: | (Member) |
1. | Section 409A Requirements . Notwithstanding any other provision of the Plan to the contrary, effective as of January 1, 2009, the terms of this 409A Addendum shall apply to the payment of a participants 409A Benefit. This 409A Addendum is intended to ensure that the terms of the Plan comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other guidance issued thereunder (Section 409A). The provisions of this 409A Addendum and any other section of the Plan that applies to the payment of benefits on or after January 1, 2009, shall be limited to those terms permitted under Section 409A. Any terms of the Plan that are not permitted under Section 409A shall be automatically modified and limited to the extent necessary to comply with Section 409A, but only to the extent such modification or limitation is permitted under Section 409A. | ||
2. | 409A Benefit . Effective as of January 1, 2009, each participants Excess Pension Benefit shall be split into the participants 409A Benefit and the participants Grandfathered Benefit, as follows: |
a. | 409A Benefit. A participants 409A Benefit shall be equal to the participants total accrued benefit under the Plan less the participants Grandfathered Benefit. | ||
b. | Grandfathered Benefit . A participants Grandfathered Benefit shall be the portion of the participants benefit that was accrued, earned, and vested as of December 31, 2004, determined under the rules in effect as of that date. |
3. | 409A Payment Event . No payment shall be made to, or in respect of, a participants 409A Benefit under this Plan prior to the occurrence of a 409A Payment Event. For purposes of this Plan, the term 409A Payment Event shall mean the date on which one of the following occurs with respect to a participant (or a date related to the occurrence of one of the following): |
a. | Separation from Service (within the meaning of Treasury Regulations Section 1.409A-1(h) and other applicable rules under Section 409A); | ||
b. | Death; | ||
c. | Disability (within the meaning of Code Section 409A(a)(2)(C) and the regulations thereunder); |
4. | Payment of 409A Benefit . Upon the occurrence of a 409A Payment Event, a participants 409A Benefit shall be paid on the participants Pension Commencement Date. For purposes of this Plan, a participants Pension Commencement Date shall be the first day of the month on or after the participants (i) 55 th birthday or (ii) 409A Payment Event, whichever is later. The time and form of payment of a participants Grandfathered Benefit shall be governed by the terms of the Plan in effect as of October 3, 2004. | ||
5. | Form of Payment of 409A Benefit . Unless otherwise elected by a participant pursuant to applicable rules and procedures under the Plan, a participants 409A Benefit shall be payable in the form of a single life annuity if the participant is single when the payment commences, or in the form of a joint and 50% surviving spouse annuity if the participant is married when the distribution commences. A participant may elect in writing, in such manner, at such times, and pursuant to any rules and procedures as the Company may adopt, to receive his 409A Benefit in any form of payment that is available under the Consolidated Retirement Plan of Johnson & Johnson (the Qualified Plan), other than the Level Income Options, provided that such election satisfies each of the following conditions: |
a. | The change in the form of payment complies with Section 409A and Treasury Regulations Section 1.409A-2(b)(2)(ii); | ||
b. | Payment of the participants 409A Benefit has not commenced as of the date of the election; | ||
c. | The actuarially equivalent life annuity form elected by the participant has the same scheduled Payment Commencement Date as the annuity that would otherwise have been paid absent such election; and | ||
d. | The annuities are determined by the Company to be actuarially equivalent applying reasonable actuarial assumptions and methods. |
6. | Death of Participant Before Commencement of Benefits . If a participant dies before his Pension Commencement Date, his 409A Benefit shall be paid to the participants beneficiary commencing as of the first day of the month on or after (i) the participants 55th birthday or (ii) the participants date of death, whichever is later. The delayed payment rules applicable to Specified Employees shall not apply to payments made on account of a participants death. | ||
7. | No Deferral of Payment . A participant may not elect to defer receipt of any portion of his benefit under the Plan. |
8. | Delayed Payment Rules for Specified Employees . Notwithstanding anything herein to the contrary, no portion of a Specified Employees 409A Benefit shall be payable before the expiration of the six-month period specified in Code Section 409A(a)(2)(B)(i) and the regulations thereunder. For purposes of this Plan, Specified Employee shall mean a key employee (within the meaning of Code Section 416(i) without regard to paragraph (5) thereof) who is one of the top 50 highest paid officers of the Company on the applicable determination date pursuant to procedures adopted by the Company. For purposes of identifying Specified Employees under this 409A Addendum, compensation shall be determined under the safe harbor definition set forth in Treasury Regulation Section 1.415(d)-2(d)(3) and shall exclude all compensation permitted under Treasury Regulation Section 1.415(c)-2(g)(ii). Any amount that would have been paid to a Specified Employee but for the six-month delay imposed by this Section 8 of the 409A Addendum shall be paid in a single lump sum to the participant during the seventh month after the participants 409A Payment Event. |
9. | Designated Payment Date . A payment shall be treated as being made on the designated payment date if it is actually made on the designated payment date or on a later date that is either in the same calendar year as the designated payment date or, if later, by the 15th day of the third calendar month following the designated payment date. In addition, a payment shall be treated as made on the designated payment date if it is made no more than 30 days before the designated payment date. Notwithstanding the foregoing, a participant shall in no way be permitted, either directly or indirectly, to designate the taxable year of a payment under this Plan. | ||
10. | Payment Upon Plan Termination . The Company may terminate the Plan at any time. Upon termination of the Plan with respect to all participants and the termination of all other arrangements sponsored by the Company that would be aggregated with the Plan under Section 409A, the Company shall have the right, in its sole discretion, and notwithstanding any elections made by a participant, to pay to each participant the actuarially equivalent value of his Excess Pension Benefit determined as of the Plan termination date in a lump sum, to the extent permitted under Section 409A. All payments made under this Section 10 of the 409A Addendum upon termination of the Plan shall be made no earlier than the 13 th month and no later than the 24 th month after the termination of the Plan. The Company may not accelerate payments pursuant to this Section 10 of the 409A Addendum if the termination of the Plan is proximate to a downturn in the Companys financial health. If the Company exercises its discretion to accelerate payments under this Section 10 of the 409A Addendum, the Company shall not adopt any new arrangement that would have been aggregated with the Plan under Section 409A within three years following the date of the Plans termination. | ||
11. | Special Transition Election . Notwithstanding any other provision to the contrary, effective as of October 3, 2004, the Company may, in its discretion, require or permit on an elective basis a change in the payment terms applicable to a participants 409A Benefit in accordance with, and to the fullest extent permitted by, applicable guidance under Section 409A, including, but not limited to, IRS Notice 2005-1, Proposed Treasury Regulations Section 1.409A, Preamble Section XI.C, and IRS Notice 2007-86, provided that such election (i) is made on or before December 31, 2008, (ii) applies only to amounts that would not otherwise be payable in the year of the election, and (iii) does not cause an amount to be paid in the year of the election that would not otherwise be payable in that year. In particular, with respect to a participant who is eligible to receive a portion of his 409A Benefit in the form of a lump sum payment, the Company may, in its discretion, permit such participant to make an irrevocable election on or before December 31, 2008, to receive such portion in a lump sum payment as of his Pension Commencement Date. Any payment election made by a participant to receive his benefit in a lump sum payment under this Section 11 of the 409A Addendum shall be irrevocable as of the date submitted in accordance with the procedures established by the Company. |
12. | Provisions Not Applicable to Grandfathered Benefits . Unless otherwise specifically provided for herein, this 409A Addendum shall in no event apply to any portion of a participants Grandfathered Benefit. No amendment or change to this Plan or any other change (including an exercise of discretion) with respect to a participants Grandfathered Benefit made after October 3, 2004, shall be effective if such amendment or change would constitute a material modification within the meaning of Section 409A. |
DATED: December 23, 2008
|
PENSION COMMITTEE | |||
|
OF JOHNSON & JOHNSON | |||
|
||||
|
NAME: |
/s/ K. Foster-Cheek
|
||
|
K. FOSTER-CHEEK | |||
|
TITLE: | (Chair) | ||
|
||||
|
NAME: | /s/ D. J. Caruso | ||
|
||||
|
D. J. CARUSO | |||
|
TITLE: | (Member) | ||
|
||||
|
NAME: | /s/ E. Dlugacz | ||
|
||||
|
E. DLUGACZ | |||
|
TITLE: | (Member) | ||
|
||||
|
NAME: | /s/ J. A. Papa | ||
|
||||
|
J. A. PAPA | |||
|
TITLE: | (Member) |
William C. Weldon
|
$ | 1,802,500 | ||
Chairman/CEO | ||||
Dominic J. Caruso
|
$ | 727,600 | ||
Vice President, Finance; CFO | ||||
Christine A. Poon
|
* | |||
Vice Chairman, Worldwide Chairman, Pharmaceuticals Group | ||||
Russell C. Deyo
|
$ | 835,600 | ||
Vice President, General Counsel | ||||
Colleen Goggins
|
$ | 800,100 | ||
Worldwide Chairman, Consumer Group |
* | Will retire in March 2009 |
Mr. Weldon
|
$ | 3,700,000 | ||
Mr. Caruso
|
$ | 900,000 | ||
Ms. Poon
|
$ | 1,500,000 | ||
Mr. Deyo
|
$ | 1,000,000 | ||
Ms. Goggins
|
$ | 1,050,000 |
Mr. Weldon
|
627,464 stock options | 52,289 | RSUs | |||||||||
Mr. Caruso
|
110,578 stock options | 9,215 | RSUs | |||||||||
Mr. Deyo
|
138,865 stock options | 11,572 | RSUs | |||||||||
Ms. Goggins
|
144,008 stock options | 12,001 | RSUs |
Mr. Weldon
|
125,000 | CLC units | ||||||
Mr. Caruso
|
40,000 | CLC units | ||||||
Mr. Deyo
|
22,000 | CLC units | ||||||
Ms. Goggins
|
70,000 | CLC units |
Sincerely,
/s/ Kaye Foster-Cheek Executive Committee Member Vice President, Human Resources |
||||
cc:
|
M. Ullmann | |
|
L. Uthgenannt | |
|
D. Ng |
|
||||
/s/ Alex Gorsky
|
February 19, 2009 | |||
|
||||
Signature
|
Date |
Fiscal Year Ended | ||||||||||||||||||||
December 28,
|
December 30,
|
December 31,
|
January 1,
|
January 2,
|
||||||||||||||||
2008 | 2007 | 2006 | 2006 | 2005 | ||||||||||||||||
Determination of Earnings:
|
||||||||||||||||||||
Earnings Before Provision for Taxes on Income
|
$ | 16,929 | $ | 13,283 | $ | 14,587 | $ | 13,116 | $ | 12,331 | ||||||||||
Fixed Charges
|
538 | 397 | 158 | 137 | 272 | |||||||||||||||
Total Earnings as Defined
|
$ | 17,467 | $ | 13,680 | $ | 14,745 | $ | 13,253 | $ | 12,603 | ||||||||||
Fixed Charges and Other:
|
||||||||||||||||||||
Rents
|
103 | 101 | 95 | 83 | 85 | |||||||||||||||
Interest Expense Before Capitalization of Interest
|
583 | 426 | 181 | 165 | 323 | |||||||||||||||
Total Fixed Charges
|
$ | 686 | $ | 527 | $ | 276 | $ | 248 | $ | 408 | ||||||||||
Ratio of Earnings to Fixed Charges
|
25.46 | 25.96 | 53.42 | 53.44 | 30.89 | |||||||||||||||
(1) | The ratio of earnings to fixed charges is computed by dividing the sum of earnings before provision for taxes on income and fixed charges by fixed charges. Fixed charges represent interest expense (before interest is capitalized), amortization of debt discount and an appropriate interest factor on operating leases. |
34 |
Organization and Business Segments
|
|||
34 |
Results of Operations
|
|||
35 |
Analysis of Sales by Business Segments
|
|||
37 |
Analysis of Consolidated Earnings Before Provision for
Taxes on Income
|
|||
40 |
Liquidity and Capital Resources
|
|||
41 |
Other Information
|
|||
43 |
Cautionary Factors That May Affect Future Results
|
44 |
Consolidated Balance Sheets
|
|||
45 |
Consolidated Statements of Earnings
|
|||
46 |
Consolidated Statements of Equity
|
|||
47 |
Consolidated Statements of Cash Flows
|
|||
48 |
Notes to Consolidated Financial Statements
|
|||
69 |
Report of Independent Registered Public Accounting Firm
|
|||
69 |
Managements Report on Internal Control over
|
|||
Financial Reporting
|
||||
70 |
Summary of Operations and Statistical Data 1998-2008
|
|||
71 |
Shareholder Return Performance Graphs
|
JOHNSON & JOHNSON 2008 ANNUAL REPORT
|
33 |
Sales
increase due to:
|
2008 | 2007 | 2006 | ||||||||||||
Volume
|
1.1% | 10.1 | 3.8 | ||||||||||||
Price
|
0.8 | 1.4 | 1.5 | ||||||||||||
Currency
|
2.4 | 3.1 | 0.3 | ||||||||||||
Total
|
4.3% | 14.6 | 5.6 | ||||||||||||
34 |
JOHNSON & JOHNSON 2008 ANNUAL REPORT
|
% Change | |||||||||||||||||||||||||
(Dollars in Millions)
|
2008 | 2007 | 2006 | '08 vs. '07 | '07 vs. '06 | ||||||||||||||||||||
OTC Pharmaceuticals & Nutritionals
|
$ | 5,894 | 5,142 | 2,742 | 14.6 | % | 87.5 | ||||||||||||||||||
Skin Care
|
3,381 | 3,051 | 2,633 | 10.8 | 15.9 | ||||||||||||||||||||
Baby Care
|
2,214 | 1,982 | 1,740 | 11.7 | 13.9 | ||||||||||||||||||||
Womens Health
|
1,911 | 1,806 | 1,666 | 5.8 | 8.4 | ||||||||||||||||||||
Oral Care
|
1,624 | 1,488 | 406 | 9.1 | 266.5 | ||||||||||||||||||||
Wound Care/Other
|
1,030 | 1,024 | 587 | 0.6 | 74.4 | ||||||||||||||||||||
Total
|
$ | 16,054 | 14,493 | 9,774 | 10.8 | % | 48.3 | ||||||||||||||||||
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|
35 |
% Change | |||||||||||||||||||||||||
(Dollars in Millions)
|
2008 | 2007 | 2006 | '08 vs. '07 | '07 vs. '06 | ||||||||||||||||||||
REMICADE
®
(infliximab)
|
$ | 3,748 | 3,327 | 3,013 | 12.7 | % | 10.4 | ||||||||||||||||||
TOPAMAX
®
(topiramate)
|
2,731 | 2,453 | 2,027 | 11.3 | 21.0 | ||||||||||||||||||||
PROCRIT
®
/EPREX
®
(Epoetin alfa)
|
2,460 | 2,885 | 3,180 | (14.7 | ) | (9.3 | ) | ||||||||||||||||||
RISPERDAL
®
(risperidone)
|
2,126 | 3,420 | 3,334 | (37.8 | ) | 2.6 | |||||||||||||||||||
LEVAQUIN
®
/FLOXIN
®
(levofloxacin/ofloxacin)
|
1,591 | 1,646 | 1,530 | (3.3 | ) | 7.6 | |||||||||||||||||||
RISPERDAL
®
CONSTA
®
(risperidone)
|
1,309 | 1,128 | 849 | 16.0 | 32.9 | ||||||||||||||||||||
CONCERTA
®
(methylphenidate HCl)
|
1,247 | 1,028 | 930 | 21.3 | 10.5 | ||||||||||||||||||||
ACIPHEX
®
/PARIET
®
(rabeprazole sodium)
|
1,158 | 1,357 | 1,239 | (14.7 | ) | 9.5 | |||||||||||||||||||
DURAGESIC
®
/Fentanyl Transdermal (fentanyl transdermal system)
|
1,036 | 1,164 | 1,295 | (11.0 | ) | (10.1 | ) | ||||||||||||||||||
Other
|
7,161 | 6,458 | 5,870 | 10.9 | 10.0 | ||||||||||||||||||||
Total
|
$ | 24,567 | 24,866 | 23,267 | (1.2 | )% | 6.9 | ||||||||||||||||||
* Prior year amounts have been reclassified to conform to current presentation. |
36 |
JOHNSON & JOHNSON 2008 ANNUAL REPORT
|
% Change | |||||||||||||||||||||||||
(Dollars in Millions)
|
2008 | 2007 | 2006 | '08 vs. '07 | '07 vs. '06 | ||||||||||||||||||||
DEPUY
®
|
$ | 4,989 | 4,587 | 4,105 | 8.8 | % | 11.7 | ||||||||||||||||||
ETHICON ENDO-SURGERY
®
|
4,286 | 3,834 | 3,376 | 11.8 | 13.6 | ||||||||||||||||||||
ETHICON
®
|
3,840 | 3,603 | 3,223 | 6.6 | 11.8 | ||||||||||||||||||||
CORDIS
®
|
3,135 | 3,425 | 4,088 | (8.5 | ) | (16.2 | ) | ||||||||||||||||||
Diabetes Care
|
2,535 | 2,373 | 2,074 | 6.8 | 14.4 | ||||||||||||||||||||
Vision Care
|
2,500 | 2,209 | 1,879 | 13.2 | 17.6 | ||||||||||||||||||||
ORTHO-CLINICAL DIAGNOSTICS
®
|
1,841 | 1,705 | 1,538 | 8.0 | 10.9 | ||||||||||||||||||||
Total
|
$ | 23,126 | 21,736 | 20,283 | 6.4 | % | 7.2 | ||||||||||||||||||
* Prior year amounts have been reclassified to conform to current presentation. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|
37 |
% of Sales
|
2008 | 2007 | 2006 | ||||||||||||
Cost of products sold
|
29.1 | % | 29.1 | 28.2 | |||||||||||
Percent point increase over the prior year
|
| 0.9 | 0.5 | ||||||||||||
Selling, marketing and administrative expenses
|
33.7 | 33.5 | 32.7 | ||||||||||||
Percent point increase/(decrease) over the
prior year
|
0.2 | 0.8 | (1.4 | ) | |||||||||||
2008 | 2007 | 2006 | |||||||||||||||||||||||||
(Dollars in Millions)
|
Amount | % of Sales | Amount | % of Sales | Amount | % of Sales | |||||||||||||||||||||
Consumer
|
$ | 624 | 3.9 | % | 564 | 3.9 | 395 | 4.0 | |||||||||||||||||||
Pharmaceutical
|
5,095 | 20.7 | 5,265 | 21.2 | 4,964 | 21.3 | |||||||||||||||||||||
Medical Devices and Diagnostics
|
1,858 | 8.0 | 1,851 | 8.5 | 1,766 | 8.7 | |||||||||||||||||||||
Total research and development expense
|
$ | 7,577 | 11.9 | 7,680 | 12.6 | 7,125 | 13.4 | ||||||||||||||||||||
Percent (decrease)/increase over the prior year
|
(1.3 | )% | 7.8 | 10.3 | |||||||||||||||||||||||
38 |
JOHNSON & JOHNSON 2008 ANNUAL REPORT
|
Percent of | ||||||||||||||||||||
Segment Sales | ||||||||||||||||||||
(Dollars in Millions)
|
2008 | 2007 | 2008 | 2007 | ||||||||||||||||
Consumer
|
$ | 2,674 | 2,277 | 16.7 | % | 15.7 | ||||||||||||||
Pharmaceutical
|
7,605 | 6,540 | 31.0 | 26.3 | ||||||||||||||||
Med Devices and Diagnostics
|
7,223 | 4,846 | 31.2 | 22.3 | ||||||||||||||||
Total
(1)
|
17,502 | 13,663 | 27.4 | 22.4 | ||||||||||||||||
Less: Expenses not allocated
to segments
(2)
|
573 | 380 | ||||||||||||||||||
Earnings before provision
for taxes on income
|
$ | 16,929 | 13,283 | 26.5 | % | 21.7 | ||||||||||||||
(1) | See Note 11 to the Consolidated Financial Statements for more details. |
(2) | Amounts not allocated to segments include interest (income) expense, minority interest, and general corporate (income) expense. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|
39 |
Unfunded | ||||||||||||||||
Operating | Debt | Retirement | ||||||||||||||
(Dollars in Millions)
|
Leases | Obligations | (1) | Plans | Total | |||||||||||
2009
|
$ | 171 | 221 | 56 | 448 | |||||||||||
2010
|
145 | 22 | 58 | 225 | ||||||||||||
2011
|
123 | 18 | 62 | 203 | ||||||||||||
2012
|
107 | 620 | 66 | 793 | ||||||||||||
2013
|
89 | 507 | 70 | 666 | ||||||||||||
After 2013
|
93 | 6,953 | 436 | 7,482 | ||||||||||||
Total
|
$ | 728 | 8,341 | 748 | 9,817 | |||||||||||
(1) | Amounts do not include interest expense. |
40 |
JOHNSON & JOHNSON 2008 ANNUAL REPORT
|
2008 | 2007 | 2006 | |||||||||||||
First quarter
|
$ | 0.415 | 0.375 | 0.330 | |||||||||||
Second quarter
|
0.460 | 0.415 | 0.375 | ||||||||||||
Third quarter
|
0.460 | 0.415 | 0.375 | ||||||||||||
Fourth quarter
|
0.460 | 0.415 | 0.375 | ||||||||||||
Total
|
$ | 1.795 | 1.620 | 1.455 | |||||||||||
Balance at | Balance at | |||||||||||||||
Beginning | Payments/ | End | ||||||||||||||
(Dollars in Millions)
|
of Period | Accruals | Other | of Period | ||||||||||||
2008
|
||||||||||||||||
Accrued rebates
(1)
|
$ | 217 | 300 | (386 | ) | 131 | ||||||||||
Accrued returns
|
113 | 135 | (133 | ) | 115 | |||||||||||
Accrued promotions
|
297 | 2,369 | (2,464 | ) | 202 | |||||||||||
Subtotal
|
$ | 627 | 2,804 | (2,983 | ) | 448 | ||||||||||
Reserve for doubtful accounts
|
71 | 41 | (2 | ) | 110 | |||||||||||
Reserve for cash discounts
|
23 | 272 | (273 | ) | 22 | |||||||||||
Total
|
$ | 721 | 3,117 | (3,258 | ) | 580 | ||||||||||
2007
|
||||||||||||||||
Accrued rebates
(1)
|
$ | 164 | 492 | (439 | ) | 217 | ||||||||||
Accrued returns
|
92 | 257 | (236 | ) | 113 | |||||||||||
Accrued promotions
|
211 | 2,249 | (2,163 | ) | 297 | |||||||||||
Subtotal
|
$ | 467 | 2,998 | (2,838 | ) | 627 | ||||||||||
Reserve for doubtful accounts
|
42 | 17 | 12 | 71 | ||||||||||||
Reserve for cash discounts
|
15 | 278 | (270 | ) | 23 | |||||||||||
Total
|
$ | 524 | 3,293 | (3,096 | ) | 721 | ||||||||||
(1) | Includes reserve for customer rebates of $73 million at December 28, 2008 and $76 million at December 30, 2007, recorded as a contra asset. |
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|
41 |
Balance at | Balance at | |||||||||||||||
Beginning | Payments/ | End | ||||||||||||||
(Dollars in Millions)
|
of Period | Accruals | Other | of Period | ||||||||||||
2008
|
||||||||||||||||
Accrued rebates
(1)
|
$1,249 | 3,331 | (3,319 | ) | 1,261 | |||||||||||
Accrued returns
|
345 | 168 | (23 | ) | 490 | |||||||||||
Accrued promotions
|
263 | 414 | (570 | ) | 107 | |||||||||||
Subtotal
|
$1,857 | 3,913 | (3,912 | ) | 1,858 | |||||||||||
Reserve for doubtful accounts
|
26 | 24 | (2 | ) | 48 | |||||||||||
Reserve for cash discounts
|
24 | 376 | (377 | ) | 23 | |||||||||||
Total
|
$1,907 | 4,313 | (2) | (4,291 | ) | 1,929 | ||||||||||
2007
|
||||||||||||||||
Accrued rebates
(1)
|
$1,233 | 3,175 | (3,159 | ) | 1,249 | |||||||||||
Accrued returns
|
324 | 36 | (15 | ) | 345 | |||||||||||
Accrued promotions
|
205 | 523 | (465 | ) | 263 | |||||||||||
Subtotal
|
$1,762 | 3,734 | (3,639 | ) | 1,857 | |||||||||||
Reserve for doubtful accounts
|
30 | | (4 | ) | 26 | |||||||||||
Reserve for cash discounts
|
29 | 531 | (536 | ) | 24 | |||||||||||
Total
|
$1,821 | 4,265 | (4,179 | ) | 1,907 | |||||||||||
(1) | Includes reserve for customer rebates of $344 million at December 28, 2008 and $321 million at December 30, 2007, recorded as a contra asset. |
(2) | Includes $115 million adjustment related to previously estimated accrued sales reserves. |
Balance at | Balance at | ||||||||||||||
Beginning | Payments/ | End | |||||||||||||
(Dollars in Millions)
|
of Period | Accruals | Other | of Period | |||||||||||
2008
|
|||||||||||||||
Accrued rebates
(1)
|
$336 | 1,947 | (1,867 | ) | 416 | ||||||||||
Accrued returns
|
190 | 99 | (100 | ) | 189 | ||||||||||
Accrued promotions
|
18 | 208 | (179 | ) | 47 | ||||||||||
Subtotal
|
$544 | 2,254 | (2,146 | ) | 652 | ||||||||||
Reserve for doubtful accounts
|
96 | 36 | (23 | ) | 109 | ||||||||||
Reserve for cash discounts
|
24 | 257 | (247 | ) | 34 | ||||||||||
Total
|
$664 | 2,547 | (2) | (2,416 | ) | 795 | |||||||||
2007
|
|||||||||||||||
Accrued rebates
(1)
|
$294 | 1,576 | (1,534 | ) | 336 | ||||||||||
Accrued returns
|
183 | 102 | (95 | ) | 190 | ||||||||||
Accrued promotions
|
41 | 136 | (159 | ) | 18 | ||||||||||
Subtotal
|
$518 | 1,814 | (1,788 | ) | 544 | ||||||||||
Reserve for doubtful accounts
|
88 | 25 | (17 | ) | 96 | ||||||||||
Reserve for cash discounts
|
18 | 213 | (207 | ) | 24 | ||||||||||
Total
|
$624 | 2,052 | (2,012 | ) | 664 | ||||||||||
(1) | Includes reserve for customer rebates of $304 million at December 28, 2008 and $313 million at December 30, 2007, recorded as a contra asset. |
(2) | Includes $56 million adjustment related to previously estimated sales rebate reserve. |
42 |
JOHNSON & JOHNSON 2008 ANNUAL REPORT
|
2008 | 2007 | ||||||||||||||||||
High | Low | High | Low | ||||||||||||||||
First quarter
|
$ | 68.85 | 61.17 | 68.22 | 59.87 | ||||||||||||||
Second quarter
|
68.32 | 63.40 | 65.45 | 59.95 | |||||||||||||||
Third quarter
|
72.76 | 63.10 | 65.75 | 59.72 | |||||||||||||||
Fourth quarter
|
69.86 | 52.06 | 68.75 | 63.55 | |||||||||||||||
Year-end close
|
$58.56 | 67.38 | |||||||||||||||||
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|
43 |
Consolidated Balance Sheets
|
Johnson & Johnson and Subsidiaries | |||||||||
At December 28, 2008 and December 30, 2007 (Dollars in Millions Except Share and Per Share Data) (Note 1)
|
2008 | 2007 | ||||||||
|
||||||||||
Assets
|
||||||||||
Current assets
|
||||||||||
Cash and cash equivalents (Notes 1 and 14)
|
$ | 10,768 | 7,770 | |||||||
Marketable securities (Notes 1 and 14)
|
2,041 | 1,545 | ||||||||
Accounts receivable trade, less allowances for doubtful accounts $268 (2007, $193)
|
9,719 | 9,444 | ||||||||
Inventories (Notes 1 and 2)
|
5,052 | 5,110 | ||||||||
Deferred taxes on income (Note 8)
|
3,430 | 2,609 | ||||||||
Prepaid expenses and other receivables
|
3,367 | 3,467 | ||||||||
|
||||||||||
Total current assets
|
34,377 | 29,945 | ||||||||
Marketable securities, non-current (Notes 1 and 14)
|
4 | 2 | ||||||||
Property, plant and equipment, net (Notes 1 and 3)
|
14,365 | 14,185 | ||||||||
Intangible assets, net (Notes 1 and 7)
|
13,976 | 14,640 | ||||||||
Goodwill, net (Notes 1 and 7)
|
13,719 | 14,123 | ||||||||
Deferred taxes on income (Note 8)
|
5,841 | 4,889 | ||||||||
Other assets (Note 5)
|
2,630 | 3,170 | ||||||||
|
||||||||||
Total assets
|
$ | 84,912 | 80,954 | |||||||
|
||||||||||
Liabilities and Shareholders Equity
|
||||||||||
Current liabilities
|
||||||||||
Loans and notes payable (Note 6)
|
$ | 3,732 | 2,463 | |||||||
Accounts payable
|
7,503 | 6,909 | ||||||||
Accrued liabilities
|
5,531 | 6,412 | ||||||||
Accrued rebates, returns and promotions
|
2,237 | 2,318 | ||||||||
Accrued salaries, wages and commissions
|
1,432 | 1,512 | ||||||||
Accrued taxes on income
|
417 | 223 | ||||||||
|
||||||||||
Total current liabilities
|
20,852 | 19,837 | ||||||||
|
||||||||||
Long-term debt (Note 6)
|
8,120 | 7,074 | ||||||||
Deferred taxes on income (Note 8)
|
1,432 | 1,493 | ||||||||
Employee related obligations (Notes 5 and 13)
|
7,791 | 5,402 | ||||||||
Other liabilities
|
4,206 | 3,829 | ||||||||
|
||||||||||
Total liabilities
|
42,401 | 37,635 | ||||||||
|
||||||||||
Shareholders equity
|
||||||||||
Preferred stock without par value
(authorized and unissued 2,000,000 shares) |
| | ||||||||
Common stock par value $1.00 per share (Note 20)
(authorized 4,320,000,000 shares; issued 3,119,843,000 shares) |
3,120 | 3,120 | ||||||||
Accumulated other comprehensive income (Note 12)
|
(4,955 | ) | (693 | ) | ||||||
Retained earnings
|
63,379 | 55,280 | ||||||||
|
61,544 | 57,707 | ||||||||
|
||||||||||
Less: common stock held in treasury, at cost (Note 20)
(350,665,000 shares and 279,620,000 shares) |
19,033 | 14,388 | ||||||||
|
||||||||||
Total shareholders equity
|
42,511 | 43,319 | ||||||||
|
||||||||||
Total liabilities and shareholders equity
|
$ | 84,912 | 80,954 | |||||||
44 |
JOHNSON & JOHNSON 2008 ANNUAL REPORT
|
Consolidated Statements of Earnings
|
Johnson & Johnson and Subsidiaries | ||||||||||||||
(Dollars in Millions Except Per Share Figures) (Note 1)
|
2008 | 2007 | 2006 | ||||||||||||
|
|||||||||||||||
Sales to customers
|
$ | 63,747 | 61,095 | 53,324 | |||||||||||
|
|||||||||||||||
Cost of products sold
|
18,511 | 17,751 | 15,057 | ||||||||||||
|
|||||||||||||||
Gross profit
|
45,236 | 43,344 | 38,267 | ||||||||||||
|
|||||||||||||||
Selling, marketing and administrative expenses
|
21,490 | 20,451 | 17,433 | ||||||||||||
Research expense
|
7,577 | 7,680 | 7,125 | ||||||||||||
Purchased in-process research and development (Note 17)
|
181 | 807 | 559 | ||||||||||||
Restructuring (Note 22)
|
| 745 | | ||||||||||||
Interest income
|
(361 | ) | (452 | ) | (829 | ) | |||||||||
Interest expense, net of portion capitalized (Note 3)
|
435 | 296 | 63 | ||||||||||||
Other (income) expense, net
|
(1,015 | ) | 534 | (671 | ) | ||||||||||
|
28,307 | 30,061 | 23,680 | ||||||||||||
Earnings before provision for taxes on income
|
16,929 | 13,283 | 14,587 | ||||||||||||
Provision for taxes on income (Note 8)
|
3,980 | 2,707 | 3,534 | ||||||||||||
|
|||||||||||||||
Net earnings
|
$ | 12,949 | 10,576 | 11,053 | |||||||||||
|
|||||||||||||||
Basic net earnings per share (Notes 1 and 19)
|
$ | 4.62 | 3.67 | 3.76 | |||||||||||
|
|||||||||||||||
Diluted net earnings per share (Notes 1 and 19)
|
$ | 4.57 | 3.63 | 3.73 | |||||||||||
CONSOLIDATED FINANCIAL STATEMENTS
|
45 |
Consolidated Statements of Equity
|
Johnson & Johnson and Subsidiaries | ||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||
Other | Treasury | ||||||||||||||||||||||||
Comprehensive | Retained | Comprehensive | Common Stock | Stock | |||||||||||||||||||||
(Dollars in Millions) (Note 1)
|
Total | Income | Earnings | Income | Issued Amount | Amount | |||||||||||||||||||
|
|||||||||||||||||||||||||
Balance, January 1, 2006
|
$38,710 | 42,310 | (755 | ) | 3,120 | (5,965 | ) | ||||||||||||||||||
Net earnings
|
11,053 | 11,053 | 11,053 | ||||||||||||||||||||||
Cash dividends paid
|
(4,267 | ) | (4,267 | ) | |||||||||||||||||||||
Employee compensation
and stock option plans
|
1,858 | 181 | 1,677 | ||||||||||||||||||||||
Conversion of subordinated debentures
|
26 | (10 | ) | 36 | |||||||||||||||||||||
Repurchase of common stock
|
(6,722 | ) | (6,722 | ) | |||||||||||||||||||||
Other
|
23 | 23 | |||||||||||||||||||||||
Other comprehensive income, net of tax:
|
|||||||||||||||||||||||||
Currency translation adjustment
|
362 | 362 | 362 | ||||||||||||||||||||||
Unrealized losses on securities
|
(9 | ) | (9 | ) | (9 | ) | |||||||||||||||||||
Employee benefit plans
|
(1,710 | ) | (34 | ) | (1,710 | ) | |||||||||||||||||||
Losses on derivatives & hedges
|
(6 | ) | (6 | ) | (6 | ) | |||||||||||||||||||
Reclassification adjustment
|
(9 | ) | |||||||||||||||||||||||
|
|||||||||||||||||||||||||
Total comprehensive income
|
11,357 | ||||||||||||||||||||||||
|
|||||||||||||||||||||||||
|
|||||||||||||||||||||||||
Balance, December 31, 2006
|
$39,318 | 49,290 | (2,118 | ) | 3,120 | (10,974 | ) | ||||||||||||||||||
Net earnings
|
10,576 | 10,576 | 10,576 | ||||||||||||||||||||||
Cash dividends paid
|
(4,670 | ) | (4,670 | ) | |||||||||||||||||||||
Employee compensation
and stock option plans
|
2,311 | 131 | 2,180 | ||||||||||||||||||||||
Conversion of subordinated debentures
|
9 | (4 | ) | 13 | |||||||||||||||||||||
Repurchase of common stock
|
(5,607 | ) | (5,607 | ) | |||||||||||||||||||||
Adoption of FIN 48
|
(19 | ) | (19 | ) | |||||||||||||||||||||
Other
|
(24 | ) | (24 | ) | |||||||||||||||||||||
Other comprehensive income, net of tax:
|
|||||||||||||||||||||||||
Currency translation adjustment
|
786 | 786 | 786 | ||||||||||||||||||||||
Unrealized gains on securities
|
23 | 23 | 23 | ||||||||||||||||||||||
Employee benefit plans
|
670 | 670 | 670 | ||||||||||||||||||||||
Losses on derivatives & hedges
|
(54 | ) | (54 | ) | (54 | ) | |||||||||||||||||||
Reclassification adjustment
|
(5 | ) | |||||||||||||||||||||||
|
|||||||||||||||||||||||||
Total comprehensive income
|
11,996 | ||||||||||||||||||||||||
|
|||||||||||||||||||||||||
|
|||||||||||||||||||||||||
Balance, December 30, 2007
|
$43,319 | 55,280 | (693 | ) | 3,120 | (14,388 | ) | ||||||||||||||||||
Net earnings
|
12,949 | 12,949 | 12,949 | ||||||||||||||||||||||
Cash dividends paid
|
(5,024 | ) | (5,024 | ) | |||||||||||||||||||||
Employee compensation
and stock option plans
|
2,180 | 175 | 2,005 | ||||||||||||||||||||||
Conversion of subordinated debentures
|
| (1 | ) | 1 | |||||||||||||||||||||
Repurchase of common stock
|
(6,651 | ) | (6,651 | ) | |||||||||||||||||||||
Other comprehensive income, net of tax:
|
|||||||||||||||||||||||||
Currency translation adjustment
|
(2,499 | ) | (2,499 | ) | (2,499 | ) | |||||||||||||||||||
Unrealized losses on securities
|
(59 | ) | (59 | ) | (59 | ) | |||||||||||||||||||
Employee benefit plans
|
(1,870 | ) | (1,870 | ) | (1,870 | ) | |||||||||||||||||||
Gains on derivatives & hedges
|
166 | 166 | 166 | ||||||||||||||||||||||
Reclassification adjustment
|
(27 | ) | |||||||||||||||||||||||
|
|||||||||||||||||||||||||
Total comprehensive income
|
8,660 | ||||||||||||||||||||||||
|
|||||||||||||||||||||||||
|
|||||||||||||||||||||||||
Balance, December 28, 2008
|
$42,511 | 63,379 | (4,955 | ) | 3,120 | (19,033 | ) | ||||||||||||||||||
46 |
JOHNSON & JOHNSON 2008 ANNUAL REPORT
|
Consolidated
Statements of Cash Flows
|
Johnson & Johnson and Subsidiaries | ||||||||||||||
(Dollars
in Millions) (Note 1)
|
2008 | 2007 | 2006 | ||||||||||||
|
|||||||||||||||
Cash flows from operating activities
|
|||||||||||||||
Net earnings
|
$ | 12,949 | 10,576 | 11,053 | |||||||||||
Adjustments to reconcile net earnings to cash flows from
operating activities:
|
|||||||||||||||
Depreciation and amortization of property and intangibles
|
2,832 | 2,777 | 2,177 | ||||||||||||
Stock based compensation
|
627 | 698 | 659 | ||||||||||||
Purchased in-process research and development
|
181 | 807 | 559 | ||||||||||||
Intangible asset write-down (NATRECOR
®
)
|
| 678 | | ||||||||||||
Decrease/(increase) in deferred tax provision
|
22 | (1,762 | ) | (1,168 | ) | ||||||||||
Accounts receivable allowances
|
86 | 22 | (14 | ) | |||||||||||
Changes in assets and liabilities, net of effects from acquisitions:
|
|||||||||||||||
Increase in accounts receivable
|
(736 | ) | (416 | ) | (699 | ) | |||||||||
(Increase)/decrease in inventories
|
(101 | ) | 14 | (210 | ) | ||||||||||
(Decrease)/increase in accounts payable and accrued liabilities
|
(272 | ) | 2,642 | 1,750 | |||||||||||
Increase in other current and non-current assets
|
(1,600 | ) | (1,578 | ) | (269 | ) | |||||||||
Increase in other current and non-current liabilities
|
984 | 564 | 410 | ||||||||||||
Net cash flows from operating activities
|
14,972 | 15,022 | 14,248 | ||||||||||||
|
|||||||||||||||
Cash flows from investing activities
|
|||||||||||||||
Additions to property, plant and equipment
|
(3,066 | ) | (2,942 | ) | (2,666 | ) | |||||||||
Proceeds from the disposal of assets
|
785 | 457 | 511 | ||||||||||||
Acquisitions, net of cash acquired (Note 17)
|
(1,214 | ) | (1,388 | ) | (18,023 | ) | |||||||||
Purchases of investments
|
(3,668 | ) | (9,659 | ) | (467 | ) | |||||||||
Sales of investments
|
3,059 | 7,988 | 426 | ||||||||||||
Other (primarily intangibles)
|
(83 | ) | (368 | ) | (72 | ) | |||||||||
|
|||||||||||||||
Net cash used by investing activities
|
(4,187 | ) | (5,912 | ) | (20,291 | ) | |||||||||
|
|||||||||||||||
Cash flows from financing activities
|
|||||||||||||||
Dividends to shareholders
|
(5,024 | ) | (4,670 | ) | (4,267 | ) | |||||||||
Repurchase of common stock
|
(6,651 | ) | (5,607 | ) | (6,722 | ) | |||||||||
Proceeds from short-term debt
|
8,430 | 19,626 | 6,385 | ||||||||||||
Retirement of short-term debt
|
(7,319 | ) | (21,691 | ) | (2,633 | ) | |||||||||
Proceeds from long-term debt
|
1,638 | 5,100 | 6 | ||||||||||||
Retirement of long-term debt
|
(24 | ) | (18 | ) | (13 | ) | |||||||||
Proceeds from the exercise of stock options/excess tax benefits
|
1,486 | 1,562 | 1,135 | ||||||||||||
|
|||||||||||||||
Net cash used by financing activities
|
(7,464 | ) | (5,698 | ) | (6,109 | ) | |||||||||
|
|||||||||||||||
Effect of exchange rate changes on cash and cash equivalents
|
(323 | ) | 275 | 180 | |||||||||||
Increase/(decrease) in cash and cash equivalents
|
2,998 | 3,687 | (11,972 | ) | |||||||||||
Cash and cash equivalents, beginning of year (Note 1)
|
7,770 | 4,083 | 16,055 | ||||||||||||
|
|||||||||||||||
Cash and cash equivalents, end of year (Note 1)
|
$ | 10,768 | 7,770 | 4,083 | |||||||||||
|
|||||||||||||||
Supplemental cash flow data
|
|||||||||||||||
Cash paid during the year for:
|
|||||||||||||||
Interest
|
$ | 525 | 314 | 143 | |||||||||||
Income taxes
|
4,068 | 4,099 | 4,250 | ||||||||||||
|
|||||||||||||||
Supplemental schedule of noncash investing and financing activities
|
|||||||||||||||
Treasury stock issued for employee compensation and
stock option plans, net of cash proceeds |
$ | 593 | 738 | 622 | |||||||||||
Conversion of debt
|
| 9 | 26 | ||||||||||||
|
|||||||||||||||
Acquisitions
|
|||||||||||||||
Fair value of assets acquired
|
$ | 1,328 | 1,620 | 19,306 | |||||||||||
Fair value of liabilities assumed
|
(114 | ) | (232 | ) | (1,283 | ) | |||||||||
|
|||||||||||||||
Net cash paid for acquisitions
|
$ | 1,214 | 1,388 | 18,023 | |||||||||||
CONSOLIDATED FINANCIAL STATEMENTS
|
47 |
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
NOT ADOPTED AS OF DECEMBER 28, 2008
48
20-40 years
10-20 years
2-13 years
49
2008
2007
$
839
905
1,372
1,384
2,841
2,821
$
5,052
5,110
JOHNSON & JOHNSON 2008 ANNUAL REPORT
2008
2007
$
886
756
7,720
7,913
15,234
14,554
3,552
3,243
27,392
26,466
13,027
12,281
$
14,365
14,185
After
2009
2010
2011
2012
2013
2013
Total
145
123
107
89
93
728
2008
2007
$
4,382
2,014
2,217
2,134
870
1,119
772
740
8,241
6,007
450
605
$
7,791
5,402
Effective
Effective
2008
Rate %
2007
Rate %
Convertible Subordinated
Debentures due 2020
$
183
3.00
%
178
3.00
500
4.95
500
4.95
500
3.82
500
3.82
294
7.14
294
7.14
250
6.73
250
6.73
199
6.80
199
6.80
1,000
5.55
1,000
5.55
995
5.99
995
5.99
(500 GBP1.4759)
(2)
/(500 GBP1.9944)
(3)
731
(2)
5.71
989
(3)
5.71
(1B Euro 1.4000)
(2)
/
(1B Euro 1.4573)
(3)
1,390
(2)
5.35
1,447
(3)
5.35
599
5.18
599
5.18
700
5.86
898
5.15
102
132
8,341
(4)
5.46
(1)
7,083
(4)
5.47
(1)
221
9
$
8,120
7,074
(1)
Weighted average effective rate.
(2)
Translation rate at December 28, 2008.
(3)
Translation rate at December 30, 2007.
(4)
The excess of the fair value over the carrying value of debt was $1.4 billion in 2008 and $0.3 billion in 2007.
51
After
2010
2011
2012
2013
2013
22
18
620
507
6,953
2008
2007
$
5,879
6,457
145
144
$
5,734
6,313
$
5,119
4,597
1,820
1,615
$
3,299
2,982
$
7,376
7,399
2,433
2,054
$
4,943
5,345
$
18,374
18,453
4,398
3,813
$
13,976
14,640
$
14,441
14,866
722
743
$
13,719
14,123
$
32,815
33,319
5,120
4,556
$
27,695
28,763
Med Dev
Consumer
Pharm
and Diag
Total
$
7,866
902
4,572
13,340
3
449
452
256
62
13
331
$
8,125
964
5,034
14,123
191
286
477
(842
)
(1
)
(38
)
(881
)
$
7,474
963
5,282
13,719
2008
2007
2006
$
2,334
2,990
3,625
1,624
1,479
1,077
3,958
4,469
4,702
126
(722
)
(726
)
(104
)
(1,040
)
(442
)
22
(1,762
)
(1,168
)
$
3,980
2,707
3,534
2008
2007
2006
$
6,579
5,237
8,110
10,350
8,046
6,477
$
16,929
13,283
14,587
35.0
%
35.0
35.0
(6.8
)
(8.8
)
(7.5
)
(0.6
)
(0.8
)
(0.7
)
1.6
2.1
1.6
(5.6
)
(7.3
)
(3.5
)
(0.4
)
(0.3
)
(0.2
)
0.4
2.1
0.6
(0.5
)
(1.9
)
(0.7
)
0.4
0.3
(0.4
)
23.5
%
20.4
24.2
JOHNSON & JOHNSON 2008 ANNUAL REPORT
2008
2007
Deferred Tax
Deferred Tax
Asset
Liability
Asset
Liability
$
2,615
1,727
1,296
1,173
(523
)
(463
)
(1,791
)
(1,554
)
1,914
1,773
688
1,155
629
487
1,357
(251
)
1,177
(127
)
74
89
1,754
542
$
10,327
(2,565
)
8,123
(2,144
)
2008
2007
$
1,653
1,262
545
487
87
77
(142
)
(117
)
(137
)
(14
)
(28
)
(42
)
$
1,978
1,653
Stock Compensation Agreements
53
2008
2007
2006
2.97
%
4.78
%
4.60
%
15.0
%
14.7
%
19.6
%
6.0
yrs
6.0
yrs
6.0
yrs
2.90
%
2.50
%
2.50
%
Aggregate
Weighted
Intrinsic
Outstanding
Average
Value
(Shares in Thousands)
Shares
Exercise Price
(Dollars in Millions)
248,542
$53.05
$2,031
28,962
58.38
(26,152
)
42.80
(8,425
)
59.33
242,927
54.57
$2,788
26,789
65.61
(33,224
)
45.92
(7,863
)
63.00
228,629
56.83
$2,411
22,428
61.80
(30,033
)
50.27
(5,525
)
61.90
215,499
$58.14
$ 597
(Shares in Thousands)
Outstanding
Exercisable
Average
Average
Exercise
Average
Exercise
Exercise
Price Range
Options
Life
(1)
Price
Options
Price
325
1.5
$
18.00
325
$
18.00
349
0.9
35.22
349
35.22
11,263
1.1
49.61
11,263
49.61
19,600
1.8
50.70
19,600
50.70
23,759
4.1
52.22
23,759
52.22
27,992
5.0
53.93
27,992
53.93
27,803
3.1
57.30
27,775
57.30
69,136
8.0
61.90
815
62.76
35,272
6.1
66.20
33,084
66.19
215,499
5.3
$
58.14
144,962
$
56.25
(1)
Average contractual life remaining in years.
Outstanding
(Shares in Thousands)
Shares
111
7,320
(33
)
(513
)
6,885
8,029
(33
)
(1,220
)
13,661
10,105
(40
)
(1,468
)
22,258
JOHNSON & JOHNSON 2008 ANNUAL REPORT
Sales to Customers
(2)
2008
2007
2006
$
6,937
6,408
4,573
9,117
8,085
5,201
16,054
14,493
9,774
14,831
15,603
15,092
9,736
9,263
8,175
24,567
24,866
23,267
10,541
10,433
10,110
12,585
11,303
10,173
23,126
21,736
20,283
$
63,747
61,095
53,324
Operating Profit
Identifiable Assets
2008
(5)
2007
(6)
2006
(7)
2008
2007
2006
$
2,674
2,277
1,374
$
23,765
26,550
25,380
7,605
6,540
6,894
19,544
19,780
18,799
7,223
4,846
6,126
20,779
19,978
18,601
17,502
13,663
14,394
64,088
66,308
62,780
573
380
(193
)
20,824
14,646
7,776
$
16,929
13,283
14,587
$
84,912
80,954
70,556
Additions to Property,
Depreciation and
Plant & Equipment
Amortization
2008
2007
2006
2008
2007
2006
$
499
504
344
$
489
472
255
920
1,137
1,246
986
1,033
929
1,251
919
823
1,146
1,080
861
2,670
2,560
2,413
2,621
2,585
2,045
396
382
253
211
192
132
$
3,066
2,942
2,666
$
2,832
2,777
2,177
Sales to Customers
(2)
Long-Lived Assets
(8)
2008
2007
2006
2008
2007
2006
$
32,309
32,444
29,775
$
21,674
21,685
22,432
16,782
15,644
12,786
14,375
15,578
14,443
5,173
4,681
3,542
3,328
3,722
3,108
9,483
8,326
7,221
1,898
1,261
1,206
63,747
61,095
53,324
41,275
42,246
41,189
785
702
543
42,852
38,006
28,824
$
63,747
61,095
53,324
$
84,912
80,954
70,556
(1)
See Note 1 for a description of the segments in which the Company operates.
(2)
Export sales are not significant. In 2008, 2007 and 2006, the Company did not have a
customer that represented 10% of total revenues.
(3)
Amounts not allocated to segments
include interest (income) expense, minority interest and general corporate (income) expense.
(4)
General corporate includes cash and marketable securities.
(5)
Includes $7 million and $174 million of In-Process Research and Development (IPR&D)
for the Consumer and Medical Devices and Diagnostics segments, respectively. Includes $379 million
of fourth quarter net litigation gain, comprised of a $50 million expense in the Consumer segment
and a gain of $429 million in the Medical Devices and Diagnostics segment. The Medical Devices and
Diagnostics segment also includes $536 million gain on the divestiture of the Professional Wound
Care business of Ethicon, Inc.
(6)
Includes $745 million of restructuring expense, comprised of $15 million, $429
million, and $301 million for the Consumer, Pharmaceutical, and Medical Devices and Diagnostics
segments, respectively. The Medical Devices and Diagnostics segment includes $807 million of IPR&D.
The Pharmaceutical segment also includes $678 million for the write-down of the NATRECOR
®
intangible asset.
(7)
Includes $320 million and $239 million of IPR&D for the Consumer and Medical Devices
and Diagnostics segments, respectively. The Medical Devices and Diagnostics segment also includes
the Guidant acquisition agreement termination fee, less associated expenses, of $622 million.
(8)
Long-lived assets include property, plant and equipment, net for 2008, 2007 and 2006
of $14,365, $14,185 and $13,044, respectively, and intangible assets and goodwill, net for 2008,
2007 and 2006 of $27,695, $28,763 and $28,688, respectively.
55
Total
Unrealized
Gains/
Accumulated
Foreign
Gains/
(Losses) on
Other
Currency
(Losses) on
Employee
Derivatives
Comprehensive
Translation
Securities
Benefit Plans
& Hedges
Income/(Loss
)
$
(520
)
70
(320
)
15
(755
)
17
(23
)
362
(9
)
(1,710
)
(6
)
(1,363
)
$
(158
)
61
(2,030
)
9
(2,118
)
(78
)
24
786
23
670
(54
)
1,425
$
628
84
(1,360
)
(45
)
(693
)
94
72
(2,499
)
(59
)
(1,870
)
166
(4,262
)
$
(1,871
)
25
(3,230
)
121
(4,955
)
JOHNSON & JOHNSON 2008 ANNUAL REPORT
Retirement Plans
Other Benefit Plans
2008
2007
2006
2008
2007
2006
$
545
597
552
$
142
140
122
701
656
570
166
149
136
(876
)
(809
)
(701
)
(2
)
(2
)
(3
)
10
10
10
(4
)
(7
)
(7
)
2
1
(1
)
62
186
251
64
66
74
7
5
4
$
451
646
685
$
366
346
322
$
1
236
5
Retirement Plans
Other Benefit Plans
2008
2007
2006
2008
2007
2006
6.50
%
6.50
6.00
6.50
%
6.50
6.00
9.00
9.00
9.00
9.00
9.00
9.00
4.50
4.50
4.50
4.50
4.50
4.50
6.00
%
5.50
5.00
7.25
%
6.50
6.00
8.00
8.25
8.00
4.00
4.00
3.75
4.50
4.50
4.50
2008
2007
9.00
%
9.00
5.00
%
5.00
2015
2014
One-Percentage-
One-Percentage-
Point Increase
Point Decrease
$ 34
$ (28
)
320
(258
)
57
*
The Company does not fund certain plans, as funding is not required. $1.2 billion of the
projected benefit obligation, $1.2 billion of the underfunded status, and $0.9 billion of the
accumulated benefit obligation for the fiscal years 2008 and 2007 relates to these unfunded
pension plans.
Retirement Plans
2008
2007
$
(9,885
)
(4,914
)
(11,379
)
(5,233
)
7,021
3,735
JOHNSON & JOHNSON 2008 ANNUAL REPORT
(Dollars in Millions)
2009
2010
2011
2012
2013
2014-2018
$
489
485
523
543
571
3,480
$
229
185
189
191
193
1,049
(9
)
(10
)
(11
)
(12
)
(13
)
(85
)
$
220
$
175
$
178
$
179
$
180
$
964
(Dollars in Millions)
2009
2010
2011
2012
2013
2014-2018
$
31
33
36
39
42
283
$
25
25
26
27
28
153
Percent of
Target
Plan Assets
Allocation
2008
2007
2009
70
%
79
%
75
%
30
21
25
100
%
100
%
100
%
61
%
67
%
67
%
38
32
33
1
1
100
%
100
%
100
%
59
December 28, 2008
December 30, 2007
Amortized
Unrealized
Estimated
Amortized
Unrealized
Estimated
Cost
Gains/(Losses)
Fair Value
Cost
Gains/(Losses)
Fair Value
$
3,276
3,276
2,978
2,978
7,486
4
7,490
2,722
1
2,723
627
1
628
1,805
3
1,808
813
813
407
407
607
607
1,403
1,403
$
12,809
5
12,814
9,315
4
9,319
$
4
4
2
2
60
Pro forma results
Year ended
December 31,
2006
$
57,115
$
10,770
$
3.64
61
62
Company
Patents
Plaintiff/
Patent Holder
Court
Trial Date
Date Filed
Cordis
Kastenhofer
Boston Scientific Corp.
Multiple European
*
09/07
Vision Care
Nicolson
CIBA Vision
M.D. FL
03/09
09/03
Cordis
Wall
Wall
E.D. TX
04/11
11/07
Cordis
Bonutti
MarcTec
S.D. IL
05/09
11/07
Cordis
Saffran
Saffran
E.D. TX
01/11
10/07
Cordis/Ethicon
Schock
Cardio Access LLC
E.D. TX
*
06/08
Strips
McNeil-PPC
Sagel
Procter & Gamble
W.D. WI
*
05/08
Lifescan
Wilsey
Roche Diagnostics
D. DE
*
11/07
golimumab, ReoPro
Centocor
Cabilly II
Genentech
C.D. CA
*
05/08
63
Patent/NDA
Generic
Trial
Date
30-Month
Holder
Challenger
Court
Date
Filed
Stay Expiration
McNeil-PPC
Andrx
D. DE
12/07
09/05
None
ALZA
tablet
Ortho-McNeil
Lupin
D. NJ
*
10/06
03/09
Ortho-McNeil
Barr
D. NJ
*
10/03
02/06
0.025 mg
and 0.25 mg/
0.025 mg
Watson
D. NJ
*
10/08
03/11
Janssen
Teva
D. DE
05/07
07/05
08/08
Mylan
D. DE
05/07
07/05
08/08
Dr. Reddys
D. DE
05/07
07/05
08/08
Purepac
D. DE
05/07
07/05
08/08
Barr
D. DE
05/07
07/05
08/08
AlphaPharm
D. DE
05/07
07/05
08/08
Janssen
Barr
D. NJ
*
06/06
None
Sandoz
D. NJ
*
05/07
None
KV Pharma
D. NJ
*
12/07
05/10
tablet
Ortho-McNeil
Par
D. DE
01/09
05/07
09/09
Ortho-McNeil-
Janssen
Impax
D. DE
*
08/08
01/11
64
65
66
(Shares in Millions Except Per Share Data)
2008
2007
2006
$
4.62
3.67
3.76
2,802.5
2,882.9
2,936.4
179.0
178.6
207.0
(149.6
)
(154.5
)
(186.3
)
3.7
3.7
3.9
2,835.6
2,910.7
2,961.0
$
4.57
3.63
3.73
(Amounts in Millions Except Treasury Stock
Treasury Stock
Number of Shares in Thousands)
Shares
Amount
145,364
$
5,965
(26,526
)
(1,677
)
(540
)
(36
)
108,314
6,722
226,612
10,974
(33,296
)
(2,180
)
(194
)
(13
)
86,498
5,607
279,620
14,388
(29,906
)
(2,005
)
(19
)
(1
)
100,970
6,651
350,665
$
19,033
2008
2007
First
Second
Third
Fourth
First
Second
Third
Fourth
(Dollars in Millions Except Per Share Data)
Quarter
Quarter
(1)
Quarter
Quarter
(2)
Quarter
(3)
Quarter
Quarter
(4)
Quarter
(5)
$
4,064
4,036
4,099
3,855
3,496
3,564
3,623
3,810
6,429
6,340
6,113
5,685
6,221
6,149
6,099
6,397
5,701
6,074
5,709
5,642
5,320
5,418
5,248
5,750
$
16,194
16,450
15,921
15,182
15,037
15,131
14,970
15,957
11,580
11,699
11,147
10,810
10,652
10,773
10,696
11,223
4,747
4,375
4,290
3,517
3,652
4,031
3,268
2,332
3,598
3,327
3,310
2,714
2,573
3,081
2,548
2,374
$
1.27
1.18
1.19
0.98
0.89
1.06
0.88
0.83
$
1.26
1.17
1.17
0.97
0.88
1.05
0.88
0.82
(1)
The second quarter of 2008 includes an after-tax charge of $40 million for IPR&D.
(2)
The fourth quarter of 2008 includes an after-tax charge of $141 million for IPR&D,
$229 million after-tax of income from net litigation and $331 million after-tax gain on the
divestiture of the Professional Wound Care business of Ethicon, Inc. The gain from the divestiture
of the Professional Wound Care business of Ethicon, Inc. was reinvested in the business.
(3)
The first quarter of 2007 includes an after-tax charge of $807 million for IPR&D.
(4)
The third quarter of 2007 includes an after-tax charge of $528 million for
restructuring.
(5)
The fourth quarter of 2007 includes an after-tax charge of $441 million for the
NATRECOR
®
intangible asset write-down and a one-time tax gain of $267 million for restructuring.
The lower tax rate is due to increases in taxable income in lower tax jurisdictions relative to
taxable income in higher tax jurisdictions.
67
Severance
$
450
(46
)
404
(226
)
$
178
*
Remaining reserve balance for severance is expected to be paid in accordance with the
Companys plans and local laws.
Quoted
prices in
active
Significant
markets for
other
Significant
identical
observable
unobservable
assets
inputs
inputs
December 28, 2008
Level 1
Level 2
Level 3
$
1,432
$
1,432
$
2,378
$
2,378
68
New York, New York
February 17, 2009
Dominic J. Caruso
Vice President, Finance,
and Chief Financial Officer
69
Summary of
Operations and Statistical Data
1998-2008
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
$
32,309
32,444
29,775
28,377
27,770
25,274
22,455
19,825
17,316
15,532
12,901
31,438
28,651
23,549
22,137
19,578
16,588
13,843
12,492
11,856
11,825
10,910
63,747
61,095
53,324
50,514
47,348
41,862
36,298
32,317
29,172
27,357
23,811
18,511
17,751
15,057
14,010
13,474
12,231
10,498
9,622
8,987
8,559
7,711
21,490
20,451
17,433
17,211
16,174
14,463
12,520
11,510
10,675
10,182
8,595
7,577
7,680
7,125
6,462
5,344
4,834
4,094
3,704
3,186
2,821
2,538
181
807
559
362
18
918
189
105
66
298
(361
)
(452
)
(829
)
(487
)
(195
)
(177
)
(256
)
(456
)
(429
)
(266
)
(302
)
435
296
63
54
187
207
160
153
204
255
186
(1,015
)
534
(671
)
(214
)
15
(385
)
294
185
(94
)
119
12
745
553
46,818
47,812
38,737
37,398
35,017
32,091
27,499
24,823
22,595
21,670
19,591
16,929
13,283
14,587
13,116
12,331
9,771
8,799
7,494
6,577
5,687
4,220
3,980
2,707
3,534
3,056
4,151
2,923
2,522
2,089
1,813
1,554
1,196
12,949
10,576
11,053
10,060
8,180
6,848
6,277
5,405
4,764
4,133
3,024
20.3
17.3
20.7
19.9
17.3
16.4
17.3
16.7
16.3
15.1
12.7
$
4.57
3.63
3.73
3.35
2.74
2.29
2.06
1.75
1.55
1.34
1.00
30.2
25.6
28.3
28.2
27.3
27.1
26.4
24.0
25.3
26.0
21.6
4.3
14.6
5.6
6.7
13.1
15.3
12.3
10.8
6.6
14.9
5.7
25.9
(2.7
)
11.3
22.3
19.7
11.2
17.7
12.9
15.7
34.0
(1.0
)
$
29,346
27,967
22,912
22,328
21,053
18,568
16,540
15,333
14,113
13,922
11,779
14,523
14,571
13,444
12,364
11,581
10,542
8,942
8,153
7,376
6,727
6,021
2,832
2,777
2,177
2,093
2,124
1,869
1,662
1,605
1,592
1,510
1,335
583
483
506
510
462
395
360
372
327
322
286
5,558
4,177
4,857
4,285
5,215
3,890
3,325
2,854
2,517
2,221
1,845
14,365
14,185
13,044
10,830
10,436
9,846
8,710
7,719
7,409
7,155
6,767
3,066
2,942
2,666
2,632
2,175
2,262
2,099
1,731
1,689
1,822
1,610
84,912
80,954
70,556
58,864
54,039
48,858
40,984
38,771
34,435
31,163
29,019
8,120
7,074
2,014
2,017
2,565
2,955
2,022
2,217
3,163
3,429
2,652
14,972
15,022
14,248
11,799
11,089
10,571
8,135
8,781
6,889
5,913
5,104
$
1.795
1.620
1.455
1.275
1.095
0.925
0.795
0.700
0.620
0.550
0.490
$
15.35
15.25
13.59
13.01
10.95
9.25
7.79
8.05
6.82
5.73
4.95
$
58.56
67.38
66.02
60.10
63.42
50.62
53.11
59.86
52.53
46.63
41.94
basic
2,802.5
2,882.9
2,936.4
2,973.9
2,968.4
2,968.1
2,998.3
3,033.8
2,993.5
2,978.2
2,973.6
2,835.6
2,910.7
2,961.0
3,002.8
2,992.7
2,995.1
3,049.1
3,089.3
3,075.2
3,090.4
3,067.0
118.7
119.2
122.2
115.6
109.9
110.6
108.3
101.8
100.9
99.8
96.1
(1)
Net of interest and other income.
(2)
Also included in cost of materials and services category.
(3)
Includes taxes on income, payroll, property and other business taxes.
(4)
2008 includes a $536 million before tax gain from the divestiture of the
Professional Wound Care business of Ethicon, Inc. and a $379 million before tax net fourth quarter
litigation gain.
2007 includes a $678 million before tax write-down related to the NATRECOR
®
intangible asset.
70
2003
2004
2005
2006
2007
2008
$
100.00
125.17
120.96
136.02
140.93
129.98
$
100.00
110.88
116.32
134.69
142.09
89.52
$
100.00
92.57
89.46
103.64
108.46
88.73
$
100.00
112.62
112.68
117.33
123.35
89.25
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
$
100.00
112.47
128.44
146.43
134.90
132.04
165.27
159.73
179.60
186.09
171.63
$
100.00
121.04
110.05
96.97
75.54
97.21
107.78
113.07
130.93
138.13
87.02
$
100.00
88.02
119.87
102.44
81.91
89.10
82.48
79.71
92.35
96.64
79.06
$
100.00
92.18
135.17
128.32
112.10
148.01
166.69
166.78
173.66
182.57
132.10
71
Jurisdiction of
|
||
Name of Subsidiary
|
Organization | |
U.S. Subsidiaries:
|
||
Advanced Sterilization Products Services Inc.
|
New Jersey | |
Advanced Technologies and Regenerative Medicine, LLC
|
Delaware | |
ALZA Corporation
|
Delaware | |
ALZA Development Corporation
|
California | |
ALZA Land Management, Inc.
|
Delaware | |
Animas Corporation
|
Delaware | |
Biosense Webster, Inc.
|
California | |
Centocor Biologics, LLC
|
Pennsylvania | |
Centocor, Inc.
|
Pennsylvania | |
Centocor Ortho Biotech Services LLC
|
New Jersey | |
Centocor Research & Development, Inc.
|
Pennsylvania | |
Closure Medical Corporation
|
Delaware | |
CNA Development LLC
|
Delaware | |
Codman & Shurtleff, Inc.
|
New Jersey | |
Conor Medsystems, LLC
|
Delaware | |
Cordis Corporation
|
Florida | |
Cordis Development Corporation
|
Florida | |
Cordis International Corporation
|
Delaware | |
Cordis LLC
|
Delaware | |
Cordis Neurovascular, Inc.
|
Florida | |
Crescendo Pharmaceuticals Corporation
|
Delaware | |
DePuy, Inc.
|
Delaware | |
DePuy Mitek, Inc.
|
Massachusetts | |
DePuy Orthopaedics, Inc.
|
Indiana | |
DePuy Products, Inc.
|
Indiana | |
DePuy Spine, Inc.
|
Ohio | |
DePuy Spine Sales Limited Partnership
|
Massachusetts | |
Diabetes Diagnostics, Inc.
|
Delaware | |
Ethicon Endo-Surgery, Inc.
|
Ohio | |
Ethicon Endo-Surgery, LLC
|
Delaware | |
Ethicon Endo-Surgery Services, L.P.
|
Texas | |
Ethicon, Inc.
|
New Jersey | |
Ethicon LLC
|
Delaware | |
Global Biologics Supply Chain, LLC
|
Pennsylvania | |
GUH Corporation
|
Delaware | |
GynoPharma Inc.
|
Delaware | |
Hand Innovations LLC
|
Delaware | |
HealthMedia, Inc.
|
Michigan | |
Innovational Holdings, LLC
|
Delaware | |
ISO Holding Corp.
|
Delaware |
Jurisdiction of
Organization
Nevada
Delaware
Delaware
Delaware
Delaware
New Jersey
New Jersey
New Jersey
New Jersey
New Jersey
New Jersey
New Jersey
New Jersey
New Jersey
New Jersey
Delaware
New Jersey
New Jersey
New Jersey
Florida
Delaware
Florida
California
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
New Jersey
Vermont
Delaware
California
Georgia
Delaware
Delaware
Delaware
Delaware
Delaware
New Jersey
New Jersey
New York
Florida
Pennsylvania
Pennsylvania
New Jersey
Delaware
Jurisdiction of
Organization
Delaware
Delaware
Delaware
New Jersey
Delaware
Delaware
Ireland
Sweden
France
China
Israel
Italy
Ireland
Netherlands
Switzerland
Switzerland
Mexico
Switzerland
Switzerland
Switzerland
Switzerland
Israel
Ireland
Mexico
Netherlands
Germany
France
Switzerland
United Kingdom
United Kingdom
Ireland
Switzerland
Germany
Switzerland
United Kingdom
Mexico
Mexico
Ireland
Switzerland
France
Switzerland
Panama
Venezuela
Switzerland
Ireland
France
United Kingdom
Jurisdiction of
Organization
Sweden
Denmark
Switzerland
Netherlands
Portugal
Brazil
Germany
Thailand
United Kingdom
Belgium
Finland
Greece
Austria
Poland
Australia
Spain
Mexico
France
Italy
Korea
Canada
Belgium
South Africa
Japan
Ireland
Belgium
Israel
Netherlands
Sweden
Switzerland
China
China
France
Italy
Hong Kong
United Kingdom
Argentina
Colombia
Mexico
Venezuela
Peru
Brazil
Ireland
Egypt
United Kingdom
Germany
Austria
Germany
Jurisdiction of
Organization
Germany
Greece
Puerto Rico
Germany
Hong Kong
Canada
Brazil
Ireland
Hungary
Japan
Korea
Portugal
India
United Kingdom
Russia
Luxembourg
United Kingdom
Netherlands
China
Germany
Italy
Korea
United Kingdom
Mexico
Belgium
Austria
South Africa
Australia
China
Italy
China
New Zealand
Sweden
Australia
Pakistan
Philippines
Poland
Slovenia
South Africa
Singapore
Australia
Spain
Malaysia
Italy
Czech Republic
Slovakia
United Kingdom
Taiwan
Jurisdiction of
Organization
Thailand
Ireland
China
France
France
Ireland
Ireland
Canada
United Kingdom
Sweden
Belgium
Germany
Spain
Denmark
Denmark
Germany
United Kingdom
Spain
United Kingdom
Australia
Mexico
United Kingdom
France
France
Sweden
Switzerland
Switzerland
Switzerland
Ireland
Ireland
United Kingdom
Germany
Japan
Belgium
France
Indonesia
China
Australia
Ireland
Belgium
Belgium
Ireland
France
China