SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2003
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-3215
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JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
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(Full title of the Plan)
JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
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(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
Item 4. Financial Statements and Exhibits
Report of Independent Registered Public Accounting Firm
Financial Statements:
Statements of Net Assets Available for Benefits
As of December 31, 2003 and 2002
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 2003
Notes to Financial Statements
Schedules required by Section 2520.103.10 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under ERISA have been omitted because
they are not applicable.
Consent of PricewaterhouseCoopers LLP, dated June 18, 2004
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
By: /s/ R. J. Darretta
-----------------------------
R. J. Darretta
Chairman, Pension Committee
June 22, 2004
JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
-----------------
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003 AND 2002
AND FOR THE YEAR ENDED
DECEMBER 31, 2003
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
INDEX TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003 AND 2002 AND FOR THE YEAR ENDED DECEMBER 31, 2003
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PAGE(S)
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Report of Independent Registered Public Accounting Firm ................. 1
Financial Statements:
Statements of Net Assets Available for Benefits
As of December 31, 2003 and 2002 .................................. 2
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 2003 ..................... 3
Notes to Financial Statements .......................................... 4 - 9
Schedules required by Section 2520.103.10 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under ERISA have been omitted because
they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants, the Pension Committee and the
Compensation & Benefits Committee of
Johnson & Johnson Savings Plan for
Union Represented Employees:
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Johnson & Johnson Savings Plan for Union Represented Employees (the
"Plan") as of December 31, 2003 and 2002 and the changes in net assets available
for benefits for the year ended December 31, 2003 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States) and auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 16, 2004
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2003 AND 2002
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2003 2002
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ASSETS
Interest in Master Trusts, at fair value
Interest in Johnson & Johnson Pension
and Savings Plans Master Trust ........... $ 35,385,877 $ --
Interest in Johnson & Johnson Savings
Plan Trust ............................... -- 35,207,706
------------ ------------
Total investments ...................... 35,385,877 35,207,706
Receivables
Employee contributions ..................... 35,169 --
Employer contributions ..................... 9,455 --
------------ ------------
Total receivables ...................... 44,624
------------ ------------
Total assets ........................... 35,430,501 35,207,706
============ ============
LIABILITIES
Accrued expenses ............................. 25,432 --
------------ ------------
Total liabilities .......................... 25,432 --
============ ============
Net assets available for benefits ........ $ 35,405,069 $ 35,207,706
============ ============
See Notes to Financial Statements
-2-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2003
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INVESTMENT INCOME (LOSS)
Investment income from interest in Master Trust
Net appreciation in fair value of investments........... $ 407,993
Investment income
Interest ............................................. 173,674
Dividends ............................................ 520,879
Contributions
Employee contributions ................................. 3,310,139
Employer contributions ................................. 813,734
------------
Total Additions ...................................... 5,226,419
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Payments to participants ................................. 4,850,204
Administrative expenses................................... 178,852
------------
Total deductions........................................ 5,029,056
------------
Net increase.......................................... 197,363
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year......................................... 35,207,706
------------
End of year............................................... $ 35,405,069
============
See Notes to Financial Statements
-3-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
GENERAL
The Johnson & Johnson Savings Plan for Union Represented Employees (the
"Plan") is a participant directed defined contribution plan which was
established on January 1, 1993 by Johnson & Johnson ("J&J" or the
"Company"). The Plan was designed to enhance the existing retirement
program of eligible employees covered under collective bargaining
agreements with the Company. The funding of the Plan is made through
employee and Company contributions. Prior to January 1, 2003 the assets
of the Plan were maintained in the Johnson & Johnson Savings Plan
Trust. As of January 1, 2003, the Johnson & Johnson Savings Plan Trust
and the Johnson & Johnson Pension Trust Fund merged to form a single
Master Trust, the Johnson & Johnson Pension and Savings Plans Master
Trust (the "Trust"). Transactions in the Trust are executed by the
trustee, State Street Trust Company ("State Street" or "Trustee"). The
Plan's interest in the Trust is allocated to the Plan based upon the
total of each participant's share of the Trust.
This brief description of the Plan is provided for general information
purposes only. Participants should refer to the Plan document for
complete information.
CONTRIBUTIONS
In general, full-time employees represented by a collective bargaining
unit participating in the Plan with at least one year of eligible
service can contribute to the Plan.
Contributions are made to the Plan by participants through payroll
deductions and by the Company on behalf of participants. Participating
employees may contribute a minimum of $0.16 per hour up to a maximum of
$2.40 per hour of the first forty hours worked in each payroll week,
depending on the negotiated contract rate. All contributions are on a
pre-tax basis and may not exceed $12,000 and $11,000 in 2003 and 2002,
respectively.
Participant contributions are invested in any of the four investment
funds offered by the Plan at the direction of the participating
employees.
After one year of eligible service, the Company contributes to the Plan
out of current or accumulated profits, an amount equal to 25% or 50% of
the employee directed contributions on the first $0.16 to $1.20 per
hour (depending on the negotiated collective bargaining agreement),
directly into the J&J Stock Fund. Participants have the option to elect
that the Company matching contribution be invested in the current
investment fund mix chosen by the participant.
INVESTMENTS
Participants have the option to invest in any one of four investment
funds offered by the Plan, which include the Fixed Interest Fund, J&J
Stock Fund, U.S. Government Securities Fund and the Diversified Equity
Fund. Participants may transfer all or a portion of their accumulated
Company matching contribution into the Plan's other investment funds.
The trustee reinvests all investment income.
VESTING
A participant's plan account, including participant contributions,
company contributions and earnings thereon, is always fully vested. As
a result, there are no forfeitures under the Plan.
-4-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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PAYMENT OF BENEFITS
Benefits are paid to participants upon termination, retirement,
long-term disability or death. Participants can elect to defer payment
until age 65. Distributions are paid in a lump sum payment for all fund
balances.
A participant's account may be distributed to their beneficiaries upon
the participant's death in the same manner described for participants.
Participants may withdraw pre-tax contributions only upon meeting
certain hardship conditions. Participants are entitled to benefits
provided by contributions (Company and participant) and investment
earnings thereon, including realized and unrealized gains and losses,
which have been allocated to the participant's account balance.
Participants have the option of receiving all or part of their balance
in the Johnson & Johnson Stock Fund as either cash or in shares of
Johnson & Johnson common stock (plus cash for fractional shares) for
distributions other than a hardship.
ADMINISTRATIVE EXPENSES
All third party administrative expenses are paid by the Plan, unless
otherwise provided for by the Company.
TERMINATION
The Company fully intends to continue the Plan indefinitely, but
reserves the exclusive right to amend, change, suspend or terminate
the Plan at any time for any reason. In the event that the Plan is
terminated, all Plan funds must be used exclusively for the benefit of
the Plan participants.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual
method of accounting in accordance with generally accepted accounting
principles in the United States of America.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's interest in the Trust is stated at fair value. Generally, it
represents securities traded on a national securities exchange, which
are valued at the last reported sales price on the last business day of
the year. Benefit responsive guaranteed and synthetic investment
contracts are recorded at contract value, which approximates fair value
(Note 5).
As the investment funds contain various underlying assets such as stock
and short-term investments, the participant's account balance is
reported in units of participation, which allows for immediate
transfers in and out of the fund. The purchase or redemption price of
the units is determined by the trustee, based on the current market
value of the underlying assets of the funds. The fund's net asset value
is the value of a single unit, which is computed by adding the value of
the fund's investments, cash and other assets, and subtracting
liabilities, then dividing the result by the number of units
outstanding.
Purchases and sales of securities are recorded on a trade-date basis.
Gains and losses on the sale of investment securities are determined on
the average cost method. Dividend income is recorded on the ex-dividend
date. Interest income is recorded as earned on an accrual basis.
-5-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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NET APPRECIATION (DEPRECIATION)
The Plan presents in the Statement of Changes in Net Assets Available
for Benefits the net appreciation (depreciation) in the fair value of
investments held in the Master Trust, which consists of unrealized
appreciation (depreciation) of the underlying investments and realized
gains and losses on sales of investments.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect the
reported amounts of net assets available for benefits at the date of
the financial statements and the changes in net assets available for
benefits during the reporting period and when applicable disclosures of
contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
RISK AND UNCERTAINTIES
The Plan provides for various investment options in funds, which can
invest in a combination of equity and fixed income securities.
Investments are exposed to various risks, such as interest rate, market
and credit. Due to the level of risk associated with certain
investments, it is at least reasonably possible that changes in risks
in the near term would materially affect participants' account balances
and the amounts reported in the Statements of Net Assets Available for
Benefits and the Statement of Changes in Net Assets Available for
Benefits.
3. INVESTMENTS
The following investments are those in the Master Trust which represent
5% or more of the Plan's net assets.
AS OF DECEMBER 31,
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2003 2002
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Johnson & Johnson Stock Fund ......... $24,975,871 $26,843,590
Diversified Equity Fund .............. 5,841,374 4,128,028
Fixed Interest Fund .................. 3,205,541 2,997,592
The Plan's investments include gains and losses on investments bought
and sold as well as held during the year which are reflected in its
interest in the Master Trust. These investments
appreciated/(depreciated) in value during 2003 as follows:
Equities ............................... $ 1,534,700
Johnson & Johnson Stock Fund ........... (1,126,707)
-----------
Net appreciation ..................... $ 407,993
===========
-6-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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4. INVESTMENTS IN PLAN MASTER TRUST
Effective January 1, 2003, the Johnson & Johnson Savings Plan Trust
merged with the Johnson & Johnson Pension Trust Fund to form a single
Master Trust, the Johnson & Johnson Pension and Savings Plans Master
Trust ("the Trust"). The Plan holds approximately 0.39% of the Trust's
net assets as of December 31, 2003.
The investments in the U.S. Government Securities, Fixed Interest, J&J
Stock and the Diversified Equity Funds are included in the Trust. The
Trust also includes other funds not part of the Plan. The Trust's net
assets, income, and expenses are allocated to the Plan based on the
total of each participant's share of the four funds of the Trust
included in the Plan.
As of December 31, 2002, the Plan held approximately 0.92% of the
Savings Plan Trust's net assets. The following table represents the
total value of investments in the respective trusts:
AS OF DECEMBER 31,
------------------------------
2003 2002
PENSION & SAVINGS SAVINGS PLAN
PLANS MASTER TRUST TRUST
-----------------------------------
Investments at fair value
Short term investment funds .............. $ 251,872,480 $ 46,899,619
U.S. Government and Agency securities .... 688,955,151 50,232,862
Corporate debt ........................... 305,698,696 7,109,175
Preferred stocks ......................... 10,536,822 --
J&J common stock ......................... 4,890,705,529 2,673,806,548
Other equities ........................... 2,074,484,099 166,832,677
Investments at contract value
Deposits in group annuity contracts
and synthetics ........................... 924,152,802 872,124,535
------------- ------------
Total Master Trust investments ........ 9,146,405,579 3,817,005,416
Receivables ................................ 179,120,628 5,456,869
Liabilities ................................ (230,499,957) (2,143,681)
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Net assets held in Master Trust,
at fair value ....................... $9,095,026,250 3,820,318,604
============= =============
-7-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The net investment income/(loss) of the Pension and Savings Plans
Master Trust was composed of the following:
FOR THE
YEAR ENDED
DECEMBER 31,
2003
--------------
Net appreciation/(depreciation) in fair value
of investments
Short term investment funds ................... $ 356,879
U.S. Government and Agency securities ......... (3,648,217)
Corporate debt ................................ 36,792,741
Preferred stocks .............................. 2,107,744
J&J common stock .............................. 536,529,673
Equities and other ............................ 410,093,798
--------------
982,232,618
--------------
Interest ...................................... 78,096,556
Dividends ..................................... 101,605,984
--------------
Net investment gain ......................... $1,161,935,158
==============
5. GUARANTEED AND SYNTHETIC INVESTMENT CONTRACTS
The Trust holds investments in guaranteed and synthetic investment
contracts as part of the Fixed Interest Fund. These investments are
recorded at their contract values. This represents cost plus accrued
interest of guaranteed investment contracts and fair value of the
collateral plus the benefit responsive wrap value for synthetics, as
the contracts are fully benefit-responsive. Participants may ordinarily
direct the withdraw or transfer of all or a portion of their investment
at contract value. There are currently no reserves against contract
values for credit risk of the contract issuers or otherwise.
The average yield of the Fixed Interest Fund was approximately 4.86%
and 5.71% for 2003 and 2002, respectively. The crediting interest rate
was approximately 4.96% for 2003 and 5.80% for 2002. The crediting
interest rate of the Fixed Interest Fund is the annual return of the
fund before plan expenses, while the average yield includes
administrative expenses. The crediting interest rate for the investment
contracts is either agreed to in advance with the issuer or varies
based on an agreed to formula, but cannot be less than zero. The fair
value of guaranteed and synthetic investment contracts at December 31,
2003 and 2002 was $924,152,802 and $872,124,535, respectively, in the
aggregate.
6. TAX STATUS
The Internal Revenue Service has determined and informed the Company by
a letter dated December 31, 2002, that the Plan and the Trust are
designed in accordance with applicable sections of the Internal Revenue
Code ("IRC"). Although the Plan has been amended since
-8-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
receiving the determination letter, the Plan administrator believes
that the Plan is designed and is currently being operated in compliance
with applicable requirements of the IRC.
7. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by State
Street Global Advisors ("State Street"). State Street is the trustee as
defined by the Plan and, therefore, these transactions qualify as
party-in-interest transactions.
The Plan also invests in shares of the Company. The Company is the plan
sponsor and, therefore, these transactions qualify as party-in-interest
transactions.
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
DECEMBER 31,
---------------------------
2003 2002
----------- -----------
Net assets available for benefits
per the financial statements ........ $35,405,069 $35,207,706
Amounts allocated to withdrawing
participants ........................ (37,952) --
----------- -----------
Net assets available for benefits per
the Form 5500 ....................... $35,367,117 $35,207,706
=========== ===========
FOR THE YEAR
ENDED
DECEMBER 31, 2003
-----------------
Benefits paid to participants per the
financial statements ........................... $4,850,204
Add: Amounts allocated to withdrawing
participants at December 31, 2003 .............. 37,952
Less: Amounts allocated to withdrawing
participants at December 31, 2002 .............. --
----------
Benefits paid to participants per the Form 5500 .. $4,888,156
==========
Amounts allocated to the withdrawing participants are recorded on the
Form 5500 for benefit payments that have been processed and approved
for payment prior to December 31, 2003, but not yet paid as of that
date.
-9-
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-52252) of Johnson & Johnson of our report dated
June 16, 2004 relating to the financial statements of the Johnson & Johnson
Savings Plan for Union Represented Employees, which appears in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 18, 2004