UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-3215
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ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
(Full title of the Plan)
JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
REQUIRED INFORMATION
Item 4. Financial Statements and Exhibits
Financial statements prepared in accordance with the financial reporting
requirements of ERISA filed herewith are listed below in lieu of the
requirements of Items 1 to 3.
Report of Independent Registered Public Accounting Firm
Statement of Net Assets Available for Benefits
Statement of Changes in Net Assets Available for Benefits
Notes to Financial Statements
Supplemental Schedule:
Schedule of Assets Held for Investment Purposes
Exhibits:
23. Consent of Morris, Davis & Chan LLP, dated May 5, 2005
SIGNATURES
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.
ALZA CORPORATION TAX DEFERRAL
INVESTMENT PLAN
By: /s/ D. R. Hoffmann
--------------------------
D. R. Hoffmann, Trustee
June 24, 2005
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE
TOGETHER WITH REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
DECEMBER 31, 2004 AND 2003
ALZA CORPORATION TAX DEFERRAL
INVESTMENT PLAN
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm 1
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-10
Supplemental Schedule: 11
Schedule of Assets Held for Investment Purposes 12
i
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Pension Committee
Johnson & Johnson
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
We have audited the accompanying statement of net assets available for benefits
of the ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN (the Plan) as of December
31, 2004 and 2003, and the related statement of changes in net assets available
for benefits for the years then ended. 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 in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2004 and 2003, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes as of December 31, 2004 is presented for the
purpose of complying with the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974, and is not a required part of the basic financial statements. The
supplemental schedule has been subjected to the auditing procedures applied in
our audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
Morris, Davis & Chan
May 5, 2005
Oakland, California
1
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Statement of Net Assets Available for Benefits
December 31, 2004 and 2003
2004 2003
------------- -------------
Investments at fair value:
Mutual funds:
Merrill Lynch Ready Asset Trust $ 22,987,271 $ 16,216,024
Merrill Lynch Basic Value 13,174,080 13,108,200
Merrill Lynch Core Bond 4,768,531 4,515,648
Merrill Lynch Balanced Capital 3,794,057 3,735,789
Merrill Lynch Global Allocation 4,683,570 3,801,829
John Hancock Small Cap Growth 2,390,885 2,319,984
Templeton Foreign 2,273,063 2,145,532
AllianceBernstein New Europe 210,281 106,673
AllianceBernstein Large Cap Growth 883,394 908,971
Fidelity Advisor Overseas 434,591 311,924
Franklin Flexible Capital Growth 3,037,583 2,488,012
Merrill Lynch Healthcare 1,605,193 1,629,900
Merrill Lynch International Index 603,648 416,048
Merrill Lynch Pacific 466,197 281,205
Merrill Lynch Small Cap Index 1,074,819 744,425
Merrill Lynch S&P 500 Index 10,228,345 8,050,054
Merrill Lynch Fundamental Growth 6,137,512 6,494,062
Munder NetNet 1,033,626 762,088
PIMCO Small Cap Value 1,951,599 1,099,099
Other investments:
Retirement Cash Management Account - 25,206,774
Johnson & Johnson Common Stock 41,810,241 40,127,924
Participant loans 1,144,102 1,230,808
------------- -------------
Total investments 124,692,588 135,700,973
Cash 140 42,953
Accrued interest and dividends receivable 25,638 24,844
Receivable for investment sold 120 43,934
------------- -------------
Net assets available for benefits $ 124,718,486 $ 135,812,704
============= =============
See accompanying notes to financial statements.
2
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Statement of Changes in Net Assets Available for Benefits
Years Ended December 31, 2004 and 2003
2004 2003
-------------- --------------
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation
in fair value of investments $ 11,363,613 $ 11,396,535
Interest and dividends 2,837,025 1,679,266
-------------- --------------
14,200,638 13,075,801
Participant rollover contributions 1,072,993 658,545
-------------- --------------
Total additions 15,273,631 13,734,346
-------------- --------------
Deductions from net assets attributed to:
Distributions 26,365,249 11,598,464
Administrative expenses 2,600 3,260
-------------- --------------
Total deductions 26,367,849 11,601,724
-------------- --------------
Net increase (decrease) (11,094,218) 2,132,622
Net assets available for benefits:
Beginning of year 135,812,704 133,680,082
-------------- --------------
End of year $ 124,718,486 $ 135,812,704
============== ==============
See accompanying notes to financial statements.
3
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2004 and 2003
1. DESCRIPTION OF PLAN
The following description of the ALZA CORPORATION TAX DEFERRAL INVESTMENT
PLAN (the Plan) provides only general information. Participants should
refer to the Summary Plan Description for a more complete description of
the Plan's provisions.
General
The Plan is a defined contribution plan. ALZA Corporation (the Company or
ALZA) remits to the Trust created by the Plan such amounts as are
voluntarily elected by participants and Company contributions. The Plan is
subject to the Employee Retirement Income Security Act of 1974 (ERISA).
On June 22, 2001, a merger between Johnson & Johnson and ALZA Corporation
was completed. Effective January 1, 2003, the Johnson & Johnson Pension
Committee has the responsibility of making decisions with respect to the
Plan. There were no participant salary reduction or Company contributions
during 2004 and 2003. Additionally, during 2003 the Johnson & Johnson
Pension Committee approved the following:
1) Freeze all new investments into the Retirement Cash Management
Account option as soon as administratively feasible.
2) The merger of the Plan into the Johnson & Johnson Salaried Savings
Plan upon completion of a compliance audit and any necessary and
appropriate corrections.
Plan management expects that the merger of the Plan into the Johnson &
Johnson Salaried Savings Plan will be completed in the third quarter of
2005.
Participant Accounts
Participants may allocate their accounts for investment into mutual funds
and other investment vehicles (see Note 4). Earnings and losses of the
investments are allocated to participants in accordance with the Plan's
provisions.
Participants are allowed to make rollover contributions of amounts
received from other qualified employer-sponsored retirement plans. Such
contributions are deposited in the appropriate investment funds in
accordance with the participant's directions and the Plan's provisions.
4
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2004 and 2003
1. DESCRIPTION OF PLAN (continued)
Vesting
Participant account balances are 100% vested at all times.
Distribution of Benefits
Distributions from the Plan are available to a participant (or the
beneficiary) in any of the following situations: termination of employment
with the Company, retirement, total disability, death, reaching age
59-1/2, or a qualified financial hardship. The participant (or the
beneficiary) may elect to receive a lump sum distribution of the value of
their account, or they may choose to have the funds remain in the Plan.
Loans
A participant who is employed by the Company and meets certain Plan
requirements may elect to borrow funds from his or her account. The
borrowings are evidenced by notes that bear interest at the published
prime rate plus 1% and have repayment terms of one to 30 years, depending
on the purpose of the loans. Such repayments and interest thereon are
credited to the borrower's account and reinvested in the same manner as
current contributions.
Income Tax Status
The Plan obtained its latest determination letter on March 11, 2002, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter.
However, the Plan Administrator and the Plan's tax counsel believe that
the Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
Administrative Expenses
Although not required to do so, the Company has paid all of the expenses
(except for certain broker fees on transactions executed at the
participant's discretion, and loan fees) associated with administering the
Plan.
5
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2004 and 2003
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Plan's financial statements are prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in
the United States of America. Revenues are recognized as earned. Expenses
are recorded as incurred.
Investment Valuation and Income Recognition
Investments in mutual funds are valued at the published fair value as
reported by the fund manager which represents the net asset value of
shares held by the Plan at year end. Other investments are valued at the
published fair value as reported. The participant loans receivable is
valued at cost which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
Estimates
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires the
Plan management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results may differ
from those estimates.
3. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Merrill
Lynch Trust Company of California. Merrill Lynch Trust Company of
California is the trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions. Fees for the
investment management services are paid by ALZA.
4. INVESTMENT FUND ACTIVITY
The following are investment options under the Plan:
Mutual Funds
Merrill Lynch Ready Asset Trust - This fund seeks preservation of capital,
liquidity and the highest possible current income consistent with the
foregoing objectives, by investing in a diversified portfolio of
short-term money-market instruments.
6
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2004 and 2003
4. INVESTMENT FUND ACTIVITY (Continued)
Mutual Funds (continued)
Merrill Lynch Basic Value Fund - A fund of equity securities that
management of the fund believes are undervalued and represent basic
investment value.
Merrill Lynch Core Bond Fund - A fund of long-term corporate fixed-income
securities, including corporate bonds and notes, convertible securities
and preferred stocks.
Merrill Lynch Balanced Capital Fund - A fund of equity, debt and
convertible securities that seeks to achieve the highest total return
consistent with prudent risk.
Merrill Lynch Global Allocation Fund - A fund investing in domestic and
foreign equities, debt, and money markets seeking total return consistent
with prudent risk.
John Hancock Small Cap Growth Fund - A fund investing in emerging-growth
companies.
Templeton Foreign Fund - A fund investing in equity securities trading on
foreign markets seeking long term growth of capital.
AllianceBernstein New Europe Fund - This fund seeks long-term capital
appreciation by investing at least 65% of its total assets in the equity
securities of European companies.
AllianceBernstein Large Cap Growth Fund - This fund seeks long-term growth
of capital by investing at least 85% of its total assets in the equity
securities of large, carefully selected, U.S. companies.
Fidelity Advisor Overseas Fund - This fund seeks capital growth by
investing at least 65% of its total assets in foreign securities.
Franklin Flexible Capital Growth Fund - This fund seeks capital
appreciation by investing in equity securities of companies that maintain
their headquarters or conduct a majority of their operations in
California.
Merrill Lynch Healthcare Fund - This fund seeks long-term capital
appreciation through worldwide investment in equity securities of
companies that derive a substantial portion of their sales from products
and services in health care.
7
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2004 and 2003
4. INVESTMENT FUND ACTIVITY (Continued)
Mutual Funds (continued)
Merrill Lynch International Index Fund - This fund seeks to provide
investment results that, before expenses, replicate the total return of
the Morgan Stanley Capital International EAFE Index.
Merrill Lynch Pacific Fund - This fund seeks long-term capital
appreciation by investing primarily in equities of corporations domiciled
in Far Eastern or Western Pacific countries.
Merrill Lynch Small Cap Index Fund - This fund seeks to provide investment
results that, before expenses, replicate the total return of the Russell
2000 Index.
Merrill Lynch S&P 500 Index Fund - This fund seeks to provide investment
results that, before expenses, replicate the total return of the Standard
& Poor's 500(TM) Composite Stock Price Index.
Merrill Lynch Fundamental Growth Fund - This fund seeks long-term growth
of capital by investing at least 65% of assets in equities issued by
medium and large capitalization companies.
Munder NetNet Fund - This fund seeks long-term capital appreciation by
investing at least 65% of its total assets in equity securities.
PIMCO Small Cap Value Fund - This fund seeks long-term growth of capital
by investing at least 65% of its total assets in the common stocks of
companies with market capitalizations between $50 million and $1 billion.
Other Investments
Retirement Cash Management Account (RCMA) - A self-directed brokerage
account that enables participants to choose from a wide variety of
investments. As a result of the planned merger of the Plan into the
Johnson & Johnson Salaried Savings Plan described in Note 1, new
investments into the RCMA were frozen during 2003. Investments held in the
RCMA were liquidated by June 30, 2004, and the proceeds were invested in
the existing mutual funds as directed by the participants.
Johnson & Johnson Common Stock Fund - As a result of the merger on June
22, 2001, between Johnson & Johnson and ALZA Corporation, holders of ALZA
common stock received 0.98 of a share of Johnson & Johnson common stock
for each share of ALZA common stock.
8
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2004 and 2003
4. INVESTMENT FUND ACTIVITY (Continued)
Other Investments (continued)
Investments representing 5% or more of the Plan's net assets as of
December 31, 2004 and 2003 were as follows:
2004 2003
------------ ------------
Merrill Lynch Ready Asset Trust $ 22,987,271 $ 16,216,024
Merrill Lynch Basic Value Fund 13,174,080 13,108,200
Merrill Lynch S&P 500 Index Fund 10,228,348 8,050,054
Johnson & Johnson Common Stock
Held in Johnson & Johnson Common Stock Fund 41,810,241 40,127,924
Held in Retirement Cash Management Account - 2,489,684
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
Included in net assets available for benefits at December 31, 2004 and
2003 are benefits due to terminated participants of $0 and $65,504,
respectively.
In accordance with accounting principles generally accepted in the United
States of America, benefits due to terminated participants are included in
net assets available for benefits.
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500 as of December 31, 2004 and
2003:
2004 2003
------------- -------------
Net assets available for benefits per the financial statements $ 124,718,486 $ 135,812,704
Amounts allocated to withdrawing participants - (65,504)
------------- -------------
Net assets available for benefits per Form 5500 $ 124,718,486 $ 135,747,200
============= =============
9
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2004 and 2003
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 (Continued)
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the years ended December 31,
2004 and 2003:
2004 2003
------------- ------------
Benefits paid to participants per the financial
statements $ 26,365,249 $ 11,598,464
Add: Amounts allocated to withdrawing participants
at end of year - 65,504
Less: Amounts allocated to withdrawing participants
at beginning of year (65,504) -
------------- ------------
Benefits paid to participants per Form 5500 $ 26,299,745 $ 11,663,968
============= ============
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for payment
prior to year end but not yet distributed.
6. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities
are exposed to various risks such as interest rate, market, and credit
risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect participants' account balances and the amounts
reported in the statement of net assets available for benefits.
10
SUPPLEMENTAL SCHEDULE
11
ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2004
(c)
(b) Description of Investment Including
Identity of Issue, Borrower, Maturity Date, Rate of Interest, (d) (e)
(a) Lessor, or Similar Party Collateral, Par, or Maturity Value Cost Current Value
------- ---------------------------- ----------------------------------- --------------- ---------------
* Merrill Lynch Ready Asset Trust Fund $ 22,987,271 $ 22,987,271
* Merrill Lynch Basic Value Fund 12,728,618 13,174,080
* Merrill Lynch Core Bond Fund 4,733,012 4,768,531
* Merrill Lynch Balanced Capital Fund 3,755,827 3,794,057
* Merrill Lynch Global Allocation Fund 4,284,283 4,683,570
John Hancock Small Cap Growth Fund 2,087,993 2,390,885
Templeton Foreign Fund 1,977,372 2,273,063
AllianceBernstein New Europe Fund 186,999 210,281
AllianceBernstein Large Cap Growth Fund 817,375 883,394
Fidelity Advisor Overseas Fund 384,523 434,591
Franklin Flexible Cap Growth Fund 2,706,147 3,037,583
* Merrill Lynch Healthcare Fund 1,542,171 1,605,193
* Merrill Lynch International Index Fund 537,468 603,648
* Merrill Lynch Pacific Fund 440,327 466,197
* Merrill Lynch Small Cap Index Fund 934,820 1,074,819
* Merrill Lynch S&P 500 Index Fund 9,500,072 10,228,345
* Merrill Lynch Fundamental Growth Fund 5,641,755 6,137,512
Munder NetNet Fund 926,586 1,033,626
PIMCO Small Cap Value Fund 1,786,654 1,951,599
* Johnson & Johnson Common Stock 659,260 shares 37,776,365 41,810,241
* Participant Loans 5% - 10.5% - 1,144,102
--------------- ---------------
Total $ 115,735,638 $ 124,692,588
=============== ===============
* Represents parties-in-interest
12