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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
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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, 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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JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
(Full title of the Plan)
JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
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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
Financial Statements:
Statements of Net Assets Available for Benefits
Statement of Changes in Net Assets Available for Benefits
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 required or are not applicable.
Exhibits:
23. Consent of PricewaterhouseCoopers LLP, dated June 24, 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.
JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN
By: /s/ R. J. Darretta
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R. J. Darretta
Chairman, Pension Committee
June 27, 2005
JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN
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FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
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PAGE(S)
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 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 required or are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants, the Pension Committee and the
Compensation & Benefits Committee of the
Johnson & Johnson Retirement Savings Plan:
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Johnson & Johnson Retirement Savings Plan (the "Plan") as of December 31,
2004 and 2003, and the changes in net assets available for benefits for the year
ended December 31, 2004 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). 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
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Florham Park, New Jersey
June 24, 2005
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JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004 AND 2003
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2004 2003
ASSETS
Interest in Johnson & Johnson Pension
and Savings Plans Master Trust, at fair value $135,917,302 $106,429,400
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Total investments 135,917,302 106,429,400
Receivables
Employee contributions 320,808 282,555
Employer contributions 117,904 104,265
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Total receivables 438,712 386,820
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Total assets 136,356,014 106,816,220
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LIABILITIES
Accrued expenses 51,711 52,680
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Total liabilitites 51,711 52,680
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Net assets available for benefits $136,304,303 $106,763,540
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The accompanying notes are an integral part of these financial statements.
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JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2004
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ADDITIONS TO NET ASSETS ATTRIBUTED TO
Investment income
Plan's interest in the Johnson & Johnson Pension and
Savings Plans Master Trust net appreciation $ 21,529,110
Interest 255,921
Dividends 2,013,275
Contributions
Employee contributions 11,674,563
Employer contributions 4,409,837
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Total additions 39,882,706
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Benefits paid to participants 10,025,320
Administrative expenses 316,623
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Total deductions 10,341,943
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Net increase 29,540,763
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 106,763,540
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End of year $136,304,303
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The accompanying notes are an integral part of these financial statements.
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JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF PLAN
GENERAL
The Johnson & Johnson Retirement Savings Plan (the "Plan") is a defined
contribution plan which was established on March 1, 1990 for eligible
employees of certain participating subsidiaries of Johnson & Johnson
("J&J" or the "Company") located in Puerto Rico which have adopted the
Plan. The Plan was designed to provide eligible employees with an
opportunity to strengthen their financial security at retirement by
providing an incentive to save and invest regularly. The funding of the
Plan is made through employee and Company contributions. Beginning January
1, 2003, assets of the Plan are maintained in the Johnson & Johnson
Pension and Savings Plans Master Trust (the "Trust"). The Plan's interest
in the Johnson & Johnson Pension and Savings Plans Master Trust is
allocated to the Plan based upon the total of each participant's share in
the Trust.
As of January 1, 2003, State Street Bank and Trust Company ("State
Street") serves as agent and custodian of the Plan for purposes of
investment of the assets of the Trust, maintained by Banco Popular de
Puerto Rico. As such, State Street performs certain services for the Plan,
including the execution of certain participant directed investments, which
are commingled for investment purposes only with assets of other
tax-qualified plans maintained by Johnson & Johnson. Prior to January 1,
2003, the assets of the Plan were maintained and transactions therein were
executed by Banco Popular de Puerto Rico.
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, salaried and hourly employees of participating Johnson &
Johnson companies who are Puerto Rico residents can contribute to the Plan
immediately.
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 3% up to a maximum of 10% pre-tax
and/or a minimum of 1% up to a maximum of 10% post-tax of their base
salary. Annual pre-tax contributions may not individually exceed $8,000 in
2004 under Puerto Rico law. All employee contributions are invested in any
of the investment funds offered by the Plan at the direction of the
participating employees.
After one year of service, the Company contributes to the Plan an amount
equal to 75% of the participant's pre-tax contributions up to 6% of their
base salary into the Johnson & Johnson Stock Fund. Beginning in 2003, all
participants have the option to elect that the Company matching
contribution be invested in the current investment fund mix chosen by the
participant.
INVESTMENT
Participants may invest in one or more of the nine investment funds
offered by the Plan. The investment mix chosen by the participant will
apply to employee and Company matching contributions, if elected. Rollover
contributions are invested at the election of the participant.
VESTING
A participant's account in the Plan, including participant contributions,
company contributions and earnings thereon, is always fully vested. As a
result, there are no forfeitures under the Plan.
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JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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PAYMENT OF BENEFITS
Benefits are paid to participants upon termination of employment or
retirement. Participants can elect to defer payment if account balances
are greater than $5,000. Distributions are paid either in a lump sum
payment, or installment payments made on a monthly, quarterly or annual
basis. Installment payments are made over a period of years selected by
the participant.
A participant's account may be distributed to their beneficiaries in lump
sum or in installments upon the participant's death.
Participants are allowed to withdraw their post-tax contributions and
earnings thereon one time per calendar year. Participants may withdraw
pre-tax contributions only upon meeting certain hardship conditions. The
benefits to which participants are entitled are the amounts provided by
contributions 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 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
Although it has not expressed an intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of a
partial or full Plan termination, all Plan funds must be used exclusively
for the benefit of the Plan participants.
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 accounting principles generally accepted
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. Securities not traded on a national securities exchange are valued
using external pricing vendors based on the frequency of their valuations.
Benefit responsive guaranteed and synthetic investment contracts are
recorded at contract value, which approximates fair value (Note 4).
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 funds. The purchase or redemption price of the units is determined
by State Street, based on the current market value of the underlying
assets of the funds. Each 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.
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JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
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 Plan's interest in the Trust and includes net appreciation
(depreciation) in the fair value of investments held in the 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 management 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 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 could 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.
RECLASSIFICATION
Certain prior year amounts have been reclassified to conform to the
current year presentation.
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JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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3. INVESTMENTS IN PLAN MASTER TRUST
Effective January 1, 2003, the assets of the Plan are maintained in the
Johnson & Johnson Pension and Savings Plans Master Trust. The Plan holds
approximately 1.27% and 1.17%, respectively of the Trust's net assets as
of December 31, 2004 and 2003.
Net assets, income, and expenses are allocated to the Plan based on the
total of each participant's share in the respective funds.
The following table represents the total value of investments in the
Trust:
AS OF DECEMBER 31,
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2004 2003
Investments at fair value
Short term investment funds $ 551,013,386 $ 251,872,480
U.S. Government and Agency securities 856,971,117 688,955,151
Corporate debt 313,196,278 305,698,696
Preferred stocks 11,061,328 10,536,822
Common stocks 6,822,053,563 4,890,705,529
Equities and other 1,348,404,513 2,074,484,099
Investments at contract value
Deposits in group annuity contracts and synthetic GICs 973,552,848 924,152,802
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Total Master Trust investments 10,876,253,033 9,146,405,579
Receivables 75,006,869 179,120,628
Liabilities (211,812,708) (230,499,957)
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Net assets held in Master Trust, at fair value $ 10,739,447,194 $ 9,095,026,250
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-7-
JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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The net investment income of the Johnson & Johnson Pension and Savings
Plans Master Trust was composed of the following:
FOR THE
YEAR ENDED
DECEMBER 31,
2004
Net appreciation in fair value of investments
Short term investment funds $ 326,060
U.S. Government and Agency securities 3,465,629
Corporate debt 8,776,223
Preferred stocks 579,384
Common stocks 1,094,390,127
Equities and other 39,969,617
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1,147,507,040
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Interest 96,085,856
Dividends 101,802,719
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Net investment gain $1,345,395,615
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4. GUARANTEED AND SYNTHETIC INVESTMENT CONTRACTS
The Trust holds investments in guaranteed and synthetic investment
contracts. 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 withdrawal or transfer of all or a
portion of their investment at contract value. There are currently no
reserves against contract values for credit risk of the contract issuers
or otherwise.
The average yield of these contracts was approximately 4.12% and 4.86% for
2004 and 2003, respectively. The crediting interest rate was approximately
4.22% and 4.96% for 2004 and 2003, respectively. The crediting interest
rate of the contracts is the annual return of the contracts before plan
expenses, while the average yield includes plan expenses. The crediting
interest rate for the investment contracts is either agreed upon in
advance with the issuer or varies based on an agreed upon formula, but
cannot be less than zero. The fair value of guaranteed and synthetic
investment contracts at December 31, 2004 and 2003 was $4,940,892 and
$4,841,473, respectively.
5. TAX STATUS
The Associated Free State of Puerto Rico, Property Department, has
determined and informed the Company by a letter dated March 1, 1990, that
the Plan constitutes as a qualified plan under Section 165(a) of the
Puerto Rico Income Tax Act of 1954 as amended (the "ITA"), and the Plan
and the related trust accounts are exempt from Puerto Rico income taxes
under Section 165(a) and 165(e) of the ITA. Although the Plan has been
amended since receiving the determination letter, the Plan Administrator
and the Plan's tax counsel believe that the Plan is currently designed and
is currently being operated in compliance with the applicable requirements
of the Puerto Rico tax code. Therefore, no provision for income taxes has
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JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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been included in the Plan's financial statements.
6. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by State
Street Global Advisors. State Street is the agent 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.
7. 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,
2004 2003
Net assets available for benefits
per the financial statements $ 136,304,303 $ 106,763,540
Amounts allocated to withdrawing participants (8,274) (17,016)
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Net assets available for benefits per the Form 5500 $ 136,296,029 $ 106,746,524
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FOR THE YEAR ENDED
DECEMBER 31, 2004
Benefits paid to participants per the financial statements $ 10,025,320
Add: Amounts allocated to withdrawing participants at
December 31, 2004 8,274
Less: Amounts allocated to withdrawing participants
at December 31, 2003 (17,016)
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Benefits paid to participants per the Form 5500 $ 10,016,578
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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, 2004 but not yet paid as of that date.
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