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, 2005
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
(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
Financial Statements:
Statements of Net Assets Available for Benefits
Statement of Changes in Net Assets Available for Benefits
Notes to Financial Statements
Supplemental Schedule*:
Schedule H, line 4i - Schedule of Assets (Held at End of Year)
* Other supplemental 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 26, 2006
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 SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
By: /s/ R. J. Darretta
------------------------------------
R. J. Darretta
Chairman, Pension Committee
June 26, 2006
JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES
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FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2005 AND 2004
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004
PAGE(S)
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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
Supplemental Schedule*:
Schedule H, line 4i - Schedule of Assets (Held at
End of Year) 10
* Other supplemental 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 Savings Plan for
Union Represented Employees:
In our opinion, the accompanying statements of net assets available for benefits
and the related statements 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, 2005 and 2004, and the changes in net assets
available for benefits for the year ended December 31, 2005 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
Florham Park, New Jersey
June 23, 2006
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2005 AND 2004
2005 2004
----------- -----------
ASSETS
Interest in Johnson & Johnson Pension
and Savings Plans Master Trust, at fair value $38,452,284 $40,301,895
----------- -----------
Total investments 38,452,284 40,301,895
Receivables
Employee contributions 37,001 35,337
Employer contributions 11,510 8,411
----------- -----------
Total receivables 48,511 43,748
----------- -----------
Total assets 38,500,795 40,345,643
=========== ===========
LIABILITIES
Accrued expenses 32,576 17,357
----------- -----------
Total liabilities 32,576 17,357
=========== ===========
Net assets available for benefits $38,468,219 $40,328,286
=========== ===========
The accompanying notes are an integral part of these financial statements.
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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2005
ADDITIONS TO NET ASSETS ATTRIBUTED TO
Investment Income
Plan's interest in the Johnson & Johnson Pension
and Savings Plans Master Trust $ (301,580)
net depreciation
Contributions
Employee contributions 3,057,504
Employer contributions 962,684
-----------
Total additions 3,718,608
-----------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Payments to participants 5,427,331
Administrative expenses 151,344
-----------
Total deductions 5,578,675
-----------
Net decrease (1,860,067)
-----------
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 40,328,286
-----------
End of year $38,468,219
===========
The accompanying notes are an integral part of these financial statements.
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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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. The net assets of the Plan are held in
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 $14,000 in 2005.
Participant contributions are invested in any of the four investment funds
offered by the Plan at the direction of the participating employees.
Effective July 1, 2002, participants age 50 and over are eligible to
contribute extra pre-tax contributions ("catch-up contribution") above the
annual IRS limitations up to $4,000 in 2005. Participants can elect an
amount to be contributed from each paycheck as their catch-up contribution.
This amount will be in addition to the pre-tax cents per hour contribution
participants have elected.
After one year of eligible service, the Company contributes to the Plan an
amount equal to 50% of the employee directed contributions on the first
$0.20 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 may invest in one or more of the four investment funds offered
by the Plan. The investment mix chosen by the participant will apply to
employee contributions while Company matching contributions are invested in
the Johnson & Johnson Stock Fund unless participants elect to diversify.
In the third quarter of 1998, Johnson & Johnson incorporated a "dividend
pass-through" feature into the Plan. Up through 2001, the pass-through was
distributed to each participant via check.
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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
Effective January 1, 2002, dividends are automatically reinvested in the
J&J Stock Fund unless specific elections are made to receive payment via
check. Participants who had their dividends reinvested in the J&J Stock
Fund had an opportunity in early 2002 to receive those 2001 dividends in
cash. The eligibility to receive a dividend pass-through is contingent on
the ownership of shares in the Johnson & Johnson Stock Fund, which does not
include shares owned in the Employee Stock Ownership Plan Fund. The 2005
dividend pass-through amount paid to participants of $6,511 is reflected as
benefits paid to participants in the Statement of Changes in Net Assets
Available for Benefits.
All other dividend and interest income is reinvested by the Trustee.
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.
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
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
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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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
the trustee, 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.
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 the 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.
DERIVATIVES
The Trust will invest in securities from time to time that are denominated
in currencies other than the U.S. dollar. To hedge against adverse changes
in foreign exchange rates relating to non-U.S. dollar denominated
investments, the Trust can enter into forward foreign exchange contracts.
Forward foreign exchange contracts qualify as a derivative under Statement
of Financial Accounting Standard, Accounting for Derivative instruments and
Hedging Activities ("SFAS No. 133"). The holder is exposed to credit risk
for nonperformance and to market risk for changes in interest and currency
rates. Those instruments involve, to varying degrees, elements of credit
risk in excess of the amount recognized in the Statements of Net Assets
Available For Plan Benefits. The Trust attempts to mitigate this credit
risk by utilizing the same policies in making commitments and conditional
obligations as it does for on-balance sheet instruments, and through
structured trading with reputable parties and continual monitoring
procedures. Accordingly the Trust does not anticipate losses for
nonperformance. The Trust does not require collateral or other security to
support forward foreign exchange contracts. The Trust accounts for forward
foreign exchange contracts at fair value. The Trust has forward exchange
contracts outstanding at December 31, 2005 and 2004 in various currencies.
At December 31, 2005 and 2004, the notional amount outstanding for these
contracts in the Trust was $15,175,043 and $11,869,143, respectively, and
the net currency (loss)/gain recognized during 2005 and 2004 by the Trust
was ($155,355) and ($808,790), respectively. The Trust holds no other
material derivative financial instruments at December 31, 2005 and 2004.
-6-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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 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 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.
3. INVESTMENTS IN PLAN 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 0.32% and 0.38%, respectively, of the
Trust's net assets as of December 31, 2005 and 2004.
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,
---------------------------------
2005 2004
--------------- ---------------
Investments at fair value
Short term investment funds $ 525,961,309 $ 551,013,386
U.S. Government and Agency securities 1,203,887,637 856,971,117
Corporate debt 384,540,272 313,196,278
Preferred stocks 12,642,943 11,061,328
Common stocks 7,248,778,441 6,822,053,563
Equitites and other 1,718,940,364 1,348,404,513
Investments at contract value
Deposits in group annuity contracts and synthetic GICs 1,037,128,055 973,552,848
--------------- ---------------
Total Trust investments 12,131,879,021 10,876,253,033
Receivables 91,846,840 75,006,869
Liabilities (273,456,135) (211,812,708)
--------------- ---------------
Net assets held in Trust, at fair value $11,950,269,726 $10,739,447,194
=============== ===============
-7-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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,
2005
------------
Net appreciation in fair value of investments
Short term investment funds $ 311,514
U.S. Government and Agency securities (8,112,371)
Corporate debt (15,656,090)
Preferred stocks 2,051,876
Common stocks 191,591,423
Equities and other 95,164,399
------------
265,350,751
------------
Interest 129,122,943
Dividends 172,796,316
------------
Net investment gain $567,270,010
============
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 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 these contracts was approximately 4.21% and 4.12% for
2005 and 2004, respectively. The crediting interest rate was approximately
4.37% for 2005 and 4.22% for 2004. The crediting interest rate of these
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 for the
Plan at December 31, 2005 and 2004 was $4,165,969 and $3,712,423,
respectively.
On December 29, 2005, The Financial Accounting Standards Board (FASB)
released FASB Staff Position Nos. AAG INV-1 and SOP 94-4-1, Reporting of
Fully Benefit-Responsive Investment Contracts Held by Certain Investment
Companies Subject to the AICPA Investment Company Guide and Defined-
Contribution Health and Welfare and Pension Plans (FSP). The FSP
clarifies the definition of fully benefit-responsive investment contracts
for contracts held by defined contribution plans. The FSP also establishes
enhanced financial statement presentation and disclosure requirements for
defined contribution plans subject to the FSP effective for financial
statements issued for periods ending after December 15, 2006.
-8-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
Management intends to adopt the FSP in the Plan's financial statements for
the year ended December 31, 2006 and does not believe the adoption will
have a material affect on the plan's financial statements.
5. 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 in
compliance with applicable sections of the Internal Revenue Code ("IRC").
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 IRC.
6. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of institutional commingled funds
managed by State Street Global Advisors, a division of State Street. State
Street is the trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions. As of December 31,
2005 the total market value of investments in the institutional commingled
funds managed by State Street was $2,648,969.
The Plan also invests in shares of the Company, which is managed by State
Street Global Advisors. The Company is the plan sponsor and, therefore,
these transactions qualify as party-in-interest transactions. As of
December 31, 2005 the market value of investments in the Johnson & Johnson
Common Stock Fund was $26,458,756.
-9-
JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES
SCHEDULE H, LINE 4I - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2005
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, COLLATERAL, CURRENT
LESSOR, OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
---------------------------- ----------------------------- ---- ----------
Plan's interest in the Trust Plan's interest in the Johnson $38,452,284
& Johnson Pension and Savings
Plans Master Trust
-10-