JOHNSON & JOHNSON — Annual Report 2009

Jun 25, 2009

11-K 1 y77896e11vk.htm 11-K 11-K PAGEBREAK

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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

þ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

*For the Fiscal Year Ended December 31, 2008*

OR

o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-3215

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)

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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

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 the Employee Retirement Income Security Act of 1974, as amended, have been omitted because they are not required or are not applicable.

Exhibits:

1. Consent of PricewaterhouseCoopers LLP, dated June 25, 2009

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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/ Kaye Foster-Cheek
	Kaye Foster-Cheek
	Chairman, Pension Committee

June 25, 2009

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JOHNSON & JOHNSON SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE

DECEMBER 31, 2008 AND 2007

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Johnson & Johnson Savings Plan for Union Represented Employees

Index to Financial Statements December 31, 2008 and 2007

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 – 15
Supplemental Schedule*:
Schedule H, line 4i — Schedule of Assets (Held at
End of Year)	16

*
EX-23

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Report of Independent Registered Public Accounting Firm

To the Participants of the Johnson & Johnson Savings Plan for Union Represented Employees and the Pension Committee of Johnson & Johnson:

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 Johnson & Johnson Savings Plan for Union Represented Employees (the “Plan”) at December 31, 2008 and December 31, 2007, and the changes in net assets available for benefits for the year ended December 31, 2008 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.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of Assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits 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.

/s/ PricewaterhouseCoopers LLP New York, NY June 24, 2009

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Johnson & Johnson Savings Plan for Union Represented Employees

Statements of Net Assets Available for Benefits December 31, 2008 and 2007

	2008
Assets
Interest in Johnson & Johnson Pension
and Savings Plans Master Trust, at fair value	$ 37,129,163	$	42,848,996
Total investments	37,129,163		42,848,996
Total assets	37,129,163		42,848,996
Liabilities
Payable for investments purchased	176,101
Accrued expenses	10,145		20,741
Total liabilities	186,246		20,741
Net assets available for benefits, at fair value	36,942,917		42,828,255
Adjustment from fair value to contract value for
fully benefit-responsive investment contracts	(45,473	)	(62,368	)
Net assets available for benefits	$ 36,897,444	$	42,765,887

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, 2008

Additions to net assets attributed to
Investment Income/Loss
Plan’s interest in the Johnson & Johnson Pension
and Savings Plans Master Trust net investment income/loss	$ (4,858,734	)
Contributions
Employee contributions	3,006,902
Employer contributions	910,069
Total additions	(941,763	)
Deductions from net assets attributed to:
Payments to participants	4,772,636
Administrative expenses	154,044
Total deductions	4,926,680
Net increase/(decrease)	(5,868,443	)
Net assets available for benefits
Beginning of year	42,765,887
End of year	$ 36,897,444

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. |
| --- |
| 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 21 years or older 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
$0.20 per hour up to a maximum of $3.00 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 $15,500 in 2008. |
| Participant contributions are invested in any of the four investment funds offered by the
Plan at the direction of the participating employees. |
| Participants age 50 and over are eligible to contribute extra pre-tax contributions
(“catch-up contributions”) above the annual IRS limitations up to $5,000 in 2008.
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 $1.50 per hour of the
participant’s contribution (depending on the negotiated collective bargaining agreement). The
employer matching contribution is composed of cash and 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. |
| Dividends are automatically reinvested in the Johnson & Johnson Stock Fund unless specific
elections are made to receive payment via check. The 2008 dividend pass-through amount paid
to participants of $9,036 is reflected in benefits paid to participants in the Statement of
Changes in Net Assets Available for Benefits. |

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

| For all other funds the Trustee reinvests all dividend and interest income. |
| --- |
| Vesting |
| A participant’s interest in his/her 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 or long-term disability.
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 his/her 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 lump sum 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, in that each participant
would receive the respective value in their account. |

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

| 2. |
| --- |
| 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. Certain amounts in the prior year financial statements have been
reclassified to conform to the current presentation. |
| Investment Valuation and Income Recognition of the Trust |
| The Plan’s interest in the Trust is stated at fair value. The majority of the securities are
traded on a national securities exchange and 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, which may include the investment manager. Estimated fair market value for these securities, primarily fixed income, are typically made using pricing matrices, models or
bids from brokers/dealers. Where readily available, multiple pricing sources are used by the
custodian bank to verify these estimates. |
| 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 for a single unit 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 net appreciation (depreciation) of 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 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 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

| The Trust accounts for forward foreign exchange contracts at fair value. The
Trust had forward foreign exchange contracts outstanding at December 31, 2008 and 2007 in various
currencies. At December 31, 2008 and 2007, the notional amount outstanding for these
contracts in the Trust was $21,719,902 and $7,090,172, respectively, and the net currency
gain/(loss) recognized during 2008 and 2007 by the Trust was $137,863 and $31,996,
respectively. The Trust held no other material derivative financial instruments at December
31, 2008 and 2007. |
| --- |
| In March 2008, the FASB issued SFAS Statement No. 161, Disclosures about Derivative
Instruments and Hedging Activities , an amendment of FASB Statement No. 133, to enhance the
disclosure regarding the Trust’s derivative and hedging activities, to improve the
transparency of financial reporting. This statement is effective for fiscal years beginning
after November 15, 2008. The adoption of SFAS No. 161 will have no impact on the Trust’s
financial position, financial performance, and cash flows. |
| Fair Value Measurements |
| In September 2006, the FASB issued SFAS 157, “Fair Value Measurements,” which is effective
for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about assets and liabilities
measured at fair value. SFAS 157 establishes the following: |

| • | Defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement
date, and establishes a framework for measuring fair value; |
| --- | --- |
| • | Establishes a three-tier hierarchy for fair value measurements based upon the
transparency of inputs to the valuation of an asset or liability as of the
measurement date; |
| • | Eliminates large position discounts for financial instruments quoted in active
markets; and |
| • | Expands disclosures about instruments measured at fair value. |

| The Plan adopted SFAS No. 157 in the fiscal first quarter of 2008, the impact of which is
discussed in Note 4. |
| --- |
| 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. |

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

| Risks and Uncertainties |
| --- |
| The Plan provides for various investment options in funds which can invest in a combination
of equity, fixed income securities and other investments. 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. |
| Reporting of Fully Benefit-Responsive Investment Contracts |
| On December 29, 2005, the 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 (the “FSP”), which became effective for the Plan on December 31,
2006. The FSP requires that investment contracts held by a defined-contribution plan be
reported at fair value. However, contract value is the relevant measurement criteria for
that portion of the net assets available for benefits of a defined contribution plan
attributable to fully benefit-responsive investment contracts because contract value is the
amount participants would receive if they were to initiate permitted transactions under the
terms of the Plan. As required by the FSP, the Statements of Net Assets Available for
Benefits present the fair value of the investment contracts as well as the adjustment of the
fully benefit-responsive investment contracts from fair value to contract value. The
Statement of Changes in Net Assets Available for Benefits is prepared on a contract value
basis. |

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

| 3. |
| --- |
| The assets of the Plan are maintained in the Johnson & Johnson Pension and Savings Plans
Master Trust. The Plan holds approximately 0.33% and 0.30%, respectively, of the Trust’s
net assets as of December 31, 2008 and 2007. The Plan’s sole investment is its interest in
the Trust and therefore is greater than 5% of Plan assets. |
| 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, — 2008	2007
Investments at fair value
Short term investment funds	$ 615,064,003	$	605,589,905
U.S. Government and Agency securities	999,402,502		1,004,959,948
Corporate debt	605,765,016		585,744,054
Preferred stock	5,885,986		13,447,079
Common stock	6,172,253,997		8,706,451,063
Common Collective Trusts	1,225,453,603		2,394,683,035
Equities and other *	178,449,770		211,810,333
Deposits in group annuity contracts and synthetic GICs	1,582,063,704		1,130,884,176
Total Trust investments at fair value	11,384,338,581		14,653,569,593
Receivables	108,472,125		120,905,382
Liabilities	(207,830,548	)	(299,589,886	)
Adjustment from fair value to contract value for
fully benefit-responsive investment contracts	(10,405,457	)	(13,390,868	)
Net assets held in the Trust	$ 11,274,574,701	$	14,461,494,221

• At December 31, 2008 the Trust has unfunded commitments of underlying funds of $53,726,755 outstanding. These commitments are expected to be satisfied by distributions from existing investments.

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

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,
	2008
Net appreciation/(depreciation) in fair value of investments
Short term investment funds	$ 127,387
U.S. Government and Agency securities	21,851,948
Corporate debt	(120,264,082	)
Preferred stock	(12,870,109	)
Common stock	(2,820,735,126	)
Common Collective Trusts	(783,225,552	)
Equities and other	(36,252,855	)
	(3,751,368,389	)
Interest	128,805,127
Dividends	214,603,154
Net investment income	$ (3,407,960,108	)

| 4. |
| --- |
| The Plan’s valuation methodologies were applied to all of the trust investments carried at
fair value, effective January 1, 2007. The Plan has an established and well-documented
process for determining fair values. Fair value is based upon quoted market prices, where
available. If listed prices or quotes are not available, fair value is based upon models
that primarily use, as inputs, market-based or independently sourced market parameters,
including yield curves, interest rates, volatilities, equity or debt prices, foreign
exchange rates and credit curves. |
| While the Plan believes its valuation methods are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair
value of certain financial instruments could result in a different estimate of fair value at
the reporting date. |
| Valuation Hierarchy |
| SFAS 157 establishes a three-level valuation hierarchy for disclosure of fair value
measurements. The three levels are defined based on the inputs to the valuation methodology
as follows: |

| • | Level 1 — quoted prices (unadjusted) for identical assets or liabilities in active
markets. |
| --- | --- |
| • | Level 2 — quoted prices for identical assets or liabilities in active markets and
inputs that are observable for the asset or liability, either directly or indirectly,
for substantially the full term of the financial instrument. |
| • | Level 3 — inputs are unobservable and significant to the fair value measurement.
These are usually negotiated prices between two parties. |

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

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Following is a description of the valuation methodologies used for the investments measured at fair value.

• Short-term investments — Cash and quoted short-term instruments are valued at the closing price or the amount held on deposit by the custodian bank. Other investments are through investment vehicles valued using the Net Asset Value (NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in a market that is not active and classified as Level 2.

• U.S. government & agency issues — A limited number of these investments are valued at the closing price reported on the major market on which the individual securities are traded. Where quoted prices are available in an active market, the investments are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available for the specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. When quoted market prices for a security are not available in an active market, they are classified as Level 2.

• Corporate Debt — A limited number of these investments are valued at the closing price reported on the major market on which the individual securities are traded. Where quoted prices are available in an active market, the investments are classified as Level 1. If quoted market prices are not available for the specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows and are classified as Level 2. Level 3 debt instruments are priced based on unobservable inputs, usually negotiated values agreed to by the interested parties.

• Common and preferred stocks — Common stocks are valued at the closing price reported on the major market on which the individual securities are traded. Substantially all common stock is classified within Level 1 of the valuation hierarchy.

• Common Collective Trusts — The investments are public investment vehicles valued using the Net Asset Value (NAV) provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. Assets in the Level 2 category have a quoted market price in a market that is not active.

• Guaranteed insurance contracts (GICs) — Traditional GICs are valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations while considering the creditworthiness of the issuer, and are classified as Level 3. The fair value of the synthetic guaranteed investment contract is based on the underlying investments held in separate account portfolios. The underlying investments are U.S. Government, Agencies, Fixed Income and Asset-Backed Securities. The synthetic guaranteed investment contract and related investments are classified as Level 2. The synthetic GIC contracts had a fair value of

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

$590,498,037 and $454,418,527 at December 31, 2008 and 2007, respectively. See Note 5 of these financial statements for further information on these contracts.

• Other assets — Other assets are represented primarily by limited partnerships, as well as commercial loans and commercial mortgages that are not classified as corporate debt. Other assets that are exchange listed and actively traded are classified as Level 1 while inactively traded assets are classified as Level 2. Most limited partnerships represent investments in private equity and similar funds that are valued by the general partners. These, as well as any other assets valued using unobservable inputs, are classified as Level 3.

Master Trust investments measured at fair value

	Quoted market — prices inputs	Observable — inputs	Unobservable — inputs
December 31, 2008	(Level 1)	(Level 2)	(Level 3)	Total Assets
Short-term investment funds	$ 21,291,008	$ 593,772,995	$ —	$ 615,064,003
U.S. government and agency securities	266,074,688	733,327,814	—	999,402,502
Corporate debt	79,657	595,867,616	9,817,743	605,765,016
Preferred stocks	5,885,986	—	—	5,885,986
Common stocks	6,170,627,010	1,156,320	470,667	6,172,253,997
Common Collective Trusts	—	1,225,453,603	—	1,225,453,603
Other assets	3,187,299	77,121,840	98,140,631	178,449,770
Trust investments at fair value	6,467,145,648	3,226,700,188	108,429,041	9,802,274,877
Guaranteed and synthetic
investment
contracts	—	590,497,993	991,565,711	1,582,063,704
Total Master Trust investments	$ 6,467,145,648	$ 3,817,198,181	$ 1,099,994,752	$ 11,384,338,581

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

Level 3 Gains and Losses
The table below sets forth a summary of changes in the fair value of the Plan’s Level 3
assets for the year ended December 31, 2008.

						and synthetic
						insurance
	Corporate debt	Common stocks		Other assets		contracts
Balance December 31, 2007	$ 12,090,931	$	1,404,825	$	98,821,844	$	676,465,649
Realized gains (losses)	(55,141	)	1,245		(2,815,476	)	6,565,253
Unrealized gains (losses) for assets
still held at December 31, 2008	(18,303,203	)	61,343		7,043,596		8,761,085
Purchases, sales, issuances and
settlements, net	16,085,156		(996,746	)	(4,909,333	)	299,773,724
Balance, December 31, 2008	$ 9,817,743	$	470,667	$	98,140,631	$	991,565,711

| 5. |
| --- |
| The Trust holds investments in traditional and synthetic guaranteed investment contracts
(GICs). The weighted average insurance financial strength rating of the insurers for these
contracts is AA. These investments are recorded at their fair values. The traditional
GICs’ contract value represents contributions made under the contract and reinvested income,
less any withdrawals. The synthetic GICs are recorded at contract value, which
represents the value of the underlying assets owned by the Trust plus the amount designed to
smooth the impact of normal market fluctuations on those assets. Both the traditional and
synthetic GICs are fully benefit-responsive. Participants may under most circumstances
direct the withdrawal or transfer of all or a portion of their investment at contract value.
Currently no reserves are needed against contract values for credit risk of the contract
issuers or otherwise. |
| The traditional GICs provide a fixed return on principal over a specified period of time
through fully benefit-responsive contracts issued by an insurance company, which are backed
by the general account of that insurer. The contract value of the traditional GICs was
$968,022,313 and $668,248,591 at December 31, 2008 and 2007, respectively. The fair value of
the traditional GICs, as determined by using discounted cash flows, was $991,565,725 and
$676,465,649 at December 31, 2008 and 2007, respectively. |
| The synthetic GIC provides a return over a period of time through a fully benefit-responsive
contract, or wrapper contract, which is backed by the underlying assets owned by the Trust.
The portfolio of assets, overall of AA+ credit quality, underlying the synthetic GIC includes
mortgages, corporate, and United States Treasury Notes and Bonds. The contract value of the
synthetic GIC was $603,635,992 and $449,244,716 at December 31, 2008 and 2007, respectively.
The fair value of the synthetic GICs is based on the fair value of the underlying pool of securities, and
at December 31, 2008 and 2007, was $590,498,037 and $454,418,527, respectively. |

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

| | The crediting interest rates for the synthetic GIC is calculated on a quarterly basis using
the contract value, and the market value, yield and duration of the underlying securities,
and cannot be less than zero. The crediting interest rates for the traditional GICs are
agreed to in advance with the issuer. The crediting interest rate for the contracts at
December 31, 2008 and 2007 was 5.20% and 5.03%, respectively. Effective April 2007, the
crediting rate is calculated on a monthly basis, and no longer on a quarterly basis. In the
event of extreme changes in interest rates, the crediting rate may be adjusted to reflect
current market condition. |
| --- | --- |
| | Key factors that could influence future average interest crediting rates include, but are
not limited to: participant directed cash flows; changes in interest rates; total return
performance of the fair market value bond strategies underlying the synthetic GIC contract;
default or credit failures of any of the securities, investment contracts, or other
investments held in the Plan; and the initiation of an extended termination (immunization) of
the synthetic GIC contract. |
| | The average market value yield of the contracts for 2008 and 2007 was 5.07% and 4.86%,
respectively (calculated by taking the average of the monthly market value weighted yields
of the investments). The average yield earned by the contracts that reflects the actual
interest credited to participants for 2008 and 2007 was 4.90% and 4.60%, respectively
(calculated by dividing annualized earnings credited to participants by the market value of
the Interest Income Fund). |
| | There are certain events not initiated by Plan participants that limit the ability of the
Plan to transact with the issuer of a GIC at its contract value. Specific coverage provided
by each traditional GIC and synthetic GIC may be different from each issuer, and can be
found in the individual traditional GIC or synthetic GIC contracts held by the Plan.
Examples of such events include: the Plan’s failure to qualify under the Internal Revenue
Code of 1986 as amended; full or partial termination of the Plan; involuntary termination of
employment as a result of a corporate merger, divestiture, spin-off, or other significant
business restructuring, which may include early retirement incentive programs or bankruptcy;
changes to the administration of the Plan which decreases employee or employer
contributions, the establishment of a competing plan by the plan sponsor, the introduction
of a competing investment option, or other Plan amendment that has not been approved by the
contract issuers; dissemination of a participant communication that is designed to induce
participants to transfer assets from this investment option; events resulting in a material
and adverse financial impact on the contract issuer, including changes in the tax code, laws
or regulations. The Plan fiduciaries do not believe that the occurrence of any of the
aforementioned events, which would limit the Plan’s ability to transact with the issuer of a
GIC at its contract value with participants, is probable. |
| 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 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. |

The accompanying notes are an integral part of these financial statements.

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Notes to Financial Statements

7.	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, 2008 the total market value of investments for the Plan in the
institutional commingled funds managed by State Street was $2,067,652.
	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. As of December 31,
2008 and 2007, the market value of investments in Johnson & Johnson Common Stock was $23,585,106 and
$27,044,148, respectively. During the year ended December 31, 2008, the Plan made purchases of $3,052,398 and sales of
$3,732,854 of the Company’s common stock. The total dividend income received during 2008 was
$721,391.
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, — 2008		2007
Net assets available for benefits per the financial statements	$ 36,897,444		$ 42,765,887
Amounts allocated to withdrawing participants	$ (2,330	)	$ (48,125	)
Adjustment of synthetic GIC values from contract value to fair value	(57,415	)	24,097
Net assets available for benefits per the Form 5500	$ 36,837,699		$ 42,741,859
The following is a reconciliation of benefits paid to participants per the financial
statements to the Form 5500:

Benefits paid to participants per the financial statements	December 31, 2008 — $ 4,772,636
Add: Amounts allocated to withdrawing participants at December 31, 2008 (not yet paid)	2,330
Less: Amounts allocated to withdrawing participants at December 31, 2007	(48,125	)
Benefits paid to participants per the Form 5500	$ 4,726,841
The following is a reconciliation of investment income per the financial statements to Form
5500:

Total investment income per the financial statements	December 31, 2008 — $ (4,858,734	)
Net change in adjustment from contract value to fair value for synthetic GIC value	$ (81,512	)
Total investment income per the Form 5500	$ (4,940,246	)

The accompanying notes are an integral part of these financial statements.

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Schedule H, line 4i — Schedule of Assets (Held at End of Year) December 31, 2008

	Description of Investment
	Including Maturity Date,
Identity of Issue, Borrower, Lessor,	Rate of Interest, Collateral,			Current
or Similar Party	Par or Maturity Value	Cost		Value
Plan’s interest in the Trust	Plan’s interest in the Johnson & Johnson
Pension and Savings Plans Master Trust	*	*	$ 37,129,163

** Not Applicable

The accompanying notes are an integral part of these financial statements.

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