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| $(3.1) | Net cash used for financing activities |
The following table summarizes cash taxes paid net of refunds:
| | | | | | | | | | | | |
| (Dollars in Millions) | 2024 | 2023 | 2022 | |
U.S. Federal (1) | $3,815 | 4,722 | 2,158 | |
| U.S. State and Local taxes | 341 | 236 | 216 | |
| Total U.S. | $4,156 | 4,958 | 2,374 | |
| Total Foreign | 2,558 | 3,616 | 2,849 | |
| Total cash taxes paid net of refunds | $6,714 | $8,574 | $5,223 | |
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For tax matters, see Note 8 to the Consolidated Financial Statements. For the proposed talc settlement payments, see Note 19 to the Consolidated Financial Statements.
Financing and market risk
The Company uses financial instruments to manage the impact of foreign exchange rate changes on cash flows. Accordingly, the Company enters into forward foreign exchange contracts to protect the value of certain foreign currency assets and liabilities and to hedge future foreign currency transactions primarily related to product costs. Gains or losses on these contracts are offset by the gains or losses on the underlying transactions. A 10% appreciation of the U.S. Dollar from the December 29, 2024 market rates would increase the unrealized value of the Company’s forward contracts by $0.2 billion. Conversely, a 10% depreciation of the U.S. Dollar from the December 29, 2024 market rates would decrease the unrealized value of the Company’s forward contracts by $0.2 billion. In either scenario, the gain or loss on the forward contract would be offset by the gain or loss on the underlying transaction, and therefore, would have no impact on future anticipated earnings and cash flows.
The Company hedges the exposure to fluctuations in currency exchange rates, and the effect on certain assets and liabilities in foreign currency, by entering into currency swap contracts. A 1% change in the spread between U.S. and foreign interest rates on the Company’s interest rate sensitive financial instruments would either increase or decrease the unrealized value of the Company’s swap contracts by approximately $1.5 billion. In either scenario, at maturity, the gain or loss on the swap contract would be offset by the gain or loss on the underlying transaction, and therefore, would have no impact on future anticipated cash flows.
The Company does not enter into financial instruments for trading or speculative purposes. Further, the Company has a policy of only entering into contracts with parties that have at least an investment grade credit rating. The counterparties to these contracts are major financial institutions and there is no significant concentration of exposure with any one counterparty. Management believes the risk of loss is remote. The Company entered into credit support agreements (CSA) with certain derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements. See Note 6 to the Consolidated Financial Statements for additional details on credit support agreements.
The Company invests in both fixed rate and floating rate interest earning securities which carry a degree of interest rate risk. The fair market value of fixed rate securities may be adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall. A 1% (100 basis points) change in spread on the Company’s interest rate sensitive investments would either increase or decrease the unrealized value of cash equivalents and current marketable securities by less than $8.0 million.
The Company has access to substantial sources of funds at numerous banks worldwide. In June 2024, the Company secured a new 364-day Credit Facility of $10 billion, which expires on June 25, 2025. Interest charged on borrowings under the credit line agreement is based on either Secured Overnight Financing Rate (SOFR) Reference Rate or other applicable market rate as allowed plus applicable margins. Commitment fees under the agreement are not material.
Total borrowings at the end of 2024 and 2023 were $36.6 billion and $29.3 billion, respectively. The increase in the borrowings was due to the issuance of new debt in 2024. In 2024, net debt (cash and current marketable securities, net of debt) was $12.1 billion compared to net debt of $6.4 billion in 2023. Total debt represented 34.0% of total capital (shareholders’ equity and total debt) in 2024 and 30.0% of total capital in 2023. Shareholders’ equity per share at the end of 2024 was $29.70 compared to $28.57 at year-end 2023.
A summary of borrowings can be found in Note 7 to the Consolidated Financial Statements.
Dividends
The Company increased its dividend in 2024 for the 62nd consecutive year. Cash dividends paid were $4.91 per share in 2024 and $4.70 per share in 2023.
On January 2, 2025, the Board of Directors declared a regular cash dividend of $1.24 per share, payable on March 4, 2025 to shareholders of record as of February 18, 2025.
Other information
Critical accounting policies and estimates
Management’s discussion and analysis of results of operations and financial condition are based on the Company’s consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP). The preparation of these financial statements requires that management make estimates and assumptions that affect the amounts reported for revenues, expenses, assets, liabilities and other related disclosures. Actual results may or may not differ from these estimates. The Company believes that the understanding of certain key accounting policies and estimates are essential in achieving more insight into the Company’s operating results and financial condition. These key accounting policies include revenue recognition, income taxes, legal and self-insurance contingencies, valuation of long-lived assets, assumptions used to determine the amounts recorded for pensions and other employee benefit plans and accounting for stock based awards.
Revenue Recognition: The Company recognizes revenue from product sales when obligations under the terms of a contract with the customer are satisfied; generally, this occurs with the transfer of control of the goods to customers. The Company's global payment terms are typically between 30 to 90 days. Provisions for certain rebates, sales incentives, trade promotions, coupons, product returns, discounts to customers and governmental clawback provisions are accounted for as variable consideration and recorded as a reduction in sales.
Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well as market conditions, including consideration of competitor pricing. Rebates and discounts are estimated based on contractual terms, historical experience, patient outcomes, trend analysis and projected market conditions in the various markets served. The Company evaluates market conditions for products or groups of products primarily through the analysis of wholesaler and other third-party sell-through and market research data, as well as internally generated information.
Sales returns are estimated and recorded based on historical sales and returns information. Products that have lost patent exclusivity, or that otherwise exhibit unusual sales or return patterns due to dating, competition or other marketing matters are specifically investigated and analyzed as part of the accounting for sales return accruals.
Sales returns allowances represent a reserve for products that may be returned due to expiration, destruction in the field, or in specific areas, product recall. In accordance with the Company’s accounting policies, the Company generally issues credit to customers for returned goods. The Company’s sales returns reserves are accounted for in accordance with the U.S. GAAP guidance for revenue recognition when right of return exists. Sales returns reserves are recorded at full sales value. Sales returns in the Innovative Medicine segment are almost exclusively not resalable. Sales returns for certain franchises in the MedTech segment are typically resalable but are not material. The Company infrequently exchanges products from inventory for returned products. The sales returns reserve for the total Company has been approximately 1.0% of annual net trade sales during the fiscal years 2024, 2023 and 2022.
Promotional programs, such as product listing allowances are recorded in the same period as related sales and include volume-based sales incentive programs. Volume-based incentive programs are based on the estimated sales volumes for the incentive period and are recorded as products are sold. These arrangements are evaluated to determine the appropriate amounts to be deferred or recorded as a reduction of revenue. The Company also earns profit-share payments through collaborative arrangements of certain products, which are included in sales to customers. Profit-share payments were less than 2.0% of the total revenues in fiscal year 2024 and 2023, respectively, and less than 3.0% of the total revenues in the fiscal year 2022 and are included in sales to customers.
In addition, the Company enters into collaboration arrangements that contain multiple revenue generating activities. Amounts due from collaborative partners for these arrangements are recognized as each activity is performed or delivered, based on the relative selling price. Upfront fees received as part of these arrangements are deferred and recognized over the performance period. See Note 1 to the Consolidated Financial Statements for additional disclosures on collaborations.
Reasonably likely changes to assumptions used to calculate the accruals for rebates, returns and promotions are not anticipated to have a material effect on the financial statements. The Company currently discloses the impact of changes to assumptions in the quarterly or annual filing in which there is a material financial statement impact.
Below are tables that show the progression of accrued rebates, returns, promotions, reserve for doubtful accounts and reserve for cash discounts by segment of business for the fiscal years ended December 29, 2024 and December 31, 2023.
Innovative Medicine segment
| | | | | | | | | | | | | | |
| (Dollars in Millions) | Balance at Beginning of Period | Accruals | Payments/ Credits(2) | Balance at End of Period |
| 2024 | | | | |
Accrued rebates (1) | $14,661 | 52,786 | (51,667) | 15,780 |
| Accrued returns | 634 | 845 | (355) | 1,124 |
| Accrued promotions | 6 | 3 | (6) | 3 |
| Subtotal | $15,301 | 53,634 | (52,028) | 16,907 |
| Reserve for doubtful accounts | 33 | 14 | (6) | 41 |
| Reserve for cash discounts | 111 | 1,493 | (1,495) | 109 |
| Total | $15,445 | 55,141 | (53,529) | 17,057 |
| | | | |
| 2023 | | | | |
Accrued rebates (1) | $12,289 | 47,523 | (45,151) | 14,661 |
| Accrued returns | 649 | 332 | (347) | 634 |
| Accrued promotions | 1 | 12 | (7) | 6 |
| Subtotal | $12,939 | 47,867 | (45,505) | 15,301 |
| Reserve for doubtful accounts | 44 | 0 | (11) | 33 |
| Reserve for cash discounts | 110 | 1,386 | (1,385) | 111 |
| Total | $13,093 | 49,253 | (46,901) | 15,445 |
(1)Includes reserve for customer rebates of $187 million at December 29, 2024 and $165 million at December 31, 2023, recorded as a contra asset.
(2)Includes prior period adjustments
MedTech segment
| | | | | | | | | | | | | | |
| (Dollars in Millions) | Balance at
Beginning of
Period | Accruals | Payments/
Credits | Balance at
End of
Period |
| 2024 | | | | |
Accrued rebates(1) | $1,455 | 5,955 | (5,986) | 1,424 |
| Accrued returns | 125 | 543 | (550) | 118 |
| Accrued promotions | 25 | 62 | (65) | 22 |
| Subtotal | $1,605 | 6,560 | (6,601) | 1,564 |
| Reserve for doubtful accounts | 133 | 31 | (38) | 126 |
| Reserve for cash discounts | 5 | 92 | (91) | 6 |
| Total | $1,743 | 6,683 | (6,730) | 1,696 |
| | | | |
| 2023 | | | | |
Accrued rebates(1) | $1,470 | 6,241 | (6,256) | 1,455 |
| Accrued returns | 134 | 555 | (564) | 125 |
| Accrued promotions | 43 | 74 | (92) | 25 |
| Subtotal | $1,647 | 6,870 | (6,912) | 1,605 |
| Reserve for doubtful accounts | 125 | 33 | (25) | 133 |
| Reserve for cash discounts | 9 | 96 | (100) | 5 |
| Total | $1,781 | 6,999 | (7,037) | 1,743 |
(1)Includes reserve for customer rebates of $704 million at December 29, 2024 and $740 million at December 31, 2023, recorded as a contra asset.
Income Taxes: Income taxes are recorded based on amounts refundable or payable for the current year and include the results of any difference between U.S. GAAP accounting and tax reporting, recorded as deferred tax assets or liabilities. The Company estimates deferred tax assets and liabilities based on enacted tax regulations and rates. Future changes in tax laws and rates may affect recorded deferred tax assets and liabilities.
The Company has unrecognized tax benefits for uncertain tax positions. The Company follows U.S. GAAP, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management believes that changes in these estimates would not have a material effect on the Company's results of operations, cash flows or financial position.
The Company has recorded deferred tax liabilities on all undistributed earnings prior to December 31, 2017 from its international subsidiaries. The Company has not provided deferred taxes on the undistributed earnings subsequent to January 1, 2018 from certain international subsidiaries where the earnings are considered to be indefinitely reinvested. The Company intends to continue to reinvest these earnings in those international operations. If the Company decides at a later date to repatriate these earnings to the U.S., the Company would be required to provide for the net tax effects on these amounts. The Company estimates that the tax effect of this repatriation would be approximately $0.5 billion under currently enacted tax laws and regulations and at current currency exchange rates. This amount does not include the possible benefit of U.S. foreign tax credits, which may substantially offset this cost.
See Note 1 and Note 8 to the Consolidated Financial Statements for further information regarding income taxes.
Legal and Self Insurance Contingencies: The Company records accruals for various contingencies, including legal proceedings and product liability claims as these arise in the normal course of business. The accruals are based on management’s judgment as to the probability of losses and, where applicable, actuarially determined estimates. The Company has self insurance through a wholly-owned captive insurance company. In addition to accruals in the self insurance program, claims that exceed the insurance coverage are accrued when losses are probable and amounts can be reasonably estimated.
The Company follows the provisions of U.S. GAAP when recording litigation related contingencies. A liability is recorded when a loss is probable and can be reasonably estimated.
See Notes 1 and 19 to the Consolidated Financial Statements for further information regarding product liability and legal proceedings.
Long-Lived and Intangible Assets: The Company assesses changes, both qualitatively and quantitatively, in economic conditions and makes assumptions regarding estimated future cash flows in evaluating the value of the Company’s property, plant and equipment, goodwill and intangible assets. As these assumptions and estimates may change over time, it may or may not be necessary for the Company to record impairment charges.
Employee Benefit Plans: The Company sponsors various retirement and pension plans, including defined benefit, defined contribution and termination indemnity plans, which cover most employees worldwide. These plans are based on assumptions for the discount rate, expected return on plan assets, mortality rates, expected salary increases, healthcare cost trend rates and attrition rates. See Note 10 to the Consolidated Financial Statements for further details on these rates.
Stock Based Compensation: The Company recognizes compensation expense associated with the issuance of equity instruments to employees for their services. Based on the type of equity instrument, the fair value is estimated on the date of grant using either the Black-Scholes option valuation model or a combination of both the Black-Scholes option valuation model and Monte Carlo valuation model, and is expensed in the financial statements over the service period. The input assumptions used in determining fair value are the expected life, expected volatility, risk-free rate and expected dividend yield. For performance share units, the fair market value is calculated for the two component goals at the date of grant: adjusted operational earnings per share and relative total shareholder return. The fair values for the earnings per share goal of each performance share unit was estimated on the date of grant using the fair market value of the shares at the time of the award, discounted for dividends, which are not paid on the performance share units during the vesting period. The fair value for the relative total shareholder return goal of each performance share unit was estimated on the date of grant using the Monte Carlo valuation model. See Note 16 to the Consolidated Financial Statements for additional information.
New accounting pronouncements
Refer to Note 1 to the Consolidated Financial Statements for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of December 29, 2024.
Economic and market factors
The Company is aware that its products are used in an environment where, for more than a decade, policymakers, consumers and businesses have expressed concerns about the rising cost of healthcare. In response to these concerns, the Company has a long-standing policy of pricing products responsibly. For the period 2014 - 2024, in the U.S., the weighted average compound annual growth rate of the Company’s net price increases for healthcare products (prescription and over-the-counter drugs, hospital and professional products) was below the U.S. Consumer Price Index (CPI).
The Company operates in certain countries where the economic conditions continue to present significant challenges. The Company continues to monitor these situations and take appropriate actions. Inflation rates continue to have an effect on worldwide economies and, consequently, on the way companies operate. The Company has accounted for operations in Argentina, Venezuela, Turkey and Egypt (beginning in the fiscal fourth quarter of 2024) as highly inflationary, as the prior three-year cumulative inflation rate surpassed 100%. This did not have a material impact to the Company's results in the period. In the face of increasing costs, the Company strives to maintain its profit margins through cost reduction programs, productivity improvements and periodic price increases.
In July 2023, Janssen Pharmaceuticals, Inc. (Janssen) filed litigation against the U.S. Department of Health and Human Services as well as the Centers for Medicare and Medicaid Services challenging the constitutionality of the IRA's Medicare Drug Price Negotiation Program. The litigation requests a declaration that the IRA violates Janssen’s rights under the First Amendment and the Fifth Amendment to the Constitution and therefore that Janssen is not subject to the IRA’s mandatory pricing scheme. The impact of the IRA on our business and the broader pharmaceutical industry remains uncertain, as litigation filed by Janssen and other pharmaceutical companies remains ongoing and while CMS has publicly announced the maximum fair price for each of the selected drugs, implementation of the program is still in progress. In April 2024, Janssen appealed the district court’s denial of its summary judgment motion to the Third Circuit.
Russia-Ukraine War
Although the long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time, the financial impact of the conflict in the fiscal year 2024, including accounts receivable or inventory reserves, was not material. As of and for each of the fiscal years ending December 29, 2024 and December 31, 2023, the business of the Company’s Russian subsidiaries represented less than 1% of the Company’s consolidated assets and revenues. The Company does not maintain Ukraine subsidiaries subsequent to the Kenvue separation.
In March of 2022, the Company took steps to suspend all advertising, enrollment in clinical trials, and any additional investment in Russia. The Company continues to supply products relied upon by patients for healthcare purposes.
Conflict in the Middle East
Although the long-term implications of the conflict in the Middle East are difficult to predict at this time, the financial impact of the conflict in the fiscal year 2024, including accounts receivable or inventory reserves, was not material. As of and for each of the fiscal years ending December 29, 2024 and December 31, 2023, the business of the Company’s Israel subsidiaries represented 1% of the Company’s consolidated assets and represented less than 1% of revenues.
The Company is exposed to fluctuations in currency exchange rates. A 1% change in the value of the U.S. Dollar as compared to all foreign currencies in which the Company had sales, income or expense in 2024 would have increased or decreased the translation of foreign sales by approximately $0.4 billion and net income by approximately $0.1 billion.
Governments around the world consider various proposals to make changes to tax laws, which may include increasing or decreasing existing statutory tax rates. In connection with various government initiatives, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in other countries. A change in statutory tax rate in any country would result in the revaluation of the Company’s deferred tax assets and liabilities related to that particular jurisdiction in the period in which the new tax law is enacted. This change would result in an expense or benefit recorded to the Company’s Consolidated Statement of Earnings. The Company closely monitors these proposals as they arise in the countries where it operates. Changes to the statutory tax rate may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted.
The Company faces various worldwide healthcare changes that may continue to result in pricing pressures that include healthcare cost containment and government legislation relating to sales, promotions, pricing and reimbursement of healthcare products.
Changes in the behavior and spending patterns of purchasers of healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing healthcare insurance coverage may continue to impact the Company’s businesses.
The Company also operates in an environment increasingly hostile to intellectual property rights. Firms have filed Abbreviated New Drug Applications or Biosimilar Biological Product Applications with the U.S. FDA or otherwise challenged the coverage and/or validity of the Company's patents, seeking to market generic or biosimilar forms of many of the Company’s key pharmaceutical products prior to expiration of the applicable patents covering those products. In the event the Company is not successful in defending the patent claims challenged in the resulting lawsuits, generic or biosimilar versions of the products at issue will be introduced to the market, resulting in the potential for substantial market share and revenue losses for those products, and which may result in a non-cash impairment charge in any associated intangible asset. There is also a risk that one or more competitors could launch a generic or biosimilar version of the product at issue following regulatory approval even though one or more valid patents are in place.
Legal proceedings
Johnson & Johnson and certain of its subsidiaries are involved in various lawsuits and claims regarding product liability, intellectual property, commercial, employment, indemnification and other matters; governmental investigations; and other legal proceedings that arise from time to time in the ordinary course of business.
The Company records accruals for loss contingencies associated with these legal matters when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. As of December 29, 2024, the Company has determined that the liabilities associated with certain litigation matters are probable and can be reasonably estimated. The Company has accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ASC 450-20-25, Contingencies. For these and other litigation and regulatory matters discussed below for which a loss is probable or reasonably possible, the Company is unable to estimate the possible loss or range of loss beyond the amounts accrued. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. The ability to make such estimates and judgments can be affected by various factors including, among other things, whether damages sought in the proceedings are unsubstantiated or indeterminate; scientific and legal discovery has not commenced or is not complete; proceedings are in early stages; matters present legal uncertainties; there are significant facts in dispute; procedural or jurisdictional issues; the uncertainty and unpredictability of the number of potential claims; ability to achieve comprehensive multi-party settlements; complexity of related cross-claims and counterclaims; and/or there are numerous parties involved. To the extent adverse awards, judgments or verdicts have been rendered against the Company, the Company does not record an accrual until a loss is determined to be probable and can be reasonably estimated.
In the Company's opinion, based on its examination of these matters, its experience to date and discussions with counsel, the ultimate outcome of legal proceedings, net of liabilities accrued in the Company's balance sheet, is not expected to have a material adverse effect on the Company's financial position. However, the resolution of, or increase in accruals for, one or more of these matters in any reporting period may have a material adverse effect on the Company's results of operations and cash flows for that period.
See Note 19 to the Consolidated Financial Statements included in Item 8 of this report for further information regarding legal proceedings.
Common stock
The Company’s Common Stock is listed on the New York Stock Exchange under the symbol JNJ. As of February 6, 2025, there were 114,147 record holders of Common Stock of the Company.
Item 7A. Quantitative and qualitative disclosures about market risk
The information called for by this item is incorporated herein by reference to Item 7. Management’s discussion and analysis of results of operations and financial condition - Liquidity and capital resources - Financing and market risk of this Report; and Note 1 Summary of significant accounting policies - Financial instruments of the Notes to Consolidated Financial Statements included in Item 8 of this Report.
Item 8. Financial statements and supplementary data
Index to audited Consolidated Financial Statements
Johnson & Johnson and subsidiaries consolidated balance sheets
At December 29, 2024 and December 31, 2023
(Dollars in Millions Except Share and Per Share Amounts) (Note 1)
| | | | | | | | |
| 2024 | 2023 |
| Assets | | |
| Current assets | | |
| Cash and cash equivalents (Notes 1 and 2) | $ | |
| Marketable securities (Notes 1 and 2) | | |
Accounts receivable trade, less allowances $ (2023, $) | | |
| Inventories (Notes 1 and 3) | | |
|
| Prepaid expenses and other receivables | | |
|
| Total current assets | | |
| Property, plant and equipment, net (Notes 1 and 4) | | |
| Intangible assets, net (Notes 1 and 5) | | |
| Goodwill (Notes 1 and 5) | | |
| Deferred taxes on income (Note 8) | | |
| Other assets | | |
|
| Total assets | $ | |
| Liabilities and Shareholders’ Equity | | |
| Current liabilities | | |
| Loans and notes payable (Note 7) | $ | |
| Accounts payable | | |
| Accrued liabilities | | |
| Accrued rebates, returns and promotions | | |
| Accrued compensation and employee related obligations | | |
| Accrued taxes on income (Note 8) | | |
|
| Total current liabilities | | |
| Long-term debt (Note 7) | | |
| Deferred taxes on income (Note 8) | | |
| Employee related obligations (Notes 9 and 10) | | |
| Long-term taxes payable (Note 1) | | |
| Other liabilities | | |
|
| Total liabilities | | |
| Commitments and Contingencies (Note 19) | | |
| Shareholders’ equity | | |
Preferred stock — without par value (authorized and unissued shares) | | |
Common stock — par value $ per share (Note 12) (authorized shares; issued shares) | | |
| Accumulated other comprehensive income (loss) (Note 13) | () | () |
| Retained earnings and Additional-paid-in-capital | | |
Less: common stock held in treasury, at cost (Note 12) ( shares and shares) | | |
| Total shareholders’ equity | | |
| Total liabilities and shareholders’ equity | $ | |
See Notes to Consolidated Financial Statements
Johnson & Johnson and subsidiaries consolidated statements of earnings
(Dollars and Shares in Millions Except Per Share Amounts) (Note 1)
| | | | | | | | | | | |
| 2024 | 2023 | 2022 |
| Sales to customers | $ | | |
| Cost of products sold | | | |
| Gross profit | | | |
| Selling, marketing and administrative expenses | | | |
| Research and development expense | | | |
| In-process research and development impairments | | | |
| Interest income | () | () | () |
| Interest expense, net of portion capitalized (Note 4) | | | |
| Other (income) expense, net | | | |
| Restructuring (Note 20) | | | |
| Earnings before provision for taxes on income | | | |
| Provision for taxes on income (Note 8) | | | |
| Net earnings from continuing operations | | | |
| Net earnings from discontinued operations, net of tax (Note 21) | | | |
Net earnings | $ | | |
| | | |
| Net earnings per share (Notes 1 and 15) | | | |
| | | |
| Continuing operations - basic | $ | | |
| Discontinued operations - basic | | | |
| Total net earnings per share - basic | $ | | |
| | | |
| Continuing operations - diluted | $ | | |
| Discontinued operations - diluted | | | |
| Total net earnings per share - diluted | $ | | |
| | | |
| Average shares outstanding (Notes 1 and 15) | | | |
| Basic | | | |
| Diluted | | | |
See Notes to Consolidated Financial Statements
Johnson & Johnson and subsidiaries consolidated statements of comprehensive income
(Dollars in Millions) (Note 1)
| | | | | | | | | | | |
| 2024 | 2023 | 2022 |
| Net earnings | $ | | |
| | | |
| Other comprehensive income (loss), net of tax | | | |
| Foreign currency translation | | () | () |
| | | |
| Securities: | | | |
| Unrealized holding gain (loss) arising during period | | | () |
| Reclassifications to earnings | | | |
| Net change | | | () |
| | | |
| Employee benefit plans: | | | |
| Prior service credit (cost), net of amortization | () | () | () |
| Gain (loss), net of amortization | | () | |
| Consumer settlement/ curtailment | | | |
| Effect of exchange rates | | () | |
| Net change | | () | |
| | | |
| Derivatives & hedges: | | | |
| Unrealized gain (loss) arising during period | () | | |
| Reclassifications to earnings | () | () | () |
| Net change | () | () | |
| | | |
| Other comprehensive income (loss) | | () | |
| | | |
| Comprehensive income | $ | | |
| |
| |
| |
| |
| |
The tax cost/(benefit) effects in other comprehensive income for the fiscal years 2024, 2023 and 2022 respectively: Foreign Currency Translation; $() billion, $ million and $() million; Employee Benefit Plans: $ million, $() million and $ million, Derivatives & Hedges: $() million, $() million and $ million.
See Notes to Consolidated Financial Statements
Amounts presented for 2023 and 2022 have not been recast to exclude discontinued operations
Johnson & Johnson and subsidiaries consolidated statements of equity
(Dollars in Millions) (Note 1)
| | | | | | | | | | | | | | | | | |
| Total | Retained
Earnings and
Additional
paid-in
capital | Accumulated
Other
Comprehensive
Income (Loss) | Common
Stock
Issued
Amount | Treasury
Stock
Amount |
| Balance, January 2, 2022 | $ | | () | | () |
| | | |
| Net earnings | | | | | |
Cash dividends paid ($ per share) | () | () | | | |
| Employee compensation and stock option plans | | () | | | |
| Repurchase of common stock | () | | | | () |
| | | |
| Other comprehensive income (loss), net of tax | | | | | |
| Balance, January 1, 2023 | | | () | | () |
| | | |
| Net earnings | | | | | |
Cash dividends paid ($ per share) | () | () | | | |
| Employee compensation and stock option plans | | () | | | |
| Repurchase of common stock | () | | | | () |
| Other | () | | | | () | |
| Kenvue Separation /IPO (Note 21) | () | | | | | | | () |
| Other comprehensive income (loss), net of tax | () | | () | | |
| Balance, December 31, 2023 | | | () | | () |
| | | |
| Net earnings | | | | | |
Cash dividends paid ($ per share) | () | () | | | |
| Employee compensation and stock option plans | | () | | | |
| Repurchase of common stock | () | | | | () |
| | | |
| | | |
| Other comprehensive income (loss), net of tax | | | | | |
| Balance, December 29, 2024 | $ | | () | | () |
See Notes to Consolidated Financial Statements
Johnson & Johnson and subsidiaries consolidated statements of cash flows
(Dollars in Millions) (Note 1)
| | | | | | | | | | | |
| 2024 | 2023 | 2022 |
| Cash flows from operating activities | | | |
| Net earnings | $ | | |
| Adjustments to reconcile net earnings to cash flows from operating activities: | | | |
| Depreciation and amortization of property and intangibles | | | |
| Stock based compensation | | | |
| |
| Asset write-downs | | | |
| |
| Charges for acquired in-process research and development assets | | | |
| Gain on Kenvue separation | | () | |
| Net gain on sale of assets/businesses | () | () | () |
| |
| Deferred tax provision | () | () | () |
| Credit losses and accounts receivable allowances | | | () |
| Changes in assets and liabilities, net of effects from acquisitions and divestitures: | | | |
| Increase in accounts receivable | () | () | () |
| Increase in inventories | () | () | () |
| Increase in accounts payable and accrued liabilities | | | |
| Decrease/(Increase) in other current and non-current assets | | () | |
| Increase/(Decrease) in other current and non-current liabilities | | | () |
| Net cash flows from operating activities | | | |
| Cash flows from investing activities | | | |
| Additions to property, plant and equipment | () | () | () |
| Proceeds from the disposal of assets/businesses, net | | | |
| Acquisitions, net of cash acquired (Note 18) | () | | () |
| Acquired in-process research and development assets (Note 18) | () | () | |
| Purchases of investments | () | () | () |
| Sales of investments | | | |
| Credit support agreements activity, net | | () | () |
| Other (including capitalized licenses and milestones) | () | | () |
| Net cash (used by)/from investing activities | () | | () |
| Cash flows from financing activities | | | |
| Dividends to shareholders | () | () | () |
| Repurchase of common stock | () | () | () |
| Proceeds from short-term debt | | | |
| Repayment of short-term debt | () | () | () |
| Proceeds from long-term debt, net of issuance costs | | | |
| Repayment of long-term debt | () | () | () |
| Proceeds from the exercise of stock options/employee withholding tax on stock awards, net | | | |
| Credit support agreements activity, net | | () | () |
| | | | | | | | | | | |
| 2024 | 2023 | 2022 |
| Settlement of convertible debt acquired from Shockwave | () | | |
| Proceeds of short and long-term debt, net of issuance cost, related to the debt that transferred to Kenvue at separation | | | |
| Proceeds from Kenvue initial public offering | | | |
| Cash transferred to Kenvue at separation | | () | |
| Other | () | () | |
| Net cash used by financing activities | () | () | () |
| Effect of exchange rate changes on cash and cash equivalents | () | () | () |
| Increase/(Decrease) in cash and cash equivalents | | | () |
| Cash and cash equivalents from continuing operations, beginning of period | | | |
| Cash and cash equivalents from discontinued operations, beginning of period | | | |
| Cash and cash equivalents, beginning of year (Note 1) | | | |
| | | |
| Cash and cash equivalents from continuing operations, end of period | | | |
| Cash and cash equivalents from discontinued operations, end of period | | | |
| Cash and cash equivalents, end of year (Note 1) | $ | | |
| | | |
| Supplemental cash flow data | | | |
| Cash paid during the year for: | | | |
| Interest | $ | | |
| Interest, net of amount capitalized | | | |
| Income taxes, inclusive of discontinued operations | | | |
| | | |
| Supplemental schedule of non-cash investing and financing activities | | | |
| Treasury stock issued for employee compensation and stock option plans, net of cash proceeds/ employee withholding tax on stock awards | $ | | |
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)
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(1)Held to maturity investments are reported at amortized cost and realized gains or losses are reported in earnings.
(2)Available for sale debt securities are reported at fair value with unrealized gains and losses reported net of taxes in other comprehensive income.
Fair value of government securities and obligations and corporate debt securities were estimated using quoted broker prices and significant other observable inputs.
| | | Due after one year through five years | | | | |
| Due after five years through ten years | | | | |
| Total debt securities | | $ | | |
The Company invests its excess cash in both deposits with major banks throughout the world and other high-quality money market instruments. The Company has a policy of making investments only with commercial institutions that have at least an investment grade credit rating.
3.
| | | Goods in process | | | | |
| Finished goods | | | | |
| Total inventories | | $ | | |
4.
| | | Buildings and building equipment | | | | |
| Machinery and equipment | | | | |
| Construction in progress | | | | |
| Total property, plant and equipment, gross | | $ | | |
| Less accumulated depreciation | | | | |
| Total property, plant and equipment, net | | $ | | |
The Company capitalizes interest expense as part of the cost of construction of facilities and equipment. Interest expense capitalized in fiscal years 2024, 2023 and 2022 was $ million, $ million and $ million, respectively.
Depreciation expense, including the amortization of capitalized interest in fiscal years 2024, 2023 and 2022 was $ billion, $ billion and $ billion, respectively.
Upon retirement or other disposal of property, plant and equipment, the costs and related amounts of accumulated depreciation or amortization are eliminated from the asset and accumulated depreciation accounts, respectively. The difference, if any, between the net asset value and the proceeds are recorded in earnings.
5.
| | | Less accumulated amortization | | () | | () |
| Patents and trademarks — net | | $ | | |
| Customer relationships and other intangibles — gross | | $ | | |
| Less accumulated amortization | | () | | () |
Customer relationships and other intangibles — net(2) | | $ | | |
| Intangible assets with indefinite lives: | | | | |
Trademarks(1) | | | | | |
| Purchased in-process research and development | | | | |
| Total intangible assets with indefinite lives | | $ | | |
| Total intangible assets — net | | $ | | |
(1)In September 2024, the Company announced changes to its MedTech brand identity and the $ billion of trademarks associated with the DePuy Synthes business were reclassified from indefinite lived to definite lived and will be amortized over a 25 year period.
(2)The majority is comprised of customer relationships
| | | | | Goodwill, related to acquisitions | | | | | | | |
| Goodwill, related to divestitures | | | | | | | |
| Currency translation/other | | | | | | * | |
| Goodwill at December 31, 2023 | | | | | | | |
| Goodwill, related to acquisitions | | | | | | | |
| Goodwill, related to divestitures | | | | | () | | () |
| Currency translation/other | | | () | | () | | () |
| Goodwill at December 29, 2024 | | | $ | | | | |
The weighted average amortization period for patents and trademarks is approximately years. The weighted average amortization period for customer relationships and other intangible assets is approximately years. The amortization expense of amortizable assets included in Cost of products sold was $ billion, $ billion and $ billion before tax, for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023, respectively. Intangible asset write-downs are included in Other (income) expense, net.
| | | | | | | | See Note 18 to the Consolidated Financial Statements for additional details related to acquisitions and divestitures.
6.
billion and $ billion net respectively, related to net investment and cash flow hedges. On an ongoing basis, the Company monitors counter-party credit ratings. The Company considers credit non-performance risk to be low, because the Company primarily enters into agreements with commercial institutions that have at least an investment grade credit rating. Refer to the table on significant financial assets and liabilities measured at fair value contained in this footnote for receivables and payables with these commercial institutions. As of December 29, 2024, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ billion, $ billion and $ billion, respectively. As of December 31, 2023, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ billion, $ billion and $ billion, respectively.All derivative instruments are recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether the derivative is designated as part of a hedge transaction, and if so, the type of hedge transaction. Cash exchanged for derivatives is primarily in cash flows from operating activities.
The designation as a cash flow hedge is made at the entrance date of the derivative contract. At inception, all derivatives are expected to be highly effective. Foreign exchange contracts designated as cash flow hedges are accounted for under the forward method and all gains/losses associated with these contracts will be recognized in the income statement when the hedged item impacts earnings. Changes in the fair value of these derivatives are recorded in accumulated other comprehensive income until the underlying transaction affects earnings, and are then reclassified to earnings in the same account as the hedged transaction.
Gains and losses associated with interest rate swaps and changes in fair value of hedged debt attributable to changes in interest rates are recorded to interest expense in the period in which they occur. Gains and losses on net investment hedges are accounted through the currency translation account within accumulated other comprehensive income. The portion excluded from effectiveness testing is recorded through interest (income) expense using the spot method. On an ongoing basis, the Company assesses whether each derivative continues to be highly effective in offsetting changes of hedged items. If and when a derivative is no longer expected to be highly effective, hedge accounting is discontinued.
The Company designated its Euro denominated notes with due dates ranging from 2024 to 2044 as a net investment hedge of the Company's investments in certain of its international subsidiaries that use the Euro as their functional currency in order to reduce the volatility caused by changes in exchange rates.
As of December 29, 2024, the balance of deferred net loss on derivatives included in accumulated other comprehensive income was $ billion after-tax. For additional information, see the Consolidated Statements of Comprehensive Income and Note 13. The Company expects that substantially all of the amounts related to forward foreign exchange contracts will be reclassified into earnings over the as a result of transactions that are expected to occur over that period. The maximum length of time over which the Company is hedging transaction exposure is months, excluding interest rate contracts and net investment hedges. The amount ultimately realized in earnings may differ as foreign exchange rates change. Realized gains and losses are ultimately determined by actual exchange rates at maturity of the derivative.
| | | | | | | | | | | Derivatives designated as hedging instruments | | | | () | | | | | | () | |
| | | | | | | | | | | |
| Gain (Loss) on net investment hedging relationship: | | | | | | | | | | | |
| Cross currency interest rate swaps contracts: | | | | | | | | | | | |
| Amount of gain or (loss) recognized in income on derivative amount excluded from effectiveness testing | $ | | | | | | | | | | |
| Amount of gain or (loss) recognized in AOCI | | | | | | | | | | | |
| | | | | | | | | | | |
| Gain (Loss) on cash flow hedging relationship: | | | | | | | | | | | |
| Forward foreign exchange contracts: | | | | | | | | | | | |
| Amount of gain or (loss) reclassified from AOCI into income | | | | | | | | | () | | |
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| Amount of gain or (loss) recognized in AOCI | () | () | | | | | | | () | | |
| | | | | | | | | | | |
| Cross currency interest rate swaps contracts: | | | | | | | | | | | |
| Amount of gain or (loss) reclassified from AOCI into income | | | | | | | | | | | |
| | | | | | | | | |
| Amount of gain or (loss) recognized in AOCI | $ | | | () | | | | | | () | |
| | | | | | | | | |
| $ | | $() | | $() |
| | | | | | | | |
| () | | () | | Interest (income) expense | | | | | | Cross Currency interest rate swaps | | $ | | | | Interest (income) expense | | | | |
The Company holds equity investments with readily determinable fair values and equity investments without readily determinable fair values. The Company measures equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
| () | | () | | | | | | | | | | | | | | | |
| Equity Investments without readily determinable value | | $ | | () | | | | | | |
| () | | | | | | | | | | | | | | | | | |
| Equity Investments without readily determinable value | | $ | | | | | | | | |
(1)Recorded in Other Income/Expense
(2)Other includes impact of currency
* The December 31, 2023 balance includes the % remaining stake in Kenvue. A debt-for-equity exchange was completed in the fiscal second quarter of 2024.
On May 15, 2024, the Company issued $ billion aggregate principal amount of commercial paper and received $ billion of net cash proceeds to be used for general corporate purposes. On May 17, 2024, the Company completed a Debt-for-Equity Exchange of its remaining shares of Kenvue Common Stock for the outstanding Commercial Paper. Upon completion of the Debt-for-Equity Exchange, the Commercial Paper was satisfied and discharged, and the Company no longer owns any shares of Kenvue Common Stock. This exchange resulted in a loss of approximately $ billion recorded in Other (income) expense.
For the fiscal years ended December 29, 2024 and December 31, 2023 for equity investments without readily determinable market values, $ million and $ million, respectively, of the changes in fair value reflected in net income were the result of impairments. There were impacts of $ million and $ million, respectively, of changes in the fair value reflected in net income due to changes in observable prices and gains on the disposal of investments.
Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement determined using assumptions that market participants would use in pricing an asset or liability. In accordance with ASC 820, a three-level hierarchy to prioritize the inputs used in measuring fair value. The levels within the hierarchy are described below with Level 1 having the highest priority and Level 3 having the lowest.
The fair value of a derivative financial instrument (i.e., forward foreign exchange contracts, interest rate contracts) is the aggregation by currency of all future cash flows discounted to its present value at the prevailing market interest rates and subsequently converted to the U.S. Dollar at the current spot foreign exchange rate. The Company does not believe that fair values of these derivative instruments materially differ from the amounts that could be realized upon settlement or maturity, or that the changes in fair value will have a material effect on the Company’s results of operations, cash flows or financial position. The Company also holds equity investments which are classified as Level 1 and debt securities which are classified as Level 2. The Company holds acquisition related contingent liabilities based upon certain regulatory and commercial events, which are classified as Level 3, whose values are determined using discounted cash flow methodologies or similar techniques for which the determination of fair value requires significant judgment or estimations.
The following three levels of inputs are used to measure fair value:
Level 1 — Quoted prices in active markets for identical assets and liabilities.
Level 2 — Significant other observable inputs.
Level 3 — Significant unobservable inputs.
| | | | | | | | Interest rate contracts(2) | | | | | | | | | | |
| | | | | | | | |
| Total | | $ | | | | | | | | |
| Liabilities: | | | | | | | | | | |
| Forward foreign exchange contracts | | | | | | | | | | |
Interest rate contracts(2) | | | | | | | | | | |
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% in fiscal years 2024, 2023 and 2022, to the Company’s effective tax rate is as follows: | | | | | | | | | | | | | | | | | |
| (Dollars in Millions) | 2024 | | 2023 | | 2022 |
| U.S. | $() | | () | | |
| International | | | | | |
| Earnings before taxes on income: | $ | | | | |
| Tax rates: | | | | | |
| U.S. statutory rate | | % | | | | | | |
International operations(1) | () | | | () | | | () | |
| | | |
| | | |
| U.S. tax settlements | | | | () | | | | |
U.S. taxes on international income(2) | () | | | () | | | () | |
| U.S. state taxes | | | | | | | | |
| Tax benefits on share-based compensation | () | | | () | | | () | |
| | | |
| | | |
| All other | | | | | | | | |
| Effective Rate | | % | | | | | | |
(1)International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly Ireland, Switzerland, and Belgium, which is a favorable impact on the effective tax rate as compared with the U.S. statutory rate.
(2)Includes the net impact of the GILTI tax, the Foreign-Derived Intangible Income deduction and other foreign income that is taxable under the U.S. tax code as well as related foreign tax credits.
The fiscal year 2024 effective tax rate increased % as compared to the fiscal year 2023 effective tax rate. The primary drivers of this change are discussed below.
In fiscal year 2024, The Company had more income in higher tax jurisdictions compared to fiscal year 2023, primarily in the U.S. where the Company recorded a charge of approximately $ billion in the fiscal year of 2024 versus approximately $ billion in the fiscal year of 2023, both for the talc matters in the United States. Both charges were recorded at an effective U.S. tax rate of approximately 21% (for further information see Note 19 to the Consolidated Financial Statements).
Additionally in the fiscal year 2024, the effective tax rate was unfavorably impacted by legislative changes that went into effect for Pillar Two in some of the Company's foreign jurisdictions which are reflected in International operations on the Company’s effective tax rate reconciliation. Also in fiscal year 2024, the Company generated incremental U.S. foreign tax credits related to income sourced and taxed outside the United States and is reflected in U.S. taxes on international income on the Company’s effective tax rate reconciliation. In 2024, the Company finalized multi-year transfer pricing agreements with the U.S. Internal Revenue Service (IRS) and certain other foreign jurisdictions. The U.S portion of the agreements were partially offset by the related tax adjustments in the foreign jurisdictions which are reflected in U.S tax settlements and International operations, respectively, on the Company’s effective rate reconciliation.
The fiscal year 2023 effective tax rate decreased % as compared to the fiscal year 2022 effective tax rate as the Company recorded certain non-recurring favorable tax items in fiscal year 2023 when compared to the prior fiscal year.
In the fiscal fourth quarter of 2023, the Company settled the U.S. Internal Revenue Service audit for tax years 2013 through 2016 which resulted in a favorable impact to the rate of %. This settlement was partially offset by the Company recording a $ billion decrease in expected U.S. foreign tax credits, an unfavorable effective rate impact of %, which has been reflected as a current tax expense in U.S. taxes on international income on the Company’s effective tax rate reconciliation.
In the fiscal year 2023, the Company had certain non-recurring impacts as a result of legislative tax elections made in certain international subsidiaries which resulted in a change in the Company’s tax basis in certain assets resulting in deferred tax re-measurements. The net impact of these non-recurring items is a net benefit of % to the Company’s annual effective tax rate, comprised of the following items:
•approximately $ billion of tax benefit on local deferred tax assets to record the remeasurement of the increased tax basis, this benefit has been reflected as International operations on the Company’s effective tax rate reconciliation. This benefit was offset by approximately $ billion of U.S. deferred tax expense on the GILTI deferred tax liability resulting from the remeasurement of these deferred tax assets. This has been reflected in the “U.S. tax on international income” on the Company’s effective tax rate reconciliation.
billion of U.S. deferred tax benefit on the GILTI deferred tax related to an election made by an international subsidiary resulting in a decrease in local deferred tax assets. This has been reflected in the U.S. taxes on international income on the Company’s effective tax rate reconciliation.The Company also had lower income in higher tax jurisdictions vs. fiscal year 2022, primarily in the U.S. where the Company recorded an approximately $ billion charge related to talc matters in the United States at an effective tax rate of % (for further information see Note 19 to the Consolidated Financial Statements).
| | | | | |
| Stock based compensation | | | | | | | | |
| Depreciation of property, plant and equipment | | | | () | | | | () |
| Goodwill and intangibles | | | | () | | | | () |
| R&D capitalized for tax | | | | | | | | |
| Reserves & liabilities | | | | | | | | |
| Inventory related | | | | | | | | |
| Operating loss carryforwards | | | | | | | | |
| Undistributed foreign earnings | | | | () | | | | () |
| Global intangible low-taxed income | | | | () | | | | () |
| Miscellaneous international | | | | | | | | |
| Miscellaneous U.S. | | | | | | | | () |
| Total deferred income taxes | | | | () | | | | () |
| Valuation allowances | | () | | | | () | | |
| Total deferred income taxes net of valuation allowances | | | | () | | | | () |
The Company has wholly-owned international subsidiaries that have cumulative net losses. The Company believes that it is more likely than not that these subsidiaries will generate future taxable income sufficient to partially utilize these deferred tax assets. In certain jurisdictions, valuation allowances have been recorded against deferred tax assets for loss carryforwards that are not more likely than not to be realized. The net operating loss carryforwards for these international subsidiaries that do not have an indefinite carryforward period will begin to expire in 2025 for various amounts.
| | | Provision | | | |
| Utilization | | | () |
| Foreign currency translation | () | | |
| Net acquisitions / (dispositions/liquidations) | | | |
| End of year | $ | | $ |
| | | | | Increases related to current year tax positions | | | | | |
| Increases related to prior period tax positions | | | | | |
| Decreases related to prior period tax positions | () | | () | | () |
| Settlements | () | | () | | () |
| Lapse of statute of limitations | () | | () | | () |
| End of year | $ | | | | |
As of December 29, 2024 the Company had approximately $ billion of unrecognized tax benefits. The Company conducts business and files tax returns in numerous countries and currently has tax audits in progress with a number of tax authorities. With respect to the United States, the Internal Revenue Service (IRS) has completed its audit for the tax years through 2016 and has commenced the audit for tax years 2017 through 2020. The Company recently finalized multi-year transfer pricing agreements with the IRS and certain other foreign jurisdictions in the fiscal fourth quarter of 2024.
In other major jurisdictions where the Company conducts business, the years that remain open to tax audits go back to the year 2013. The Company believes it is possible that some tax audits may be completed over the next twelve months by taxing authorities in some jurisdictions. The Company anticipates a change in uncertain tax positions of approximately $ million in certain jurisdictions in the next twelve months due to the expected expiration of the statute of limitations. However, generally the Company is not able to provide a reasonably reliable estimate of the timing of any other future tax payments, audit settlements, or changes in uncertain tax positions.
The Company classifies liabilities for unrecognized tax benefits and related interest and penalties as long-term liabilities. Interest expense and penalties related to unrecognized tax benefits are classified as income tax expense. The Company recognized after tax interest expense of $ million, $ million and $ million in fiscal years 2024, 2023 and 2022, respectively. The total amount of accrued interest was $ million and $ million in fiscal years 2024 and 2023, respectively.
9.
| | | Postretirement benefits | | | | |
| Postemployment benefits | | | | |
| Deferred compensation | | | | |
| Total employee obligations | | | | |
| Less current benefits payable | | | | |
| Employee related obligations — non-current | | $ | | |
Prepaid employee related obligations of $ million and $ million for 2024 and 2023, respectively, are included in Other assets on the Consolidated Balance Sheets.
10.
before retirement and the number of years of service (the Final Average Pay formula). U.S. pension benefits for employees hired after 2014, are calculated using a different formula based on employee compensation over total years of service (the Retirement Value formula).In January 2021, the Company announced that, effective on January 1, 2026, all eligible U.S. non-union employees, regardless of hire date, will earn benefits under the Retirement Value formula. This amendment does not affect the benefits accrued under the Final Average Pay formula for service before January 1, 2026.
International subsidiaries have plans under which funds are deposited with trustees, annuities are purchased under group contracts, or reserves are provided.
The Company does not fund retiree healthcare benefits in advance and has the right to modify these plans in the future.
In 2024 and 2023 the Company used December 31, 2024 and December 31, 2023, respectively, as the measurement date for all U.S. and international retirement and other benefit plans.
| | | | | | | | | | | Interest cost | | | | | | | | | | | | |
| Expected return on plan assets | | () | | () | | () | | () | | () | | () |
| Amortization of prior service cost | | () | | () | | () | | () | | () | | () |
| | | | | | | | | | |
| Recognized actuarial losses (gains) | | | | () | | | | | | | | |
| Curtailments and settlements | | () | | | | | | | | () | | |
| Net periodic benefit cost (credit) | | $() | | () | | () | | | | | | |
The service cost component of net periodic benefit cost is presented in the same line items on the Consolidated Statement of Earnings where other employee compensation costs are reported, including Cost of products sold, Research and development expense, Selling, marketing and administrative expenses, and Net earnings from discontinued operations, net of taxes if related to the separation of Kenvue. All other components of net periodic benefit cost are presented as part of Other (income) expense, net on the Consolidated Statement of Earnings, with the exception of certain amounts for curtailments and settlements, which are reported in Net earnings from discontinued operations, net of taxes if related to the separation of Kenvue (as noted above).
Unrecognized gains and losses for the U.S. pension plans are amortized over the average remaining future service for each plan. For plans with no active employees, they are amortized over the average life expectancy. The amortization of gains and losses for the other U.S. benefit plans is determined by using a % corridor of the greater of the market value of assets or the accumulated postretirement benefit obligation. Total unamortized gains and losses in excess of the corridor are amortized over the average remaining future service.
Prior service costs/benefits for the U.S. pension plans are amortized over the average remaining future service of plan participants at the time of the plan amendment. Prior service cost/benefit for the other U.S. benefit plans is amortized over the average remaining service to full eligibility age of plan participants at the time of the plan amendment.
% | | | | | | | | | | | | | | | | | Interest cost discount rate | | | % | | | | | | | | | | | | | | | |
| Rate of increase in compensation levels | | | % | | | | | | | | | | | | | | | |
| Expected long-term rate of return on plan assets | | | % | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Benefit Obligation | | | | | | | | | | | | |
| Discount rate | | | % | | | | | | | | | | | | | | | |
| Rate of increase in compensation levels | | | % | | | | | | | | | | | | | | | |
The Company’s discount rates are determined by considering current yield curves representing high quality, long-term fixed income instruments. The resulting discount rates are consistent with the duration of plan liabilities. The Company's methodology in determining service and interest cost uses duration specific spot rates along that yield curve to the plans' liability cash flows.
The expected rates of return on plan asset assumptions represent the Company's assessment of long-term returns on diversified investment portfolios globally. The assessment is determined using projections from external financial sources, long-term historical averages, actual returns by asset class and the various asset class allocations by market.
% | | | % | | Rate to which the cost trend rate is assumed to decline (ultimate trend) | | | % | | | % |
| Year the rate reaches the ultimate trend rate | | | | | | |
| | | | | | | Service cost | | | | | | | | |
| Interest cost | | | | | | | | |
| Plan participant contributions | | | | | | | | |
| Amendments | | | | () | | | | |
Actuarial (gains) losses(1) | | () | | | | | | |
Divestitures & acquisitions(2) | | | | () | | | | |
| Curtailments, settlements & restructuring | | () | | () | | | | () |
Benefits paid from plan(3) | | () | | () | | () | | () |
| Effect of exchange rates | | () | | | | () | | |
| Projected benefit obligation — end of year | | $ | | | | | | |
| | | | | | | Actual return (loss) on plan assets | | | | | | | | |
| Company contributions | | | | | | | | |
| Plan participant contributions | | | | | | | | |
| Settlements | | () | | () | | | | |
Divestitures & acquisitions(2) | | | | () | | | | |
Benefits paid from plan assets(3) | | () | | () | | () | | () |
| Effect of exchange rates | | () | | | | | | |
| Plan assets at fair value — end of year | | $ | | | | | | |
| Funded status — end of year | | $ | | | | () | | () |
| Amounts Recognized in the Company’s Balance Sheet consist of the following: | | | | | | | | |
| Non-current assets | | $ | | | | | | |
| Current liabilities | | () | | () | | () | | () |
| Non-current liabilities | | () | | () | | () | | () |
| Total recognized in the consolidated balance sheet — end of year | | $ | | | | () | | () |
| Amounts Recognized in Accumulated Other Comprehensive Income consist of the following: | | | | | | | | |
| Net actuarial loss | | $ | | | | | | |
| Prior service cost (credit) | | () | | () | | () | | () |
| Unrecognized net transition obligation | | | | | | | | |
| Total before tax effects | | $ | | | | | | |
| | | | | | | | |
| Accumulated Benefit Obligations — end of year | | $ | | | | | | |
| | | | | | | | |
(1)The actuarial (gains)/losses for retirement plans in 2024 and 2023 were primarily driven by changes in the discount rates. (2)Driven by the Kenvue separation. (3)The fiscal years 2024 and 2023 includes approximately $ million and $ million, respectively, transferred to a group annuity contract issued by a third-party insurer for the U.S. Salaried Pension Plan. |
| | Retirement Plans | | Other Benefit Plans |
| (Dollars in Millions) | | 2024 | | 2023 | | 2024 | | 2023 |
| Amounts Recognized in Net Periodic Benefit Cost and Other Comprehensive Income | | | | | | | | |
| Net periodic benefit cost (credit) | | $() | | () | | | | |
| Net actuarial (gain) loss | | () | | | | | | |
| Amortization of net actuarial loss | | () | | | | () | | () |
| Prior service cost (credit) | | | | () | | | | |
| Amortization of prior service (cost) credit | | | | | | | | |
| Effect of exchange rates | | () | | | | | | |
| Total loss/(income) recognized in other comprehensive income, before tax | | $() | | | | | | |
| Total recognized in net periodic benefit cost and other comprehensive income | | $() | | | | | | |
million and $ million to its U.S. and international pension plans, respectively. | | | | | | | | | | | Projected Benefit Obligation | | | | | | | | | | | |
| Accumulated Benefit Obligation | | | | | | | | | | | |
| Over (Under) Funded Status | | | | | | | | | | | |
| Projected Benefit Obligation | $ | | | () | () | | | | | () | () |
| Accumulated Benefit Obligation | | | | () | () | | | | | () | () |
Plans with accumulated benefit obligations in excess of plan assets have an accumulated benefit obligation, projected benefit obligation and plan assets of $ billion, $ billion and $ billion, respectively, at the end of 2024, and $ billion, $ billion and $ billion, respectively, at the end of 2023.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| Other benefit plans | | $ | | | | | | | | | | |
| | | | | | | | | | Each pension plan is overseen by a local committee or board that is responsible for the overall administration and investment of the pension plans. In determining investment policies, strategies and goals, each committee or board considers factors including, local pension rules and regulations; local tax regulations; availability of investment vehicles (separate accounts, commingled accounts, insurance funds, etc.); funded status of the plans; ratio of actives to retirees; duration of liabilities; and other relevant factors including: diversification, liquidity of local markets and liquidity of base currency. A majority of the Company’s pension funds are open to new entrants and are expected to be on-going plans. Permitted investments are primarily liquid and/or listed, with little reliance on illiquid and non-traditional investments such as hedge funds.
% | | | % | | | % | | Debt securities | | | | | | | | | |
| Total plan assets | | | % | | | % | | | % |
Determination of fair value of plan assets
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
The authoritative literature establishes a three-level hierarchy to prioritize the inputs used in measuring fair value. The levels within the hierarchy are described in the table below with Level 1 having the highest priority and Level 3 having the lowest.
The Net Asset Value (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.
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 investment funds — 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 NAV provided by the administrator of the fund. The NAV is a quoted price in a market that is not active and classified as Level 2.
•Government and agency securities — 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.
•Debt instruments — 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.
•Equity securities — Equity securities are valued at the closing price reported on the major market on which the individual securities are traded. Substantially all equity securities are classified within Level 1 of the valuation hierarchy.
•Commingled funds — These investment vehicles are valued using the NAV provided by the fund administrator. Assets in the Level 2 category have a quoted market price.
•Other assets — Other assets are represented primarily by limited partnerships. These investment vehicles are valued using the NAV provided by the fund administrator. Other assets that are exchange listed and actively traded are classified as Level 1, while inactively traded assets are classified as Level 2.
| | | | | | | | | | | | — | | — | | | | | | Government and agency securities | | | | | | | | | | | | | | — | | — | | | | |
| Debt instruments | | | | | | | | | | | | | | — | | — | | | | |
| Equity securities | | | | | | | | | | | | | | — | | — | | | | |
| Commingled funds | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| Other assets | | | | | | | | | | | | | | | | | | | | |
| Investments at fair value | | $ | | | | | | | | | | | | | | | | | | | |
(1)The activity for the Level 3 assets is not significant for all years presented.
The Company's Other Benefit Plans are unfunded except for U.S. commingled funds (Level 2) of $ million and $ million at December 31, 2024 and December 31, 2023, respectively.
million at December 31, 2024 and $ million at December 31, 2023.
11.
million, $ million and $ million in fiscal years 2024, 2023 and 2022, respectively.
12.
| $ | | Employee compensation and stock option plans | | () | | () |
| Repurchase of common stock | | | | |
| Balance at January 1, 2023 | | | | |
| Employee compensation and stock option plans | | () | | () |
| Repurchase of common stock | | | | |
| Kenvue share exchange (Note 21) | | | | | |
| Balance at December 31, 2023 | | | | |
| Employee compensation and stock option plans | | () | | () |
| Repurchase of common stock | | | | |
| | |
| Balance at December 29, 2024 | | | | $ |
Aggregate shares of common stock issued were approximately shares at the end of fiscal years 2024, 2023 and 2022.
Cash dividends paid were $ per share in fiscal year 2024, compared with dividends of $ per share in fiscal year 2023, and $ per share in fiscal year 2022.
On January 2, 2025, the Board of Directors declared a regular cash dividend of $ per share, payable on March 4, 2025 to shareholders of record as of February 18, 2025.
On September 14, 2022, the Company announced that its Board of Directors approved a share repurchase program, authorizing the Company to purchase up to $ billion of the Company's shares of common stock. The repurchase program was completed during the fiscal first quarter of 2023.
13.
) | () | | () | | () | | () | | | | | | | | | |
| Net 2022 changes | | () | | () | | | | | | |
| January 1, 2023 | | () | | () | | () | | () | | () |
| | | | | | | | |
| Net 2023 changes | | () | | | | () | | () | | () |
| Kenvue Separation/IPO | | | | — | | | * | — | | |
| December 31, 2023 | | () | | () | | () | | () | | () |
| Net 2024 changes | | | | | | | | () | | |
| | | | | | | | |
| December 29, 2024 | | $() | | | | () | | () | | () |
14.
million, $ million and $ million in fiscal years 2024, 2023 and 2022, respectively.
15.
| | | | | | Basic net earnings per share from discontinued operations | | | | | | | |
| Total net earnings per share - basic | | | | | | |
| Average shares outstanding — basic | | | | | | |
| Potential shares exercisable under stock option plans | | | | | | |
| Less: shares repurchased under treasury stock method | | () | | () | | () |
| Adjusted average shares outstanding — diluted | | | | | | |
| Diluted net earnings per share from continuing operations | | | | | | | |
| Diluted net earnings per share from discontinuing operations | | | | | | | |
| Total net earnings per share - diluted | | $ | | | | | |
| | | | | | |
| (Shares in Millions) | | | | | | |
| The diluted net earnings per share calculation excluded the following number of shares related to stock options, as the exercise price of these options was greater than the average market value of the Company’s stock. | | | | | | | | |
16.
active stock-based compensation plan, the 2022 Long-Term Incentive Plan. The shares outstanding are for contracts under the Company's 2012 Long-Term Incentive Plan and 2022 Long-Term Incentive Plan. The 2012 Long-Term Incentive Plan expired on April 26, 2022. All awards (stock options, restricted shares units and performance share units) granted subsequent to that date were under the 2022 Long-Term Incentive Plan. Under the 2022 Long-Term Incentive Plan, the Company may issue up to million shares of common stock, of which up to million shares of common stock may be issued subject to stock options or stock appreciation rights and up to million shares of common stock may be issued subject to full value awards. Awards will generally be counted on a 1-for-1 basis against the share reserve, provided that if more than million full value awards are granted, each full value award in excess of million will be counted on a 5-for-1 basis against the share reserve. Shares available for future grants under the 2022 Long-Term Incentive Plan were million at the end of fiscal year 2024.The compensation cost that has been charged against income for these plans was $ million, $ million and $ million for fiscal years 2024, 2023 and 2022, respectively. The total income tax benefit recognized in the income statement for share-based compensation costs was $ million, $ million and $ million for fiscal years 2024, 2023 and 2022, respectively. The Company also recognized additional income tax benefits of $ million, $ million and $ million for fiscal years 2024, 2023 and 2022, respectively, for which options were exercised or restricted shares were vested. The total unrecognized compensation cost was $ million, $ million and $ million for fiscal years 2024, 2023 and 2022, respectively. The weighted average period for this cost to be recognized was years, years and years for fiscal years 2024, 2023, and 2022, respectively. Share-based compensation costs capitalized as part of inventory were insignificant in all periods.
The Company settles employee benefit equity issuances with treasury shares. Treasury shares are replenished through market purchases throughout the year for the number of shares used to settle employee benefit equity issuances.
years from the date of grant and vest over service periods that range from months to years. Options granted under the 2012 Long-Term Incentive Plan were granted at the average of the high and low prices of the Company’s Common Stock on the New York Stock Exchange on the date of grant. Options granted under the 2022 Long-Term incentive Plan were granted at the closing price of the Company’s Common Stock on the New York Stock Exchange on the date of grant.The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. For 2024, 2023, and 2022 grants, expected volatility represents a blended rate of 10-year weekly historical overall volatility rate, and a 5-week average implied volatility rate based on at-the-money traded Johnson & Johnson options with a life of 2 years. For all grants, historical data is used to determine the expected life of the option. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant.
, $ and $, in fiscal years 2024, 2023 and 2022, respectively. The fair value was estimated based on the weighted average assumptions of: | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Risk-free rate | | % | | | % | | | % |
| Expected volatility | | % | | | % | | | % |
| Expected life (in years) | | | | | |
| Expected dividend yield | | % | | | % | | | % |
| $ | | $ | | Options granted | | | | | | |
| Options exercised | | () | | | | |
| Options canceled/forfeited | | () | | | | |
| Shares at December 29, 2024 | | | | $ | | $ |
The total intrinsic value of options exercised was $ million, $ million and $ million in fiscal years 2024, 2023 and 2022, respectively.
- $ | | | | | $ | | | | $ | $ - $ | | | | | | | | | | |
$ - $ | | | | | | | | | | |
$ - $ | | | | | | | | | | |
$ - $ | | | | | | | | | | |
| | | | | | | $ | | | | $ |
(1)Average contractual life remaining in years.
Stock options outstanding at December 31, 2023 and January 1, 2023 were and an average life of years and and an average life of years, respectively. Stock options exercisable at December 31, 2023 and January 1, 2023 were at an average price of $ and at an average price of $, respectively.
Restricted share units and performance share units
The Company grants restricted share units which vest over service periods that range from months to years. The Company also grants performance share units, which are paid in shares of Johnson & Johnson Common Stock after the end of a performance period. Performance shares were granted with two equally-weighted goals that directly align with or help drive long-term total shareholder return: adjusted operational earnings per share and relative total shareholder return. The number of shares actually earned at the end of the period will vary, based only on actual performance, from % to % of the target number of performance share units granted.
| | | Granted | | | | |
| Issued | | () | | () |
| Canceled/forfeited/adjusted | | () | | () |
| Shares at December 29, 2024 | | | | |
The average fair value of the restricted share units granted was $, $ and $ in fiscal years 2024, 2023 and 2022, respectively, using the fair market value at the date of grant. The fair value of restricted share units was discounted for dividends, which are not paid on the restricted share units during the vesting period. The fair value of restricted share units issued was $ million, $ million and $ million in 2024, 2023 and 2022, respectively.
The weighted average fair value of the performance share units granted was $, $ and $ in fiscal years 2024, 2023 and 2022, calculated using the weighted average fair market value for each of the component goals at the date of grant.
The fair values for the earnings per share goals of each performance share unit were estimated on the date of grant using the fair market value of the shares at the time of the award discounted for dividends, which are not paid on the performance share units during the vesting period. The fair value for the relative total shareholder return goal of each performance share unit was estimated on the date of grant using the Monte Carlo valuation model. The fair value of performance share units issued was $ million, $ million and $ million in fiscal years 2024, 2023 and 2022, respectively.
17.
reportable segments: Innovative Medicine and MedTech. The segment results have been recast for all periods to reflect the continuing operations of the Company.The Company’s chief operating decision maker (CODM) is the Chief Executive Officer (Principal Executive Officer). For the Innovative Medicine and MedTech segments, the CODM uses segment income before tax to allocate resources (including employees, financial, and capital resources) for each segment predominantly in the annual forecasting process. The CODM considers planning-to-actual variances on a quarterly basis to assess performance and make decisions about allocating resources to the segments.
| | | | | () | % | | | | | International | | | | | | | | () | | | | |
| Worldwide | | | | | | | | () | | | | |
| REMICADE | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| U.S. Exports | | | | | | | | () | | | () | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | () | |
| SIMPONI / SIMPONI ARIA | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | | | | | |
| Worldwide | | | | | | | | () | | | | |
| STELARA | | | | | | | | | | |
| U.S. | | | | | | | | () | | | | |
| International | | | | | | | | () | | | | |
| Worldwide | | | | | | | | () | | | | |
| TREMFYA | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | | | | | |
| Worldwide | | | | | | | | | | | | |
| OTHER IMMUNOLOGY | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | | | | — |
| Worldwide | | | | | | | | () | | | () | |
| | | | | | | | | | |
| Infectious Diseases | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | () | |
| COVID-19 VACCINE | | | | | | | | | | |
| U.S. | | | | | | | | | | * |
| International | | | | | | | | () | | | () | |
| | | | | () | | | () | | | EDURANT / rilpivirine | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | | | | | |
| Worldwide | | | | | | | | | | | | |
PREZISTA / PREZCOBIX / REZOLSTA / SYMTUZA | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | () | |
| OTHER INFECTIOUS DISEASES | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | () | |
| | | | | | | | | | |
| Neuroscience | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | | |
| CONCERTA / methylphenidate | | | | | | | | | | |
| U.S. | | | | | | | | () | | | | |
| International | | | | | | | | () | | | | |
| Worldwide | | | | | | | | () | | | | |
| INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | | | | () | |
| SPRAVATO | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | | | | * |
| Worldwide | | | | | | | | | | | | |
| OTHER NEUROSCIENCE | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | () | |
| | | | | | | | | | |
| Oncology | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | | | | | |
| Worldwide | | | | | | | | | | | | |
| CARVYKTI | | | | | | | | | | |
| U.S. | | | | | | | | | | * |
| International | | | | | | | | * | | * |
| | | | | | | | | | |
| | | | | | | * | | DARZALEX | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | | | | | |
| Worldwide | | | | | | | | | | | | |
| ERLEADA | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | | | | | |
| Worldwide | | | | | | | | | | | | |
| IMBRUVICA | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | () | |
| TECVAYLI | | | | | | | | | | |
| U.S. | | | | | | | | | | | * |
| International | | | | | | | | * | | * |
| Worldwide | | | | | | | | | | | * |
| ZYTIGA /abiraterone acetate | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | () | |
| OTHER ONCOLOGY | | | | | | | | | | |
| U.S. | | | | | | | | * | | | |
| International | | | | | | | | | | | () | |
| Worldwide | | | | | | | | | | | | |
| | | | | | | | | | |
| Pulmonary Hypertension | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | | | | | |
| Worldwide | | | | | | | | | | | | |
| OPSUMIT | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | () | | | | |
| Worldwide | | | | | | | | | | | | |
| UPTRAVI | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | | | | | |
| Worldwide | | | | | | | | | | | | |
| OTHER PULMONARY HYPERTENSION | | | | | | | | | | |
| U.S. | | | | | | | | | | | () | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | | | | () | |
| | | | | | | | | | |
| | | | | () | | | () | | | International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | () | |
| XARELTO | | | | | | | | | | |
| U.S. | | | | | | | | | | | () | |
| International | | | | | | | | | | | | |
| Worldwide | | | | | | | | | | | () | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| OTHER | | | | | | | | | | |
| U.S. | | | | | | | | () | | | () | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | () | | | () | |
| | | | | | | | | | |
| TOTAL INNOVATIVE MEDICINE | | | | | | | | | | |
| U.S. | | | | | | | | | | | | |
| International | | | | | | | | () | | | () | |
| Worldwide | | | | | | | | | | | | |
| | | | | | | | | | |
| MEDTECH | | | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
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| | |
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)
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)
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| (Dollars in Millions) | 2023|
Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Johnson & Johnson Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Johnson & Johnson and its subsidiaries (the “Company”) as of December 29, 2024 and December 31, 2023, and the related consolidated statements of earnings, of comprehensive income, of equity and of cash flows for each of the three fiscal years in the period ended December 29, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 29, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the three fiscal years in the period ended December 29, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s report on internal control over financial reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. As described in Management’s report on internal control over financial reporting, management has excluded Shockwave Medical, Inc., (“Shockwave”) from its assessment of internal control over financial reporting as of December 29, 2024 because it was acquired by the Company in a purchase business combination during 2024. We have also excluded Shockwave from our audit of internal control over financial reporting. Shockwave is a wholly-owned subsidiary whose total assets and total sales excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% of each of the related consolidated financial statement amounts as of and for the fiscal year ended December 29, 2024.
Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. U.S. Innovative Medicine Rebate Reserves – Managed Care, Medicare and Medicaid As described in Note 1 to the consolidated financial statements, the Company recognizes revenue from product sales when obligations under the terms of a contract with the customer are satisfied. Rebates and discounts provided to customers are accounted for as variable consideration and recorded as a reduction in sales. The liability for such rebates and discounts is recognized within Accrued rebates, returns, and promotions on the consolidated balance sheet. A significant portion of the liability related to rebates is from the sale of pharmaceutical products within the U.S., primarily the Managed Care, Medicare and Medicaid programs, which amounted to $12.3 billion as of December 29, 2024. For significant rebate programs, which include the U.S. Managed Care, Medicare and Medicaid rebate programs, rebates and discounts estimated by management are based on contractual terms, historical experience, patient outcomes, trend analysis, and projected market conditions in the various markets served. The principal considerations for our determination that performing procedures relating to U.S. Innovative Medicine rebate reserves - Managed Care, Medicare and Medicaid is a critical audit matter are (i) the significant judgment by management due to the significant measurement uncertainty when developing the estimate of these reserves and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the assumptions related to contractual terms, historical experience, patient outcomes, trend analysis, and projected market conditions in the U.S. pharmaceutical market. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s estimate of the U.S. Innovative Medicine rebate reserves - Managed Care, Medicare and Medicaid, including controls over the assumptions used to estimate these rebates. These procedures also included, among others (i) developing an independent estimate of the rebates by utilizing third party information on price and market conditions in the U.S. pharmaceutical market, the terms of the specific rebate programs, and the historical experience and trend analysis of actual rebate claims paid; (ii) testing, on a sample basis, rebate claims processed by the Company, including evaluating those claims for consistency with the contractual and mandated terms of the Company’s rebate arrangements; and (iii) comparing the independent estimates to management’s estimates to evaluate the reasonableness of management’s estimates.
Litigation Contingencies – Talc As described in Notes 1 and 19 to the consolidated financial statements, the Company records accruals for loss contingencies associated with legal matters, including talc, when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. To the extent adverse awards, judgments, or verdicts have been rendered against the Company, management does not record an accrual until a loss is determined to be probable and can be reasonably estimated. For these matters, management is unable to estimate the possible loss or range of loss beyond the amounts accrued. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. The ability to make such estimates and judgments can be affected by various factors, including, among other things, whether damages sought in the proceedings are unsubstantiated or indeterminate; scientific and legal discovery has not commenced or is not complete; proceedings are in early stages; matters present legal uncertainties; there are significant facts in dispute; procedural or jurisdictional issues; the uncertainty and unpredictability of the number of potential claims; ability to achieve comprehensive multi-party settlements; complexity of related cross-claims and counterclaims; and/or there are numerous parties involved. Management continues to believe that the Company has strong legal grounds to contest the talc verdicts it has appealed. Notwithstanding management’s confidence in the safety of the Company’s talc products, in certain circumstances the Company has settled cases. In May 2024, the Company proposed a consensual “prepackaged” Chapter 11 bankruptcy plan (the “Proposed Plan”) for the final resolution of all current and future claims related to cosmetic talc in the United States, excluding claims related to mesothelioma or State consumer protection claims. In September 2024, the Company’s subsidiary Red River Talc, LLC filed a voluntary petition, seeking relief under Chapter 11 of the Bankruptcy Code, in furtherance of the Company’s consensual “prepackaged” Proposed Plan. As of December 29, 2024, the total present value of the reserve to resolve the talc claims is approximately $11.6 billion, of which approximately ten percent is recorded as a current liability. The recorded amount remains the Company's best estimate of probable loss. The Company is unable to estimate the possible loss or range of loss beyond the amounts accrued. The principal considerations for our determination that performing procedures relating to the litigation contingencies - talc is a critical audit matter are (i) the significant judgment by management when assessing the likelihood of a loss being incurred for the remaining unresolved talc claims, when determining whether a reasonable estimate of the loss or range of loss for the remaining unresolved talc claims can be made, and when determining the timing of settlement payments for the remaining unresolved talc claims, and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s assessment of the loss contingencies associated with the talc litigation. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of the litigation contingencies – talc, including controls over determining whether a loss is probable and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures. These procedures also included, among others (i) gaining an understanding of the Company’s process around the accounting and reporting for the talc litigation; (ii) obtaining and evaluating certain executed settlement agreements related to the talc litigation; (iii) discussing the status of significant known actual and potential litigation and settlements activity with the Company’s in-house legal counsel, as well as external counsel when deemed necessary; (iv) obtaining and evaluating the letters of audit inquiry with internal and external legal counsel related to the talc litigation; (v) evaluating the reasonableness of management’s assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably estimable; and (vi) evaluating the sufficiency of the Company’s litigation contingencies disclosures.
/s/ February 13, 2025 We have served as the Company’s auditor since at least 1920. We have not been able to determine the specific year we began serving as auditor of the Company.
Management’s report on internal control over financial reporting Under Section 404 of the Sarbanes-Oxley Act of 2002, management is required to assess the effectiveness of the Company’s internal control over financial reporting as of the end of each fiscal year and report, based on that assessment, whether the Company’s internal control over financial reporting is effective. Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company’s financial reporting and the preparation of external financial statements in accordance with generally accepted accounting principles. Internal controls over financial reporting, no matter how well designed, have inherent limitations. Therefore, internal control over financial reporting determined to be effective can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all misstatements. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Company’s management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 29, 2024. In making this assessment, the Company used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework (2013).” These criteria are in the areas of control environment, risk assessment, control activities, information and communication, and monitoring. The Company’s assessment included extensive documenting, evaluating and testing the design and operating effectiveness of its internal controls over financial reporting. The Company acquired Shockwave Medical, Inc. (Shockwave), in a business combination in May 2024. Shockwave’s total assets, excluding intangible assets and goodwill, and total sales represented less than 1% of each of the related consolidated financial statement amounts as of and for the fiscal year ended December 29, 2024. As the acquisition occurred in the fiscal year 2024, the scope of the Company's assessment of the design and effectiveness of internal control over financial reporting for the fiscal year 2024 excluded the above mentioned acquisition. This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from the scope in the year of acquisition. Based on the Company’s processes and assessment, as described above, management has concluded that, as of December 29, 2024, the Company’s internal control over financial reporting was effective. The effectiveness of the Company’s internal control over financial reporting as of December 29, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears herein.
| | | | | | /s/ J. Duato | /s/ J. J. Wolk | | Joaquin Duato | Joseph J. Wolk | | Chairman, Board of Directors | Executive Vice President, Chief Financial Officer | | Chief Executive Officer | |
Shareholder return performance graphs Set forth below are line graphs comparing the cumulative total shareholder return on the Company’s Common Stock for periods of five years and ten years ending December 31, 2024, against the cumulative total return of the Standard & Poor’s 500 Stock Index, the Standard & Poor’s Pharmaceutical Index and the Standard & Poor’s Healthcare Equipment Index. The graphs and tables assume that $100 was invested on December 31, 2019 and December 31, 2014 in each of the Company’s Common Stock, the Standard & Poor’s 500 Stock Index, the Standard & Poor’s Pharmaceutical Index and the Standard & Poor’s Healthcare Equipment Index and that all dividends were reinvested. 5 Year Shareholder Return Performance J&J vs. Indices | | | | | | | Johnson & Johnson | | S&P 500 Index | | S&P Pharmaceutical Index | | S&P Healthcare Equipment Index |
| | | | | | | 5-year CAGR | | J&J | 2.6 | % | | S&P 500 | 14.5 | % | | S&P Pharm | 9.8 | % | | S&P H/C Equip | 6.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | Johnson & Johnson | $100.00 | | $110.85 | | $123.54 | | $130.91 | | $119.65 | | $113.91 | | S&P 500 Index | $100.00 | | $118.39 | | $152.36 | | $124.75 | | $157.52 | | $196.90 | | S&P Pharmaceutical Index | $100.00 | | $107.53 | | $135.34 | | $146.78 | | $147.27 | | $159.35 | | S&P Healthcare Equipment Index | $100.00 | | $117.63 | | $140.40 | | $113.92 | | $124.22 | | $137.81 |
10 Year Shareholder Return Performance J&J vs. Indices | | | | | | | Johnson & Johnson | | S&P 500 Index | | S&P Pharmaceutical Index | | S&P Healthcare Equipment Index |
| | | | | | | 10-year CAGR | | J&J | 6.2 | % | | S&P 500 | 13.1 | % | | S&P Pharm | 8.8 | % | | S&P H/C Equip | 11.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | | Johnson & Johnson | $100.00 | $101.16 | $116.66 | $145.13 | $137.67 | $159.99 | $177.35 | $197.66 | $209.45 | $191.43 | $182.25 | | S&P 500 Index | $100.00 | $101.37 | $113.48 | $138.25 | $132.18 | $173.81 | $205.78 | $264.82 | $216.83 | $273.79 | $342.24 | | S&P Pharmaceutical Index | $100.00 | $105.79 | $104.13 | $117.22 | $126.71 | $145.83 | $156.80 | $197.36 | $214.04 | $214.75 | $232.38 | | S&P Healthcare Equipment Index | $100.00 | $105.97 | $112.85 | $147.71 | $171.70 | $222.04 | $261.19 | $311.74 | $252.95 | $275.82 | $306.00 |
Item 9. Changes in and disagreements with accountants on accounting and financial disclosure Not applicable. Item 9A. Controls and procedures Disclosure controls and procedures. At the end of the period covered by this Report, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Joaquin Duato, Chairman and Chief Executive Officer, and Joseph J. Wolk, Executive Vice President, Chief Financial Officer, reviewed and participated in this evaluation. Based on this evaluation, Messrs. Duato and Wolk concluded that, as of the end of the period covered by this Report, the Company’s disclosure controls and procedures were effective. Reports on internal control over financial reporting. The information called for by this item is incorporated herein by reference to Management’s report on internal control over financial reporting, and the attestation regarding internal controls over financial reporting included in the report of independent registered public accounting firm included in Item 8 of this Report. Changes in internal control over financial reporting. During the fiscal quarter ended December 29, 2024, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required under Rules 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company continues to monitor and assess the effectiveness of the design and operation of its disclosure controls and procedures. The Company is implementing a multi-year, enterprise-wide initiative to integrate, simplify and standardize processes and systems for the human resources, information technology, procurement, supply chain and finance functions. These are enhancements to support the growth of the Company’s financial shared service capabilities and standardize financial systems. This initiative is not in response to any identified deficiency or weakness in the Company’s internal control over financial reporting. In response to this initiative, the Company has and will continue to align and streamline the design and operation of its financial control environment. Item 9B. Other information Securities trading plans of Directors and Executive Officers. During the fiscal fourth quarter of 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the or of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K. Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections Not applicable.
Part III Item 10. Directors, executive officers and corporate governance The information called for by this item is incorporated herein by reference to the discussion of the Audit Committee under the caption Item 1. Election of Directors - Board committees; and the material under the captions Item 1. Election of Directors and, if applicable, Delinquent Section 16(a) reporting in the Proxy Statement; and the material under the caption “Executive Officers of the Registrant” in Part I of this Report. The Company’s Code of Business Conduct, which covers all employees (including the Chief Executive Officer, Chief Financial Officer and Controller), meets the requirements of the SEC rules promulgated under Section 406 of the Sarbanes-Oxley Act of 2002. The Code of Business Conduct is available on the Company’s website at www.jnj.com/code-of-business-conduct, and copies are available to shareholders without charge upon written request to the Secretary at the Company’s principal executive offices. Any substantive amendment to the Code of Business Conduct or any waiver of the Code granted to the Chief Executive Officer, the Chief Financial Officer or the Controller will be posted on the Company’s website at www.jnj.com/code-of-business-conduct within five business days (and retained on the website for at least one year). In addition, the Company has adopted a Code of Business Conduct & Ethics for Members of the Board of Directors and Executive Officers. The Code of Business Conduct & Ethics for Members of the Board of Directors and Executive Officers is available on the Company’s website at www.investor.jnj.com/governance/corporate-governance-overview/code-of-business-conduct--ethics, and copies are available to shareholders without charge upon written request to the Secretary at the Company’s principal executive offices. Any substantive amendment to the Code or any waiver of the Code granted to any member of the Board of Directors or any executive officer will be posted on the Company’s website at www.investor.jnj.com/governance/corporate-governance-overview/code-of-business-conduct--ethics within five business days (and retained on the website for at least one year). In addition to the prohibition on insider trading for all employees covered in our Code of Business Conduct, the Company has an insider trading policy governing the purchase, sale and other dispositions of its securities by directors, officers and certain other insiders that is reasonably designed to promote compliance with insider trading laws, rules and regulations and any applicable listing standards. A copy of this policy is filed with this Annual Report on Form 10-K as Exhibit 19. Item 11. Executive compensation The information called for by this item is incorporated herein by reference to the material under the captions Item 1. Election of Directors – Director compensation, and Item 2. Compensation Committee report, Compensation discussion and analysis and Executive compensation tables in the Proxy Statement. The material incorporated herein by reference to the material under the caption Compensation Committee report in the Proxy Statement shall be deemed furnished, and not filed, in this Report and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, as a result of this furnishing, except to the extent that the Company specifically incorporates it by reference. Item 12. Security ownership of certain beneficial owners and management and related stockholder matters The information called for by this item is incorporated herein by reference to the material under the caption Stock ownership in the Proxy Statement; and Note 16 Common stock, stock option plans and stock compensation agreements of the Notes to Consolidated Financial Statements in Item 8 of this Report.
Equity compensation plan information The following table provides certain information as of December 29, 2024 concerning the shares of the Company’s Common Stock that may be issued under existing equity compensation plans. | | | | | | | | | | | | | Plan Category | Number of
Securities to
be Issued Upon
Exercise of
Outstanding
Options and Rights | Weighted Average
Exercise Price of
Outstanding
Options
and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans(2)(3) | Equity Compensation Plans Approved by Security Holders(1) | 127,682,644 | $127.63 | 111,042,139 | | Equity Compensation Plans Not Approved by Security Holders | — | — | — | | Total | 127,682,644 | $127.63 | 111,042,139 |
(1)Included in this category are the following equity compensation plans which have been approved by the Company’s shareholders: 2012 Long-Term Incentive Plan and 2022 Long-Term Incentive Plan. (2)This column excludes shares reflected under the column “Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights.” (3)The 2012 Long-Term Incentive Plan expired April 26, 2022. All options and restricted shares granted subsequent to that date were under the 2022 Long-Term Incentive Plan. Item 13. Certain relationships and related transactions, and director independence The information called for by this item is incorporated herein by reference to the material under the captions Item 1. Election of Directors - Related person transactions & Director independence in the Proxy Statement. Item 14. Principal accountant fees and services The information called for by this item is incorporated herein by reference to the material under the caption Item 3. Ratification of appointment of independent registered public accounting firm in the Proxy Statement.
Part IV Item 15. Exhibits and financial statement schedules The following documents are filed as part of this report: 1.Financial Statements Consolidated balance sheets at end of fiscal years 2024 and 2023 Consolidated statements of earnings for fiscal years 2024, 2023 and 2022 Consolidated statements of comprehensive income for Fiscal Years 2024, 2023 and 2022 Consolidated statements of equity for fiscal years 2024, 2023 and 2022 Consolidated statements of cash flows for fiscal years 2024, 2023 and 2022 Notes to Consolidated Financial Statements Report of independent registered public accounting firm All schedules are omitted because they are not applicable or the required information is included in the financial statements or notes. 2.Exhibits required to be filed by item 60l of regulation S-K The information called for by this item is incorporated herein by reference to the Exhibit Index in this Report. Item 16. Form 10-K summary Registrants may voluntarily include a summary of information required by Form 10-K under this Item 16. The Company has elected not to include such summary information.
Signatures Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. | | | | JOHNSON & JOHNSON | | (Registrant) |
| | | | | | | By | /s/ J. Duato | | J. Duato, Chairman of the Board and Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. | | | | | | | | | | Signature | Title | Date | | | | /s/ J. Duato | Chairman of the Board | February 13, 2025 | | J. Duato | Chief Executive Officer
(Principal Executive Officer) | | | | | /s/ J. J. Wolk | Chief Financial Officer | February 13, 2025 | | J. J. Wolk | (Principal Financial Officer) | | | | | /s/ R. J. Decker Jr. | Controller and Chief Accounting Officer | February 13, 2025 | | R. J. Decker Jr. | (Principal Accounting Officer) | | | | | /s/ D. Adamczyk | Director | February 13, 2025 | | D. Adamczyk | | | | | | /s/ M. C. Beckerle | Director | February 13, 2025 | | M. C. Beckerle | | | | | | /s/ J. A. Doudna | Director | February 13, 2025 | | J. A. Doudna | | |
| | | | | | | | | | Signature | Title | Date | | | | /s/ M. A. Hewson | Director | February 13, 2025 | | M. A. Hewson | | | | | | /s/ P. A. Johnson | Director | February 13, 2025 | | P. A. Johnson | | | | | | /s/ H. Joly | Director | February 13, 2025 | | H. Joly | | | | | | /s/ M. B. McClellan | Director | February 13, 2025 | | M. B. McClellan | | | | | | /s/ A. M. Mulcahy | Director | February 13, 2025 | | A. M. Mulcahy | | | | | | /s/ M. A. Weinberger | Director | February 13, 2025 | | M. A. Weinberger | | | | | | /s/ N. Y. West | Director | February 13, 2025 | | N. Y. West | | | | | | /s/ E. A. Woods | Director | February 13, 2025 | | E. A. Woods | | |
Exhibit index | | | | | | | | | Reg. S-K
Exhibit Table
Item No. | | Description
of Exhibit | | | Agreement and Plan of Merger, dated as of October 31, 2022, by and among Johnson & Johnson, Athos Merger Sub, Inc. and ABIOMED, Inc. – Incorporated herein by reference to Exhibit 2.1 of the Registrant’s Form 8-K Current Report filed November 1, 2022.† | | | Restated Certificate of Incorporation effective February 19, 2016 — Incorporated herein by reference to Exhibit 3(i) of the Registrant’s Form 10-K Annual Report for the fiscal year ended January 3, 2016. | | | Certificate of Amendment to the Certificate of Incorporation of Johnson & Johnson effective April 30, 2020 — Incorporated herein by reference to Exhibit 3.1 of the Registrant's Form 8-K Current Report filed April 29, 2020. | | | Amended and Restated By-Laws of the Company, as amended effective April 25, 2024 — Incorporated herein by reference to Exhibit 3.1 of the Registrant’s Form 8-K Current Report filed April 29, 2024. | | 4(a) | | Upon the request of the Securities and Exchange Commission, the Registrant will furnish a copy of all instruments defining the rights of holders of long-term debt of the Registrant. | | | Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 — Filed with this document. | | 4(c)** | | Indenture, dated as of September 15, 1987 – Incorporated herein by reference to Exhibit 4(a) to the Registrant’s Form S-3 Registration Statement filed on October 11, 1994 | | 4(d)** | | First Supplemental Indenture, dated as of September 1, 1990 – Incorporated herein by reference to Exhibit 4(b) to the Registrant’s Form S-3 Registration Statement filed on October 11, 1994 | | | Second Supplemental Indenture, dated as of November 9, 2017 – Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form 8-K Current Report filed on November 13, 2017 | | | 2012 Long-Term Incentive Plan — Incorporated herein by reference to Appendix A of the Registrant’s Proxy Statement filed on March 15, 2012.* | | | Form of Stock Option Certificate under the 2012 Long-Term Incentive Plan — Incorporated herein by reference to Exhibit 10.2 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended April 1, 2012.* | | | Global NonQualified Stock Option Award Agreement under the 2012 Long-Term Incentive Plan — Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended April 1, 2018.* | | | Global Restricted Share Unit Award Agreement under the 2012 Long-Term Incentive Plan — Incorporated herein by reference to Exhibit 10.2 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended April 1, 2018.* | | | Global Performance Share Unit Award Agreement under the 2012 Long-Term Incentive Plan — Incorporated herein by reference to Exhibit 10.3 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended April 1, 2018.* | | | Global Restricted Share Unit Award Agreement granted to John Reed on May 1, 2023 under the 2022 Long-Term Incentive Plan — Incorporated herein by reference to Exhibit 10(h) of the Registrant’s Form 10-K Annual Report for the fiscal year ended December 31, 2023* | | | Domestic Deferred Compensation (Certificate of Extra Compensation) Plan — Incorporated herein by reference to Exhibit 10(g) of the Registrant’s Form 10-K Annual Report for the year ended December 28, 2003.* | | | Amendments to the Certificate of Extra Compensation Plan effective as of January 1, 2009 — Incorporated herein by reference to Exhibit 10(j) of the Registrant’s Form 10-K Annual Report for the year ended December 28, 2008.* | | | Amended and Restated Deferred Fee Plan for Directors (Amended as of January 17, 2012) — Incorporated herein by reference to Exhibit 10(k) of the Registrant's Form 10-K Annual Report for the fiscal year ended January 1, 2012.* |
| | | | | | | | | Reg. S-K
Exhibit Table
Item No. | | Description
of Exhibit | | | The Johnson & Johnson Executive Income Deferral Plan Amended and Restated Effective January 1, 2010 — Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended September 30, 2012.* | | | The Johnson & Johnson Excess Savings Plan (amended and restated as of January 1, 2022) — Incorporated herein by reference to Exhibit 10(l) of the Registrant’s Form 10-K Annual Report for the fiscal year ended January 1, 2023.* | | | Excess Benefit Plan of Johnson & Johnson and Affiliated Companies (amended and restated as of January 1, 2020) — incorporated by reference to Exhibit 10(m) of the Registrant’s Form 10-K Annual Report for the fiscal year ended January 3, 2021. | | 10(m)** | | Executive Life Plan Agreement — Incorporated herein by reference to Exhibit 10(i) of the Registrant’s Form 10-K Annual Report for the fiscal year ended January 3, 1993.* | | | Executive Life Plan Agreement Closure Letter — Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended March 29, 2015.* | | | 2022 Long-Term Incentive Plan — Incorporated by reference to Appendix A of the Registrant’s Proxy Statement filed on March 16, 2022.* | | | Severance Pay Plan of Johnson & Johnson and U.S. Affiliated Companies, Amended and Restated as of October 1, 2014 — Incorporated herein by reference to Exhibit 10.1 of the Registrant's Form 10-Q Quarterly Report for the quarter ended September 28, 2014.* | | | First Amendment to the Severance Pay Plan of Johnson & Johnson and U.S. Affiliated Companies (as amended and restated effective October 1, 2014) — Incorporated herein by reference to Exhibit 10.1 of the Registrant's Form 10-Q Quarterly Report for the quarter ended June 28, 2015.* | | | Second Amendment to the Severance Pay Plan of Johnson & Johnson and U.S. Affiliated Companies (as amended and restated effective October 1, 2014) — Incorporated herein by reference to Exhibit 10(x) of the Registrant's Form 10-K Annual Report for the fiscal year ended January 3, 2016.* | | | Contingent Value Rights Agreement, dated as of December 22, 2022, by and between Johnson & Johnson and American Stock Transfer & Trust Company, LLC – Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 8-K Current Report filed December 22, 2022.† | | | Intellectual Property Agreement, dated as of May 3, 2023, by and between Johnson & Johnson and Kenvue Inc. — Incorporated herein by reference to Exhibit 10.4 of the Registrant's Form 8-K Current Report filed May 8, 2023. | | | Trademark Phase-Out License Agreement, dated as of April 3, 2023, by and between Johnson & Johnson and Johnson & Johnson Consumer Inc. — Incorporated herein by reference to Exhibit 10.5 of the Registrant's Form 8-K Current Report filed May 8, 2023. | | | Johnson & Johnson Deferred Compensation Plan — Incorporated herein by reference to Exhibit 10.1 of the Registrant's Form 8-K Current Report filed November 27, 2023.* | | | Global Performance Share Unit Award Agreement under the Johnson & Johnson 2022 Long-Term Incentive Plan — Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Quarterly Report for the quarter year ended April 2, 2023.* | | | Global Restricted Share Unit Award Agreement under the Johnson & Johnson 2022 Long-Term Incentive Plan — Incorporated herein by reference to Exhibit 10.2 of the Registrant’s Form 10-Q Quarterly Report for the quarter year ended April 2, 2023.* | | | Global Nonqualified Stock Option Award Agreement under the Johnson & Johnson 2022 Long-Term Incentive Plan — Incorporated herein by reference to Exhibit 10.3 of the Registrant’s Form 10-Q Quarterly Report for the quarter year ended April 2, 2023.* | | | Amendment One to the Johnson & Johnson Excess Savings Plan (amended and restated effective as of January 1, 2022) — Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended October 1, 2023.* |
| | | | | | | | | Reg. S-K
Exhibit Table
Item No. | | Description
of Exhibit | | | Johnson & Johnson Executive Incentive Plan (Amended as of September 7, 2023) — Incorporated herein by reference to Exhibit 10.2 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended October 1, 2023.* | | | Johnson & Johnson Executive Officer Cash Severance Policy — Filed with this document.* | | | Johnson & Johnson Stock Trading Policy for Directors, Executive Officers and Insiders (Amended as of April 27, 2023) — Incorporated herein by reference to Exhibit 19 of the Registrant’s Form 10-K Annual Report for the fiscal year ended December 31, 2023. | | | Subsidiaries — Filed with this document. | | | Consent of Independent Registered Public Accounting Firm — Filed with this document. | | | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act — Filed with this document. | | | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act — Filed with this document. | | | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act — Furnished with this document. | | | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act — Furnished with this document. | | | Johnson & Johnson Clawback Policy (effective as of August 8, 2023) — Incorporated herein by reference to
Exhibit 97 of the Registrant’s Form 10-K Annual Report for the fiscal year ended December 31, 2023. | | Exhibit 101: | | | | EX-101.INS | | Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | | EX-101.SCH | | Inline XBRL Taxonomy Extension Schema | | EX-101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase | | EX-101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase | | EX-101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase | | EX-101.DEF | | Inline XBRL Taxonomy Extension Definition Document | | Exhibit 104: | | Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| | | | | | | * | Management contract or compensatory plan. | | ** | Paper filing. | | † | Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2)(ii) or 601(b)(10)(iv) of Regulation S-K, as applicable. |
A copy of any of the Exhibits listed above will be provided without charge to any shareholder submitting a written request specifying the desired exhibit(s) to the Secretary at the principal executive offices of the Company. Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has not filed as exhibits to this Form 10-K certain long-term debt instruments, under which the total amount of securities authorized does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. The Company hereby agrees to furnish a copy of any such instrument to the SEC upon request. 
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