refer to attachment and answer the following...refer to page 35...can be like a page and a half

Strategy: Identify accounting choices which allow managers to strategically communicate economic information or high true performance:

Example: Norms for accounting policies with industry peers, incentives for managers to manage earnings, changes in policies and estimates and the rationale for doing so, whether transactions are structured to achieve certain accounting objectives

Quality of Disclosure: Identify whether disclosures seem adequate, adequacy of footnotes to the financial statements, whether MD&A sufficiently explains and is consistent with current performance, whether GAAP restricts the appropriate measurement of key measures of success, adequacy of segment disclosure

A N N U A L R E P O R T 2 015 MARCH 2016 TO OUR SHAREHOLDERS ALEX GORSKY Chairman, Board of Directors and Chief Executive Officer This year at Johnson & Johnson, we are proud this aligned with our values. Our Board of to celebrate 130 years of helping people Directors engages in a formal review of everywhere live longer, healthier and happier our strategic plans, and provides regular lives. As I reflect on our heritage and consider guidance to ensure our strategy will continue our future, I am optimistic and confident in the creating better outcomes for the patients long-term potential for our business. and customers we serve, while also creating long-term value for our shareholders. WRITTEN OVER 70 YEARS AGO, OUR CREDO UNITES & INSPIRES THE EMPLOYEES OF JOHNSON & JOHNSON. We manage our business using a strategic framework that begins with Our Credo. Written OUR STRATEGIES ARE BASED ON over 70 years ago, it unites and inspires the OUR BROAD AND DEEP KNOWLEDGE employees of Johnson & Johnson. It reminds OF THE HEALTH CARE LANDSCAPE us that our first responsibility is to the patients, IN WHICH WE OPERATE. customers and health care professionals who For 130 years, our company has been use our products, and it compels us to deliver driving breakthrough innovation in health on our responsibilities to our employees, care - from revolutionizing wound care in communities and shareholders. the 1880s to developing cures, vaccines and treatments for some of today's most Our strategic framework positions us well pressing diseases in the world. We are acutely to continue our leadership in the markets in aware of the need to evaluate our business which we compete through a set of strategic against the changing health care environment principles: we are broadly based in human and to challenge ourselves based on the health care, our focus is on managing for the results we deliver. Consider some of the long term, we operate under a decentralized changes we are facing in the future global management approach, and we do all health care market: $)"* 3 ."/4\u0001-&55& 3\u0001\u0001* \u0001 \u0001 1PQVMBUJPOT\u0001PG\u0001EFWFMPQFE\u0001OBUJPOT\u0001BSF\u0001 base gives us a unique perspective. While we aging rapidly - and we know the elderly are pleased to see that health care is a focus consume about seven times the health in the dialogue among government officials, care resources as younger people. politicians, and other stakeholders, we must .JEEMF\u0001DMBTTFT\u0001BSF\u0001FYQBOEJOH\u0001JO\u0001NBOZ\u0001 ensure that the discussion isn't just about developing nations - and we know that \u0001 those developing economies cannot grow focus on pharmaceutical pricing, which fast enough to meet the demand of nearly represents approximately 14%* of total U.S. two billion people who want and deserve health spending, puts us at risk of missing the greater access to quality health care. bigger picture. 1BUJFOUT\u0001BSF\u0001CFDPNJOH\u0001JODSFBTJOHMZ\u0001 involved in their own health care decisions WE HAVE TO PUT THE PATIENT IN THE CENTER & REWARD INNOVATIONS THAT DRIVE BETTER OUTCOMES & LONG-TERM VALUE. cost of care alone. In fact, a disproportionate In this discussion we have to put the patient - and we know we must deliver a holistic in the center and reward innovations that approach to meet their needs and drive better outcomes and long-term value. expectations; integrating wellness solutions, We realize it is the responsibility of all innovative new medicines and advanced stakeholders to also consider the economic technologies. and financial implications of health care, so that we have a high quality, innovative, and At Johnson & Johnson, we believe the sustainable approach in all that we do. most important contribution we can make to the dynamic challenges we are facing is The promise of innovation in health care innovation - innovation in products, services, is great, but it comes with the need for solutions and in everything we do. As I think forward-focused investment in R&D, a holistic back on how far we've come, the advances in approach to evolving global health care health care are remarkable. The average life markets and bold future-facing strategies. expectancy continues to rise; and diseases, such as HIV, that were once considered a OUR BROAD BASE STRUCTURE IS A death sentence are now treatable. Cures and STRATEGIC CHOICE, NOT JUST OUR treatments reaching the market today are not HERITAGE, AND IT IS ONE THAT IS only improving quality of life for many patients, GROUNDED IN PERFORMANCE. extending life for others, and contributing Our broad base in human health care extends to the productivity of our society, but they our reach, capabilities and strategic advantages are also helping to reduce caregiver burden, for patients, providers and consumers disability, and health care spending in other around the world, and ultimately benefits our parts of the system. shareholders. We review and discuss our structure with our Board of Directors, and we * *\u0001\u0001$)"* 3 ."/4\u0001-&55& 3 In this environment, ensuring access to believe it has a number of inherent advantages important medicines and medical procedures given the challenges and opportunities in remains a key objective for us, and our broad today's evolving health care marketplace. Our broad base enables us to: OUR FOCUS IS ON MANAGING \u0001 $SFBUF\u0001BOE\u0001BDDFTT\u0001HSPXUI\u0001PQQPSUVOJUJFT\u0001 FOR THE LONG TERMBUILDING across multiple sectors of the health ENDURING EQUITY FOR OUR BRANDS care market. AND BUILDING SHAREHOLDER VALUE \u0001 #F\u0001B\u0001TUSBUFHJD\u0001QBSUOFS\u0001PG\u0001DIPJDF\u0001GPS\u0001 information technology companies and \u0001 innovative start-ups that can benefit from objectives for creating long-term value. We the deep health care expertise Johnson expect global health care to grow at three & Johnson can uniquely provide. to five percent over the next five years, 8PSL\u0001XJUI\u0001MPDBM\u0001HPWFSONFOUT\u0001BOE\u0001QVCMJD\u0001 health organizations, where we are collaborating more than ever to address the world's most pressing health challenges. \u0001 1SPWJEF\u0001PVS\u0001DVTUPNFST\u0001XJUI\u0001CSPBEFS\u0001 offerings of products, solutions and partnership opportunities with us, particularly in large health care systems focused \u0001 and we have an objective to grow our sales organically at a faster rate than the market. We also intend to grow our earnings faster than sales. When we combine these objectives with our plans to continue creating value through strategic acquisitions and partnerships, as well as our strong dividend yield, we believe the result to on attracting patients, improving patient be a compelling basis for long-term total outcomes and reducing the cost of care. shareholder return. $SFBUF\u0001QSPEVDU\u0001QMBUGPSNT\u0001BOE\u0001TZTUFNT\u0001 that cross categories and establish new sources of innovation through convergent \u0001 OVER TIME. Johnson & Johnson has a set of clear Johnson & Johnson also has a rigorous and disciplined portfolio review program combination products. We are excited about focused on creating long-term shareholder the promise of convergent technologies in value, and this applies to all our businesses. categories like lung cancer, vision care, We regularly review this approach with biosurgery, robotics, obesity and diabetes. our Board of Directors, and we have a 3FBMJ[F\u0001BEWBOUBHFT\u0001PG\u0001TDBMF\u0001UP\u0001BDIJFWF\u0001 track record of taking decisive actions, enterprise efficiencies and capabilities OUR BROAD BASE IN HUMAN HEALTH CARE EXTENDS OUR REACH, CAPABILITIES & STRATEGIC ADVANTAGES FOR PATIENTS, PROVIDERS & CONSUMERS AROUND THE WORLD. including divestitures and acquisitions, across all sectors. We are targeting as in order to meet changing industry and much as $1 billion in operational savings consumer dynamics. by 2018, to support our growth. Additionally, our disciplined capital allocation Because of its many advantages, our strategy allows us to capitalize on the broad base ultimately helps us deliver right opportunities to create greater long- strong, consistent and sustainable financial term value for our shareholders, while also performance. And most importantly, it allows investing in our businesses for the future. us to create better products, more valuable Our capital allocation strategy starts with services and improve outcomes for patients, paying dividends to our shareholders. consumers and their families. Next, we seek value-creating strategic $)"* 3 ."/4\u0001-&55& 3\u0001\u0001* * * acquisitions and partnership opportunities. As an enterprise, we continue to focus Finally, we consider other prudent ways to on delivering on our financial and quality return value to shareholders such as share commitments. Consistent with our long-term repurchase programs. strategy, we exceeded our 2015 adjusted operational earnings per share growth During 2015, we increased our dividend for the goal and met our operational sales and 53rd consecutive year, we invested nearly $2.5 free cash flow goals**, while executing billion in licensing, acquisitions and strategic against our enterprise priorities for long- partnerships, and we announced a $10 billion term value creation. share repurchase program in October. The success of our strategies is predicated THE SUCCESS OF OUR STRATEGIES IS PREDICATED ON THE STRENGTH OF OUR LEADERS & OUR TALENTED, DIVERSE EMPLOYEES ACROSS THE Over the past decade, we have supported on the strength of our leaders and our our organic growth programs and prioritized talented, diverse employees across the business needs while also investing globe, with their broad base of experience GLOBE, WITH THEIR BROAD BASE OF EXPERIENCE HELPING TO DRIVE RESULTS. *7\u0001\u0001$)"* 3 ."/4\u0001-&55& 3 about 30 percent of our free cash flows helping to drive results. Our goal is to attract in merger and acquisition opportunities. and retain the best talent in order to deliver Approximately 70 percent has been returned the best outcomes. We've made significant to our shareholders in the form of dividends investments, both internally and externally, in or share repurchases. Historically, about global diverse talent who share our vision. ** half of our growth has come from mergers and acquisitions, and half from internal PHARMACEUTICALS development, which we expect to continue 0VS\u00011IBSNBDFVUJDBMT\u0001CVTJOFTT\u0001EFMJWFSFE\u0001 in the future. With our strong balance sheet, strong financial results and continued to we have the financial strength and flexibility strengthen our industry-leading innovation to execute on all of our capital allocation pipeline in 2015. Our objective is to continue priorities simultaneously. building on our launch excellence and robust pipeline of transformational medicines. OUR DECENTRALIZED MANAGEMENT 0VS\u00011IBSNBDFVUJDBMT\u0001CVTJOFTT\u0001IBT\u0001B\u0001DMFBS\u0001 APPROACH ACKNOWLEDGES THAT strategy, focused on five therapeutic areas THOSE CLOSEST TO PATIENTS AND of high unmet medical need, a robust CUSTOMERS ARE IN THE BEST POSITION innovation engine and proven commercial TO UNDERSTAND AND ADDRESS capabilities. As we announced at our THEIR NEEDS. 1IBSNBDFVUJDBM\u0001"OBMZTU\u0001%BZ\u0001MBTU\u0001.BZ \u0001XF\u0001 In order to meet our performance objectives, are investing in our future with 10 new we have developed a set of near-term product candidates which we plan to file priorities for each business segment that will for regulatory approval by 2019, each with enable our enterprise to achieve the growth the potential to exceed a billion dollars in we expect in the long term, while also driving annual sales. In 2015, we delivered the first success for each segment. of those breakthrough medicines to the market, four months ahead of schedule, mega-brands to address key consumer with the U.S. Food and Drug Administration need states. Our priority for this business in approval of DARZALEX (Daratumumab), 2016 is to expand our market leadership in the first human monoclonal antibody to be key consumer segments in OTC, oral care, approved anywhere in the world for patients baby products and beauty. Our health and with multiple myeloma. We are confident wellness-based products are grounded in that our above-industry investment in science and endorsed by professionals, and R&D, demonstrated record of disciplined we are investing in technologies that will acquisitions and licensing deals and strong help us capitalize on our consumer expertise in-market performance, will enable us to across our broad base. successfully navigate through the launches of new competition, biosimilar and generic MEDICAL DEVICES entrants, and evolving market dynamics. 0VS\u0001.FEJDBM\u0001%FWJDFT\u0001CVTJOFTT\u0001EJE\u0001OPU\u0001 With the combined strength of our in-market achieve its revenue ambitions for the year. portfolio, deep late-stage pipeline and robust However, we did demonstrate improved early-stage pipeline, our objective is to performance in several key business units continue delivering above-industry growth. and key initiatives in 2015, including strong operational sales growth in endocutters, CONSUMER biosurgery and electrophysiology. Our priority During the year, our Consumer business JO\u0001.FEJDBM\u0001%FWJDFT\u0001JT\u0001UP\u0001CFUUFS\u0001TFSWF\u0001UIF\u0001 exceeded operational sales goals, expanding needs of customers and patients in today's market share in Oral Care and U.S. OTC, evolving health care marketplace. Our 2015 and delivering solid operational growth in BDRVJTJUJPO\u0001PG\u0001$PIFSFY\u0001.FEJDBM\u0001JO\u0001UIF\u0001BSFB\u0001 emerging markets with double-digit growth of atrial fibrillation and the surgical robotics in Brazil, India and Russia. We expect to collaboration with Verily (formerly Google continue to return our Consumer business Lifesciences) are examples of the type of to benchmark performance by recapturing strategic investments we will be focused share, growing sales faster than competitors on in the future. As part of the restructuring and enhancing our financial metrics. In 2015, we announced in January 2016, we are also our U.S. OTC business did just that, and we undertaking actions to further strengthen are happy to report that nearly all of our OTC our go-to-market model, accelerate the pace products have returned to shelves. We are of innovation, prioritize key platforms and also proud of the quality system milestones geographies, and streamline operations while we have completed - including receiving maintaining high quality standards. We will OPUJDFT\u0001PG\u0001DPOGPSNJUZ\u0001GPS\u0001PVS\u0001.D/FJM\u0001GBDJMJUJFT\u0001 continue to take the bold but appropriate from the U.S. Food and Drug Administration TUFQT\u0001UP\u0001QVU\u0001PVS\u0001.FEJDBM\u0001%FWJDFT\u0001CVTJOFTT\u0001 - and the improvements we have put in in the best position to deliver more value place. In Consumer, we focus our portfolio in for customers, for our company and for critical geographies and leverage our iconic our shareholders. OUR GOAL IS TO ATTRACT & RETAIN THE BEST TALENT IN ORDER TO DELIVER THE BEST OUTCOMES. $)"* 3 ."/4\u0001-&55& 3\u0001\u00017 THE VALUES IN OUR CREDO UNIFY in which we live and work, and the world OUR DIRECTION AND DECISIONS, community as well. HELPING US TOUCH THE LIVES OF MORE THAN A BILLION PEOPLE EVERY DAY. We understand the important role Johnson & Johnson & Johnson is privileged to play a Johnson plays in the world, and we continue role in the health and well-being of billions to build on our 130-year legacy of caring of people throughout the world. In our through strategic philanthropy with hundreds view, the climate and our environment are of partner organizations worldwide. Our also important health care issues. We are corporate philanthropy includes work with proud of the progress we have made in Operation Smile - helping to provide safe collaboration with our partners to improve our surgeries for facial deformities in children; social, environmental and economic impact Save the Children - providing care to tens WE ARE COMMITTED TO USING OUR CAPABILITIES, EXPERTISE, RESOURCES & PARTNERSHIPS TO FULFILL OUR ROLE IN MAKING THE WORLD and influence - including reducing carbon of millions of children around the world in emissions, protecting our environment and resource limited and crisis situations, including conserving our natural resources. And, we are long-term support for Syrian refugees; and the committed to doing more. &MJ[BCFUI\u0001(MBTFS\u00011FEJBUSJD\u0001"*%4\u0001'PVOEBUJPO A BETTER, HEALTHIER PLACE FOR GENERATIONS TO COME. - eliminating HIV infections in children around Johnson & Johnson has had an energy the world. We also partner with global health management program in place for over three agencies and non-governmental organizations decades and since setting our first public to battle some of the most deadly epidemics goal to reduce greenhouse gas emissions of our generation, like our commitment and in 2000, we have completed more than 150 partnership to rapidly develop a vaccine energy efficiency and renewable energy for Ebola. Through these commitments, we projects on our properties around the globe. envision a world where everyone has the In 2015, I participated in a roundtable with means to be healthy and can thrive. We are 1SFTJEFOU\u00010CBNB\u0001BIFBE\u0001PG\u0001UIF\u00016OJUFE\u0001/BUJPOT\u0001 committed to using our capabilities, expertise, $POGFSFODF\u0001PO\u0001$MJNBUF\u0001$IBOHF\u0001\t$01\u0013\u0012 \u0001 resources and partnerships to fulfill our role in where I shared our goal to tap 20 percent of making the world a better, healthier place for our electricity needs from clean or renewable generations to come. sources by 2020 and our aspiration to use 7*\u0001\u0001$)"* 3 ."/4\u0001-&55& 3 100 percent renewable power by 2050. JOHNSON & JOHNSON IS We understand the value of advancing WELL-POSITIONED FOR THE FUTURE these goals and making these investments. Although Our Credo was written over 70 In the past 10 years, our energy and CO2 years ago, I cannot imagine a more forward- emissions reduction projects have reduced looking document to continue guiding our both our energy costs and carbon footprint long-term strategy. Our Credo has long by approximately 15 percent. We believe embodied a strong sense of responsibility investing in the health of our environment is and inspiration. It is a clear measure of investing in the health of the communities accountability for our long-term success. When we operate according to the principles I trust you share my enthusiasm in looking of Our Credo, our shareholders should forward to 2016 and the future of Johnson & realize a fair return. We believe our long-term Johnson. Our 130-year heritage of leadership success is the result of meeting the needs of and service will continue, and I offer my all the stakeholders outlined in Our Credo. sincere thanks for your support of our mission. I am excited about the future for Johnson & As the world's largest health care company, Johnson and committed to continuing our we have a unique perspective on the long-term success. challenges facing global health care. We believe we also have a responsibility to lead Sincerely, in addressing those challenges facing every individual, family, community and country. With the strong oversight of our Board of Directors, the leadership of our management team and Alex Gorsky the contributions of our more than 127,000 Chairman, Board of Directors employees around the world, we will continue and Chief Executive Officer to move this great company forward. \u0001 \u0001 4PVSDF\u001b\u0001\u0013\u0011\u0012\u0015\u0001$.4\u0001/BUJPOBM\u0001)FBMUI\u0001&YQFOEJUVSFT\u00013FQPSU\u0001BOE\u0001"MUBSVN\u0001*OTUJUVUF \u0001 \u0001 \u0001/PO\u000e(""1\u0001NFBTVSFT\u0001\u0001"EKVTUFE\u0001PQFSBUJPOBM\u0001FBSOJOHT\u0001QFS\u0001TIBSF\u0001FYDMVEFT\u0001TQFDJBM\u0001JUFNT \u0001JOUBOHJCMF\u0001BTTFU\u0001 BNPSUJ[BUJPO\u0001FYQFOTF\u0001BOE\u0001UIF\u0001FGGFDU\u0001PG\u0001USBOTMBUJPOBM\u0001DVSSFODZ\u000f\u00014FF\u00013FDPODJMJBUJPO\u0001PG\u0001/PO\u000e(""1\u0001'JOBODJBM\u0001 .FBTVSFT\u0001JO\u0001UIJT\u0001"OOVBM\u00013FQPSU\u000f\u00010QFSBUJPOBM\u0001TBMFT\u0001FYDMVEFT\u0001UIF\u0001FGGFDU\u0001PG\u0001USBOTMBUJPOBM\u0001DVSSFODZ\u000f\u0001 Free cash flow is defined as operating cash flow less capital spending. /05&\u00013&("3%*/(\u0001'038"3%-00,*/(\u000145"5&.&/54\u0001 This letter contains forward-looking statements relating to, among other things, future operating and financial performance, product development, market position and business strategy. The reader is cautioned not to rely on these statements, which are based on current expectations of future events. For important information about these statements, including the risks, uncertainties and other factors that could cause actual results to vary materially from the assumptions, expectations, and projections expressed in any forward-looking statements, the reader should review the enclosed Annual Report on Form 10-K for the fiscal year ended January 3, 2016, JODMVEJOH\u0001$BVUJPOBSZ\u0001'BDUPST\u00015IBU\u0001.BZ\u0001"GGFDU\u0001'VUVSF\u00013FTVMUT\u0001PO\u0001QBHF\u0001\u0013\u001a\u0001BOE\u0001&YIJCJU\u0001\u001a\u001a\u0001UIFSFUP\u000f\u0001+PIOTPO\u0001\u0007\u0001 Johnson does not undertake to update any forward-looking statement as a result of new information or future events or developments. $)"* 3 ."/4\u0001-&55& 3\u0001\u00017* * UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 3, 2016 Commission file number 1-3215 JOHNSON & JOHNSON (Exact name of registrant as specified in its charter) New Jersey 22-1024240 (State of incorporation) (I.R.S. Employer Identification No.) One Johnson & Johnson Plaza New Brunswick, New Jersey 08933 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (732) 524-0400 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT Title of each class Name of each exchange on which registered Common Stock, Par Value $1.00 4.75% Notes Due November 2019 5.50% Notes Due November 2024 New York Stock Exchange New York Stock Exchange New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ' Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ' No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ' Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No ' Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of \"large accelerated filer,\" \"accelerated filer\" and \"smaller reporting company\" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer ' Non-accelerated filer ' Smaller reporting company (Do not check if a smaller reporting company) ' Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ' No The aggregate market value of the Common Stock held by non-affiliates computed by reference to the price at which the Common Stock was last sold as of the last business day of the registrant's most recently completed second fiscal quarter was approximately $276 billion. On February 19, 2016, there were 2,759,359,192 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Parts I and III: Portions of registrant's proxy statement for its 2016 annual meeting of shareholders filed within 120 days after the close of the registrant's fiscal year (the \"Proxy Statement\"), are incorporated by reference to this report on Form 10-K (this \"Report\"). Item Page PART I 1 1A. 1B. 2 3 4 Business General Segments of Business Geographic Areas Raw Materials Patents Trademarks Seasonality Competition Research and Development Environment Regulation Available Information Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Executive Officers of the Registrant 1 1 1 2 2 2 3 3 3 3 4 4 4 5 5 5 6 6 6 PART II 5 6 7 7A. 8 9 9A. 9B. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information 8 9 10 30 30 81 81 81 PART III 10 11 12 13 14 Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services 82 82 82 83 83 PART IV 15 Exhibits and Financial Statement Schedules Signatures Exhibit Index 84 85 87 PART I Item 1. Business General Johnson & Johnson and its subsidiaries (the \"Company\") have approximately 127,100 employees worldwide engaged in the research and development, manufacture and sale of a broad range of products in the health care field. Johnson & Johnson is a holding company, which has more than 250 operating companies conducting business in virtually all countries of the world. The Company's primary focus is products related to human health and well-being. Johnson & Johnson was incorporated in the State of New Jersey in 1887. The Executive Committee of Johnson & Johnson is the principal management group responsible for the strategic operations and allocation of the resources of the Company. This Committee oversees and coordinates the activities of the Company's three business segments: Consumer, Pharmaceutical and Medical Devices. Within the strategic parameters provided by the Committee, senior management groups at U.S. and international operating companies are each responsible for their own strategic plans and the day-to-day operations of those companies. Each subsidiary within the business segments is, with limited exceptions, managed by residents of the country where located. Segments of Business The Company is organized into three business segments: Consumer, Pharmaceutical and Medical Devices. Additional information required by this item is incorporated herein by reference to the narrative and tabular descriptions of segments and operating results under: Item 7 \"Management's Discussion and Analysis of Results of Operations and Financial Condition\" of this Report; and Note 18 \"Segments of Business and Geographic Areas\" of the Notes to Consolidated Financial Statements included in Item 8 of this Report. Consumer The Consumer segment includes a broad range of products used in the baby care, oral care, skin care, over-the-counter pharmaceutical, women's health and wound care markets. Baby Care includes the JOHNSON'S line of products. Oral Care includes the LISTERINE product line. Major brands in Skin Care include the AVEENO; CLEAN & CLEAR; DABAO; JOHNSON'S Adult; LE PETITE MARSEILLAIS; LUBRIDERM; NEUTROGENA; and RoC product lines. Over-the-counter medicines include the broad family of TYLENOL acetaminophen products; SUDAFED cold, flu and allergy products; BENADRYL and ZYRTEC allergy products; MOTRIN IB ibuprofen products; and the PEPCID line of heartburn products. Major brands in Women's Health outside of North America are STAYFREE and CAREFREE sanitary pads and o.b. tampon brands. Wound Care brands include the BAND-AID Brand Adhesive Bandages and NEOSPORIN First Aid product lines. These products are marketed to the general public and sold both to retail outlets and distributors throughout the world. Pharmaceutical The Pharmaceutical segment is focused on five therapeutic areas: immunology (e.g., rheumatoid arthritis, inflammatory bowel disease and psoriasis), infectious diseases and vaccines (e.g., HIV, hepatitis, respiratory infections and tuberculosis), neuroscience (e.g., Alzheimer's disease, mood disorders and schizophrenia), oncology (e.g., prostate cancer, hematologic malignancies and lung cancer), and cardiovascular and metabolic diseases (e.g., thrombosis and diabetes). Products in this segment are distributed directly to retailers, wholesalers, hospitals and health care professionals for prescription use. Key products in the Pharmaceutical segment include: REMICADE (infliximab), a treatment for a number of immune-mediated inflammatory diseases; SIMPONI (golimumab), a subcutaneous treatment for adults with moderate to severe rheumatoid arthritis, active psoriatic arthritis, active ankylosing spondylitis and moderately active to severely active ulcerative colitis; SIMPONI ARIA (golimumab), an intravenous treatment for adults with moderate to severe rheumatoid arthritis; STELARA (ustekinumab), a treatment for adults with moderate to severe plaque psoriasis and active psoriatic arthritis, and for adolescents with moderate to severe psoriasis; OLYSIO / SOVRIAD (simeprevir), for combination treatment of chronic hepatitis C in adult patients; PREZISTA (darunavir), EDURANT (rilpivirine), and PREZCOBIX /REZOLSTA (darunavir/cobicistat), antiretroviral medicines for the Johnson & Johnson 2015 Annual Report 1 treatment of human immunodeficiency virus (HIV-1) in combination with other antiretroviral products; SIRTURO (bedaquiline), a diarylquinoline antimycobacterial drug indicated as part of combination therapy in adults (>18 years) with pulmonary multi-drug resistant tuberculosis (MDR-TB); CONCERTA (methylphenidate HCl) extended-release tablets CII, a treatment for attention deficit hyperactivity disorder; INVEGA (paliperidone) extended-release tablets, for the treatment of schizophrenia and schizoaffective disorder; INVEGA SUSTENNA /XEPLION (paliperidone palmitate), for the treatment of schizophrenia and schizoaffective disorder in adults; INVEGA TRINZA (paliperidone palmitate), for the treatment of schizophrenia in patients after they have been adequately treated with INVEGA SUSTENNA for at least four months; RISPERDAL CONSTA (risperidone long-acting injection), for the treatment of schizophrenia and the maintenance treatment of Bipolar 1 Disorder in adults; VELCADE (bortezomib), a treatment for multiple myeloma and for use in combination with rituximab, cyclophosphamide, doxorubicin and prednisone for the treatment of adult patients with previously untreated mantle cell lymphoma; ZYTIGA (abiraterone acetate), used in combination with prednisone as a treatment for metastatic castration-resistant prostate cancer; IMBRUVICA (ibrutinib), an oral, once-daily therapy approved for use in treating certain B-cell malignancies, or blood cancers, and Waldenstrm's Macroglobulinemia; DARZALEXTM (daratumumab), for the treatment of double refractory multiple myeloma; YONDELIS (trabectedin), for the treatment of patients with unresectable or metastatic liposarcoma or leiomyosarcoma who received a prior anthracyclinecontaining regimen; PROCRIT (epoetin alfa, sold outside the U.S. as EPREX ), to stimulate red blood cell production; XARELTO (rivaroxaban), an oral anticoagulant for the prevention of deep vein thrombosis (DVT), which may lead to pulmonary embolism (PE) in patients undergoing hip or knee replacement surgery, to reduce the risk of stroke and systemic embolism in patients with nonvalvular atrial fibrillation, for the treatment and reduction of risk of recurrence of DVT and PE; INVOKANA (canagliflozin), for the treatment of adults with type 2 diabetes; and INVOKAMET /VOKANAMET (canagliflozin/metformin HCl), a combination therapy of fixed doses of canagliflozin and metformin hydrochloride for the treatment of adults with type 2 diabetes. Many of these medicines were developed in collaboration with strategic partners or are licensed from other companies and maintain active lifecycle development programs. Medical Devices The Medical Devices segment includes a broad range of products used in the orthopaedic, surgery, cardiovascular, diabetes care and vision care fields. These products are distributed to wholesalers, hospitals and retailers, and used principally in the professional fields by physicians, nurses, hospitals, eye care professionals and clinics. They include orthopaedic products; general surgery, biosurgical, endomechanical and energy products; electrophysiology products to treat cardiovascular disease; sterilization and disinfection products to reduce surgical infection; diabetes care products, such as blood glucose monitoring and insulin delivery products; and disposable contact lenses. Geographic Areas The business of Johnson & Johnson is conducted by more than 250 operating companies located in 60 countries, including the U.S., in virtually all countries throughout the world. The products made and sold in the international business include many of those described above under \"- Segments of Business - Consumer,\" \"- Pharmaceutical\" and \"- Medical Devices.\" However, the principal markets, products and methods of distribution in the international business vary with the country and the culture. The products sold in international business include those developed in the United States and by subsidiaries abroad. Investments and activities in some countries outside the U.S. are subject to higher risks than comparable U.S. activities because the investment and commercial climate may be influenced by financial instability in international economies, restrictive economic policies and political and legal system uncertainties. Raw Materials Raw materials essential to the Company's business are generally readily available from multiple sources. Where there are exceptions, the temporary unavailability of those raw materials would not likely have a material adverse effect on the financial results of the Company. Patents The Company's subsidiaries have made a practice of obtaining patent protection on their products and processes where possible. They own or are licensed under a number of patents relating to their products and manufacturing processes, which in the aggregate are believed to be of material importance to the Company in the operation of its businesses. Sales 2 Johnson & Johnson 2015 Annual Report of the Company's largest product, REMICADE (infliximab), accounted for approximately 9.4% of the Company's total revenues for fiscal 2015. Accordingly, the patents related to this product are believed to be material to the Company. There are two sets of patents related specifically to REMICADE (infliximab). The first set of patents is co-owned by Janssen Biotech, Inc., a wholly-owned subsidiary of Johnson & Johnson, and NYU Langone Medical Center (NYU). Janssen Biotech, Inc. has an exclusive license to NYU's interests in the patents. These patents have expired in all countries outside the United States. In the United States, the latest of these patents expires in September 2018 and this patent stands rejected and is subject to reexamination proceedings instituted by a third party in the United States Patent and Trademark Office. Those proceedings are on going. The second set of patents specifically related to REMICADE was granted to The Kennedy Institute of Rheumatology in Europe, Canada, Australia and the United States. Janssen Biotech, Inc. has licenses (exclusive for human anti-TNF antibodies and semi-exclusive for non-human anti-TNF antibodies) to these patents that expire in 2017 outside of the United States and 2018 in the United States. The validity of these patents has been challenged. Certain claims have been invalidated and others are under review in various patent offices around the world and are also subject to litigation in Canada. The Company does not expect that any additional extensions will be available for the above described patents specifically related to REMICADE. If any of the REMICADE related patents discussed above is found to be invalid, any such patent could not be relied upon to prevent the introduction of biosimilar versions of REMICADE. For a more extensive description of legal matters regarding the patents related to REMICADE, see Note 21 \"Legal Proceedings - Intellectual Property - Pharmaceutical - REMICADE Related Cases\" of the Notes to Consolidated Financial Statements included in Item 8 of this Report. In addition to competing in the immunology market with REMICADE, the Company is currently marketing STELARA (ustekinumab), SIMPONI (golimumab) and SIMPONI ARIA (golimumab), next generation immunology products with remaining patent lives of up to eight years. Trademarks The Company's subsidiaries have made a practice of selling their products under trademarks and of obtaining protection for these trademarks by all available means. These trademarks are protected by registration in the United States and other countries where such products are marketed. The Company considers these trademarks in the aggregate to be of material importance in the operation of its businesses. Seasonality Worldwide sales do not reflect any significant degree of seasonality; however, spending has been heavier in the fourth quarter of each year than in other quarters. This reflects increased spending decisions, principally for advertising and research and development activity. Competition In all of their product lines, the Company's subsidiaries compete with companies both locally and globally. Competition exists in all product lines without regard to the number and size of the competing companies involved. Competition in research, both internally and externally sourced, involving the development and the improvement of new and existing products and processes, is particularly significant. The development of new and innovative products, as well as protecting the underlying intellectual property of the Company's product portfolio, is important to the Company's success in all areas of its business. The competitive environment requires substantial investments in continuing research. In addition, the development and maintenance of customer demand for the Company's consumer products involve significant expenditures for advertising and promotion. Research and Development Research activities represent a significant part of the Company's businesses. Research and development expenditures relate to the processes of discovering, testing and developing new products, improving existing products, as well as demonstrating product efficacy and regulatory compliance prior to launch. The Company remains committed to investing in research and development with the aim of delivering high quality and innovative products. Worldwide costs of research and development activities amounted to $9.0 billion, $8.5 billion and $8.2 billion for fiscal years 2015, 2014 and 2013, respectively. Research facilities are located in the United States, Belgium, Brazil, Canada, China, France, Germany, India, Israel, Japan, the Netherlands, Singapore, Switzerland and the United Kingdom. Johnson & Johnson 2015 Annual Report 3 Environment The Company is subject to a variety of U.S. and international environmental protection measures. The Company believes that its operations comply in all material respects with applicable environmental laws and regulations. The Company's compliance with these requirements did not change during the past year, and is not expected to have a material effect upon its capital expenditures, cash flows, earnings or competitive position. Regulation The Company's businesses are subject to varying degrees of governmental regulation in the countries in which operations are conducted, and the general trend is toward increasingly stringent regulation. In the U.S., the drug, device and cosmetic industries have long been subject to regulation by various federal and state agencies, primarily as to product safety, efficacy, manufacturing, advertising, labeling and safety reporting. The exercise of broad regulatory powers by the U.S. Food and Drug Administration (the \"FDA\") continues to result in increases in the amounts of testing and documentation required for FDA approval of new drugs and devices and a corresponding increase in the expense of product introduction. Similar trends are also evident in major markets outside of the U.S. The costs of human health care have been and continue to be a subject of study, investigation and regulation by governmental agencies and legislative bodies around the world. In the U.S., attention has been focused on drug prices and profits and programs that encourage doctors to write prescriptions for particular drugs, or to recommend, use or purchase particular medical devices. Payers have become a more potent force in the market place and increased attention is being paid to drug and medical device pricing, appropriate drug and medical device utilization and the quality and costs of health care generally. U.S. government agencies continue to implement the extensive requirements of the Patient Protection and Affordable Care Act (the \"ACA\"). These have both positive and negative impacts on the U.S. healthcare industry with much remaining uncertain as to how various provisions of the ACA will ultimately affect the industry. The regulatory agencies under whose purview the Company operates have administrative powers that may subject it to actions such as product withdrawals, recalls, seizure of products and other civil and criminal sanctions. In some cases, the Company's subsidiaries may deem it advisable to initiate product recalls. In addition, business practices in the health care industry have come under increased scrutiny, particularly in the United States, by government agencies and state attorneys general, and resulting investigations and prosecutions carry the risk of significant civil and criminal penalties. Further, the Company relies on global supply chains, and production and distribution processes, that are complex, are subject to increasing regulatory requirements that may affect sourcing, supply and pricing of materials used in the Company's products. These processes also are subject to lengthy regulatory approvals. Available Information The Company's main corporate website address is www.jnj.com. Copies of the Company's Quarterly Reports on Form 10-Q, Annual Report on Form 10-K and Current Reports on Form 8-K filed or furnished to the U.S. Securities and Exchange Commission (the \"SEC\"), and any amendments to the foregoing, will be provided without charge to any shareholder submitting a written request to the Secretary at the principal executive offices of the Company or by calling 1800-950-5089. All of the Company's SEC filings are also available on the Company's website at www.investor.jnj.com/ gov/sec-filings.cfm, as soon as reasonably practicable after having been electronically filed or furnished to the SEC. All SEC filings are also available at the SEC's website at www.sec.gov. In addition, the written charters of the Audit Committee, the Compensation & Benefits Committee, the Nominating & Corporate Governance Committee, the Regulatory, Compliance & Government Affairs Committee and the Science, Technology & Sustainability Committee of the Board of Directors and the Company's Principles of Corporate Governance, Code of Business Conduct (for employees), Code of Business Conduct & Ethics for Members of the Board of Directors and Executive Officers, and other corporate governance materials, are available at www.investor.jnj.com/gov/materials.cfm on the Company's website and will be provided without charge to any shareholder submitting a written request, as provided above. The information on the Company's website is not, and will not be deemed, a part of this Report or incorporated into any other filings the Company makes with the SEC. 4 Johnson & Johnson 2015 Annual Report Item 1A. Risk Factors The Company faces a number of uncertainties and risks that are difficult to predict and many of which are outside of the Company's control. In addition to the other information in this Report and the Company's other filings with the SEC, investors should consider carefully the factors set forth in Exhibit 99 to this Report. Investors should realize that if known or unknown risks or uncertainties materialize, the Company's business, results of operations or financial condition could be adversely affected. Item 1B. Unresolved Staff Comments Not applicable. Item 2. Properties The Company's subsidiaries operate 121 manufacturing facilities occupying approximately 21.3 million square feet of floor space. The manufacturing facilities are used by the industry segments of the Company's business approximately as follows: Square Feet (in thousands) Segment Consumer 6,942 Pharmaceutical 7,435 Medical Devices 6,919 Worldwide Total 21,296 Within the United States, eight facilities are used by the Consumer segment, eight by the Pharmaceutical segment and 20 by the Medical Devices segment. Outside of the United States, 30 facilities are used by the Consumer segment, 18 by the Pharmaceutical segment and 37 by the Medical Devices segment. The locations of the manufacturing facilities by major geographic areas of the world are as follows: Geographic Area United States Number of Facilities 36 Square Feet (in thousands) 5,808 Europe 38 7,917 Western Hemisphere, excluding U.S. 14 2,815 Africa, Asia and Pacific Worldwide Total 33 4,756 121 21,296 In addition to the manufacturing facilities discussed above, the Company maintains numerous office and warehouse facilities throughout the world. Research facilities are also discussed in Item 1 of this Report under \"Business - Research and Development.\" The Company's subsidiaries generally seek to own their manufacturing facilities, although some, principally in non-U.S. locations, are leased. Office and warehouse facilities are often leased. The Company also engages contract manufacturers. The Company is committed to maintaining all of its properties in good operating condition and repair, and the facilities are well utilized. McNEIL-PPC, Inc. (now Johnson & Johnson Consumer Inc.) (McNEIL-PPC) continues to operate under a consent decree, signed in 2011 with the FDA, which governs certain McNeil Consumer Healthcare manufacturing operations, and requires McNEIL-PPC to remediate the facilities it operates in Lancaster, Pennsylvania, Fort Washington, Pennsylvania, and Las Piedras, Puerto Rico (the \"Consent Decree\"). The Fort Washington facility was voluntarily shut down in April 2010, and subsequently many products were transferred to other manufacturing sites and successfully reintroduced to the market. After McNEIL-PPC successfully completed all requirements contained in the Consent Decree Workplans for the Johnson & Johnson 2015 Annual Report 5 Lancaster and Las Piedras manufacturing sites and completed the steps required for third-party certification of the Fort Washington plant, a third-party cGMP expert submitted written certifications to the FDA for all three manufacturing sites. Following FDA inspections in 2015, McNEIL-PPC received notifications from the FDA that all three manufacturing facilities are in conformity with applicable laws and regulations. Commercial production in Fort Washington started as of September 2015. Under the Consent Decree, after receiving notice from the FDA of being in compliance with applicable laws and regulations, each of the three facilities is subject to a five-year audit period by a third-party cGMP expert. Thus, a thirdparty expert will continue to reassess the sites at various times for at least five years. A discussion of legal proceedings related to this matter can be found in Note 21 \"Legal Proceedings - Government Proceedings - McNeil Consumer Healthcare\" of the Notes to Consolidated Financial Statements included in Item 8 of this Report. For information regarding lease obligations, see Note 16 \"Rental Expense and Lease Commitments\" of the Notes to Consolidated Financial Statements included in Item 8 of this Report. Segment information on additions to property, plant and equipment is contained in Note 18 \"Segments of Business and Geographic Areas\" of the Notes to Consolidated Financial Statements included in Item 8 of this Report. Item 3. Legal Proceedings The information called for by this item is incorporated herein by reference to the information set forth in Note 21 \"Legal Proceedings\" of the Notes to Consolidated Financial Statements included in Item 8 of this Report. In addition, Johnson & Johnson and its subsidiaries are from time to time party to government investigations, inspections or other proceedings relating to environmental matters, including their compliance with applicable environmental laws. Item 4. Mine Safety Disclosures Not applicable. Executive Officers of the Registrant Listed below are the executive officers of the Company as of February 23, 2016. There are no family relationships between any of the executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected. At the annual meeting of the Board of Directors, the executive officers are elected by the Board to hold office for one year and until their respective successors are elected and qualified, or until earlier resignation or removal. Information with regard to the Directors of the Company, including information for Alex Gorsky, is incorporated herein by reference to the material captioned \"Item 1: Election of Directors\" in the Proxy Statement. Name Age Dominic J. Caruso Peter M. Fasolo 58 Member, Executive Committee; Vice President, Finance; Chief Financial Officer(a) 53 Member, Executive Committee; Vice President, Global Human Resources(b) 55 Chairman, Board of Directors; Chairman, Executive Committee; Chief Executive Officer 57 Member, Executive Committee; Group Worldwide Chairman(c) 54 Member, Executive Committee; Chief Scientific Officer; Worldwide Chairman, Pharmaceuticals(d) 57 Member, Executive Committee; Vice President, General Counsel(e) Alex Gorsky Sandra E. Peterson Paulus Stoffels Michael H. Ullmann (a) Position Mr. D. J. Caruso joined the Company in 1999 when the Company acquired Centocor, Inc. At the time of that acquisition, he had been Senior Vice President, Finance of Centocor. Mr. Caruso was named Vice President, Finance of Ortho-McNeil Pharmaceutical, Inc., a subsidiary of the Company, in 2001 and Vice President, Group Finance of the Company's Medical Devices and Diagnostics Group in 2003. In 2005, Mr. Caruso was named Vice President of the Company's Group Finance organization. Mr. Caruso became a Member of the Executive Committee and Vice President, Finance and Chief Financial Officer in 2007. 6 Johnson & Johnson 2015 Annual Report (b) Dr. P. M. Fasolo joined the Company in 2004 as Vice President, Worldwide Human Resources for Cordis Corporation, a subsidiary of the Company. He was then named Vice President, Global Talent Management for the Company. He left Johnson & Johnson in 2007 to join Kohlberg Kravis Roberts & Co. as Chief Talent Officer. Dr. Fasolo returned to the Company in 2010 as the Vice President, Global Human Resources, and in 2011, he became a Member of the Executive Committee. (c) Ms. S. E. Peterson joined the Company in 2012 as Group Worldwide Chairman and a Member of the Executive Committee, with responsibility for the Consumer Group of Companies, consumer medical device businesses in the Vision Care and Diabetes Care franchises, and functions such as Johnson & Johnson Supply Chain, Information Technology, Wellness and Prevention and Global Strategic Design. Prior to joining Johnson & Johnson, Ms. Peterson had an extensive global career in healthcare, consumer goods and consulting. Most recently, she was Chairman and Chief Executive Officer of Bayer CropScience AG in Germany, previously serving as President and Chief Executive Officer of Bayer Medical Care and President of Bayer HealthCare AG's Diabetes Care Division. Before joining Bayer in 2005, Ms. Peterson held a number of leadership roles at Medco Health Solutions (previously known as Merck-Medco). Among her responsibilities was the application of information technology to healthcare systems. (d) Dr. P. Stoffels joined the Company in 2002 with the acquisition of Virco and Tibotec, where he was Chief Executive Officer of Virco and Chairman of Tibotec. In 2005, he was appointed Company Group Chairman, Global Virology where he led the development of PREZISTA and INTELENCE, leading products for the treatment of HIV. In 2006, he assumed the role of Company Group Chairman, Pharmaceuticals, with responsibility for worldwide research and development for the Central Nervous System and Internal Medicine Franchises. Dr. Stoffels was appointed Global Head, Research & Development, Pharmaceuticals, in 2009, and in 2011 became Worldwide Chairman, Pharmaceuticals, with responsibility for the Company's therapeutic pipeline through global research and development and strategic business development. In 2012, Dr. Stoffels was also appointed Chief Scientific Officer, with responsibility for enterprise-wide innovation and product safety, and a Member of the Executive Committee. (e) Mr. M. H. Ullmann joined the Company in 1989 as a corporate attorney in the Law Department. He was appointed Corporate Secretary in 1999 and served in that role until 2006. During that time, he also held various management positions in the Law Department. In 2006, he was named General Counsel, Medical Devices and Diagnostics. Mr. Ullmann was appointed Vice President, General Counsel and a Member of the Executive Committee in 2012. Johnson & Johnson 2015 Annual Report 7 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities As of February 19, 2016, there were 158,749 record holders of common stock of the Company. Additional information called for by this item is incorporated herein by reference to the following sections of this Report: Item 7 \"Management's Discussion and Analysis of Results of Operations and Financial Condition - Liquidity and Capital Resources - Dividends\" and \"- Other Information - Common Stock Market Prices\"; Note 17 \"Common Stock, Stock Option Plans and Stock Compensation Agreements\" of the Notes to Consolidated Financial Statements included in Item 8; and Item 12 \"Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters - Equity Compensation Plan Information\". Issuer Purchases of Equity Securities On October 13, 2015, the Company announced that its Board of Directors approved a share repurchase program, authorizing the Company to purchase up to $10.0 billion of the Company's Common Stock. Share repurchases take place on the open market from time to time based on market conditions. The repurchase program has no time limit and may be suspended for periods or discontinued at any time. The following table provides information with respect to common stock purchases by the Company during the fiscal fourth quarter of 2015. Common stock purchases on the open market are made as part of a systematic plan to meet the needs of the Company's compensation programs. The repurchases below also include the stock-for-stock option exercises that settled in the fiscal fourth quarter. Period Total Number of Shares Purchased(1) Avg. Price Paid Per Share Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(2) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(3) September 28, 2015 through October 25, 2015 1,134,367 $96.45 - - October 26, 2015 through November 22, 2015 6,298,421 100.21 5,408,965 - November 23, 2015 through January 3, 2016 11,330,068 102.30 4,462,352 - Total 18,762,856 9,871,317 87,618,945 (1) During the fiscal fourth quarter of 2015, the Company repurchased an aggregate of 18,762,856 shares of Johnson & Johnson Common Stock in open-market transactions, of which 9,871,317 shares were purchased pursuant to the repurchase program that was publicly announced on October 13, 2015, and of which 8,891,539 shares were purchased in open-market transactions as part of a systematic plan to meet the needs of the Company's compensation programs. (2) As of January 3, 2016, an aggregate of 9,871,317 shares were purchased for a total of $1.0 billion since the inception of the repurchase program announced on October 13, 2015. (3) As of January 3, 2016, the maximum number of shares that may yet be purchased under the plan is 87,618,945 based on the closing price of Johnson & Johnson Common Stock on the New York Stock Exchange on December 31, 2015 of $102.72 per share. 8 Johnson & Johnson 2015 Annual Report Item 6. Selected Financial Data Summary of Operations and Statistical Data 2005-2015 (Dollars in Millions Except Per Share Amounts) Sales to customers - U.S. Sales to customers - International Total sales Cost of products sold Selling, marketing and administrative expenses Research and development expense In-process research and development Interest income Interest expense, net of portion capitalized Other (income) expense, net Restructuring 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 $35,687 2015 34,782 31,910 29,830 28,908 29,450 30,889 32,309 32,444 29,775 28,377 34,387 70,074 21,536 39,549 74,331 22,746 39,402 71,312 22,342 37,394 67,224 21,658 36,122 65,030 20,360 32,137 61,587 18,792 31,008 61,897 18,447 31,438 63,747 18,511 28,651 61,095 17,751 23,549 53,324 15,057 22,137 50,514 14,010 21,203 21,954 21,830 20,869 20,969 19,424 19,801 21,490 20,451 17,433 17,211 9,046 8,494 8,183 7,665 7,548 6,844 6,986 7,577 7,680 7,125 6,462 224 (128) 178 (67) 552 (2,064) 509 50,878 533 (70) - 53,768 482 2,498 - 55,841 532 1,626 - 53,449 571 2,743 569 52,669 455 451 435 296 (768) (526) (1,015) 534 - 1,073 - 745 44,640 46,142 46,818 47,812 63 54 (671) (214) - - 38,737 37,398 20,563 4,240 16,323 15,471 1,640 13,831 13,775 3,261 10,514 12,361 2,689 9,672 16,947 3,613 13,334 15,755 3,489 12,266 16,929 3,980 12,949 13,283 2,707 10,576 14,587 3,534 11,053 13,116 3,056 10,060 - - 339 - - - - - - - 16,323 22.0 13,831 19.4 10,853 16.1 9,672 14.9 13,334 21.7 12,266 19.8 12,949 20.3 10,576 17.3 11,053 20.7 10,060 19.9 5.70 4.81 3.86 3.49 4.78 4.40 4.57 3.63 3.73 3.35 22.7 19.9 17.8 17.0 24.9 26.4 30.2 25.6 28.3 28.2 4.2 18.5 6.1 24.6 3.4 10.6 5.6 (27.0) (0.5) 8.6 (2.9) (3.7) 4.3 25.9 14.6 (2.7) 5.6 11.3 6.7 22.3 16,126 16,710 16,097 Earnings before provision for taxes on income $19,196 Provision for taxes on income 3,787 Net earnings 15,409 Add: Net loss attributable to noncontrolling interest - Net earnings attributable to Johnson & Johnson 15,409 Percent of sales to customers 22.0% Diluted net earnings per share of common stock(1) $5.48 Percent return on average shareholders' equity 21.9% Percent increase (decrease) over previous year: Sales to customers (5.7)% Diluted net earnings per share (3.9)% Supplementary balance sheet data: Property, plant and equipment, net 15,905 Additions to property, plant and equipment 3,463 Total assets(2) 133,411 Long-term debt 12,857 Operating cash flow 19,279 Common stock information Dividends paid per share $2.95 Shareholders' equity per share 25.82 Market price per share (yearend close) $102.72 Average shares outstanding (millions) - basic 2,771.8 - diluted 2,812.9 Employees (thousands) 127.1 580 (74) 1,163 (64) - (91) 14,739 - (107) - (90) 181 (361) 807 (452) 559 (829) 362 (487) 14,553 14,759 14,365 14,185 13,044 10,830 3,714 3,595 2,934 2,893 2,384 130,358 131,754 121,347 113,644 102,908 15,122 13,328 11,489 12,969 9,156 18,471 17,414 15,396 14,298 16,385 2,365 94,682 8,223 16,571 3,066 84,912 8,120 14,972 2,942 80,954 7,074 15,022 2,666 70,556 2,014 14,248 2,632 58,864 2,017 11,799 2.76 2.59 2.40 2.25 2.11 1.93 1.795 1.62 1.455 1.275 25.06 26.25 23.33 20.95 20.66 18.37 15.35 15.25 13.59 13.01 105.06 92.35 69.48 65.58 61.85 64.41 58.56 67.38 66.02 60.10 2,815.2 2,863.9 126.5 2,809.2 2,877.0 128.1 2,753.3 2,812.6 127.6 2,736.0 2,775.3 117.9 (1) Attributable to Johnson & Johnson. (2) Amounts have been reclassified to conform to current year presentation. 2,751.4 2,759.5 2,802.5 2,882.9 2,936.4 2,973.9 2,788.8 2,789.1 2,835.6 2,910.7 2,961.0 3,002.8 114.0 115.5 118.7 119.2 122.2 115.6 Johnson & Johnson 2015 Annual Report 9 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition Organization and Business Segments Description of the Company and Business Segments Johnson & Johnson and its subsidiaries (the Company) have approximately 127,100 employees worldwide engaged in the research and development, manufacture and sale of a broad range of products in the health care field. The Company conducts business in virtually all countries of the world with the primary focus on products related to human health and well-being. The Company is organized into three business segments: Consumer, Pharmaceutical and Medical Devices. The Consumer segment includes a broad range of products used in the baby care, oral care, skin care, over-the-counter pharmaceutical, women's health and wound care markets. These products are marketed to the general public and sold both to retail outlets and distributors throughout the world. The Pharmaceutical segment is focused on five therapeutic areas, including immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic diseases. Products in this segment are distributed directly to retailers, wholesalers, hospitals and health care professionals for prescription use. The Medical Devices segment includes a broad range of products used in the orthopaedic, surgery, cardiovascular, diabetes care and vision care fields which are distributed to wholesalers, hospitals and retailers, and used principally in the professional fields by physicians, nurses, hospitals, eye care professionals and clinics. The Executive Committee of Johnson & Johnson is the principal management group responsible for the strategic operations and allocation of the resources of the Company. This Committee oversees and coordinates the activities of the Consumer, Pharmaceutical and Medical Devices business segments. In all of its product lines, the Company competes with companies both locally and globally, throughout the world. Competition exists in all product lines without regard to the number and size of the competing companies involved. Competition in research, involving the development and the improvement of new and existing products and processes, is particularly significant. The development of new and innovative products, as well as protecting the underlying intellectual property of the Company's product portfolio, is important to the Company's success in all areas of its business. The competitive environment requires substantial investments in continuing research. In addition, the development and maintenance of customer demand for the Company's consumer products involves significant expenditures for adve