2015 Historical Financial Review

Transcription

1 2015 Historical Financial Review

2 Historical Financial Review T he Historical Financial Review is prepared once per year and is available on line at It is intended to supplement the Annual Report and other SEC filings and be used primarily by financial analysts to assist in a detailed financial analysis. While this document does include abbreviated financial statements, it is not a substitute for the more detailed financial statements (including footnotes) found in the Annual Report and other SEC filings. We appreciate your comments and suggestions on ways to improve this document and will attempt to incorporate them into future editions. Index Page Introduction 1 Five Year Selected Financial Data 2 Description of Major Business Franchises 3-4 Balance Sheets, Statements of Earnings, Statements of Cash Flows 5-7 Segments of Business Information 8-9 Geographical Areas 10 Sales Growth Rates 11 Quarterly Sales and Earnings Information Historical Sales and Net Earnings 16 Stock Split and Share Repurchase Information 17 Historical Common Stock Information Reconciliation of Non-GAAP Measures 20 Corporate and Shareholder/Investor Information 21 1

3 Five-Year Selected Financial Data (Dollars in Millions Except Per Share Figures) Operating Results 2015 (1) 2014 (1) 2013 (1) 2012 (1) 2011 (1) Sales to customers $ 70,074 74,331 71,312 67,224 65,030 Earnings before provision for taxes on income 19,196 20,563 15,471 13,775 12,361 Net earnings attributable to J&J (2) 15,409 16,323 13,831 10,853 9,672 Basic net earnings per share Diluted net earnings per share Statistics Before tax margin 27.4 % Net profit margin (2) Effective tax rate Return on average shareholders' equity Return on total assets Capital Structure Cash and Current Marketable Securities $ 38,376 33,089 29,206 21,089 32,261 Debt 19,861 18,760 18,180 16,165 19,627 Equity 71,150 69,752 74,053 64,826 57,080 Total capital 91,011 88,512 92,233 80,991 76,707 Net cash/(debt) $ 18,515 $ 14,329 11,026 4,924 12,634 Total debt/total capital 21.8 % Common Stock Information Dividends paid per share $ Shareholders' equity per share Market price per share (year end close) Average shares outstanding (mm) - basic 2, , , , , diluted 2, , , , ,775.3 Cash dividends $ 8,173 7,768 7,286 6,614 6,156 Other Data Total assets* $ 133, , , , ,644 Research & development expense 9,046 8,494 8,183 7,665 7,548 Capital expenditures 3,463 3,714 3,595 2,934 2,893 Number of employees (thousands) (1) For Adjusted earnings (before and after tax) and adjusted earnings per share, see Reconciliation of Non-GAAP Measures on Page 20. (2) After noncontrolling interests * Prior year amounts have been reclassified to conform to current year presentation 2

4 Description of Major Business Franchises Consumer Segment 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. Worldwide Consumer sales of $13.5 billion for the full-year 2015 represented a decrease of 6.8% versus the prior year, consisting of an operational increase of 2.7% and a negative impact from currency of 9.5%. U.S. sales increased 2.5%; international sales decreased 11.9%, which reflected an operational increase of 2.7% and a negative currency impact of 14.6%. In 2015, divestitures had a negative impact of 1.4% on the worldwide Consumer segment operational growth. Medical Devices Segment 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. The Medical Devices segment sales in 2015 were $25.1 billion, a decrease of 8.7% from 2014, which included an operational decline of 1.4% and a negative currency impact of 7.3%. U.S. sales were $12.1 billion, a decrease of 1.0% as compared to the prior year. International sales were $13.0 billion, a decrease of 14.8% as compared to the prior year, with an operational decrease of 1.7% and a negative currency impact of 13.1%. In 2015, the divestitures of the Ortho- Clinical Diagnostics and the Cordis Businesses had a negative impact of 3.2% and 0.6%, respectively, on the worldwide operational growth of the Medical Devices segment as compared to Pharmaceutical Segment 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 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 3

5 Pharmaceutical Segment (Cont.) 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 Waldenström's Macroglobulinemia; DARZALEX TM (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 anthracycline-containing 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. Worldwide Pharmaceutical sales of $31.4 billion for the fullyear 2015 represented a decrease of 2.7% versus the prior year with an operational increase of 4.2% and a negative impact from currency of 6.9%. U.S. sales increased 5.2%; international sales decreased 12.0%, which reflected an operational increase of 3.0% and a negative currency impact of 15.0%. In 2015, acquisitions, divestitures and Hepatitis C sales had a negative impact of 6.8% on the Pharmaceutical segment worldwide operational sales growth. With 12 new medicines launched since 2011, our Pharmaceutical segment is one of the fastest growing of the top 10 pharmaceutical businesses in the U.S., Europe and Japan, and our medicines are making a dramatic impact. 4

6 Consolidated Balance Sheets Assets * 2013* Current assets Cash and cash equivalents $ 13,732 14,523 20,927 Marketable securities 24,644 18,566 8,279 Accounts receivable trade, less allowance for doubtful accounts 10,734 10,985 11,713 Inventories 8,053 8,184 7,878 Other current assets 3,047 3,486 4,003 Total current assets 60,210 55,744 52,800 Property, plant and equipment, net 15,905 16,126 16,710 Intangible assets, net and Goodwill 47,393 49,054 50,745 Other non-current assets 9,903 9,434 11,499 Total assets $ 133, , ,754 Liabilities and Shareholders' Equity Current liabilities Loans and notes payable $ 7,004 3,638 4,852 Accounts payable 6,668 7,633 6,266 Accrued liabilities 13,325 13,314 13,787 Accrued taxes on income Total current liabilities 27,747 25,031 25,643 Long-term debt 12,857 15,122 13,328 Other long-term liabilities 21,657 20,453 18,730 Total liabilities 62,261 60,606 57,701 Shareholders' equity Common stock 3,120 3,120 3,120 Accumulated other comprehensive income (13,165) (10,722) (2,860) Retained earnings 103,879 97,245 89,493 93,834 89,643 89,753 Less: common stock held in treasury, at cost 22,684 19,891 15,700 Total shareholders' equity $ 71,150 69,752 74,053 Total liabilities and shareholders' equity $ 133, , ,754 * Prior year amounts have been reclassified to conform to current year presentation 5

7 Consolidated Statements of Earnings 2015 (1) 2014 (1) 2013 (1) 2012 (1) 2011 (1) Sales to customers $ 70,074 $ 74,331 $ 71,312 $ 67,224 $ 65,030 Cost of products sold 21,536 22,746 22,342 21,658 20,360 Gross profit 48,538 51,585 48,970 45,566 44,670 Selling, marketing and administrative expenses 21,203 21,954 21,830 20,869 20,969 Research and development expense 9,046 8,494 8,183 7,665 7,548 In-process research and development ,163 - Interest income (128) (67) (74) (64) (91) Interest expense, net of portion capitalized Other (income) expense, net (2,064) (70) 2,498 1,626 2,743 Restructuring Earnings before provision for taxes on income 19,196 20,563 15,471 13,775 12,361 Provision for taxes on income 3,787 4,240 1,640 3,261 2,689 Net earnings 15,409 16,323 13,831 10,514 9,672 Add: Net loss attributable to noncontrolling interests Net earnings attributable to Johnson & Johnson 15,409 16,323 13,831 10,853 9,672 Basic net earnings per share attributable to J&J $ 5.56 $ 5.80 $ 4.92 $ 3.94 $ 3.54 Diluted net earnings per share attributable to J&J $ 5.48 $ 5.70 $ 4.81 $ 3.86 $ 3.49 Ratios to Sales Sales to customers 100.0% 100.0% 100.0% 100.0% 100.0% Cost of products sold Gross profit Selling, marketing & administrative expense Research and development expense Earnings before provision for taxes on income Provision for taxes on income Net earnings attributable to Johnson & Johnson (1) For adjusted earnings (before and after tax) and adjusted earnings per share, see Reconciliation of Non-GAAP Measures on Page 20. 6

8 Consolidated Statements of Cash Flows Cash flows from operations Net earnings $ 15,409 16,323 13,831 Adjustments to reconcile net earnings to cash flows: Depreciation and amortization of property and intangibles 3,746 3,895 4,104 Stock Based Compensation Venezuela adjustments Asset write-downs Net gain on sale of assets/businesses (2,583) (2,383) (113) Net gain on equity investment transactions - - (417) Deferred tax provision (270) 441 (607) Accounts receivable allowances 18 (28) (131) Changes in assets and liabilities, net of effects from acquisitions: Increase in accounts receivable (433) (247) (632) Increase in inventories (449) (1,120) (622) (Decrease)/Increase in accounts payable and accrued liabilities (3) 955 1,821 Decrease/(Increase) in other current and non-current assets (1,693) Increase/(Decrease) in other current and non-current liabilities 2,159 (1,096) 298 Net cash flows from operating activities 19,279 18,471 17,414 Cash flows from investing activities Additions to property, plant and equipment (3,463) (3,714) (3,595) Proceeds from the disposal of assets / businesses, net 3,464 4, Acquisitions, net of cash acquired (954) (2,129) (835) Purchases of investments (40,828) (34,913) (18,923) Sales of investments 34,149 24,119 18,058 Other (103) (299) (266) Net cash used by investing activities (7,735) (12,305) (5,103) Cash flows from financing activities Dividends to shareholders (8,173) (7,768) (7,286) Repurchase of common stock (5,290) (7,124) (3,538) Proceeds from short-term debt 2,416 1,863 1,411 Retirement of short-term debt (1,044) (1,267) (1,397) Proceeds from long-term debt 75 2,098 3,607 Retirement of long-term debt (68) (1,844) (1,593) Proceeds from the exercise of stock options/excess tax benefits 1,295 1,782 2,649 Other (57) - 56 Net cash used by financing activities (10,846) (12,260) (6,091) Effect of exchange rate changes on cash and cash equivalents (1,489) (310) (204) (Decrease)/Increase in cash and cash equivalents (791) (6,404) 6,016 Cash and cash equivalents, beginning of year 14,523 20,927 14,911 Cash and cash equivalents, end of year $ 13,732 14,523 20,927 Supplemental cash flow data Cash paid during the year for: Interest $ Interest, net of amount capitalized Income taxes 2,865 3,536 3,155 Supplemental schedule of non-cash investing and financing activities Treasury stock issued for employee compensation and stock option plans, net of cash proceeds $ 1,196 1, Conversion of debt Acquisition of businesses Fair value of assets acquired $ 1,174 2,167 1,028 Fair value of liabilities assumed and noncontrolling interests (220) (38) (193) Net cash paid for acquisitions $ 954 2,

9 Segments of Business Sales to Customers 2015 (1) 2014 (2) 2013 (3) 2012 (4) 2011 (5) Consumer United States $ 5,222 5,096 5,162 5,046 5,151 International 8,285 9,400 9,535 9,401 9,732 Total 13,507 14,496 14,697 14,447 14,883 Pharmaceutical United States 18,333 17,432 13,948 12,421 12,386 International 13,097 14,881 14,177 12,930 11,982 Total 31,430 32,313 28,125 25,351 24,368 Medical Devices United States 12,132 12,254 12,800 12,363 11,371 International 13,005 15,268 15,690 15,063 14,408 Total 25,137 27,522 28,490 27,426 25,779 Worldwide United States 35,687 34,782 31,910 29,830 28,908 International 34,387 39,549 39,402 37,394 36,122 Total $ 70,074 74,331 71,312 67,224 65,030 Income Before Tax Consumer $ 1,787 1,941 1,973 1,693 2,096 Pharmaceutical 11,734 11,696 9,178 6,075 6,406 Medical Devices 6,826 7,953 5,261 7,187 5,263 Segments Total 20,347 21,590 16,412 14,955 13,765 Less: Expenses not allocated to segments (6) 1,151 1, ,180 1,404 Worldwide Total $ 19,196 20,563 15,471 13,775 12,361 Income Before Tax as % of Segment Sales Consumer 13.2% Pharmaceutical 37.3% Medical Devices 27.2% Segments Total 29.0% Worldwide Total 27.4% Identifiable Assets Consumer $ 20,772 21,813 23,711 24,131 24,210 Pharmaceutical 26,144 25,803 23,783 23,219 23,747 Medical Devices 40,979 41,445 44,585 42,926 23,609 Segments Total 87,895 89,061 92,079 90,276 71,566 General corporate (7) 45,516 41,297 39,675 31,071 42,078 Worldwide Total $ 133, , , , ,644 (1) 2015 income before tax includes a restructuring charge of $590 million, an intangible asset write-down of $346 million related to Acclarent, Synthes integration costs of $196 million and $148 million expense for the cost associated with the DePuy ASR TM Hip program in the Medical Devices segment. Includes $224 million of in-process research and development expense, comprised of $214 million and $10 million in the Pharmaceutical and Medical Devices segments, respectively. Includes net litigation expense of $141 million comprised of $136 million in the Pharmaceutical segment and $5 million in the Medical Devices segment, which included the gain from the litigation settlement agreement with Guidant for $600 million. The Medical Devices Segment includes a gain of $1.3 billion from the divestiture of the Cordis business. The Pharmaceutical segment includes a gain of $981 million from the U.S. divestiture of NUCYNTA and a positive adjustment of $0.5 billion to previous reserve estimates, including Managed Medicaid rebates. The Consumer segment includes a gain of $229 million from the divestiture of SPLENDA brand. (2) 2014 income before tax includes net litigation expense of $1,253 million comprised of $907 million, $259 million and $87 million in the Medical Devices, Pharmaceutical and Consumer segments, respectively. Includes $178 million of in-process research and development expense, comprised of $147 million and $31 million in the Pharmaceutical and Medical Devices segments, respectively. The Medical Devices segment includes a net gain of $1,899 million from the divestiture of the Ortho-Clinical Diagnostics business, Synthes integration costs of $754 million and $126 million expense for the cost associated with the DePuy ASR TM Hip program. Includes an additional year of the Branded Prescription Drug Fee of $220 million in the Pharmaceutical segment. (3) 2013 income before tax includes $2,276 million of net litigation expense comprised of $1,975 million and $301 million in the Medical Devices and Pharmaceutical segments, respectively. Includes $683 million of Synthes integration/transaction costs in the Medical Devices segment. Includes $580 million of in-process research and development expense, comprised of $514 million and $66 million in the Pharmaceutical and Medical Devices segments, respectively. The Medical Devices segment also includes $251 million expense for the cost associated with the DePuy ASR TM Hip program. Includes $98 million of income related to other adjustments comprised of $55 million and $43 million in the Consumer and Pharmaceutical segments, respectively. (4) 2012 income before tax includes $1,218 million of net litigation expense comprised of $658 million and $560 million in the Pharmaceutical and Medical Devices segments, respectively. Includes $1,163 million of in-process research and development expense, comprised of $1,111 million and $52 million in the Pharmaceutical and Medical Devices segments, respectively. Includes $795 million of Synthes integration/transaction costs in the Medical Devices segment. Includes $909 million of asset write-downs and other adjustments, comprised of $499 million, $264 million and $146 million in the Pharmaceutical, Consumer and Medical Devices segments, respectively. The Medical Devices segment also includes $110 million expense for the cost associated with the DePuy ASR Hip program. (5) 2011 income before tax includes $3,310 million of net litigation expense comprised of $1,741 million and $1,569 million in the Pharmaceutical and Medical Devices segments, respectively. Includes $656 million of net restructuring expense, comprised of $676 million expense in the Medical Devices segment and a gain of $20 million in the Pharmaceutical segment. The Medical Devices segment also includes $521 million expense for the cost associated with the DePuy ASR Hip program. (6) Amounts not allocated to segments include interest (income) expense, noncontrolling interests and general corporate (income) expense. Includes expense of $0.2 billion and $0.5 billion of currency related expense related to the acquisition of Synthes, Inc. in 2012 and 2011, respectively. (7) General corporate includes cash, cash equivalents & marketable securities. Prior year amounts have been reclassified to conform to current year presentation. 8

10 Segments of Business Additions to Property, Plant and Equipment Consumer $ Pharmaceutical 1, Medical Devices 1,631 1,807 1,724 1,230 1,095 Segments Total 3,238 3,365 3,113 2,435 2,494 General corporate Worldwide Total $ 3,463 3,714 3,595 2,934 2,893 Depreciation & Amortization Consumer $ Pharmaceutical 929 1,053 1,075 1, Medical Devices 1,945 1,974 2,224 1,857 1,331 Segments Total 3,433 3,604 3,838 3,442 2,920 General corporate Worldwide Total $ 3,746 3,895 4,104 3,666 3,158 Research and Development Expense Consumer segment $ Pharmaceutical segment 6,821 6,213 5,810 5,362 5,138 Medical Devices segment 1,600 1,652 1,783 1,681 1,751 Worldwide total $ 9,046 8,494 8,183 7,665 7,548 Research Expense as a Percent of Segment Sales Consumer segment 4.6% Pharmaceutical segment 21.7% Medical Devices segment 6.4% Worldwide total 12.9% Pharmaceutical Research Expense as a Percent of total J&J WW Sales 9.7%

11 Geographical Areas Sales to Customers United States $ 35,687 34,782 31,910 29,830 28,908 Europe 15,995 18,947 18,599 16,945 17,129 Western Hemisphere excluding U.S. 6,045 7,160 7,421 7,207 6,418 Asia-Pacific, Africa 12,347 13,442 13,382 13,242 12,575 Total $ 70,074 74,331 71,312 67,224 65,030 Long-Lived Assets United States $ 36,609 36,835 35,880 35,115 23,529 Europe 20,167 21,559 24,868 25,261 19,056 Western Hemisphere excluding U.S. 2,881 3,210 3,281 3,636 3,517 Asia-Pacific, Africa 2,493 2,438 2,434 2,362 2,163 Segments total 62,150 64,042 66,463 66,374 48,265 General corporate 1,148 1, Other non long-lived assets* 70,113 65,178 64,299 54,074 64,629 Worldwide total $ 133, , , , ,644 * Prior year amounts have been reclassified to conform to current year presentation 10

12 Sales Growth Rates United States 2.6% 9.0% 7.0% 3.2% -1.8% Operations 2.6% 9.0% 7.0% 3.2% -1.8% International -13.1% 0.4% 5.4% 3.5% 12.4% Operations 1.1% 3.7% 8.2% 8.4% 7.0% Currency -14.2% -3.3% -2.8% -4.9% 5.4% Worldwide -5.7% 4.2% 6.1% 3.4% 5.6% Operations 1.8% 6.1% 7.7% 6.1% 2.8% Currency -7.5% -1.9% -1.6% -2.7% 2.8% Compound Growth Rates United States International Worldwide (5 Yr.) 3.9% 1.4% 2.6% (10 Yr.) 2.3% 4.5% 3.3% 11

13 Quarterly Sales by Segment (Dollars in Millions) Consumer Pharmaceutical Year U.S. Int'l WW U.S. Int'l WW 1Q 2011 $ 1,345 2,337 3,682 $ 3,391 2,668 6,059 2Q ,339 2,454 3,793 3,239 2,994 6,233 3Q ,219 2,521 3,740 2,869 3,113 5,982 4Q ,248 2,420 3,668 2,887 3,207 6, ,151 9,732 14,883 12,386 11,982 24,368 1Q ,316 2,279 3,595 3,026 3,107 6,133 2Q ,313 2,306 3,619 3,094 3,197 6,291 3Q ,214 2,367 3,581 3,288 3,114 6,402 4Q ,203 2,449 3,652 3,013 3,512 6, ,046 9,401 14,447 12,421 12,930 25,351 1Q ,348 2,327 3,675 3,471 3,297 6,768 2Q ,326 2,332 3,658 3,377 3,648 7,025 3Q ,225 2,386 3,611 3,549 3,487 7,036 4Q ,263 2,490 3,753 3,551 3,745 7, ,162 9,535 14,697 13,948 14,177 28,125 1Q ,309 2,248 3,557 3,740 3,758 7,498 2Q ,320 2,424 3,744 4,613 3,896 8,509 3Q ,173 2,416 3,589 4,723 3,584 8,307 4Q ,294 2,312 3,606 4,356 3,643 7, ,096 9,400 14,496 17,432 14,881 32,313 1Q ,359 2,031 3,390 4,371 3,355 7,726 2Q ,355 2,128 3,483 4,543 3,403 7,946 3Q ,277 2,037 3,314 4,509 3,185 7,694 4Q ,231 2,089 3,320 4,910 3,154 8, ,222 8,285 13,507 18,333 13,097 31,430 12

14 Quarterly Sales by Segment (Dollars in Millions) Medical Devices Total Year U.S. Int'l WW U.S. Int'l WW 1Q 2011 $ 2,872 3,560 6,432 $ 7,608 8,565 16,173 2Q ,869 3,702 6,571 7,447 9,150 16,597 3Q ,780 3,503 6,283 6,868 9,137 16,005 4Q ,850 3,643 6,493 6,985 9,270 16, ,371 14,408 25,779 28,908 36,122 65,030 1Q ,877 3,534 6,411 7,219 8,920 16,139 2Q ,953 3,612 6,565 7,360 9,115 16,475 3Q ,289 3,780 7,069 7,791 9,261 17,052 4Q ,244 4,137 7,381 7,460 10,098 17, ,363 15,063 27,426 29,830 37,394 67,224 1Q ,206 3,856 7,062 8,025 9,480 17,505 2Q ,243 3,951 7,194 7,946 9,931 17,877 3Q ,151 3,777 6,928 7,925 9,650 17,575 4Q ,200 4,106 7,306 8,014 10,341 18, ,800 15,690 28,490 31,910 39,402 71,312 1Q ,155 3,905 7,060 8,204 9,911 18,115 2Q ,199 4,043 7,242 9,132 10,363 19,495 3Q ,946 3,625 6,571 8,842 9,625 18,467 4Q ,954 3,695 6,649 8,604 9,650 18, ,254 15,268 27,522 34,782 39,549 74,331 1Q ,962 3,296 6,258 8,692 8,682 17,374 2Q ,013 3,345 6,358 8,911 8,876 17,787 3Q ,005 3,089 6,094 8,791 8,311 17,102 4Q ,152 3,275 6,427 9,293 8,518 17, ,132 13,005 25,137 35,687 34,387 70,074 13

15 Quarterly Statement of Earnings (1) (Dollars in Millions except per share figures) Year Sales Cost of Products Sold SM&A R&D In-process Research and Development Net Interest Exp. (Inc.) Other Exp. (Inc.) Restructuring 1Q 2015 $ 17,374 $ 5,282 $ 4,847 $ 1,899 $ - $ 119 $ (348) $ - 2Q ,787 5,357 5,384 2, (931) - 3Q ,102 5,224 5,081 2, Q ,811 5,673 5,891 2, (1,205) $ 70,074 $ 21,536 $ 21,203 $ 9,046 $ 224 $ 424 $ (2,064) $ 509 Quarterly Statement of Earnings - as a % of Sales Year Sales Cost of Products Sold Gross Margin SM&A R&D In-process Research and Development Net Interest Exp. (Inc.) Restructuring 1Q % 30.4% 69.6% 27.9% 10.9% - 0.7% - 2Q % 30.1% 69.9% 30.3% 12.0% - 0.6% - 3Q % 30.5% 69.5% 29.7% 12.6% 0.1% 0.5% - 4Q % 31.8% 68.2% 33.1% 16.1% 1.2% 0.6% 2.9% % 30.7% 69.3% 30.3% 12.9% 0.3% 0.6% 0.7% (1) Net Earnings are GAAP and therefore, do not exclude special items. Refer to Page 20, Reconciliation of Non-GAAP Measures, for an analysis of Full Year Adjusted Earnings 14

16 Quarterly Statement of Earnings (Continued) (1) (Dollars in Millions except per share figures) Year Total Cost & Expense Earnings Before Taxes Provision for Taxes on Income Net Earnings Basic Earnings per Share Basic Average Shares Diluted Earnings per Share Diluted Average Shares 1Q 2015 $ 11,799 $ 5,575 $ 1,255 $ 4,320 $ ,782.6 $ , Q ,046 5,741 1,225 4, , , Q ,980 4, , , , Q ,053 3, , , , $ 50,878 $ 19,196 $ 3,787 $ 15,409 $ ,771.8 $ ,812.9 Quarterly Statement of Earnings - as a % of Sales Year Other Exp. (Inc.) Total Cost & Expense Earnings Before Taxes Provision for Taxes on Income Income Taxes (Eff. Rate) Net Earnings 1Q % 67.9% 32.1% 7.2% 22.5% 24.9% 2Q % 67.7% 32.3% 6.9% 21.3% 25.4% 3Q % 75.9% 24.1% 4.5% 18.5% 19.6% 4Q % 78.9% 21.1% 3.0% 14.4% 18.1% % 72.6% 27.4% 5.4% 19.7% 22.0% (1) Net Earnings are GAAP and therefore, do not exclude special items. Refer to Page 20, Reconciliation of Non-GAAP Measures, for an analysis of Full Year Adjusted Earnings 15

17 Sales and Net Earnings (2) (1) (Dollars in Millions) Year Net Trade Sales Net Earnings Year Net Trade Sales Net Earnings Year Net Trade Sales (1) Net Earnings , $ , , , , , , , , , , $ , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , $ 70,074.0 $ 15, , , , , , (1) Sales restated for EITF change for only. Net Earnings restated for FAS 123R Share Based Payment for (2) Net Earnings attributable to Johnson & Johnson. Note: information not restated and may include estimates. Note: Net Earnings are reported according to GAAP and therefore do not exclude special items. Refer to Page 20, Reconciliation of Non-GAAP Measures, for an analysis of Adjusted Earnings. 16

18 Stock Split and Share Repurchase Information (Dollars in Millions) Stock Splits Pay Out Date May 5, 1947 November 15, 1948 November 15, 1949 March 20, 1951 January 9, 1959 June 19, 1967 May 15, 1970 May 18, 1981 May 10, 1989 June 9, 1992 June 11, 1996 June 12, 2001 Action 100% Stock Dividend 5% Stock Dividend 5% Stock Dividend 5% Stock Dividend 2 1/2 for 1 Split 200% Stock Dividend 3 for 1 Split 3 for 1 Split 2 for 1 Split 2 for 1 Split 2 for 1 Split 2 for 1 Split Share Repurchase Program* Total Shares Total Value Avg. Price Year (Millions) (Dollars in Millions) Per Share $329 $ , , , , , (1) , (2) , * Total value may be rounded. In addition, the Company repurchases shares annually for use in employee stock option and employee incentive plans. In 1990, the Company repurchased 12.8 million shares for a total value of $100 million in connection with the establishment of an ESOP. All shares and average price per share have been adjusted for stock split. (1) On July 21, 2014, the Company announced that is Board of Directors approved a share repurchase program, authorizing the Company to purchase up to $5.0 billion of the Company's Common Stock. The repurchase program was completed on April 28, 2015 (2) 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. 17

19 Common Stock Information (Price per share/shares in Millions) YEARLY YEARLY YEARLY YEAR-END YEARLY NET SHARES P/E YEAR HIGH LOW AVERAGE PRICE DIVIDEND OUTSTANDING* RATIO 9/25/44 (open) $ , $ 0.02 $ 0.01 $ $ , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

20 Common Stock Information (Price per share/shares in Millions) YEARLY YEARLY YEARLY YEAR-END YEARLY NET SHARES P/E YEAR HIGH LOW AVERAGE PRICE DIVIDEND OUTSTANDING* RATIO , , , , , , , , , , , , , , , , , , , , * Net shares outstanding = shares issued less treasury stock at Johnson & Johnson year-end close. Note: All data adjusted for prior stock splits; shares outstanding are actual J&J year-end close; yearly average share price per Yahoo Finance for J&J 2015 fiscal year; year-end share price per Yahoo Finance at J&J year-end close; P/E ratio based on fiscal year-end closing price. 19

21 Reconciliation of Non-GAAP Measures (Dollars in Millions except per share amounts) Earnings before provision for taxes on income- as reported $ 19,196 20,563 15,471 13,775 12,361 Litigation expense, net 141 1,253 2,282 1,229 3,310 Ortho-Clinical Diagnostics divestiture net gain (62) (1,899) Additional year of Branded Prescription Drug Fee DePuy ASR TM Hip program Synthes integration costs , In-process research & development , Intangible asset write-downs Restructuring Intangible asset amortization expense 1,570 1,630 1,522 1, Other - - (98) (30) - Earnings before provision for taxes on income- as adjusted $ 22,003 22,825 20,691 19,389 18,205 Net Earnings (1) - as reported $ 15,409 16,323 13,831 10,853 9,672 Litigation expense, net 118 1,225 (2) 1,646 1,052 2,745 Ortho-Clinical Diagnostics divestiture net gain (46) (1,062) Additional year of Branded Prescription Drug Fee Tax benefit associated with Conor Medsystems - (398) DePuy ASR TM Hip program Synthes integration costs In-process research & development (3) 11 Scios Tax Benefit - - (707) - - Intangible asset write-downs Restructuring Intangible asset amortization expense 1,113 1,213 1, Other - - (79) (16) - Net Earnings (1) - as adjusted $ 17,445 $ 18,318 17,024 15,183 14,460 Diluted net earnings per share (1) - as reported $ Litigation expense, net Ortho-Clinical Diagnostics divestiture net gain (0.02) (0.37) Additional year of Branded Prescription Drug Fee Tax benefit associated with Conor Medsystems - (0.14) DePuy ASR TM Hip program Synthes integration costs In-process research & development Scios Tax Benefit - - (0.25) - - Intangible asset write-downs Restructuring Intangible asset amortization expense Other - - (0.02) (0.01) - Diluted net earnings per share (1) - as adjusted $ (1) Attributable to Johnson & Johnson (2) Includes adjustment to deferred tax asset related to deductibility by tax jurisdiction (3) Amount includes in-process research and development charge of $679M related to bapineuzumab IV offset by $339M reported as net loss attributable to noncontrolling interest The Company believes investors gain additional perspective of underlying business trends and results by providing a measure of earnings before provision for taxes on income, net earnings and diluted net earnings per share that excludes intangible asset amortization expense and special items in order to evaluate ongoing business operations. These non-gaap financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. 20

22 Corporate and Shareholder/Investor Information Principal Office One Johnson & Johnson Plaza New Brunswick, New Jersey (732) Common Stock Listed on New York Stock Exchange Stock Symbol: JNJ Annual Meeting The Annual Meeting of Shareholders will take place on Thursday, April 28, 2016, at the State Theatre, 15 Livingston Avenue, New Brunswick, New Jersey. The meeting will convene at 10 a.m. All shareholders as of the record date of March 1, 2016 are cordially invited to attend. A formal Notice of Annual Meeting, Proxy Statement and Proxy have been sent to shareholders. Transfer Agent and Registrar Questions regarding stock holdings, certificate replacement/transfer, dividends and address changes should be directed to: Computershare Trust Company, N.A. 250 Royall St. Canton, MA (800) or (781) (outside the U.S.) Dividend Reinvestment Plan The Plan allows for full or partial dividend reinvestment and additional monthly cash investments up to $50,000 per year in Johnson & Johnson Common Stock without brokerage commissions or service charges on stock purchases. If you are interested in participating in the Plan and need an authorization form and/or more information, please call Computershare Trust Company, N.A. at (800) or (781) (outside the U.S.). Shareholder Relations Contact Elizabeth Forminard WW Vice President - Corporate Governance (732) Investor Relations Department One Johnson & Johnson Plaza New Brunswick, New Jersey Fax: (732) Louise Mehrotra Vice President, Investor Relations (732) Jason Valmore Senior Director, Investor Relations (732) Lesley Fishman Senior Director, Investor Relations (732) Lisa Romanko Senior Director, Investor Relations (732) Renee McKenna Senior Analyst (732) Reports Available Copies of the Company's 2015 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K to the Securities and Exchange Commission, Proxy Statement and the Annual Report are available online at or to shareholders without charge upon written request to the Secretary at the Company's principal address or by calling (800) or (781) (outside the U.S.) Press Releases Press releases, including earnings reports, are available via web access Internet Access Visit the Johnson & Johnson Home Page on the Internet: Johnson & Johnson 2015 Trademarks and service marks of Johnson & Johnson and its affiliated companies are designated by all capital letters in this publication 21