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June 27, 2002

JOHNSON & JOHNSON FORM 10-K/A 12/30/2001
Game Order Book Career Print

Filed under: SEC Filing — Tags: , — admin @ 12:00 am — Font size: A A
JOHNSON & JOHNSON (Form: 10-K/A, Received: 06/27/2002 15:40:58)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

ANNUAL REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 30, 2001 Commission file number 1-3215

J O H N S O N & J O H N S O N
(Exact name of Registrant as specified in its charter)

 New Jersey 22-l024240 (State of (I.R.S. Employer Incorporation) 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

 Name of each exchange on Title of each class which registered ------------------- ------------------------- Common Stock, Par Value $1.00 New York Stock Exchange 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [X] 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 [ ]

The aggregate market value of the voting stock held by non-affiliates of the Registrant on February 26, 2002 was approximately $181 billion.

On February 26, 2002 there were 3,047,147,480 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Parts I and II: Portions of Registrant's annual report to shareowners for fiscal year 2001.

Part III: Portions of Registrant's proxy statement for its 2002 annual meeting of shareowners.


SIGNATURES

Pursuant to the requirements of Section l3 of the Securities Exchange Act of l934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: June 25, 2002 JOHNSON & JOHNSON (Registrant) By /s/ W.C. Weldon ----------------------------------------- W.C. Weldon, Chairman, Board of Directors and Chief Executive Officer 

Pursuant to the requirements of the Securities Exchange Act of l934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 Signature Title Date --------- ----- ---- /s/ W.C. Weldon ------------------------ Chairman, Board of June 25, 2002 W.C. Weldon Directors, Chief Executive Officer and Director (Principal Executive Officer) /s/ R. J. Darretta Executive Vice President, June 24, 2002 ----------------------- Finance & Information R. J. Darretta Management, and Director (Principal Financial Officer) /s/ S.J. Cosgrove Controller June 24, 2002 ----------------------- S. J. Cosgrove /s/ G.N. Burrow Director June 18, 2002 ----------------------- G. N. Burrow /s/ J.G. Cullen Director June 21, 2002 ----------------------- J. G. Cullen Director June , 2002 -------------------------- M. J. Folkman 

1

 Signature Title Date --------- ----- ---- /s/ A.D. Jordan Director June 21, 2002 ------------------------ A. D. Jordan /s/ A.G. Langbo Director June 19, 2002 ------------------------ A. G. Langbo /s/ J. T. Lenehan ------------------------ Vice Chairman, June 26, 2002 J. T. Lenehan Board of Directors and Director /s/ L.F. Mullin Director June 18, 2002 ------------------------ L. F. Mullin /s/ D. Satcher Director June 24, 2002 ------------------------- D. Satcher /s/ H.B. Schacht Director June 21, 2002 ------------------------ H. B. Schacht /s/ M.F. Singer Director June 24, 2002 ------------------------ M. F. Singer /s/ J.W. Snow Director June 18, 2002 ------------------------- J. W. Snow /s/ R.N. Wilson Senior Vice Chairman, June 24, 2002 ------------------------- Board of Directors R. N. Wilson and Director 

2

EXHIBIT INDEX

 Reg. S-K Exhibit Table Description Item No. of Exhibit -------- ---------- 3(a)(i) Restated Certificate of Incorporation dated April 26, 1990- Incorporated herein by reference to Exhibit 3(a) of the Registrant's Form 10-K Annual Report for the year ended December 30, 1990. 3(a)(ii) Certificate of Amendment to the Restated Certificate of Incorporation of the Company dated May 20, 1992 -- Incorporated herein by reference to Exhibit 3(a) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1993. 3(a)(iii) Certificate of Amendment to the Restated Certificate of Incorporation of the Company dated May 21, 1996 - - Incorporated herein by reference to Exhibit 3(a)(iii) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996. 3(a)(iv) Certificate of Amendment to the Restated Certificate of Incorporation of the Company effective May 22, 2001 - Incorporated herein by reference to Exhibit 3 of the Registrant's Form 10-Q Quarterly Report for the quarter ended July 1, 2001. 3(b) By-Laws of the Company, as amended effective June 11, 2001 - Incorporated herein by reference to Exhibit 99.2 of the Registrant's Form 10-Q Quarterly Report for the quarter ended July 1, 2001. 4(a) Upon the request of the Securities and Exchange Commission, the Registrant will furnish a copy of all instruments defining the rights of holders of long term debt of the Registrant. 10(a) Stock Option Plan for Non-Employee Directors - - Incorporated herein by reference to Exhibit 10(a) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996.* 10(b) 2000 Stock Option Plan - Incorporated herein by reference to Exhibit 10(b) of the Registrant's Form 10-K Annual Report for the year ended December 31, 2000.* 10(c) 1995 Stock Option Plan (as amended) - - Incorporated herein by reference to Exhibit 10(b) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1999.* 10(d) 1991 Stock Option Plan (as amended) - - Incorporated herein by reference to Exhibit 10(c) of the Registrant's Form 10-K Annual Report for the year ended December 28, 1997.* 10(e) 2000 Stock Compensation Plan - Incorporated herein by reference to Exhibit 10(e) of the Registrant's Form 10-K Annual Report for the year ended December 31, 2000.* 10(f) Executive Incentive Plan (as amended) - Incorporated herein by reference to Exhibit 10(f) of the Registrant's Form 10-K Annual Report for the year ended December 31, 2000.* 10(g) Domestic Deferred Compensation (Certificate of Extra Compensation) Plan (as amended) - (1).* 10(h) Deferred Fee Plan for Directors (as amended) -- Incorporated herein by reference to Exhibit 10(h) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996.* 10(i) Executive Income Deferral Plan (as amended) - Incorporated herein by reference to Exhibit 10(i) of the Registrant's Form 10-K Annual Report for the year ended January 2, 2000.* 

3

10(j) Excess Savings Plan -- Incorporated herein by reference to Exhibit 10(j) of the Registrant's Form 10-K Annual Report for the year ended December 29, 1996.* 10(k) Supplemental Retirement Plan -- Incorporated herein by reference to Exhibit 10(h) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1993.* 10(l) Executive Life Insurance Plan -- Incorporated herein by reference to Exhibit 10(i) of the Registrant's Form 10-K Annual Report for the year ended January 3, 1993.* 10(m) Stock Option Gain Deferral Plan - Incorporated herein by reference to Exhibit 10(m) of the Registrant's Form 10-K Annual Report for the year ended January 2, 2000.* 10(n) Estate Preservation Plan -- Incorporated herein by reference to Exhibit 10(n) of the Registrant's Form 10-K Annual Report for the year ended January 2, 2000.* 12 -- Statement of Computation of Ratio of Earnings to Fixed Charges -- (1). 13 -- Pages 25-50 of the Company's Annual Report to Shareowners for fiscal year 2001 (only those portions of the Annual Report incorporated by reference in this document are deemed "filed") - (1). 21 -- Subsidiaries - - (1). 23 -- Consent of Independent Accountants - (1). 99(a)(i) -- Form 11-K for the Johnson & Johnson Savings Plan -- Filed with this document. 99(a)(ii) -- Form 11-K for the Johnson & Johnson Retirement Savings Plan -- Filed with this document. 99(a)(iii) -- Form 11-K for the Johnson & Johnson Savings Plan for Union Represented Employees -- Filed with this document. 99(a)(iv) -- Form 11-K for the Centocor Qualified Savings and Retirement Plan -- Filed with this document. 99(a)(v) -- Form 11-K for the ALZA Corporation Tax Deferral Investment Plan - Filed with this document. 99(b) -- Cautionary Statement pursuant to Private Securities Litigation Reform Act of 1995: "Safe Harbor" for Forward-Looking Statements - - (1). 


(1) Incorporated herein by reference to the Exhibit bearing the same Exhibit Number in Registrant's Form 10-K Annual Report for the fiscal year ended December 30, 2001.

* Management contracts and compensatory plans and arrangements required to be filed as Exhibits to this form pursuant to Item 14(c) of the report.

A copy of any of the Exhibits listed above will be provided without charge to any shareowner submitting a written request specifying the desired Exhibit(s) to the Secretary at the principal executive offices of the Company.

4

Exhibit 99(a)(i)

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 11-K


[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the Fiscal Year Ended December 30, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Commission File Number 1-3215


JOHNSON & JOHNSON
SAVINGS PLAN

(Full title of the Plan)

JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933

(Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office)


Item 4. Financial Statements and Exhibits

Report of Independent Accountants

Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2001 and 2000

Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2001 and 2000

Notes to Financial Statements

Supplemental Schedule:
Form 5500 Schedule H - Part IV - 4I - Schedule of Assets (Held at End of Year) at December 31, 2001

Consent of PricewaterhouseCoopers LLP, dated June 26, 2002

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

JOHNSON & JOHNSON SAVINGS PLAN

 By: /s/ R.J. Darretta ------------------------------ R. J. Darretta Chairman, Pension Committee June 25, 2002 


JOHNSON & JOHNSON SAVINGS PLAN

FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE

AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2001 AND 2000


JOHNSON & JOHNSON
SAVINGS PLAN

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

 PAGE(S) Report of Independent Accountants 1 Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 2001 and 2000 2 Statement of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2001 and 2000 3 Notes to Financial Statements 4 - 14 Supplemental Schedule: Form 5500 Schedule H - Part IV - 4I - Schedule of Assets (Held at End of Year) as of December 31, 2001 15 


REPORT OF INDEPENDENT ACCOUNTANTS

To the Pension and Benefits Committees of Johnson & Johnson

In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Johnson & Johnson Savings Plan (the "Plan") as of December 31, 2001 and 2000, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

June 19, 2002

1

JOHNSON & JOHNSON
SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2001 AND 2000

 2001 2000 ASSETS Deposits in Group Annuity Contracts (Note 2) $ 685,666,437 $ 619,112,768 Investments at fair value (Notes 2, 6 and 8) 2,313,528,190 1,986,270,276 Investments in Master Trust (Notes 2, 6 and 8) 1,366,699,342 1,418,537,072 Accrued dividends and interest receivable 5,351,233 4,818,327 Due From Johnson & Johnson 3,444,631 4,514,063 Loans to participants (Note 5) 33,808,844 5,940,765 -------------- -------------- Total assets 4,408,498,677 4,039,193,271 LIABILITIES Accrued expenses 566,385 543,436 Accrued interest 2,489,642 3,093,218 Current portion of long term note (Note 11) 8,082,746 7,664,462 Long-term note payable to J&J (Note 11) 23,531,749 31,614,495 -------------- -------------- Total liabilities 34,670,522 42,915,611 -------------- -------------- Net assets available for benefits $4,373,828,155 $3,996,277,660 ============== ============== 

See notes to financial statements.

-2-

JOHNSON & JOHNSON SAVINGS PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

ADDITIONS TO NET ASSETS ATTRIBUTED TO: 2001 2000 Investment income: Net appreciation in fair value of investments $ 159,787,387 $ 191,548,754 Interest 52,782,751 48,917,395 Dividends 39,894,321 36,412,138 Contributions: Employee contributions (Note 3) 229,365,784 174,536,815 Employer contributions (Note 3 and 11) 59,595,393 54,603,734 Asset transfers (Note 1) 45,528,557 10,368,670 -------------- -------------- Total additions 586,954,193 516,387,506 -------------- -------------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Payments to participants (Note 4) 195,200,928 217,806,278 Interest expense 2,931,530 3,617,116 Administrative expenses 7,645,728 6,128,290 Asset transfers (Note 1) 3,625,512 -------------- -------------- Total deductions 209,403,698 227,551,684 -------------- -------------- Net increase 377,550,495 288,835,822 -------------- -------------- Net assets available for benefits, Beginning of year 3,996,277,660 3,707,441,838 -------------- -------------- Net assets available for benefits, End of year $4,373,828,155 $3,996,277,660 ============== ============== 

See notes to financial statements.

-3-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

The Johnson & Johnson Savings Plan (the "Plan") is a defined contribution plan which was established on June 1, 1982 for eligible salaried and non-union hourly employees of Johnson & Johnson ("J&J" or the "Company") and certain domestic subsidiaries. The Plan was designed to enhance the existing retirement program of eligible employees. The funding of the Plan is made through employee and Company contributions. The assets of the Plan are maintained in two Master Trust accounts, the Johnson & Johnson Savings Plan Trust ("Savings Plan Trust") and the Johnson & Johnson Pension Trust Fund ("Pension Trust Fund"), and transactions therein are executed by the trustee, State Street Trust Company ("State Street"). The Savings Plan Trust and the Pension Trust Fund are allocated based upon the total of each individual participant's share of the Savings Plan Trust and the Pension Trust Fund.

Participants have the option to invest in any one of nine investment options which include the Fixed Interest Fund, J&J Stock Fund, U.S. Government Securities ("USGS") Fund, Diversified Equity Fund, Balanced Fund, International Equity Fund, Intermediate Bond Fund, Small Cap Fund, and the Russell 3000 Fund.

Effective January 1, 1991, the Company implemented a Leveraged Employee Stock Ownership Plan ("ESOP") to supplement its existing 401(k) plan. The ESOP is a leveraged employee stock ownership plan and is designed to comply with Section 4975(e)(7) and the regulations thereunder of the Internal Revenue Code of 1986, as amended, and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended. The ESOP is used to fund an additional 25% match of employee contributions (referred to herein as the "ESOP contribution"). Additionally, the Company may elect to fund the employer 50% match of employee directed contributions with ESOP leveraged shares.

Initial funding for the ESOP was made through an advance from J&J of $100 million, which was used to purchase 1,554,800 shares of J&J common stock on the open market (which equates to 12,438,400 shares when adjusted for subsequent stock splits). Of these shares, 1,985,939 and 2,715,858 (adjusted for stock splits) remain unallocated as of December 31, 2001 and 2000 respectively. As of December 31, 2001 and 2000, the net assets of the unallocated portion are $99,705,191 and $107,313,107 respectively, while the net assets of the allocated portion are $469,503,721 and $411,399,762 respectively. Shares are allocated to Plan participants under a formula set forth in the ESOP note agreement (see note 3) relating to the advance from J&J.

Each participant is entitled to exercise voting rights attributable to the shares allocated to his or her account. The Company is entitled to exercise voting rights attributable to unallocated shares. In the third quarter of 1998, Johnson & Johnson incorporated a "dividend pass-through" feature into the Plan. This feature allows a participant to receive cash for dividends paid on certain shares owned through the plan. The eligibility to receive a dividend pass-through is contingent on the ownership of shares in the Johnson & Johnson Stock Fund, which does not include shares owned in the Employee Stock Ownership Plan Trust Fund. The amount received is based on the lesser of (a) 20% of the eligible compensation (annual base pay rate for the year plus 50% of prior calendar year commissions) and (b) IRS Pre-tax compensation limit ($10,500 in 2001 and 2000) reduced by the estimated pre-tax contribution for the year (current pre-tax percentage multiplied by the eligible compensation for the year). For the 2001 and 2000 plan years, the dividend pass-through amounts recorded in the Plan Statement of Changes in Net Assets Available for Benefits

-4-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

as dividend income and payments to participants were $11,101,456 and $9,312,968 respectively.

Up through 2001, the pass-through was distributed to each participant via check. For participants who had their dividend reinvested in the J&J Stock Fund, they had an opportunity in early 2002 to receive those 2001 dividends in cash.

In October 2001, the assets of the Centocor Qualified Savings and Retirement Plan were transferred into the Plan. In December 2001, the assets of the Horizon Health Services Employee Savings and Retirement Plan and Indigo Medical, Incorporated 401(k) Plan were transferred into the Plan. In April 2000, the assets of the McFaul & Lyons 401(k) Profit Sharing Plan were transferred into the Plan. In July 2000, the assets of the Mitek Products 401(k) Plan, the AcroMed 401(k) Profit Sharing Plan and the Nitinol Devices & Components 401(k) Plan were transferred into the Plan. In August 2000, the assets of the Biopsys Medical Inc. 401(k) Plan were transferred into the Plan.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The financial statements of the Plan are prepared under the accrual basis of accounting.

VALUATION OF INVESTMENTS

Equity investments in the Johnson & Johnson Stock Fund and the ESOP, administered by State Street, are valued at the closing price on the last business day of the year. The cost of equity investments in the Johnson & Johnson Stock Fund is recorded at the closing price of the stock transactions for the day during which the contribution is made. The investments in the USGS, Fixed Interest, Diversified Equity, Russell 3000, and Small Cap Funds represent the rest of the Plan's share of assets in the Savings Plan Trust. The USGS Fund consists of short-term obligations that are issued or guaranteed by the U.S. Government. Investments are valued at cost which approximates market value. Deposits in group annuity contracts in the Fixed Interest Fund are recorded at their contract values which approximates fair value because these investments have fully benefit-responsive features. Contract value represents contributions and reinvested income, less any withdrawals plus accrued interest. Participants may direct the withdrawal or transfer of all or a portion of their investment at contract value. However, withdrawals influenced by employer initiated events such as in connection with the sale of a business, may result in a distribution at other than contract value. There are no reserves against contract values for credit risk of contract issuers or otherwise.

The average yield of the Fixed Interest Fund was approximately 6.67% and 6.47% for 2001 and 2000, respectively. The crediting interest rate of the Fixed Interest Fund was approximately 6.75% for 2001 and 6.54% for 2000. The difference between the average yield and crediting interest rate is due to administrative charges paid by the Plan. The crediting interest rate for the investment contracts is either agreed to in advance with the issuer or varies based on an agreed to formula, but cannot be less than zero.

Equity investments and corporate obligations in the Diversified Equity Fund, managed by Capital Guardian Trust Company and J.P. Morgan Investment Management, Inc., are traded on a national securities exchange and are valued at the last reported market sales price on the last business day of the year. Investments in the Diversified Equity Fund are purchased periodically by Capital Guardian

-5-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

Trust Company and J.P. Morgan Investment Management, Inc. based on the prevailing market values of the underlying investments.

The Intermediate Bond Fund invests in various kinds of bonds, primarily corporate and U.S. government bonds. The Balanced Fund is invested in a mix of stocks, bonds, and real estate. The International Equity Fund, managed by American Express Management and Capital Guardian Trust Company, invests primarily in equities sold on foreign exchange markets. The investments in these three funds represent the Plan's share of the assets in the Pension Trust Fund. These investments are stated at fair value. Generally, they represent securities traded on a national securities exchange which are valued at the last reported sales price on the last business day of the year.

The U.S. Small Cap Fund is a stock fund that emphasizes companies with a capitalization of between approximately $50 million and $1 billion at the time the stock was purchased, and whose principal markets are in the United States. The current fund manager of the U.S. Small Cap Fund is Capital Guardian Trust Company.

The goal of the Russell 3000 Index Fund is to closely match the performance of the Russell 3000 Index, which is widely used to measure the stock performance of the 3,000 largest companies in the U.S. market. The Russell 3000 Index is a broad representation - approximately 97% - of all the stocks in the U.S. stock market available for investment. The current investment manager of the Fund is State Street Global Advisors.

The Loan Fund, consisting of participant loans, are valued at cost, which approximates fair value. Temporary cash investments are stated at redemption value which approximates fair value.

NET APPRECIATION (DEPRECIATION)

The plan presents in the statement of changes in net assets available for benefits the net appreciation (depreciation) in the fair value of investments, which consists of unrealized appreciation (depreciation) of the underlying investments and realized gains and losses on sales of investments.

PAYMENT OF BENEFITS

Benefits are recorded when paid.

USE OF ESTIMATES

The preparation of the Plan's financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

RISKS AND UNCERTAINTIES

The Plan provides for various participant investment options in funds which can invest in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the

-6-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

Statements of Net Assets Available for Benefits and the Statements of Changes in Net Assets Available for Benefits.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133), as amended. SFAS No. 133 requires that an entity recognize all derivative instruments and measure those instruments at fair value.

The Plan was required to adopt SFAS No. 133 effective January 1, 2001. Management initially was unable to determine the impact of SFAS No. 133 on the Plan financial statements as a result of the inconsistency in accounting literature between SFAS No. 133, requiring derivative instruments to be measured at fair value and the AICPA Audit and Accounting Guide on "Audits of Employee Benefit Plans" and Statement of Position 94-4, "Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined-Contribution Pension Plans," (SOP 94-4) requiring benefit responsive investment contracts (including synthetic GICs) held by defined-contribution pension plans to be measured at contract value.

In October 2001, the Derivatives Implementation Group (DIG) of the FASB tentatively released Implementation Issue C19 (DIG C19), which provides that fully benefit responsive investment contracts accounted for under either paragraph 4 or 5 of SOP 94-4 are not subject to SFAS No. 133. The tentative guidance included in DIG C19 has been incorporated into an exposure draft of the amendment of FAS 133. Although this amendment project has yet to be finalized, management believes that it provides the most relevant accounting guidance for fully benefit responsive investment contracts held by defined-contribution pension plans. Accordingly, the Plans have measured all fully benefit responsive investment contracts at contract value at December 31, 2001 and 2000. The FAS 133 amendment project is expected to be finalized during 2002. The Plans hold no other material derivative financial instruments at December 31, 2001 or 2000.

OTHER

Interest and dividend income is recorded as earned on the accrual basis. Purchases and sales of investment securities are reflected on a trade-date basis. Gains and losses on sales of investment securities are determined on the average cost method. Administrative charges are allocated monthly based on the quarterly percentage of assets in each of the six investment funds.

All third party administrative expenses are paid by the Plan, except cost of entering new investment vehicles which are paid primarily by the Company.

3. CONTRIBUTIONS

Participating employees may contribute a minimum of 3% up to a maximum of 20% of their base salary plus 50% of eligible commissions in combinations of pre- and post-tax contributions. Pre-tax contributions may not exceed the smaller of 20% of their base salary including 50% of eligible commissions or $10,500 in 2001 and 2000. The Company contributes to the Plan an amount equal to 75% of the employee directed contributions of the participants up to a maximum of 6% of the

-7-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

employee's base salary and 50% of eligible commissions.

Contributions are made to the Plan by participants through payroll deductions and by the Company on behalf of participants. Such contributions, with the exception of the ESOP contribution, are invested in any of the nine investment funds at the direction of the participating employees. The 25% ESOP contribution is invested in J&J stock, except for employees over 55 years of age who may choose the alternative investments. ESOP shares are released from the unallocated portion of the ESOP each February following the payment of the loan (see Note 11), in accordance with the ESOP Trust Agreement. Shares released, in accordance with the ESOP note agreement, may be more or less than shares earned by participants.

4. PARTICIPANT ACCOUNTS AND BENEFITS

All participants are fully vested in their contributions and the Company match. The benefit to which a Plan participant is entitled is the amount provided by contributions (Company and participant) and investment earnings thereon (including net realized and unrealized investment gains and losses) which have been allocated to such participant's account balance. Allocations are based on participant earnings on account balance, as defined.

Participants may withdraw before-tax contributions only upon meeting certain hardship conditions.

5. LOANS TO PARTICIPANTS

Participants may borrow up to a maximum of 50% of their account balance or $50,000, whichever is less. Loans bear a market rate of interest plus 1% and are repayable within five years. Loans are secured by the balance in the participant accounts. In 2001, the Plan was amended to allow participants to obtain loans due to circumstances other than hardship.

-8-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

6. INVESTMENTS

The following presents investments that each represent 5% or more of the Plan's net assets.

 AS OF DECEMBER 31, 2001 2000 Johnson & Johnson Stock Fund $1,663,605,667 $1,429,736,759 Diversified Equity Fund 974,855,347 1,024,914,175 Fixed interest fund 685,666,437 619,112,768 Employee Stock Ownership Plan Trust Fund* 599,854,450 556,533,517 Balanced Fund 238,508,436 262,378,109 Total of remaining investment balances, each holding less than 5% of the Plan's net assets 237,212,476 137,185,553 -------------- -------------- Total investment balance $4,399,702,813 $4,029,860,881 ============== ============== 

* Non-participant directed

During 2001 and 2000, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $159,787,387 and $191,548,754 respectively as follows:

 FOR THE YEARS ENDED DECEMBER 31, 2001 2000 Equities $ (60,829,372) $ (38,934,263) Bonds 2,197,133 2,689,740 Common stock 236,573,615 240,213,266 Other (18,153,989) (12,419,989) ------------- ------------- $ 159,787,387 $ 191,548,754 ============= ============= 

7. NONPARTICIPANT-DIRECTED INVESTMENTS

The ESOP is the Plan's only nonparticipant-directed investment. Information about the ESOP's net assets and the significant components of the changes in net assets is as follows:

-9-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

 AS OF DECEMBER 31, 2001 2000 NET ASSETS: J&J common stock $ 569,208,912 $ 518,712,869 

 FOR THE YEARS ENDED DECEMBER 31, CHANGES IN NET ASSETS: 2001 2000 Contributions $ 3,444,631 $ 4,514,063 Interest/dividend income 7,341,923 6,872,055 Net appreciation 59,178,965 48,675,938 Benefits paid to participants (14,686,318) (14,166,408) Transfers to participant-directed investments (1,851,628) (1,767,000) Interest expense (2,931,530) (3,617,116) ------------- ------------- $ 50,496,043 $ 40,511,532 ============= ============= 

8. INVESTMENTS IN SAVINGS PLAN TRUST AND PENSION TRUST FUND

As of December 31, 2001 and 2000 the investments in the USGS, Fixed Interest, J&J Stock, Diversified Equity, and ESOP Funds are included in the Savings Plan Trust. As of December 31, 2001 the Trust also holds the Small Cap and Russell 3000 Funds. The Plan holds approximately 99.05% and 99.06% of the Trust's net assets as of December 31, 2001 and 2000 respectively.

The Trust's net assets, income, and expenses are allocated to the Plan based on the total of each participant's share in the Trust. Information concerning the Savings Plan Trust's investments held and investment income is as follows:

 AS OF DECEMBER 31, 2001 INVESTMENTS BY TYPE FAIR VALUE COST Interest bearing cash $ 117,068,720 $ 117,068,720 Government securities 37,502,467 36,056,366 Common stocks (common) 2,195,819,664 767,961,497 Equities 995,845,728 837,310,795 Deposits in group annuity contracts* 671,161,230 671,161,230 -------------- -------------- $4,017,397,809 $2,429,558,608 ============== ============== 

-10-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

 AS OF DECEMBER 31, 2000 INVESTMENTS BY TYPE FAIR VALUE COST Interest bearing cash $ 137,547,662 $ 137,547,662 Government securities 31,598,063 30,000,363 Common stocks 1,899,050,245 660,830,884 Equities 992,140,689 766,755,736 Deposits in group annuity contracts* 601,183,330 601,183,330 -------------- -------------- $3,661,519,989 $2,196,317,975 ============== ============== 

* Stated at cost which approximates fair value.

 FOR THE YEARS ENDED DECEMBER 31, INVESTMENT INCOME BY TYPE 2001 2000 Interest $ 43,822,281 $ 42,571,642 Dividends 37,670,605 34,561,040 Net appreciation (depreciation) 208,126,979 228,690,355 ------------ ------------ $289,619,865 $305,823,037 ============ ============ 

The investments in the Intermediate Bond, Balanced, and International Equity Funds are included in the Pension Trust Fund. The Plan holds approximately 10.9% and 9.3% of the Fund's net assets as of December 31, 2001 and 2000 respectively. The Trust's net assets, income and expenses are allocated to the Plan based on the total of each participant's share in the Trust. Information concerning the Pension Trust's Fund's investments held and investment income is as follows:

 AS OF DECEMBER 31, 2001 FAIR VALUE BY INVESTMENT TYPE FAIR VALUE COST Interest bearing cash $ 92,125,398 $ 91,983,260 U.S. Government securities 381,983,148 380,512,200 Corporate bonds 298,014,173 294,687,209 Preferred stocks 9,110,893 9,754,417 Common stocks 1,761,878,459 1,311,314,909 Equities and other 746,220,722 774,278,592 -------------- -------------- $3,289,332,793 $2,862,530,587 ============== ============== 

 AS OF DECEMBER 31, 2000 FAIR VALUE BY INVESTMENT TYPE FAIR VALUE COST Interest bearing cash $ 208,921,241 $ 208,921,241 U.S. Government securities 350,499,180 340,487,917 Corporate bonds 380,093,770 382,588,149 Preferred stocks 14,803,313 13,969,322 Common stocks 2,486,721,538 1,863,462,121 Equities and other 458,963,976 438,847,494 -------------- -------------- $3,900,003,018 $3,248,276,244 ============== ============== 

-11-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, INVESTMENT INCOME BY TYPE 2001 2000 Interest $ 87,438,526 $ 55,042,115 Dividends 24,404,499 20,394,205 Net appreciation (depreciation) (223,405,265) (232,505,836) ------------- ------------- $(111,562,240) $(157,069,516) ------------- ------------- 

9. TAX STATUS

The Internal Revenue Service has determined and informed the Company by a letter dated April 25, 1996, that the Plan, the Savings Plan Trust, and the Pension Trust Fund are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with applicable requirements of the IRC.

10. TERMINATION PRIORITIES

The Company has the right to terminate the Plan at any time, and in the event the Plan is terminated, subject to conditions set forth in ERISA, the amount of each participant's account balance in the Plan is fully vested.

-12-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

11. INDEBTEDNESS

In connection with the formation of the Plan's ESOP feature, the Plan borrowed $100 million from Johnson & Johnson for the purpose of purchasing J&J common stock. The note bears interest at 9% and is payable through February 15, 2005. The Company is obligated to make contributions in cash to the ESOP which, when aggregated with the ESOP's dividends and interest earnings, equal the amount necessary to enable the ESOP to make its regularly scheduled payments of principal and interest due on the term loan. Aggregate maturities for each year until retirement are as follows:

2002 $ 8,082,746 2003 8,548,156 2004 9,064,538 2005 5,919,055 ----------- $31,614,495 =========== 

In the event of Plan termination or of termination of the ESOP portion of the Plan, any unallocated shares shall be sold to the Company or on the open market. The proceeds of such sale shall be used to satisfy the outstanding principal and interest. The Company has no rights against shares once they are allocated under the ESOP.

12. CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Plan to concentrations of credit risk consist principally of the Fixed Interest Fund holdings in fully benefit-responsive group annuity contracts with insurance and other financial institutions.

The Fixed Interest Fund places its fully benefit-responsive group annuity contracts with high-credit quality institutions and, by policy, limits the amount of credit exposure to any one financial institution. If any of the insurance companies that the group annuity contracts are invested with fail to perform according to the contract, the asset value of the Plan could be impaired.

13. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500.

 AS OF DECEMBER 31, 2001 2000 Net assets available for benefits per the financial statements $4,373,828,155 $ 3,996,277,660 Amounts allocated to withdrawing participants -- (12,150,594) -------------- --------------- Net assets available for benefits per the Form 5500 $4,373,828,155 $ 3,984,127,066 ============== =============== 

-13-

JOHNSON & JOHNSON SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2001 2000 Benefits paid to participants per the financial statements $ 195,200,928 $ 217,806,278 Add: Amounts allocated to withdrawing participants at December 31, 2001 and 2000 -- 12,150,594 Less: Amounts allocated to withdrawing participants at December 31, 2000 and 1999 (12,150,594) (6,895,528) ------------- ------------- Benefits paid to participants per the Form 5500 $ 183,050,334 $ 223,061,344 ============= ============= 

Amounts allocated to the withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 2001 and 2000 but not yet paid as of that date.

-14-

JOHNSON & JOHNSON SAVINGS PLAN

FORM 5500 SCHEDULE H - PART IV - 4I
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2001

ISSUES COST FAIR VALUE PARTICIPANT-DIRECTED FUNDS* USGS Fund $ 36,692,797 Fixed Interest Fund 685,666,437 Diversified Equity Fund 974,855,347 J&J Stock Fund 1,663,605,667 Small Cap Fund 20,626,529 Russell 3000 Fund 28,084,622 International Equity Fund 50,511,014 Intermediate Bond Fund 64,096,363 Balanced Fund 238,508,436 NONPARTICIPANT-DIRECTED FUNDS ESOP $ 86,724,478 599,854,450 Loan Fund -- 33,808,844 Clearing account 3,392,307 3,392,307 ------------ --------------- $ 90,116,785 $ 4,399,702,813 ============ =============== 

*Cost need not be disclosed for participant-directed funds.

-15-

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-40294) of Johnson & Johnson of our report dated June 19, 2002 relating to the financial statements and financial statement schedule of the Johnson & Johnson Savings Plan, which appears in this Form 11-K.

PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 26, 2002


Exhibit 99(a)(ii)

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 11-K

[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the Fiscal Year Ended December 30, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Commission File Number 1-3215

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

(Full title of the Plan)

JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933

(Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office)


Item 4. Financial Statements and Exhibits

Report of Independent Accountants

Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2001 and 2000

Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2001 and 2000

Notes to Financial Statements

Supplemental Schedules:
Form 5500 Schedule H - Part IV- 4I - Schedule of Assets (Held at End of Year) as of December 31, 2001

Form 5500 Schedule H - Part IV - 4J - Schedule of Reportable Transactions for the Year Ended December 31, 2001

Consent of PricewaterhouseCoopers LLP, dated June 26, 2002

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN

 By: /s/ R.J. Darretta -------------------------------- R. J. Darretta Chairman, Pension Committee June 25, 2002 


JOHNSON & JOHNSON RETIREMENT SAVINGS PLAN

FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES

AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2001 AND 2000


JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

PAGE(S)

Report of Independent Accountants 1 Financial Statements: Statements of Net Assets Available for Benefits As of December 31, 2001 and 2000 2 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2001 and 2000 3 Notes to Financial Statements 4-8 Supplemental Schedules: Form 5500 Schedule H -- Part IV -- 4I -- Schedule of Assets (Held at End of Year) as of December 31, 2001 9 Form 5500 Schedule H -- Part IV -- 4J -- Schedule of Reportable Transactions for the Year Ended December 31, 2001 10 


REPORT OF INDEPENDENT ACCOUNTANTS

To the Pension and Benefits Committees of Johnson & Johnson

In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Johnson & Johnson Retirement Savings Plan (the "Plan") as of December 31, 2001 and 2000, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

June 19, 2002

1

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2001 AND 2000

 2001 2000 ASSETS Investments at fair value (Notes 2, 5 and 6) $105,187,871 $94,800,234 ------------ ----------- Net assets available for benefits $105,187,871 $94,800,234 ============ =========== 

See notes to financial statements.

-2-

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

 2001 2000 ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income: Net appreciation in fair value of investments (Note 5) $ 9,708,166 $12,585,948 Interest 203,393 136,147 Dividends 1,312,537 1,608,169 Contributions Employee contributions (Note 3) 7,956,060 7,599,179 Employer contributions (Note 3) 3,439,758 3,305,053 ------------ ----------- Total additions 22,619,914 25,234,496 ============ =========== DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Payment to participants (Note 4) 11,938,620 11,452,084 Administrative expenses 293,657 240,659 ------------ ----------- Total deductions 12,232,277 11,692,743 ------------ ----------- Net increase 10,387,637 13,541,753 Net assets available for benefits, Beginning of year 94,800,234 81,258,481 ------------ ----------- Net assets available for benefits, End of year $105,187,871 $94,800,234 ============ =========== 

See notes to financial statements.

-3-

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

The Johnson & Johnson Retirement Savings Plan (the "Plan") is a defined contribution plan which was established on March 1, 1990 for eligible employees of certain subsidiaries of Johnson & Johnson ("J&J" or the "Company") located in Puerto Rico which have adopted the Plan. The Plan was designed to provide eligible employees with an opportunity to strengthen their financial security at retirement by providing an incentive to save and invest regularly. The funding of the Plan is made through employee and Company contributions. The assets of the Plan are maintained and transactions therein are executed by the trustee, Banco Popular de Puerto Rico.

Participants have the option to invest in any one of three investment options which include the Equity Fund, Short Term Investment Fund and the J&J Stock Fund.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The financial statements of the Plan are prepared under the accrual basis of accounting.

VALUATION OF INVESTMENTS

Equity investments in the Johnson & Johnson Stock Fund, administered by Banco Popular de Puerto Rico, are valued at the closing market price on the last business day of the year. Equity investments in the Equity Fund, managed by the Capital Research and Management Company, represent shares of a registered investment company and are valued at the quoted market price which represents the net asset value of shares held by the Plan at year-end.

The cost of equity investments in the Johnson & Johnson Stock Fund is recorded at the average market price of the stock transactions for the month during which the contribution is made. Units in the Equity Fund are purchased throughout the month at the prevailing quoted market price on those dates.

Deposits in short-term investments in the Short-Term Investment Fund are principally purchases of shares of the Prime Portfolio of Vanguard Money Market Reserves, Inc. The Portfolio invests in securities which mature in less than one year. The value of this portfolio is the market value on the last business day of the year.

Temporary cash investments are stated at redemption value which approximates fair value.

USE OF ESTIMATES

The preparation of the Plan's financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

-4-

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

RISKS AND UNCERTAINTIES

The Plan provides for various participant investment options in funds which can invest in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the Statements of Net Assets Available for Benefits and the Statements of Changes in Net Assets Available for Benefits.

NET APPRECIATION (DEPRECIATION)

The Plan presents in the Statement of Changes in Net Assets Available for Benefits the net appreciation (depreciation) in the fair value of investments, which consists of unrealized appreciation (depreciation) of the underlying investments and realized gains and losses on the sales of investments.

PAYMENT OF BENEFITS

Benefits are recorded when paid.

OTHER

Interest and dividend income are recorded as earned on the accrual basis. Purchases and sales of investment securities are reflected on a trade-date basis. Gains and losses on sales of investment securities are determined on the average cost method.

All third party administrative expenses are paid by the Plan, except costs of entering new investment vehicles which are paid primarily by J&J.

3. CONTRIBUTIONS

Participating employees may contribute a minimum of 3% up to a maximum of 10% pre-tax and/or 1% to 10% post-tax of their base salary. Annual pre-tax contributions may not exceed $8,000 in 2001 or 2000 under Puerto Rico law. The Company contributes to the Plan, out of current or accumulated profits, an amount equal to 75% of the employee's pre-tax contributions for the Plan year up to a maximum of 6%.

Contributions are made to the Plan by participants through payroll deductions and by the Company on behalf of participants. Employee contributions are to be invested in any of the three investment funds at the direction of the participating employees. All Company contributions are made to the J&J Stock Fund, except for participants over the age of 50, who may choose the alternative investments.

-5-

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

4. PARTICIPANT ACCOUNTS AND BENEFITS

All participants are fully vested in their contributions and the Company match. The benefit to which a Plan participant is entitled is the amount provided by contributions (Company and participant) and investment earnings thereon (including net realized and unrealized investment gains and losses) which have been allocated to such participant's account balance. Allocations are based on participant's earnings or account balance, as defined.

Participants are allowed to withdraw their after-tax contributions and earnings thereon, at any time. Participants may withdraw before-tax contributions only upon meeting certain hardship conditions.

5. INVESTMENTS

The following presents investments that represent 5% or more of the Plan's net assets.

 AS OF DECEMBER 31, 2001 2000 Johnson & Johnson Stock Fund, 1,594,234 shares and 1,607,604 shares, respectively* $ 95,056,871 $84,576,085 Equity Fund, 185,626 shares and 186,677 shares, respectively 5,295,914 5,778,407 Total of remaining Fund which was less than 5% of the Plan's net assets 4,835,086 4,445,742 ------------ ----------- $105,187,871 $94,800,234 ============ =========== 

* Nonparticipant-directed

During 2001 and 2000, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $9,708,166 and $12,585,948 respectively, as follows:

 FOR THE YEARS ENDED DECEMBER 31, 2001 2000 Equities $ (448,807) $ (250,523) J&J Common Stock 10,156,973 12,836,471 ----------- ----------- $ 9,708,166 $12,585,948 =========== =========== 

-6-

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

6. NON-PARTICIPANT DIRECTED INVESTMENTS

Included in the J&J Stock Fund are participant and non-participant directed investments. Information about the net assets and the significant components of the changes in net assets relating to the fund is as follows:

 AS OF DECEMBER 31, 2001 2000 Net assets: J&J Stock Fund $ 95,056,871 $ 84,576,085 

 FOR THE YEARS ENDED DECEMBER 31, 2001 2000 Changes in net assets: Contributions $ 10,249,063 $ 9,693,301 Investment income 1,124,838 1,023,855 Net appreciation in fair value 10,156,973 12,836,471 Benefits paid to participants (10,457,679) (10,252,939) Administrative expenses (223,306) (211,172) Assets transferred (369,103) (138,000) ------------- ------------- $ 10,480,786 $ 12,951,516 ============= ============= 

7. TAX STATUS

The Plan constitutes as a qualified plan under Section 165(a) of the Puerto Rico Income Tax Act of 1954 as amended (the "ITA"), and the Plan and the related trust accounts are exempt from Puerto Rico income taxes under
Section 165(a) and 165(e) of the ITA.

The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's tax counsel believe that the Plan is currently designed and operated in compliance with the applicable requirements of the Puerto Rico tax code. Therefore, no provision for income taxes has been included in the Plan's financial statements.

8. TERMINATION PRIORITIES

The Company has the right to terminate the Plan at any time and in the event the Plan is terminated, subject to conditions set forth in ERISA, the amount of each participant's account balance in the Plan is fully vested.

-7-

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

9. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:

AS OF DECEMBER 31,

 2001 2000 Net assets available for benefits per the financial statements $105,187,871 $94,800,234 Amounts allocated to withdrawing participants -- (1,252,098) ------------ ----------- Net assets available for benefits per the Form 5500 $105,187,871 $93,548,136 ------------ ----------- 

FOR THE YEARS ENDED
DECEMBER 31,

 2001 2000 Benefits paid to participants per the financial statements $ 11,938,620 $11,452,084 Add: Amounts allocated to withdrawing participants at December 31, 2001 and 2000 1,252,098 Less: Amounts allocated to withdrawing participants at December 31, 2000 and 1999 (1,252,098) (601,685) ------------ ----------- Benefits paid to participants per the Form 5500 $ 10,686,522 $12,102,497 ------------ ----------- 

Amounts allocated to the withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 2001 and 2000 but not yet paid as of that date.

8

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

FORM 5500 SCHEDULE H -- PART IV -- 4I
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2001 SUPPLEMENTAL SCHEDULE

ISSUES COST FAIR VALUE PARTICIPANT-DIRECTED FUNDS* Short-term investment fund $ 4,835,086 Equity Fund 5,295,914 NONPARTICIPANT-DIRECTED FUNDS J&J Stock Fund $42,833,353 95,056,871 ----------- ------------ $42,833,353 $105,187,871 =========== ============ 

*Cost need not be disclosed for participant-directed funds.

-9-

JOHNSON & JOHNSON
RETIREMENT SAVINGS PLAN

FORM 5500 SCHEDULE H -- PART IV -- 4J
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2001 SUPPLEMENTAL SCHEDULE

 DISPOSED ACQUIRED SECURITY/PARTY SALES COSTS PROCEEDS GAINS/(LOSSES) PURCHASES COSTS DESCRIPTION (# of Transactions) (# of Transactions) SERIES OF TRANSACTIONS Johnson & Johnson Common Stock 26 $10,334,059 $11,125,094 $791,035 69 $11,471,896 

-10-

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-32875) of Johnson & Johnson of our report dated June 19, 2002 relating to the financial statements and financial statement schedules of the Johnson & Johnson Retirement Savings Plan, which appears in this Form 11-K.

PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 26, 2002


Exhibit 99(a)(iii)

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 11-K


[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the Fiscal Year Ended December 30, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Commission File Number 1-3215


JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES

(Full title of the Plan)

JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933

(Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office)


Item 4. Financial Statements and Exhibits

Report of Independent Accountants

Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2001 and 2000

Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2001 and 2000

Notes to Financial Statements

Supplemental Schedule:
Form 5500 Schedule H - Part IV - 4I - Schedule of Assets (Held at End of Year) as of December 31, 2001

Consent of PricewaterhouseCoopers LLP, dated June 26, 2002

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES

 By: /s/ R.J. Darretta --------------------------------- R. J. Darretta Chairman, Pension Committee June 25, 2002 


JOHNSON & JOHNSON SAVINGS PLAN
FOR UNION REPRESENTED EMPLOYEES


FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULE

AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2001 AND 2000


JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

 PAGE(S) Report of Independent Accountants 1 Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 2001 and 2000 2 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2001 and 2000 3 Notes to Financial Statements 4-10 Supplemental Schedule: Form 5500 Schedule H -- Part IV -- 4I -- Schedule of Assets (Held at End of Year) as of December 31, 2001 11 


REPORT OF INDEPENDENT ACCOUNTANTS

To the Pension and Benefits Committees of Johnson & Johnson

In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the Johnson & Johnson Savings Plan for Union Represented Employees (the "Plan") as of December 31, 2001 and 2000 and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

June 19, 2002

1

JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2001 AND 2000

 2001 2000 ASSETS Deposits in Group Annuity Contracts (Notes 2, 5 and 7) $ 2,449,117 $ 2,243,829 Investments at fair value (Notes 2, 5 and 6) 28,930,608 24,729,781 Investments in Master Trust (Notes 2, 5 and 7) 6,965,736 7,566,740 Accrued dividends and interest receivable 19,274 19,791 ----------- ----------- Net assets available for benefits $38,364,735 $34,560,141 ----------- ----------- 

See Notes to Financial Statements

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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

 2001 2000 ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income: Net appreciation in fair value of investments (Note 5) $ 2,880,078 $ 2,735,116 Interest 220,528 216,995 Dividends 394,699 363,700 Contributions: Employee contributions (Note 3) 2,943,621 2,752,843 Employer contributions (Note 3) 681,952 596,636 Assets Transferred 17,868 - ----------- ----------- Total additions 7,138,746 6,665,290 ----------- ----------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Payments to participants (Note 4) 3,176,114 2,420,474 Administrative expenses 158,038 142,049 ----------- ----------- Total deductions 3,334,152 2,562,523 ----------- ----------- Net increase 3,804,594 4,102,767 Net assets available for benefits, Beginning of year 34,560,141 30,457,374 ----------- ----------- Net assets available for benefits, End of year $38,364,735 $34,560,141 ----------- ----------- 

See notes to financial statements.

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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

The Johnson & Johnson Savings Plan for Union Represented Employees (the "Plan") is a defined contribution plan which was established on January 1, 1993 by Johnson & Johnson ("J&J" or the "Company"). The Plan was designed to enhance the existing retirement program of eligible employees covered under collective bargaining agreements with the Company. The funding of the Plan is made through employee and Company contributions. The assets of the Plan are maintained in the Johnson & Johnson Savings Plan Master Trust (the "Trust") and transactions therein are executed by the trustee, State Street Trust Company ("State Street"). The Johnson & Johnson Savings Plan Master Trust is allocated based upon the total of each individual participant's share of the Trust.

Participants have the option to invest in any one of four investment options which include the Fixed Interest Fund, J&J Stock Fund, U.S. Government Securities ("USGS") Fund and the Diversified Equity Fund.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The financial statements of the Plan are prepared under the accrual method of accounting.

VALUATION OF INVESTMENTS

Equity investments in the Johnson & Johnson Stock Fund, administered by State Street, are valued at the closing market price on the last business day of the year. The cost of equity investments in the Johnson & Johnson Stock Fund is recorded at the market price of the stock transactions for the day during which the contribution is made.

The investments in the USGS, Fixed Interest and Diversified Equity Funds represent the Plan's share of assets in the Trust. The USGS Fund consists of short-term obligations that are issued or guaranteed by the U.S. Government. Investments are valued at cost, which approximates market value. Deposits in group annuity contracts in the Fixed Interest Fund are recorded at their contract value, which approximates fair value, because these investments have fully benefit-responsive features. Contract value represents contributions and reinvested income, less any withdrawals plus accrued interest. Participants may direct the withdrawal or transfer of all or a portion of their investment at contract value. However, withdrawals influenced by employer initiated events, such as in connection with the sale of a business, may result in a distribution at other than contract value. There are no reserves against contract values for credit risk of contract issuers or otherwise. The average yield and crediting interest rate of the Fixed Interest Fund was 6.44% for 2001 and 6.05% for 2000. The crediting interest rate for the investment contracts is either agreed-to in advance with the issuer or varies based on an agreed-to formula, but cannot be less than zero.

Equity investments and corporate obligations in the Diversified Equity Fund, managed by the Capital Guardian Trust Company and J.P. Morgan Investment Management, Inc., are traded on a national securities exchange and are valued at the last reported market sales price on the last business day of the year. Investments in the Diversified Equity Fund are purchased periodically by Capital Guardian Trust Company and J.P. Morgan Investment Management, Inc. based on the

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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

NOTES TO FINANCIAL STATEMENTS

prevailing market values of the underlying investments.

Temporary cash investments are stated at redemption value which approximates fair value.

NET APPRECIATION (DEPRECIATION)
The Plan presents in the Statements of Changes in Net Assets Available for Benefits the net appreciation (depreciation) in the fair value of investments which consists of unrealized appreciation (depreciation) of the underlying investments and realized gains and losses on sales of investments.

PAYMENTS OF BENEFITS
Benefits are recorded when paid.

USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

RISKS AND UNCERTAINTIES
The Plan provides for various participant investment options in funds which can invest in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with ceratin investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the Statements of Net Assets Available for Benefits and the Statements of Changes in Net Assets Available for Benefits.

NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133), as amended. SFAS No. 133 requires that an entity recognize all derivative instruments and measure those instruments at fair value.

The Plan was required to adopt SFAS No. 133 effective January 1, 2001. Management initially was unable to determine the impact of SFAS No. 133 on the Plan financial statements as a result of the inconsistency in accounting literature between SFAS No. 133, requiring derivative instruments to be measured at fair value and the AICPA Audit and Accounting Guide on "Audits of Employee Benefit Plans" and Statement of Position 94-4, "Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined-Contribution Pension Plans," (SOP 94-4) requiring benefit responsive investment contracts (including synthetic GICs) held by defined-contribution pension plans to be measured at contract value.

In October 2001, the Derivatives Implementation Group (DIG) of the FASB tentatively released Implementation Issue C19 (DIG C19), which provides that fully benefit responsive investment

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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

NOTES TO FINANCIAL STATEMENTS

contracts accounted for under either paragraph 4 or 5 of SOP 94-4 are not subject to SFAS No. 133. The tentative guidance included in DIG C19 has been incorporated into an exposure draft of the amendment of FAS 133. Although this amendment project has yet to be finalized, management believes that it provides the most relevant accounting guidance for fully benefit responsive investment contracts held by defined-contribution pension plans. Accordingly, the Plan has measured all fully benefit responsive investment contracts at contract value at December 31, 2001 and 2000. The FAS 133 amendment project is expected to be finalized during 2002. The Plan holds no other material derivative financial instruments at December 31, 2001 or 2000.

OTHER

Interest and dividend income is recorded as earned on the accrual basis. Purchases and sales of investment securities are reflected on a trade-date basis. Gains and losses on sales of investment securities are determined on the average cost method. Third party administrative expenses are paid by the Plan, except costs of entering new investment vehicles which will be paid primarily by the Company.

3. CONTRIBUTIONS

Participating employees may contribute a minimum of $0.16 per hour up to a maximum of $2.40 per hour, depending on the negotiated contract rate, of the first forty hours worked in each payroll week. All contributions are on a pre-tax basis. Annual pre-tax contributions may not exceed $10,500 in 2001 or 2000. The Company contributes to the Plan, out of current or accumulated profits, an amount equal to 25% or 50% in 2001 and 25% or 40% in 2000 (depending on the negotiated collective bargaining agreement) of the employee directed contributions on the first $0.16 to $1.20 per hour, directly into J&J common stock.

Contributions are made to the Plan by participants through payroll deductions and by the Company on behalf of the participants. Employee contributions are to be invested in any of the four investment funds at the direction of the participating employees. All Company contributions are made to the J&J Stock Fund.

4. PARTICIPANT ACCOUNTS AND BENEFITS

All participants are fully vested in their contributions and the Company match. The benefit to which a Plan participant is entitled is the amount provided by contributions (Company and participant) and investment earnings thereon (including net realized and unrealized investment gains and losses) which have been allocated to such participant's account balance. Allocations are based on participant's earnings or account balances, as defined.

Participants may withdraw before-tax contributions only upon meeting certain hardship conditions.

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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

NOTES TO FINANCIAL STATEMENTS

5. INVESTMENTS

The following presents investments that represent 5% or more of the Plan's net assets.

 AS OF DECEMBER 31, 2001 2000 Johnson & Johnson Stock Fund* $28,930,608 $24,729,781 Diversified Equity Fund 5,756,356 6,405,424 Fixed Interest Fund 2,449,117 2,243,829 Total of remaining investment accounts, each of which was less than 5% of the Plan's net assets 1,209,380 1,161,316 ----------- ----------- $38,345,461 $34,540,350 =========== =========== * Non-participant directed 

During 2001 and 2000, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $2,880,078 and $2,735,116 respectively, as follows:

 AS OF DECEMBER 31, 2001 2000 Equities $ (243,555) $ (105,255) J&J Common Stock 3,123,633 2,840,371 ---------- ---------- $2,880,078 $2,735,116 ========== ========== 

6. NON-PARTICIPANT-DIRECTED INVESTMENTS

Included in the J&J Stock Fund are participant and non-participant directed investments. Information about the net assets and the significant components of the changes in net assets relating to this fund is as follows:

 AS OF DECEMBER 31, 2001 2000 Net assets: J&J Stock Fund $28,931,215 $24,730,717 

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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

NOTES TO FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, 2001 2000 Changes in net assets: Contributions $ 2,490,005 $ 2,201,410 Investment income 350,012 294,257 Net appreciation in fair value 3,123,633 2,840,371 Benefits paid to participants (2,013,296) (1,649,755) Administrative expenses (96,971) (93,211) Assets transferred 347,115 14,800 ----------- ----------- $ 4,200,498 $ 3,607,872 =========== =========== 

7. INVESTMENTS IN SAVINGS PLAN MASTER TRUST

The investments in the USGS, Fixed Interest, J&J Stock and the Diversified Equity Funds are included in the Savings Plan Trust. The Trust also includes other funds not part of the Union Plan. The Trust's net assets, income, and expenses are allocated to the Plan based on the total of each participant's share of the four funds of the Trust included in the Plan. The Plan holds approximately 0.95% and 0.94% of the Trust's net assets as of December 31, 2001 and 2000 respectively. Information concerning the Savings Plan Master Trust's investment income and investments held is as follows:

 AS OF DECEMBER 31, 2001 INVESTMENTS BY TYPE: FAIR VALUE COST Interest bearing cash $ 117,068,720 $ 117,068,720 Government securities 37,502,467 36,056,366 Common stocks (common) 2,195,819,664 767,961,497 Equities 995,845,728 837,310,795 Deposits in group annuity contracts* 671,161,230 671,161,230 -------------- -------------- $4,017,397,809 $2,429,558,608 ============== ============== 

 AS OF DECEMBER 31, 2000 INVESTMENTS BY TYPE: FAIR VALUE COST Interest bearing cash $ 137,547,662 $ 137,547,662 Government securities 31,598,063 30,000,363 Common stocks 1,899,050,245 660,830,884 Equities 992,140,689 766,755,736 Deposits in group annuity contracts* 601,183,330 601,183,330 -------------- -------------- $3,661,519,989 $2,196,317,975 ============== ============== 

* Stated at cost which approximates fair value.

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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

NOTES TO FINANCIAL STATEMENTS

 FOR THE YEARS ENDED DECEMBER 31, -------------------------------- INVESTMENT INCOME BY TYPE 2001 2000 Interest $ 43,822,281 $ 42,571,642 Dividends 37,670,605 34,561,040 Net appreciation (depreciation) 208,126,979 228,690,355 ----------- ----------- $ 289,619,865 $ 305,823,037 =========== =========== 

8. TAX STATUS

The Internal Revenue Service has determined and informed the Company by a letter dated April 26, 1996, that the Plan and the Trust are designed in accordance with applicable sections of the Internal Revenue Code ("IRC"). The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with applicable requirements of the IRC.

9. TERMINATION PRIORITIES

The Company has the right to terminate the Plan at any time and in the event the Plan is terminated, subject to conditions set forth in ERISA, the amount of each participant's account balance in the Plan is fully vested.

10. CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Plan to concentrations of credit risk consist principally of the Fixed Interest Fund holdings in fully benefit-responsive group annuity contracts with insurance and other financial institutions.

The Fund places its fully benefit-responsive group annuity contracts with high-credit quality institutions and, by policy, limits the amount of credit exposure to any one financial institution. If any of the insurance companies that the group annuity contracts are invested with fail to perform according to the contract, the asset value of the Plan could be impaired.

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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

NOTES TO FINANCIAL STATEMENTS

11. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:

 AS OF DECEMBER 31, 2001 2000 Net assets available for benefits per the financial statements $38,364,735 $34,560,141 Amounts allocated to withdrawing participants -- (208,357) ----------- ----------- Net assets available for benefits per the Form 5500 $38,364,735 $34,351,784 ----------- ----------- 

 FOR THE YEARS ENDED DECEMBER 31, 2001 2000 Benefits paid to participants per the financial statements $3,176,114 $2,420,474 Add: Amounts allocated to withdrawing participants at December 31, 2001 and 2000 -- 208,357 Less: Amounts allocated to withdrawing participants at December 31, 2001 and 2000 (208,357) (118,294) ---------- ---------- Benefits paid to participants per the Form 5500 $2,967,757 $2,510,537 ---------- ---------- 

Amounts allocated to the withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 2001 and 2000 but not yet paid as of that date.

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JOHNSON & JOHNSON
SAVINGS PLAN FOR UNION REPRESENTED EMPLOYEES

FORM 5500 SCHEDULE H - PART IV - 4I
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2001 SUPPLEMENTAL SCHEDULE

ISSUES COST FAIR VALUE PARTICIPANT-DIRECTED FUNDS* USGS Fund $ 1,192,607 Fixed Interest Fund 2,460,540 Diversified Equity Fund 5,761,252 NONPARTICIPANT-DIRECTED FUNDS J&J Stock Fund $ 14,909,186 28,931,215 Clearing account 19,121 19,121 ------------- ------------- $ 14,928,307 $ 38,364,735 ------------- ------------- 

* Cost need not be disclosed for participant-directed funds.

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CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-52252) of Johnson & Johnson of our report dated June 19, 2002 relating to the financial statements and financial statement schedule of the Johnson & Johnson Savings Plan for Union Represented Employees, which appears in this Form 11-K.

PricewaterhouseCoopers LLP
Florham Park, New Jersey
June 26, 2002.


Exhibit 99(a)(iv)

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 11-K


[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the Period Ended October 17, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Commission File Number 1-3215


CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN

(Full title of the Plan)

JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933

(Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office)


Item 4. Financial Statements and Exhibits

Report of Independent Accountants

Financial Statements:
Statements of Net Assets Available for Plan Benefits at October 17, 2001 and December 31, 2000

Statements of Changes in Net Assets Available for Plan Benefits for the period January 1 through October 17, 2001 and the year ended December 31, 2000

Notes to Financial Statements

Consent of PricewaterhouseCoopers LLP, dated June 27, 2002

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

CENTOCOR QUALIFIED SAVINGS
AND RETIREMENT PLAN

 By: /s/ R.J. Darretta ------------------------------------ R. J. Darretta Chairman, Pension Committee June 25, 2002 

1

CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN

FINANCIAL STATEMENTS FOR
THE PERIOD JANUARY 1 THROUGH
OCTOBER 17, 2001 AND THE YEAR
ENDED DECEMBER 31, 2000
AND
SUPPLEMENTAL SCHEDULE
FOR THE PERIOD
JANUARY 1 THROUGH OCTOBER 17, 2001


CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
TABLE OF CONTENTS
OCTOBER 17, 2001 AND DECEMBER 31, 2000

 PAGES Report of Independent Accountants 1 Financial Statements: Statements of Net Assets Available for Plan Benefits at October 17, 2001 and December 31, 2000 2 Statements of Changes in Net Assets Available for Plan Benefits for the period January 1 through October 17, 2001 and the year ended December 31, 2000 3 Notes to Financial Statements 4-8 


REPORT OF INDEPENDENT ACCOUNTANTS

To the Participants and Administrator of the Centocor Qualified Savings and Retirement Plan':

In our opinion, the accompanying statements of net assets available for plan benefits and the related statements of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for plan benefits of the Centocor Qualified Savings and Retirement Plan (the "Plan") as of October 17, 2001 and December 31, 2000, and the changes in net assets available for plan benefits for the period January 1 through October 17, 2001 and the year ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplemental information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

As discussed in Note 1 to the financial statements, the Plan merged into the Johnson and Johnson Savings Plan on October 17, 2001.

May 9, 2002

1

CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS

 October 17, December 31, 2001 2000 ----------- ------------ Assets: Investments at fair value $ --- $52,479,036 Receivables: Employer's contribution --- 3,948,591 Loans from participants --- 623,716 ----- ----------- --- 4,572,307 ----- ----------- Total assets $ --- $57,051,343 ===== =========== Net assets available for Plan benefits $ --- $57,051,343 ===== =========== 

See accompanying Notes to Financial Statements.

2

CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS

 January 1 through Year ended October 17, December 31, 2001 2000 ------------- ------------- Additions: Interest and dividend income $ 527,178 $ 3,198,894 Net depreciation in fair value of investments (5,057,094) (4,751,892) Contributions: Employee --- 8,605,294 Employer --- 3,948,591 Participant rollovers into Plan --- 3,132,956 ------------ ------------ Total additions (4,529,916) 14,133,843 Deductions: Benefits paid (6,481,478) (2,556,042) Forfeitures (630,058) --- ------------ ------------ Total deductions (7,111,536) (2,556,042) Other income (expense), net (848) 474 ------------ ------------ Net (decrease) increase (11,642,300) 11,578,275 Net assets available for Plan benefits: Beginning of year 57,051,343 45,473,068 ------------ ------------ Transfer to J&J Savings Plan (45,409,043) --- ------------ ------------ End of year $ --- $ 57,051,343 ============ ============ 

See accompanying Notes to Financial Statements.

3

CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS

NOTE 1 DESCRIPTION OF PLAN

The following description of the Plan provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions.

Plan Merger

Effective December 31, 2000, all participants in the Plan who were employed by Centocor on December 31, 2000 became fully vested. All participant contributions were suspended. Initiation of new loans was suspended. The requirement that a participant must take all available loans under the plan before receiving his or her participant directed contributions in the form of a hardship withdrawal was eliminated.

All Centocor employees employed on December 31, 2000 were eligible to participate in the Johnson & Johnson Savings Plan beginning January 1, 2001.

Effective October 17, 2001, Centocor delegated all of its powers and duties as the Administrator of the Plan to Johnson & Johnson. In October 2001, Centocor transferred all assets in the Centocor Qualified Savings and Retirement Plan to the Johnson & Johnson Savings Plan.

On April 26, 2001, Johnson & Johnson announced a two-for-one stock split to holders of record on May 22, 2001 and effective June 12, 2001. The stock split does not impact the value of any of the Plan's investment funds.

General

Effective January 1, 1985, Centocor, Inc. (the "Company") established the Plan, a defined contribution savings plan subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Substantially all U.S. employees of the Company, or any of its subsidiaries or affiliates, were eligible to participate in the Plan. Employees were able to participate as of the first date of his/her employment. Substantially all of the legal, accounting and administrative expenses associated with Plan operations were paid by the Company.

Contributions

Eligible employees were able to make voluntary tax-deferred contributions of 1 to 15 percent of their eligible cash compensation up to certain annual limits as prescribed by the U.S. Internal Revenue Code. Maximum annual contributions were able to be limited at the discretion of the Company.

Employee contributions were invested as directed by the employee in any of the eight investment programs available under an investment contract with the Trustee (see Note 3). Company contributions were made principally in the Johnson & Johnson Common Stock Fund.

4

CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS

The Company was able to elect, but was not required, to make contributions to the Plan for the benefit of the participating employees. To date, contributions have been made as a percentage of the participants' contributions for the year, as determined by the Company's Board of Directors. In 2000, the Company elected to contribute an amount equal to 50 percent of the contributions of each employee. The Company's contribution was based upon annual employee contributions up to a level of 6 percent of their cash compensation. Additionally, in 2000, the Company committed to make a contribution equal to 1% of each employee's compensation. At December 31, 2000, 33,329 shares of the Johnson & Johnson Common Stock Fund, with a fair value of $99.5781 per share determined by the average trade price for the last twenty days in December of 2000 and $57 in cash was due to the Plan from the Company for its 2000 contribution. Participant forfeitures of $630,058 were used for the 2000 Company contribution.

Participants' Accounts

Separate accounts were maintained by the Trustee for each participant. Each participant's account reflected the participant's contribution, the Company's contribution, interest, dividends, other income, and gains or losses earned by each of the investment programs. Investment income was reinvested in the same programs.

Participants were able to transfer all or a portion of their accounts among the eight investment programs available under the Plan by directly contacting the Trustee. The transfer would take effect immediately upon the participant's notification of the change.

Vesting

Employee contributions were fully (100%) vested and non-forfeitable. Employer contributions were fully vested upon death, total and permanent disability, or attainment of age 65; otherwise, employer contributions were subject to vesting percentages based on years of service, as defined by the Plan documents. Employee non-vested forfeitures were used by the Company to offset employer contributions. The amount of forfeitures for 2001 and 2000 were $630,058 and $112,772, respectively. The employer contributions vesting percentages were as follows:

Less than one year of service 0% One year of service 20% Two years of service 40% Three years of service 60% Four years of service 80% Five or more years of service 100% 

Payment of Benefits

Benefits from the participants' vested accounts were normally payable to Plan participants upon retirement, death, termination of Company employment or total and permanent disability.

5

CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS

A participant, while still an employee, generally was able to withdraw all or a portion of his vested, non-forfeitable tax-deferred contribution account if such amount was needed to defray the cost of a medical emergency, enable the participant to acquire or improve his principal residence, or assist the participant in preventing eviction or foreclosure proceedings. Such a withdrawal was required to first be taken as a loan as noted below.

Any additional funds required would be distributed as a hardship withdrawal subject to income tax and penalties. Such loan and withdrawal would not exceed the amount required to meet the immediate financial need created by the hardship and shall not be reasonably available from other sources of the participant.

Loan Provisions

Participants were able to borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance and may have only one loan outstanding at any point of time. All such loans bore interest at prevailing market rates. Loans were required to be repaid within five years in approximately equal installments or up to 15 years if used for the purchase of a primary residence. Loans are secured by the balance in the participants' accounts.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying financial statements have been prepared on the accrual basis of accounting.

Investments

The Centocor Qualified Savings and Retirement Plan's (the "Plan") Investments, administered by The Vanguard Group, Inc. (the "Trustee"), are stated at fair value based on the market value of the underlying securities on the last business day of the period.

Johnson & Johnson common shares are carried at market value, which is determined by quoted market prices. Participant loans are valued at cost, which approximates fair value.

Purchases and sales of investment securities are reflected on a trade date basis. Gains and losses on sales of investment securities are determined on the average cost method.

Use of Estimates

The preparation of the Plan's financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of net assets available for plan benefits at the date of the financial statements and the changes in net assets available for plan benefits during the reporting period and, when

6

CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS

applicable, disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Risks and Uncertainties

The Plan provided for various participant investment options in funds, which could invest in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities were exposed to various risks, such as interest rate, market and credit.

Related Party Transactions

Certain Plan investments were shares of mutual funds managed by the Trustee. Therefore, these transactions qualified as party - in - interest.

Payment of benefits

Benefit payments are recorded when paid.

NOTE 3 INVESTMENTS

The number of participants in the investment programs at October 17, 2001 and December 31, 2000 was as follows:

 2001 2000 ---- ---- Johnson & Johnson Common Stock Fund --- 1,370 Vanguard Money Market Reserves - Prime Portfolio --- 355 Vanguard Bond Index Fund - Total Bond Market Portfolio --- 401 Vanguard Index Trust - 500 Portfolio --- 1,223 Vanguard U.S. Growth Portfolio --- 1,152 Vanguard/Windsor II --- 594 Templeton Foreign Fund --- 489 Fidelity Contrafund --- 758 

The Johnson & Johnson Common Stock Fund program consists of shares of Johnson & Johnson Common Stock. The Vanguard Money Market Reserves - Prime Portfolio invests in short-term, high-quality money market instruments issued by financial institutions, non-financial corporations, the U.S. government and federal agencies. The Vanguard Bond Index Fund - Total Bond Market Portfolio invests in U.S. Treasury, federal agency, mortgage backed and corporate securities and attempts to match the performance of the Lehman Brothers Aggregate Bond Index, a widely recognized measure of the entire taxable U.S. bond market. The Vanguard Index Trust - 500 Portfolio invests in all of the 500

7

CENTOCOR QUALIFIED SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS

stocks that make up the Standard & Poor's 500 Composite Stock Price Index, a widely recognized benchmark of U.S. stock market performance. The Vanguard U.S. Growth Portfolio invests in large, high-quality, seasoned U.S. companies. The Vanguard/Windsor II Fund invests in a diversified group of out-of-favor stocks of large-capitalization companies. The Templeton Foreign Fund invests primarily in stocks of companies located outside the United States. The Fidelity Contrafund invests in undervalued stocks of foreign and U.S. companies with the goal of achieving long-term capital appreciation.

Custody of the Plan's investments is maintained by the Trustee. Plan investments at fair value at October 17, 2001 and December 31, 2000 were as follows:

 October 17, December 31, Name of Issuer and Title of Issue At, 2001 2000 ----------- ------------ Johnson & Johnson Common Stock Fund $ --- $ 13,665,693* Vanguard Money Market Reserves - Prime Portfolio --- 2,131,304 Vanguard Bond Index Fund - Total Bond Market Portfolio --- 2,358,063* Vanguard Index Trust - 500 Portfolio --- 16,809,319* Vanguard U.S. Growth Portfolio --- 8,469,201* Vanguard/Windsor II --- 2,929,833* Templeton Foreign Fund --- 1,970,561 Fidelity Contrafund --- 4,145,062* --------- ------------ $ --- $ 52,479,036 ========= ============ 

* Represents 5% or more of net assets available for Plan benefits

During the period January 1 through October 17, 2001 and the year ended December 31, 2000, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows:

 2001 2000 ----------- ----------- Mutual Funds $(6,521,644) $(6,367,266) Common Stock 1,464,550 1,615,374 ----------- ----------- $(5,057,094) $(4,751,892) =========== =========== 

NOTE 4 TAX STATUS

The Internal Revenue Service has determined and informed the Company by a letter dated April 26, 1995, that the Plan is designed in accordance with applicable sections of the Internal Revenue Code ("IRC"). The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and was operated in compliance with applicable requirements of the IRC.

8

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in Registration Statements on Form S-8 (No. 333-86611) of Johnson & Johnson of our report dated May 9, 2002, relating to the financial statements and supplemental schedule of the Centocor Qualified Savings and Retirement Plan, which appears in this Form 11-K.

PricewaterhouseCoopers LLP
Philadelphia, PA
June 27, 2002


EXHIBIT 99(a)(v)

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 11-K


[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the Fiscal Year Ended December 30, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Commission File Number 1-3215


ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN

(Full title of the Plan)

JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933

(Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office)

i

Item 4. Financial Statements and Exhibits

Independent Auditors' Report

Statement of Net Assets Available for Benefits

Statement of Changes in Net Assets Available for Benefits

Notes to Financial Statements

Supplemental Schedule:

Schedule of Assets Held for Investment Purposes

Consent of Morris Davis & Chan, LLP dated June 25, 2002

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

ALZA CORPORATION TAX DEFERRAL
INVESTMENT PLAN

 By: /s/ D.R. HOFFMAN ----------------------- D.R. HOFFMANN Trustee June 25, 2002 

ii

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN

FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES

AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2001 AND 2000

iii

ALZA CORPORATION TAX DEFERRAL
INVESTMENT PLAN

TABLE OF CONTENTS

Independent Auditors' Report 1 Statement of Net Assets Available for Benefits 2 Statement of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4-10 Supplemental Schedule: 11 Schedule of Assets Held for Investment Purposes 12-39 

iv

INDEPENDENT AUDITORS' REPORT

Administrative Committee of the
ALZA CORPORATION TAX DEFERRAL
INVESTMENT PLAN

We have audited the accompanying statement of net assets available for benefits of the ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN (the Plan) as of December 31, 2001 and 2000, and the related statement of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2001 and 2000, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes as of December 31, 2001 is presented for the purpose of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and is not a required part of the basic financial statements. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

April 17, 2002

1

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN

Statement of Net Assets Available for Benefits December 31, 2001 and 2000

 2001 2000 -------------- -------------- Investments at fair value: Mutual funds: Merrill Lynch Ready Asset Trust $ 15,782,386 $ 12,995,436 Merrill Lynch Basic Value 11,810,199 11,580,100 Merrill Lynch Growth - 9,524,487 Merrill Lynch Corporate Bond 3,795,085 4,022,727 Merrill Lynch Capital 3,531,862 3,718,390 Merrill Lynch Global Allocation 3,249,197 3,000,763 Merrill Lynch Equity Index Fund - 88 John Hancock Emerging Growth 2,991,029 3,013,587 Templeton International 1,798,814 1,686,211 Alliance New Europe 81,948 76,323 Alliance Premier Growth 1,353,788 821,019 Fidelity Advisor Overseas 191,448 130,419 Franklin California Growth 1,644,479 1,460,274 Merrill Lynch Healthcare 1,328,948 630,601 Merrill Lynch International Index 307,710 284,621 Merrill Lynch Pacific 63,156 42,581 Merrill Lynch Small Cap Index 215,898 142,598 Merrill Lynch S&P 500 Index 6,990,932 6,792,096 Merrill Lynch Fundamental Growth 6,918,633 - Munder NetNet 411,528 373,199 PIMCO Small Cap Value 540,538 42,035 Other investments: Retirement Cash Management Account 33,826,806 36,673,497 ALZA Corporation Common Stock - 49,565,200 Johnson & Johnson Common Stock 57,289,235 - Participant loans 917,581 1,096,733 -------------- -------------- Total investments 155,041,200 147,672,985 Cash 113,914 49,018 Employer contributions receivable 2,315,461 2,071,224 Employee contributions receivable 360,343 341,163 -------------- -------------- Net assets available for benefits $ 157,830,918 $ 150,134,390 ============== ============== 

See accompanying notes to financial statements.

2

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN

Statement of Changes in Net Assets Available for Benefits Years Ended December 31, 2001 and 2000

 2001 2000 -------------- -------------- Additions to net assets attributed to: Investment income: Net realized and unrealized appreciation in fair value of investments $ 8,291,237 $ 28,535,335 Interest and dividends 3,108,884 5,204,108 -------------- -------------- 11,400,121 33,739,443 Employer contributions 3,594,549 3,127,724 Participant contributions 13,619,013 11,738,959 -------------- -------------- Net additions 28,613,683 48,606,126 -------------- -------------- Deductions from net assets attributed to: Distributions 20,915,378 30,806,852 Administrative expenses 1,777 2,575 -------------- -------------- Net deductions 20,917,155 30,809,427 -------------- -------------- Increase in net assets 7,696,528 17,796,699 Net assets available for benefits: Beginning of year 150,134,390 132,337,691 -------------- -------------- End of year $ 157,830,918 $ 150,134,390 ============== ============== 

See accompanying notes to financial statements.

3

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000

1. DESCRIPTION OF PLAN

The following description of the ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN (the Plan) provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions.

General

The Plan is a defined contribution plan. ALZA Corporation (the Company or ALZA) remits to the Trust created by the Plan such amounts as are voluntarily elected by participants and Company contributions. The Plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA).

Contributions

Participants may make elective salary reduction contributions which are tax deferred and are, therefore, not included in a participant's compensation for federal income tax purposes until distributed to the participant. Under the Plan, participants may elect to contribute through bi-weekly payroll deductions a fixed dollar amount up to a maximum of $10,500 in 2001 and 2000. Further restrictions may be imposed on highly compensated individuals and Plan participants who also participate in the ALZA Retirement Plan.

For the years ended December 31, 2001 and 2000 the Company made a contribution of $20 each pay period for each employee (thereby making all ALZA employees participants) to begin an account and encourage employees to participate further in the Plan. The Company also made a matching contribution at 50% of participant contributions. The maximum Company contribution was $2,000 for each participant.

Participant Accounts

Each participant's account is credited with 100% of the contributions made by the participant through a salary deferral agreement. The Company will suspend the pretax salary deferral agreement of any participant if it determines that a participant's annual contribution limitation, as described in the Internal Revenue Code, will be exceeded.

Participants are allowed to make rollover contributions of amounts received from other qualified employer-sponsored retirement plans. Such contributions are deposited in the appropriate investment funds in accordance with the participant's directions and the Plan's provisions.

4

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000

1. DESCRIPTION OF PLAN (continued)

Participant Accounts (continued)

Participants allocate their contributions for investment into mutual funds and other investment vehicles (see Note 4). Earnings and losses of the investments are allocated to participants in accordance with the Plan's provisions.

Vesting

Participant account balances are 100% vested at all times.

Distribution of Benefits

Distributions from the Plan are available to a participant (or the beneficiary) in any of the following situations: termination of employment with the Company, retirement, total disability, death, reaching age 59 1/2, or a qualified financial hardship. The participant (or the beneficiary) may elect to receive a lump sum distribution of the value of his account, or he or she may choose to have the funds remain in the Plan.

Loans

A participant who is employed by the Company and meets certain Plan requirements may elect to borrow funds from his or her account. The borrowings are evidenced by notes that bear interest at the published prime rate plus 1% and have repayment terms of one to 30 years, depending on the purpose of the loans. Such repayments and interest thereon are credited to the borrower's account and reinvested in the same manner as current contributions.

Income Tax Status

The Company has received a favorable determination letter from the IRS dated March 11, 2002 which states that the Plan is qualified under Section 401(a) and 401(k) of the Internal Revenue Code. Accordingly, income generated by the underlying trust is generally exempt from federal income tax under Section 501(a) of the Internal Revenue Code. The Company is unaware of any event or series of events that may cause operational disqualification of the Plan.

5

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000

1. DESCRIPTION OF PLAN (Continued)

Administrative Expenses

Although not required to do so, the Company has paid all of the expenses (except for certain broker fees on transactions executed at the participant's discretion, and loan fees) associated with administering the Plan.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investment Valuation and Income Recognition

Investments in mutual funds are valued at the published fair value as reported by the fund manager which represents the net asset value of shares held by the Plan at year end. Other investments are valued at the published fair value as reported. The participant loans receivable is valued at cost which approximates fair value.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the Plan management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.

3. RELATED PARTY TRANSACTIONS

Certain Plan investments are shares of mutual funds managed by Merrill Lynch Trust Company of California. Merrill Lynch Trust Company of California is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. Fees for the investment management services are paid by ALZA.

6

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000

4. INVESTMENT FUND ACTIVITY

During 1991, the Plan was amended to allow for the acceptance of quarterly plan-to-plan transfers from the ALZA Corporation Employee Stock Ownership Plan (the ESOP) pursuant to the phased termination of the ESOP. The Plan was amended in 1992 to allow ALZA Common Stock to be an investment choice under the Plan. The ESOP termination was considered complete as of December 1995, and no further ALZA Stock Transfers were made after that date. The following are investment options under the Plan:

Mutual Funds

Merrill Lynch Ready Asset Trust - A money market fund.

Merrill Lynch Basic Value Fund - A fund of equity securities that management of the fund believes are undervalued and represent basic investment value.

Merrill Lynch Growth Fund - A mutual fund investing primarily in a diversified portfolio of equity securities seeking growth of capital and, as a secondary objective, income. This fund was eliminated as an investment option as of December 31, 2001.

Merrill Lynch Corporate Bond Fund - A fund of long-term corporate fixed-income securities, including corporate bonds and notes, convertible securities and preferred stocks.

Merrill Lynch Capital Fund - A fund of equity, debt and convertible securities that seeks to achieve the highest total return consistent with prudent risk.

Merrill Lynch Global Allocation Fund - A fund investing in domestic and foreign equities, debt, and money markets seeking total return consistent with prudent risk.

Merrill Lynch Equity Index Fund - A fund investing in S&P 500 Index(TM) stocks that seeks to achieve market performance with diversified securities. This fund was eliminated as an investment option as of December 31, 2001.

John Hancock Emerging Growth Fund - A fund investing in emerging-growth companies.

Templeton International Fund - A fund investing in equity securities trading on foreign markets seeking long term growth of capital.

7

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000

4. INVESTMENT FUND ACTIVITY (Continued)

Mutual Funds (continued)

Effective May 2000, the following funds were added as investment options:

Alliance New Europe Fund - This fund seeks long-term capital appreciation by investing at least 65% of its total assets in the equity securities of European companies.

Alliance Premier Growth Fund - This fund seeks long-term growth of capital by investing at least 85% of its total assets in the equity securities of large, carefully selected, U.S. companies.

Fidelity Advisor Overseas Fund - This fund seeks capital growth by investing at least 65% of its total assets in foreign securities.

Franklin California Growth Fund - This fund seeks capital appreciation by investing in equity securities of companies that maintain their headquarters or conduct a majority of their operations in California.

Merrill Lynch Healthcare Fund - This fund seeks long-term capital appreciation through worldwide investment in equity securities of companies that derive a substantial portion of their sales from products and services in health care.

Merrill Lynch International Index Fund - This fund seeks to provide investment results that, before expenses, replicate the total return of the Morgan Stanley Capital International EAFE Index.

Merrill Lynch Pacific Fund - This fund seeks long-term capital appreciation by investing primarily in equities of corporations domiciled in Far Eastern or Western Pacific countries.

Merrill Lynch Small Cap Index Fund - This fund seeks to provide investment results that, before expenses, replicate the total return of the Russell 2000 Index.

Merrill Lynch S&P 500 Index Fund - This fund seeks to provide investment results that, before expenses, replicate the total return of the Standard & Poor's 500(TM) Composite Stock Price Index.

8

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000

4. INVESTMENT FUND ACTIVITY (Continued)

Mutual Funds (continued)

Merill Lynch Fundamental Growth Fund - This fund seeks long-term growth of capital by investing at least 65% of assets in equities issued by medium and large capitalization companies.

Munder NetNet Fund - This fund seeks long-term capital appreciation by investing at least 65% of its total assets in equity securities.

PIMCO Small Cap Value Fund - This fund seeks long-term growth of capital by investing at least 65% of its total assets in the common stocks of companies with market capitalizations between $50 million and $1 billion.

Other Investments

Retirement Cash Management Account (RCMA) - A self-directed brokerage account that enables participants to choose from a wide variety of investments.

ALZA Corporation Common Stock - A fund consisting of shares of ALZA Common Stock transferred from the ALZA ESOP or purchased under the provisions of the Plan.

Johnson & Johnson Common Stock Fund - On June 22, 2001, a merger between Johnson & Johnson and ALZA Corporation was completed as further discussed in Note 5. Holders of ALZA common stock received 0.98 of a share of Johnson & Johnson common stock for each share of ALZA common stock.

Investments representing 5% or more of the Plan's net assets were as follows:

 December 31, ---------------------------- 2001 2000 ----------- ----------- Merrill Lynch Ready Asset Trust $15,782,386 $12,995,436 Merrill Lynch Basic Value Fund 11,810,199 11,580,100 Merrill Lynch Growth Fund - 9,524,487 ALZA Corporation Common Stock Held in ALZA Corporation Common Stock Fund - 49,565,200 Held in Retirement Cash Management Account - 3,737,535 Johnson & Johnson Common Stock Held in Johnson & Johnson Common Stock Fund 57,289,235 - Held in Retirement Cash Management Account 4,928,741 - 

9

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
Notes to Financial Statements
December 31, 2001 and 2000

5. COMPANY MERGER

On June 22, 2001 a merger between Johnson & Johnson and ALZA Corporation (ALZA) was completed. The Plan will continue through at least December 31, 2002. It is not anticipated that there will be any employer contributions to the Plan subsequent to December 31, 2002. However, the future of the Plan has not yet been determined.

10

SUPPLEMENTAL SCHEDULE

11

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------- ---------------------------------------- ----------------------------------- ------------ ------------ * Merrill Lynch Ready Asset Trust Fund $ 15,782,386 $ 15,782,386 * Merrill Lynch Basic Value Fund 13,718,100 11,810,199 * Merrill Lynch Corporate Bond Fund 3,832,111 3,795,085 * Merrill Lynch Capital Fund 4,121,464 3,531,862 * Merrill Lynch Global Allocation Fund 3,456,736 3,249,197 John Hancock Emerging Growth Fund 3,798,050 2,991,029 Templeton International Fund 1,865,227 1,798,814 Alliance New Europe Fund 99,013 81,948 Alliance Premier Growth Fund 1,792,932 1,353,788 Fidelity Advisor Overseas Fund 247,275 191,448 Franklin California Growth Fund 2,202,560 1,644,479 * Merrill Lynch Healthcare Fund 1,317,376 1,328,948 * Merrill Lynch International Index Fund 427,317 307,710 * Merrill Lynch Pacific Fund 79,053 63,156 * Merrill Lynch Small Cap Index Fund 226,549 215,898 * Merrill Lynch S&P 500 Index Fund 8,334,709 6,990,932 * Merrill Lynch Fundamental Growth Fund 10,495,914 6,918,633 Munder NetNet Fund 461,085 411,528 PIMCO Small Cap Value Fund 509,878 540,538 * Johnson & Johnson Common Stock - 969,361 shares 8,620,415 57,289,235 Retirement Cash Management Account Daimler Chrysler Common Stock - 374 shares 17,874 15,585 Deutsche Bank Common Stock - 165 shares 10,260 11,575 Elan Corp. Common Stock - 500 shares 310 67 Global Crossing Ltd. Common Stock - 659 shares 14,771 553 Globalsantafe Corp. Common Stock - 284 shares 7,511 8,100 

12

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------- ---------------------------------------- ----------------------------------- ------------ ------------ Global Telecommunication Common Stock - 200 shares $ 8,013 $ 32 Interwave Communications International Common Stock - 50 shares 1,303 38 Loral Space & Comm Ltd. Common Stock - 3,075 shares 35,308 9,194 Open TV Corp. Common Stock - 50 shares 8,500 414 Sina.com Common Stock - 250 shares 1,738 395 Check Point Software Tech Ltd. Common Stock - 120 shares 4,937 4,787 Westpac Banking Corp. Common Stock - 6,375 shares 53,295 51,414 Flextronics International Ltd. Common Stock - 1,974 shares 58,706 47,356 ADC Telecommunications Inc. Common Stock - 1,000 shares 9,163 4,600 A N Amro Common Stock - 700 shares 16,532 11,396 AOL Time Warner Inc. Common Stock - 3,820 shares 146,167 122,622 AT&T Corporation Common Stock - 1,245 shares 37,870 22,579 AT & T Wireless Common Stock - 558 shares 13,937 8,022 AVI Biopharma Inc. Common Stock - 200 shares 4,800 2,184 Abbott Labs Common Stock - 1,538 shares 45,728 85,744 Abbey Natl. Common Stock - 295 shares 8,202 8,408 Abgenix Inc. Common Stock - 257 shares 14,095 8,645 Adaptive Broadband Corp. Common Stock - 20 shares 1,328 - Adaptec Inc. Common Stock - 700 shares 23,210 10,150 Advanced Digital Information Common Stock - 500 shares 7,113 8,020 Advanced Fibre Communication Common Stock - 400 shares 29,248 7,068 Advance PCS Common Stock - 68 shares 2,382 1,996 Advanced Micro Devices Inc. Common Stock - 2,307 shares 62,153 36,589 Advent Software Inc. Common Stock - 86 shares 4,267 4,296 Affiliated Computer Svcs Inc. Common Stock - 35 shares 2,700 3,715 Affymetrix Inc. Common Stock - 1,208 shares 103,084 45,602 

13

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------- ---------------------------------------- ----------------------------------- ------------ ------------ Agilent Technologies Inc. Common Stock - 1,719 shares $ 78,024 $ 49,009 Agile Software Corp. Common Stock - 400 shares 19,980 6,888 Air Products & Chemicals Common Stock - 140 shares 4,362 6,567 AKZO Common Stock - 240 shares 5,015 10,764 Alcoa Inc. Common Stock - 2,180 shares 68,543 77,499 Alliant Tech Systems Inc. Common Stock - 60 shares 4,202 4,632 Allied Irish Banks Common Stock - 500 shares 9,263 11,550 Allstate Corp. Common Stock - 120 shares 5,108 4,044 Alpha Industries Inc. Common Stock - 181 shares 5,186 3,946 Altera Corp. Common Stock - 5,864 shares 47,104 124,434 Amazon.com Common Stock - 150 shares 4,985 1,623 America Movil Common Stock - 1,000 shares 6,021 19,480 America West Common Stock - 570 shares 1,796 1,995 American Bank Common Stock - 4,000 shares 7,360 6,440 American Home Products Common Stock - 235 shares 8,243 14,420 American Intl. Group Inc. Common Stock - 610 shares 50,011 48,434 American Tower Corp. Common Stock - 100 shares 3,344 947 Amerisourcebergen Corp. Common Stock - 198 shares 12,822 12,583 Amgen Inc. Common Stock - 1,300 shares 54,922 73,372 Anadarko Pete Corp. Common Stock - 200 shares 10,109 11,370 Analog Devices Inc. Common Stock - 300 shares 22,333 13,317 Andrx Corp. Group Common Stock - 200 shares 12,898 14,082 Antigenics Inc. Common Stock - 1,059 shares 6,125 968 Apollo Group Inc. Common Stock - 244 shares 8,058 10,982 Apple Computer Inc. Common Stock - 640 shares 16,988 14,016 Applera Common Stock - 225 shares 6,731 8,836 

14

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------- ---------------------------------------- ----------------------------------- ------------ ------------ Applied Digital Solutions Common Stock - 1,700 shares $ 11,963 $ 731 Applied Micro Circuits Common Stock - 400 shares 4,076 4,528 Applied Materials Inc. Common Stock - 8,706 shares 243,017 349,111 Arch Wireless Inc. Common Stock - 47 shares 2,233 - Ariad Pharmaceuticals Inc. Common Stock - 100 shares 4,338 533 Ariba Inc. Common Stock - 500 shares 4,825 3,080 Armstrong Holdings Inc. Common Stock - 100 shares 8,610 341 Ascential Software Corp. Common Stock - 27 shares - 109 Aspeon Inc. Common Stock - 350 shares 3,491 28 At Home Common Stock - 300 shares 13,766 2 At Track Communications Common Stock - 60 shares 2,760 90 Atmel Corp. Common Stock - 400 shares 5,925 2,948 Avanex Corp. Common Stock - 40 shares 1,065 236 Avaya Inc. Common Stock - 210 shares 5,752 2,552 Avon Prod. Inc. Common Stock - 329 shares 11,135 15,318 Axa Common Stock - 380 shares 12,861 7,988 Bae Sys Common Stock - 363 shares 6,993 6,588 BASF Ag Common Stock - 224 shares 10,196 8,492 B A T Intl. Inc. Common Stock - 6,900 shares 2,779 69 BJS Wholesale Club Inc. Common Stock - 1,000 shares 7,181 44,100 BJ Svcs Co. Common Stock - 249 shares 7,348 8,080 BP Amoco Common Stock - 790 shares 36,533 36,743 BT Group Common Stock - 250 shares 6,773 9,188 BMC Software Inc. Common Stock - 1,000 shares 46,079 16,370 Ballard Pwr Sys. Inc. Common Stock - 748 shares 35,421 22,118 Bank of America Corp. Common Stock - 1,775 shares 65,901 111,736 

15

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------- ---------------------------------------- ----------------------------------- ------------ ------------ Bank of NY Common Stock - 550 shares $ 21,104 $ 22,440 Bank One Corp. Common Stock - 282 shares 11,546 11,025 BARR Labs Common Stock - 92 shares 7,433 7,301 Bayer Common Stock - 270 shares 8,199 8,451 BEA Sys Inc. Common Stock - 1,000 shares 12,500 15,400 Becton Dickinson Co. Common Stock - 100 shares 3,038 3,315 Bed Bath & Beyond Inc. Common Stock - 288 shares 7,141 9,763 Bellsouth Corp. Common Stock - 800 shares 17,380 30,520 Berkshire Hathaway Inc. Common Stock - 30 shares 66,601 75,750 Best Buy Co. Inc. Common Stock - 837 shares 27,610 62,340 Bio Technology Gen. Corp. Common Stock - 500 shares 5,419 4,115 Biogen Inc. Common Stock - 23 shares 1,856 1,319 Biotech Common Stock - 200 shares 21,151 26,400 Boeing Company Common Stock - 570 shares 25,222 22,105 Boston Scientific Corp. Common Stock - 200 shares 3,050 4,824 Boykin Lodging Co. Common Stock - 6,000 shares 54,600 47,820 Bristol Myers Squibb Co. Common Stock - 407 shares 17,660 20,757 Broadcom Corp. Common Stock - 357 shares 48,554 14,591 Broadvision Inc. Common Stock - 1,200 shares 52,188 3,288 Brocade Communications Sys. Common Stock - 1,240 shares 83,804 41,069 Burnham Pac Pptys Inc. Common Stock - 1,000 shares 12,375 4,120 CMGI Common Stock - 1,450 shares 52,897 2,364 CPX Corp. Common Stock - 1 share - 45 CVS Corp. Common Stock - 715 shares 19,590 21,164 Cable & Wireless Pub Ltd. Co. Common Stock - 200 shares 3,240 2,962 Cable Design Technologies Co. Common Stock - 300 shares 6,900 4,104 

16

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Cabot Corp. Common Stock - 166 shares $ 6,059 $ 5,926 Cadbury Schweppes Common Stock - 261 shares 6,645 6,713 Calico Commerce Inc. Common Stock - 125 shares 6,300 21 Calif Micro Devices Corp. Common Stock - 300 shares 11,010 1,410 California Water Svc Grp Common Stock - 1,000 shares 18,223 25,750 Caliper Techs Corp. Common Stock - 116 shares 4,987 1,811 Calpine Corp. Common Stock - 517 shares 17,214 8,680 CAM COMM Solutions Inc. Common Stock - 500 shares 8,075 2,000 Canon Inc. Common Stock - 600 shares 11,706 21,036 Catalytica Energy Sys. Common Stock - 1,001 shares 7,837 4,575 Caterpillar Inc. Common Stock - 479 shares 20,324 25,004 Cellular Tech Svcs Common Stock - 500 shares 5,388 1,145 Cendant Corp. Common Stock - 50 shares 1,055 981 Centura Software Corp. Common Stock - 2,100 shares 14,150 11 Cepheid Inc. Common Stock - 100 shares 1,124 420 Cephalon Inc. Common Stock - 56 shares 4,051 4,233 ChevronTexaco Corp. Common Stock - 982 shares 74,624 88,003 China Mobile HK Common Stock - 100 shares 1,440 1,748 Chiron Corp. Common Stock - 48 shares 678 2,104 Chubb Corp. Common Stock - 265 shares 14,933 18,285 Ciena Corp. Common Stock - 500 shares 15,075 7,155 Cisco Systems Inc. Common Stock - 36,406 shares 1,197,190 659,313 Citigroup Inc. Common Stock - 7,979 shares 242,279 402,780 Citrix Systems Inc. Common Stock - 1,553 shares 41,414 35,191 City National Corp. Common Stock - 147 shares 6,632 6,887 Coca Cola Common Stock - 253 shares 12,237 11,928 

17

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Colonial Properties Common Stock - 750 shares $ 18,469 $ 23,363 Comcast Corp. Common Stock - 1,200 shares 44,682 43,200 Compaq Computer Corp. Common Stock - 2,280 shares 40,509 22,253 Computer Science Corp. Common Stock - 506 shares 24,586 24,784 Conagra Inc. Common Stock - 400 shares 7,840 9,508 Concord EFS Inc. Common Stock - 136 shares 2,919 4,458 Connectics Corp. Common Stock - 2,000 shares 11,075 23,800 Consolidated Edison Inc. Common Stock - 92 shares 3,048 3,698 Copart Inc. Common Stock - 193 shares 5,620 7,019 Copper Mtn. Networks Inc. Common Stock - 800 shares 5,720 1,352 Cor Therapeutics Inc. Common Stock - 26 shares 816 622 Corning Inc. Common Stock - 128 shares 9,866 1,142 Corporate High Yld Common Stock - 3,000 shares 37,902 24,570 Correctional Properties Trust Common Stock - 6,000 shares 55,350 101,400 Corvis Corp. Common Stock - 1,093 shares 4,768 3,530 Cybertel Communications Corp. Common Stock - 200 shares 2,125 60 Cylink Corp. Common Stock - 3,410 shares 12,190 9,378 Cypress Semiconductor Common Stock - 1,000 shares 32,627 19,930 DMC Stratex Networks Inc. Common Stock - 50 shares 1,750 389 Debt Strategy Fund Inc. Common Stock - 3,391 shares 40,000 22,008 Dell Computer Corp. Common Stock - 10,072 shares 233,916 273,757 Delta Air Lines Inc. Common Stock - 100 shares 6,200 2,926 Deltagen Inc. Common Stock - 250 shares 4,925 2,300 Developers Diversified Rlty. Common Stock - 3,600 shares 54,743 68,760 Diageo Common Stock - 320 shares 10,131 14,806 Diametrics Med. Common Stock - 200 shares 1,630 1,132 

18

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Digital Lightwave Inc. Common Stock - 100 shares $ 12,988 $ 938 Digital Video Systems Common Stock - 500 shares 5,950 2,245 Walt Disney Company Common Stock - 2,240 shares 64,863 46,422 Ditech Communications Common Stock - 185 shares 4,051 1,114 Dollar Tree Stores Inc. Common Stock - 620 shares 14,182 19,164 Dominium Res Inc. Common Stock - 1,931 shares 80,102 116,026 Donaldson Co. Inc. Common Stock - 400 shares 9,310 15,536 DSL Net Inc. Common Stock - 200 shares 1,375 252 E I Dupont Common Stock - 747 shares 38,207 31,744 Duke Energy Corp. Common Stock - 425 shares 13,129 16,686 Durect Corp. Common Stock - 1,000 shares 13,100 11,590 EMC Corporation Common Stock - 6,210 shares 116,433 83,462 Eni SPA Common Stock - 160 shares 9,903 9,914 E Trade Group Inc. Common Stock - 813 shares 22,253 8,333 Econnect Common Stock - 600 shares 1,564 26 Edison Intl. Common Stock - 238 shares 3,760 3,592 Edwards JD & Co. Common Stock - 316 shares 4,753 5,198 Egain Communications Corp. Common Stock - 600 shares 1,647 840 Eisai Ltd. Common Stock - 282 shares 6,786 7,121 El Paso Corp. Common Stock - 1,230 shares 19,558 54,870 Elan Corp. Common Stock - 692 shares 23,653 31,182 Electric Data Sys. Corp. Common Stock - 1,011 shares 48,013 69,292 Eloyalty Corp. Common Stock - 30 shares 10,138 159 Emerson Elec. Co. Common Stock - 150 shares 9,309 8,565 Endesa S.A. Common Stock - 1,085 shares 25,037 17,002 Energy Power Sys. Ltd. Common Stock - 2,000 shares 11,580 8,400 

19

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Engage Technologies Inc. Common Stock - 250 shares $ 2,003 $ 110 Enron Corp. Common Stock - 4,703 shares 80,036 2,822 Enterasys Networks Inc. Common Stock - 500 shares 7,964 4,425 Entrada Networks Inc. Common Stock - 50 shares 97 6 Enzon Inc. Common Stock - 99 shares 6,359 5,572 Enzo Biochem Inc. Common Stock - 300 shares 4,905 7,050 Equity Office Properties Common Stock - 100 shares 3,050 3,008 Equity Residential Properties Common Stock - 1,200 shares 30,383 34,452 Ericsson Common Stock - 628 shares 9,472 3,278 Essex Properties Common Stock - 1,400 shares 34,600 69,174 Etoys Inc. Common Stock - 200 shares 1,131 1 Exodus Communications Inc. Common Stock - 1,468 shares 41,654 57 Extreme Networks Inc. Common Stock - 100 shares 3,250 1,290 Exxon Mobil Corp. Common Stock - 2,742 shares 95,599 107,761 Federal Natl. Mtg. Assn Common Stock - 505 shares 29,547 40,182 Fedex Corp. Common Stock - 25 shares 873 1,297 Fibercore Inc. Common Stock - 1,200 shares 11,272 2,880 Finisar Corp. Common Stock - 1,175 shares 38,986 11,950 First Health Group Corp. Common Stock - 207 shares 5,488 5,121 FleetBoston Finl Corp. Common Stock - 490 shares 18,719 17,885 Fluor Corp. Common Stock - 200 shares - 7,480 Ford Motor Co. Common Stock - 200 shares 2,724 3,144 Forest Labs Inc. Common Stock - 200 shares 13,340 16,390 Foundry Networks Inc. Common Stock - 250 shares 22,544 2,038 4 Kids Entertainment Inc. Common Stock - 1,000 shares 29,163 20,030 France Telecom Common Stock - 200 shares 19,313 7,998 

20

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Franklin Res. Inc. Common Stock - 80 shares $ 3,513 $ 2,822 Friede Goldman Halter Common Stock - 570 shares 4,913 108 Fuji Photo Film Common Stock - 488 shares 12,927 17,539 Gannett Co. Common Stock - 1,100 shares 51,319 73,953 Gap Inc. Common Stock - 1,012 shares 9,360 14,107 Genentech Inc. Common Stock - 600 shares 48,368 32,550 Genl Dynamics Corp. Common Stock - 100 shares 2,400 7,964 General Electric Common Stock - 14,890 shares 360,438 596,785 General Motors Corp. Common Stock - 100 shares 9,212 4,860 Genzyme Corp. Common Stock - 70 shares 3,703 4,190 Geron Corp. Common Stock - 1,000 shares 10,463 8,700 Gillette Co. Common Stock - 780 shares 34,843 26,052 Glaxo Common Stock - 1,393 shares 48,298 69,399 Goldman Sachs Group Inc. Common Stock - 275 shares 21,963 25,506 Guidant Corp. Common Stock - 780 shares 25,671 38,844 HRPT Properties Common Stock - 18,600 shares 121,685 161,076 HSBC Hldg Common Stock - 306 shares 6,560 18,271 Halliburton Company Common Stock - 100 shares 3,325 1,310 Harley Davidson Inc. Common Stock - 932 shares 10,380 50,617 Harmonic Lightwaves Inc. Common Stock - 475 shares 19,737 5,710 Health Care Ppty Invs. Common Stock - 4,000 shares 110,600 144,840 Health Mgmt Assoc. Inc. Common Stock - 500 shares 7,543 9,200 Healthcare Rlty Common Stock - 5,000 shares 89,563 140,000 Health Care REIT Inc. Common Stock - 6,000 shares 104,600 146,100 Health Grades Inc. Common Stock - 2,000 shares 9,075 140 Heinz H J Co. Common Stock - 200 shares 5,993 8,224 

21

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Hewlett Packard Co. Common Stock - 1,940 shares $ 47,292 $ 39,848 Highwoods Pptys Inc. Common Stock - 2,400 shares 58,691 62,280 Hitachi Ltd. Common Stock - 132 shares 13,000 9,661 Home Depot Inc. Common Stock - 3,130 shares 69,568 159,655 Honda Motor Common Stock - 83 shares 7,117 6,765 Honeywell Intl. Inc. Common Stock - 35 shares 1,298 1,168 House2home Inc. Common Stock - 500 shares 2,069 1 Human Genome Sciences Inc. Common Stock - 68 shares 4,539 2,293 Humphrey Hospitality Common Stock - 10,000 shares 73,156 29,500 Hyseq Inc. Common Stock - 200 shares 19,150 1,544 Icos Corp. Common Stock - 105 shares 5,366 6,031 Idec Pharmaceuticals Corp. Common Stock - 98 shares 5,511 6,755 Ibis Technology Corp. Common Stock - 30 shares 1,153 446 Illumina Inc. Common Stock - 230 shares 3,730 2,705 Imagistics Intl. Inc. Common Stock - 8 shares 145 99 Immunex Corp. Common Stock - 979 shares 29,417 27,128 Incyte Pharmaceuticals Inc. Common Stock - 60 shares 7,130 1,166 Infocast Corp. Common Stock - 200 shares 1,775 12 Infocus Corp. Common Stock - 1,000 shares 16,100 22,020 Ing Gp Common Stock - 668 shares 7,680 17,001 Inhale Therapeutic Sys. Common Stock - 560 shares 14,984 10,388 Innkeepers USA Common Stock - 5,000 shares 58,000 49,000 Integrated Device Tech Common Stock - 100 shares 3,650 2,659 Intelidata Technologies Common Stock - 250 shares 1,613 708 Intel Corp. Common Stock - 34,424 shares 849,040 1,019,740 Intermune Inc. Common Stock - 73 shares 3,243 3,596 

22

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Interferon Common Stock - 3,000 shares $ 6,100 $ 1,350 Intl. Business Mach. Common Stock - 2,450 shares 235,775 296,352 Intl. Fibercom Inc. Common Stock - 600 shares 7,189 150 Intl. Paper Co. Common Stock - 973 shares 37,877 39,269 Internet Cap Group Inc. Common Stock - 2,922 shares 63,034 3,536 Internet Infrastructure Common Stock - 600 shares 24,277 3,756 Internet Architecture Common Stock - 200 shares 15,813 7,670 Intersil Hldg. Corp. Common Stock - 70 shares 2,495 2,258 Intrpublic Grp of Co. Common Stock - 635 shares 18,647 18,758 Intuit Inc. Common Stock - 100 shares 3,106 4,278 Invitrogen Common Stock - 100 shares 7,017 6,193 Invision Technologies Inc. Common Stock - 200 shares 2,970 5,958 Iomega Corp. Common Stock - 200 shares 8,638 1,670 Isis Pharmaceuticals Common Stock - 1,200 shares 10,428 26,628 Ito Yokado Common Stock - 230 shares 14,528 10,465 12 Technologies Inc. Common Stock - 110 shares 5,644 869 Ivax Corp. Common Stock - 300 shares 5,934 6,042 Ivoice Com Inc. Common Stock - 3,000 shares 10,894 165 JDN Rlty Corp. Common Stock - 5,000 shares 53,000 61,650 JDS Uniphase Corp. Common Stock - 9,686 shares 358,076 84,074 JMAR Inds Inc. Common Stock - 150 shares 2,481 449 JNI Corp. Common Stock - 295 shares 12,539 2,451 JP Realty Inc. Common Stock - 5,000 shares 81,125 118,950 JP Morgan Chase and Co. Common Stock - 2,385 shares 89,675 86,695 Jacobs Engn Grp Inc. Common Stock - 506 shares 15,801 33,396 * Johnson & Johnson Common Stock - 83,397 shares 336,166 4,928,741 

23

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Jones Apparel Grp Inc. Common Stock - 116 shares $ 3,848 $ 3,848 Juniper Networks Inc. Common Stock - 1,273 shares 72,829 24,123 KLA Instrs Corp. Common Stock - 271 shares 10,066 13,431 Kanakaris Wireless Common Stock - 13 shares 1,074 2 Kimberly Clark Common Stock - 230 shares 11,209 13,754 King Pharmaceuticals Inc. Common Stock - 157 shares 5,441 6,614 Kingfisher Common Stock - 613 shares 6,232 6,866 Koninkl Phil E Ny Common Stock - 664 shares 16,027 19,329 Korea Telecom Common Stock - 260 shares 8,625 5,286 Korea Elec Pwr Common Stock - 720 shares 10,468 6,588 Kulicke & Soffa Indust Common Stock - 2,000 shares 57,800 34,300 Kyocera Corp. Common Stock - 185 shares 12,431 12,345 LSI Logic Corp. Common Stock - 2,600 shares 116,609 41,028 LTX Corp. Common Stock - 500 shares 13,138 10,470 L-3 Communications Hldg. Common Stock - 99 shares 8,170 8,910 Lam Research Corp. Common Stock - 250 shares 5,581 5,805 Learningstar Corp. Common Stock - 125 shares 9,056 188 Learn2 Corp. Common Stock - 474 shares 5,311 57 Lilly Eli Co. Common Stock - 930 shares 62,534 73,042 Lionbridge Technologies Common Stock - 57 shares 2,160 100 Lockheed Martin Corp. Common Stock - 100 shares 1,756 4,667 Loudeye Technologies Inc. Common Stock - 150 shares 6,022 110 Lucent Technologies Inc. Common Stock - 2,792 shares 101,089 17,590 MGI Pharma Inc. Common Stock - 3,381 shares 102,590 51,662 MRV Communications Inc. Common Stock - 100 shares 7,381 424 Macromedia Inc. Common Stock - 220 shares 4,647 3,916 

24

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Manor Care Inc. Common Stock - 269 shares $ 7,619 $ 6,378 Marks & Spencer Ltd. Common Stock - 245 shares 9,004 7,669 Martha Stewart Common Stock - 200 shares 5,875 3,290 Massey Energy Co. Common Stock - 400 shares 16,674 8,292 Maxim Integrated Prods. Common Stock - 3,200 shares 80,610 168,032 Maxygen Inc. Common Stock - 600 shares 12,204 10,542 McData Corp. Common Stock - 162 shares 1,878 3,969 McDonalds Corp. Common Stock - 1,800 shares 44,049 47,646 Medimmune Inc. Common Stock - 76 shares 4,431 3,553 Medtronic Inc. Common Stock - 2,150 shares 88,260 110,102 Mellon Financial Corp. Common Stock - 50 shares 1,642 1,881 Merck & Co. Inc. Common Stock - 1,832 shares 96,223 107,702 * Merrill Lynch & Co. Common Stock - 9,305 shares 580,833 484,977 MessageMedia Inc. Common Stock - 230 shares 1,592 32 MetLife Inc. Common Stock - 575 shares 11,969 18,216 Metricom Inc. Common Stock - 2,200 shares 39,189 136 Metrocall Inc. Common Stock - 1,000 shares 11,650 26 Metromedia Common Stock - 400 shares 4,700 176 Microsoft Corp. Common Stock - 8,318 shares 394,920 551,068 Micromuse Inc. Common Stock - 70 shares 7,033 1,050 Micron Technology Inc. Common Stock - 200 shares 12,575 6,200 Millennium Pharmaceuticals Common Stock - 130 shares 9,689 3,186 Minnesota Mng Mfg. Common Stock - 115 shares 9,573 13,594 MIPS Techs Inc. Common Stock - 13 shares 723 104 Molecular Diagnostics Common Stock - 491 shares 9,269 442 Moody's Corp. Common Stock - 180 shares 6,229 7,175 

25

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

 ( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------------- ---------------------------- ----------------------------------- ---------- ---------- Motorola Inc. Common Stock - 1,505 shares $ 44,636 $ 22,605 UTS Motorola Inc. Common Stock - 145 shares 7,259 6,777 NRG Energy Inc. Common Stock - 400 shares 9,905 6,200 Nanogen Inc. Common Stock - 104 shares 1,571 600 Nasdaq-100 Common Stock - 4,001 shares 233,660 155,679 Natl. Australia Common Stock - 198 shares 9,603 16,137 Nationwide Health Properties Common Stock - 8,000 shares 98,800 149,520 Neotherapeutics Inc. Common Stock - 1,000 shares 3,350 3,660 Nestle S A Common Stock - 370 shares 9,401 19,703 Network Appliance Inc. Common Stock - 1,926 shares 115,323 42,122 New Focus Inc. Common Stock - 760 shares 11,251 2,896 News Corp. Ltd. Common Stock - 1,000 shares 49,863 31,810 Nintendo Ltd. Common Stock - 286, shares 3,231 6,149 Nippon Teleg & Tel Corp. Common Stock - 570 shares 31,636 9,234 Nisource Inc. Common Stock - 395 shares 10,088 9,109 Nokia Corp. Common Stock - 12,464 shares 298,877 305,736 Norsk Hydro Common Stock - 400 shares 18,030 16,800 Nortel Networks Corp. Common Stock - 2,370 shares 83,999 17,683 Nova Chemicals Corp. Common Stock - 100 shares 2,231 1,927 Novartis Common Stock - 512 shares 11,542 18,688 Novell Inc. Common Stock - 300 shares 8,950 1,377 Novellus Sys Inc. Common Stock - 1,898 shares 77,627 74,876 Nvidia Common Stock - 118 shares 5,031 7,894 Nutrition 21 Inc. Common Stock - 350 shares 2,433 249 Office Depot Inc. Common Stock - 500 shares 10,881 9,270 On2.com Inc. Common Stock - 460 shares 7,199 156 

26

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ Openwave Sys Inc. Common Stock - 2,000 shares $ 18,420 $ 19,580 Oracle Sys Corp. Common Stock - 24,817 shares 158,049 342,723 Outback Steakhouse Inc. Common Stock - 260 shares 6,667 8,905 PG&E Corp. Common Stock - 370 shares 8,998 7,123 Pacific Aerospace & Eltr Inc. Common Stock - 2,000 shares 2,815 90 Pall Corp. Common Stock - 695 shares 15,635 16,722 Palm Inc. Common Stock - 2,950 shares 19,873 11,446 Pan Pacific Retail Properties Common Stock - 930 shares 18,918 26,710 JC Penney Co. Common Stock - 2,000 shares 52,700 53,800 Peoplesoft Inc. Common Stock - 120 shares 4,345 4,824 Pepsi Bottling Group Inc. Common Stock - 226 shares 5,462 5,311 Pepsico Inc. Common Stock - 1,800 shares 53,668 87,642 Peregrine Systems Inc. Common Stock - 305 shares 6,735 4,523 Peregrine Pharmactls Inc. Common Stock - 1,000 shares 4,060 3,430 Petrleo Bras Vtg. Spd Common Stock - 260 shares 6,895 6,058 Pfizer Inc. Common Stock - 4,795 shares 175,695 191,071 Pharmactcl Hldrs Common Stock - 400 shares 36,452 39,400 Pharmacia Corp. Common Stock - 200 shares 9,600 8,530 Philip Morris Cos Inc. Common Stock - 2,405 shares 93,183 110,253 Pitney Bowes Inc. Common Stock - 100 shares 6,305 3,761 Pixar Common Stock - 200 shares 8,190 7,192 Plantronics Inc. Common Stock - 700 shares 22,148 17,948 Portugal Telecom Common Stock - 1,662 shares 14,652 12,648 Power-One Inc. Common Stock - 100 shares 4,650 1,041 Price T Rowe Group Inc. Common Stock - 50 shares 1,903 1,737 Procter & Gamble Common Stock - 2,000 shares 112,336 158,260 

27

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ Providian Finl Corp. Common Stock - 3,200 shares $ 18,160 $ 11,360 Proxim Inc. Common Stock - 100 shares 1,806 992 Psinet Inc. Common Stock - 105 shares 5,064 1 Qlogic Corp. Common Stock - 200 shares 9,470 8,902 Qualcomm Inc. Common Stock - 296 shares 36,625 14,948 Quest Diagnostics Inc. Common Stock - 63 shares 4,222 4,518 RSA Security Inc. Common Stock - 300 shares 13,023 5,238 RF Micro Devices Inc. Common Stock - 840 shares 33,542 16,153 Railamerica Inc. Common Stock - 533 shares 5,743 7,707 Rambus Inc. Common Stock - 105 shares 9,500 839 Real Networks Inc. Common Stock - 500 shares 4,370 2,970 Red Hat Inc. Common Stock - 200 shares 3,013 1,420 Redback Networks Inc. Common Stock - 867 shares 10,780 3,425 Repsol Common Stock - 650 shares 8,430 9,445 Rio Tinto Ltd. Common Stock - 96 shares 5,943 7,152 Rite Aid Corporation Common Stock - 250 shares 800 1,265 Riverstone Networks Inc. Common Stock - 256 shares 4,054 4,250 Roche Hldg Ltd. Common Stock - 83 shares 5,976 5,918 Rogue Wave Software Common Stock - 200 shares 2,028 640 Rolls-Royce Plc. Common Stock - 503 shares 6,526 5,935 Ross Store Inc. Common Stock - 130 shares 3,920 4,170 Roxio Inc. Common Stock - 114 shares 6,546 1,887 SBC Communications Inc. Common Stock - 1,000 shares 28,380 39,170 Saba Software Inc. Common Stock - 150 shares 1,550 783 Safeguard Scientifics Common Stock - 1,100 shares 39,015 3,850 St. Mary Ld & Expl Co. Common Stock - 250 shares 3,410 5,298 

28

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ San Paolo-Imi Sps Common Stock - 220 shares $ 7,112 $ 4,816 Sandisk Corp. Common Stock - 225 shares 16,903 3,240 Sanmina-Sci Corp. Common Stock - 635 shares 9,786 12,637 Sap Aktiengesellschaft Common Stock - 200 shares 8,289 6,386 Save the Worldair Inc. Common Stock - 530 shares 2,889 270 Schering Plough Corp. Common Stock - 100 shares 4,950 3,581 Schlumberger Ltd. Common Stock - 485 shares 25,647 26,651 Schwab Charles Corp. Common Stock - 180 shares 5,129 2,785 Scios Inc. Common Stock - 600 shares 5,352 14,262 Scottish Power Common Stock - 500 shares 15,217 10,850 Sector Spdr Consumers Stpl. Common Stock - 100 shares 2,761 2,540 Sector Spdr Technology Common Stock - 125 shares 4,548 3,000 Sempra Energy Common Stock - 495 shares 11,249 12,152 Serologicals Corp. Common Stock - 150 shares 3,300 3,225 Shell Trns & Trdng Common Stock - 357 shares 8,575 14,798 Sicor Inc. Common Stock - 246 shares 6,053 3,857 Siebel Sys Inc. Common Stock - 1,850 shares 44,337 51,763 Silicon Graphics Inc. Common Stock - 2,948 shares 11,586 6,191 Societe Generale France Common Stock - 1,560 shares 9,240 17,238 Sohu Com Inc. Common Stock - 500 shares 2,325 600 Solectron Corp. Common Stock - 2,200 shares 81,781 24,816 Sony Corp. Common Stock - 325 shares 23,217 14,658 Sorrento Networks Corp. Common Stock - 200 shares 7,750 718 Sonus Networks Inc. Common Stock - 180 shares 811 832 Southwest Airlines Co. Common Stock - 275 shares 4,024 5,082 Sovran Self Storage Inc. Common Stock - 5,000 shares 91,750 155,750 

29

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ Sprint Corp. Common Stock - 800 shares $ 21,311 $ 16,064 Starbucks Corp. Common Stock - 319 shares 6,663 6,077 Statoil ASA Common Stock - 1,001 shares 6,677 6,557 Stellent Inc. Common Stock - 38 shares 1,549 1,123 Stemcells Inc. Common Stock - 1,000 shares 4,538 3,490 Stryker Corp. Common Stock - 120 shares 6,281 7,004 Sun Microsystems Inc. Common Stock - 11,066 shares 293,565 136,112 Sunguard Data Sys Inc. Common Stock - 181 shares 4,498 5,236 Superconductor Technologies Common Stock - 100 shares 3,725 650 Supergen Inc. Common Stock - 2,587 shares 58,904 37,046 Symantec Corp. Common Stock - 153 shares 9,866 10,148 Symyx Tech Inc. Common Stock - 200 shares 4,650 4,248 Syngenta Common Stock - 711 shares 6,577 7,537 TDK Corp. Common Stock - 190 shares 15,221 9,215 TJX Cos Inc. Common Stock - 187 shares 6,750 7,454 Telecom Italia Common Stock - 130 shares 5,976 11,115 Telefonos M SA RP L Common Stock - 1,338 shares 18,128 46,857 Tellabs Inc. Common Stock - 200 shares 12,450 2,992 Teraforce Tech Corp. Common Stock - 4,200 shares 18,118 353 Texas Instruments Common Stock - 7,700 shares 478,651 215,600 3Com Corp. Common Stock - 110 shares 1,134 702 Tibco Software Inc. Common Stock - 105 shares 8,897 1,568 Tiffany & Co. Common Stock - 141 shares 4,299 4,437 Topps Inc. Common Stock - 500 shares 5,335 6,075 Total SA Common Stock - 265 shares 8,246 18,614 Toyota Motor Corp. Common Stock - 70 shares 5,935 3,567 

30

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ Trans World Airlines Inc. Common Stock - 500 shares $ 2,888 $ 5 Transcanada Pipeline Common Stock - 500 shares 10,700 6,255 Transmeta Corp. Common Stock - 140 shares 6,236 321 Triangle Pharms Inc. Common Stock - 1,000 shares 6,913 4,010 Trinity Biotech Common Stock - 2,000 shares 3,825 3,040 Tyco Intl. Ltd. Common Stock - 200 shares 10,231 11,780 UAL Corp. Common Stock - 200 shares 9,425 2,700 USX Marathon Group Common Stock - 1,500 shares 40,139 45,000 US Oncology Inc. Common Stock - 1,100 shares 8,822 8,294 USA Education Inc. Common Stock - 113 shares 7,669 9,494 Unilever Common Stock - 636 shares 26,043 36,640 Union Pacific Corp. Common Stock - 206 shares 8,775 11,740 United Parcel Services Common Stock - 315 shares 21,838 17,168 US Air Group Inc. Common Stock - 1,000 shares 16,600 6,340 United Health Group Inc. Common Stock - 600 shares 17,061 42,462 Universal Health Realty Common Stock - 800 shares 15,528 18,800 Universal Health Svcs Common Stock - 200 shares 4,839 8,556 Univision Communications Common Stock - 429 shares 14,372 17,357 Unocal Corp. Common Stock - 545 shares 19,229 19,658 Upgrade Intl. Corp. Common Stock - 50 shares 3,354 39 Valero Refng & Mktng Co. Common Stock - 121 shares 5,129 4,613 Varco Intl Inc. Common Stock - 1,000 shares 8,100 14,980 Vast Solutions Inc. Common Stock - 90 shares 4,620 - Ventro Corp. Common Stock - 550 shares 11,625 215 Verisign Inc. Common Stock - 433 shares 47,011 16,471 Verizon Communications Common Stock - 3,889 shares 135,245 184,549 

31

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ Veritas Software Co. Common Stock - 144 shares $ 7,308 $ 6,456 Viacom Inc. Common Stock - 1,050 shares 30,786 46,463 Viacom Inc. CL B Common Stock - 390 shares 23,520 17,219 Viador Inc. Common Stock - 1,000 shares 19,688 60 Vicon Indust Inc. Common Stock - 500 shares 2,075 2,280 Visionics Corporation Common Stock - 100 shares 1,578 1,443 Visteon Corp. Common Stock - 26 shares 167 391 Visx Inc. Common Stock - 200 shares 5,350 2,650 Vivendi Universal Common Stock - 254 shares 19,922 13,663 Vixel Corp. Common Stock - 500 shares 3,700 925 Vodavi Technology Inc. Common Stock - 500 shares 2,684 653 Vodafone Grp Common Stock - 550 shares 25,898 14,124 Vulcan Materials Co. Common Stock - 165 shares 6,980 7,910 Wachovia Corp. Common Stock - 495 shares 19,874 15,523 Wal mart Stores Inc. Common Stock - 1,765 shares 90,681 101,576 Washington Mut Inc. Common Stock - 150 shares 4,893 4,905 Westell Technologies Inc. Common Stock - 300 shares 10,793 792 Williams Sonoma Inc. Common Stock - 160 shares 5,828 6,864 Wind Riv Sys Inc. Common Stock - 1,450 shares 51,518 25,970 Worldcom Inc. Common Stock - 6,760 shares 155,444 95,181 MCI Group-Worldcom Inc. Common Stock - 1,114 shares 14,893 14,148 Worldwide Restaurant Common Stock - 2,000 shares 5,088 2,380 XO Communications Common Stock - 1,680 shares 11,249 161 Xcel Energy Inc. Common Stock - 183 shares 4,684 5,076 Xilinx Inc. Common Stock - 150 shares 10,278 5,858 Xerox Corp. Common Stock - 966 shares 21,852 10,066 

32

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ Yahoo Inc. Common Stock - 1,016 shares $ 63,468 $ 18,024 Zimmer Holdings Inc. Common Stock - 40 shares 893 1,223 Zurich Finl Svcs Common Stock - 380 shares 20,309 8,854 Global Crossing Ltd. Preferred Stock - 145 shares 13,321 181 Repsol Intl Capital Ltd. Preferred Stock - 800 shares 20,000 18,360 AES Trust VII Preferred Stock - 315 shares 16,340 8,978 ABN Amro Preferred Stock - 1,000 shares 25,517 25,170 Alabama Pwr Preferred Stock - 400 shares 10,000 9,988 Allstate Corporation Preferred Stock - 2,000 shares 50,000 50,400 American Exp Co. Preferred Stock - 1,000 shares 25,000 25,230 BankAmerica Preferred Stock - 1,000 shares 25,000 25,420 Bethlehem Steel Preferred Stock - 173 shares 8,432 279 Bank of New York Preferred Stock - 1,000 shares 25,000 25,280 Calpine Captl Trst Preferred Stock - 205 shares 11,778 6,663 Duke Energy Preferred Stock - 1,000 shares 25,000 25,050 Electronic Data Systems Preferred Stock - 155 shares 7,761 8,262 Enterprise Cap Tr I Preferred Stock - 600 shares 15,000 14,760 Enterprise Cap Tr III Preferred Stock - 1,000 shares 25,000 23,800 Equity Office Properties Preferred Stock - 200 shares 7,900 9,160 Equity Residential Properties Preferred Stock - 955 shares 23,254 24,162 Georgia Pwr Preferred Stock - 400 shares 10,000 9,900 Harris Preferred Cap Cor Preferred Stock - 400 shares 10,000 9,840 Hartford Life Preferred Stock - 1,000 shares 25,517 25,050 Host Marriott Preferred Stock - 240 shares 9,226 10,311 International Paper Preferred Stock - 190 shares 8,509 8,480 KCPL Financing I Preferred Stock - 400 shares 10,000 10,092 

33

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ MCI Capital Preferred Stock - 1,500 shares $ 38,750 $ 36,750 * Merrill Lynch Capital Tr I Preferred Stock - 3,000 shares 75,000 78,360 * Merrill Lynch Capital Tr II Preferred Stock - 400 shares 10,000 10,552 * Merrill Lynch Pfd Sers III Preferred Stock - 2,000 shares 50,000 49,900 Met Life Inc. Preferred Stock - 85 shares 4,440 8,432 NB Capital Trust I Preferred Stock - 1,750 shares 45,023 43,785 National Australia Bank Preferred Stock - 790 shares 20,181 23,700 Newell Financial Trust I Preferred Stock - 220 shares 10,306 8,188 Plc Capital Trust Preferred Stock - 600 shares 15,000 14,880 PP&L Capital Trust Preferred Stock - 1,100 shares 27,500 28,325 Pwg Capital Trust II Preferred Stock - 800 shares 20,705 20,120 Pacificorp Preferred Stock - 900 shares 23,171 21,600 Placer Dome Inc. Preferred Stock - 2,000 shares 51,625 47,960 Potomac Elec Pwr Co. Preferred Stock - 900 shares 22,500 22,419 Prudential Financial Inc. Preferred Stock - 115 shares 6,054 6,693 Raytheon Company Preferred Stock - 120 shares 6,004 6,690 Reliastar Financing Preferred Stock - 2,200 shares 55,721 55,880 Sealed Air Corp. Preferred Stock - 245 shares 8,146 10,658 Simon Property Group Inc. Preferred Stock - 1,500 shares 37,500 39,000 Suiza Capital Trust II Preferred Stock - 150 shares 5,941 6,189 UDS Capital I Preferred Stock - 500 shares 12,500 12,350 US Bancorp Capital II Preferred Stock - 1,100 shares 27,500 27,379 Union Pacific Cap Trust Preferred Stock - 175 shares 7,755 8,714 Unit Washtn Mut Cap TR I Preferred Stock - 135 shares 7,665 6,404 Weingarten Realty Invstr. Preferred Stock - 1,000 shares 25,000 24,900 Aim Europe Growth Fund 16,932 9,897 

34

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ Aim America Value Fund $ 189,100 $ 178,483 Aim Global Telecomm Fund 55,222 13,378 Aim Constellation Fund 29,941 19,684 Aim Aggressive Growth Fund 21,668 14,244 Aim Blue Chip Fund 320,145 241,935 Aim High Yield Fund 13,245 6,833 Aim Value Fund 32,981 22,866 Aim Balanced Fund 22,544 21,498 Alger Growth Portfolio 2,878 2,112 Alger Midcap Growth 3,088 2,922 Alger Retirement Fund 25,000 25,960 Alliance Premier Growth Fund Class A 170,270 107,757 Alliance Premier Growth Fund ADV CL 47,806 33,547 Alliance Technology Fund 82,230 60,703 Captial World Growth and Income Fund 2,517 2,744 Davis NY Venture Fund 122,738 120,141 Federated Aggresive Growth Fund 18,527 7,118 Federated European Growth Fund 17,053 11,375 Federated International Small Company Fund 45,000 20,407 Fidelity Equity Portfolio Growth Fund 53,164 35,274 Fidelity Series I Mid Cap Fund 10,926 8,277 Fidelity High Yield Portfolio 66,962 44,903 Franklin Calif 250 Growth Fund 279,863 188,479 Ivy Fund Emerging Growth Fund 81,674 28,115 John Hancock Growth & Income Fund 188,476 130,878 John Hancock High Yield Bond Fund 35,968 21,465 

35

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ John Hancock Sovereign Bond Fund $ 59,516 $ 57,713 John Hancock Pacific Basin Equity Fund 12,399 10,640 John Hancock Global Technology Fund 13,500 4,236 Lord Abb Dev Growth Fund 6,582 6,513 MFS Total Return Fund 12,343 9,189 MFS High Income Fund 56,578 39,863 MFS Over-the-Counter Fund 3,896 2,537 Massachusetts Investors Inv Growth Stk Fund 154,282 118,621 Massachusetts Investors Investors Trust 40,314 33,615 * Merrill Lynch Focus Value Fund 16,565 15,754 * Merrill Lynch Euro Fund 36,529 27,318 * Merrill Lynch Equity Income Fund 11 9 * Merrill Lynch Global Allocation Fund 503,326 482,186 * Merrill Lynch Fundamentl Growth Fund 58,016 42,801 * Merrill Lynch Global Value Fund 93,405 74,653 * Merrill Lynch Global Tech Fund 216,901 113,141 * Merrill Lynch Latin America Fund 25,628 19,154 * Merrill Lynch Dragon Fund 33,414 15,774 * Merrill Lynch Healthcare Fund 19,115 18,008 * Merrill Lynch Basic Value Fund CL A 586,634 485,789 * Merrill Lynch Basic Value Fund CL B 68,267 54,143 * Merrill Lynch Balanced Capital Fund 264,352 223,682 * Merrill Lynch Small Cap Value Fund 147,355 156,401 * Merrill Lynch Global Growth Fund 433,000 359,451 * Merrill Lynch S&P 500 Index Fund 212,773 221,047 * Merrill Lynch Small Cap Index Fund 1,213 1,212 

36

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ * Merrill Lynch Pacific Fund $ 22,678 $ 17,218 * Merrill Lynch Corp Bond High Income Fund 140,727 90,214 * Merrill Lynch Bond Fund 37,502 37,268 Munder Framlingtn Health Care Fund 62,254 54,236 Munder NetNet Fund 411,045 151,639 Oppenheimer International Growth Fund 5,635 3,759 Oppenheimer Global Fund 25,000 25,342 PIMCO Capital Appreciation Fund 16,975 11,849 PIMCO Renaissance Fund 181,624 184,927 PIMCO Innovation Fund 123,310 58,398 PIMCO High Yield Fund 22,883 19,312 PIMCO Total Return Fund 6,225 6,553 Pilgrim Intl Small-Cap Gr Fund 55,379 30,870 Seligman Communications & Information Fund 56,169 41,029 State Street Aurora Fund 175,000 200,185 State Street Government Income Fund 63,740 61,904 Templeton Developing Markets Trust 16,957 12,391 Templeton Foreign Fund 80,991 73,964 Van Kampen American Cap Fund 66,932 31,419 Washington Mutual Investors Fund Inc. 52,449 44,733 United States Treasury Note 8.125% Due 08/15/21 93,736 98,344 United States Treasury Bond 6.000% Due 02/15/26 21,047 20,578 United States Treasury Note 6.500% Due 05/15/05 147,046 146,752 United States Treasury Note 5.625% Due 02/15/06 29,390 30,554 United States Treasury Note 5.875% Due 11/15/04 45,714 45,513 United States Treasury Note 6.500% Due 02/15/10 28,254 27,442 

37

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ Alza Corp. Corporate Bond - 10,000 shares 0% Due 07/28/20 $ 7,185 $ 8,310 Amazon.com Corporate Bond - 13,000 shares 4.750% Due 02/01/09 6,399 6,617 Anadarko Petroleum Corp. Corporate Bond - 16,000 shares 0% Due 03/07/20 11,194 11,221 Anixter International Lyons Corporate Bond - 31,000 shares 0% Due 06/28/20 7,766 8,922 Arrow Electronic Inc. Corporate Bond - 18,000 shares 0% Due 02/21/21 8,015 8,557 Atmel Corp. Corporate Bond - 11,000 shares 0% Due 04/21/18 6,471 5,656 Carnival Corp. Corporate Bond - 4,000 shares 2.000% Due 04/15/21 3,766 3,994 Cendant Corp. Corporate Bond - 11,000 shares 0% Due 02/13/21 8,262 8,076 Clear Channel Communications Corporate Bond - 10,000 shares 1.500% Due 12/01/02 10,043 9,541 Conexant Systems inc. Corporate Bond - 9,000 shares 4.000% Due 02/01/07 7,389 4,176 Countrywide Corporate Bond - 8,000 shares 0% Due 02/08/31 5,732 5,790 Devon Energy Corporation Corporate Bond - 9,000 shares 4.900% Due 08/15/08 8,823 9,276 Devon Energy Corporation Corporate Bond - 15,000 shares 0% Due 06/27/20 7,645 6,804 Diamond Offshore Drilling Inc. Corporate Bond - 9,000 shares 1.500% Due 04/15/31 8,050 8,299 First Data Corporation Corporate Bond - 7,000 shares 2.000% Due 03/01/08 7,542 7,368 Health Management Assoc. Corporate Bond - 12,000 shares 0.250% Due 08/16/20 8,094 8,311 Interim Services Inc. Corporate Bond - 7,000 shares 4.500% Due 06/01/05 6,169 5,613 Jones Apparel Group Corporate Bond - 14,000 shares 0% Due 02/01/21 7,867 7,217 Liberty Media Group Corporate Bond - 7,000 shares 4.000% Due 11/15/29 7,782 5,207 Lowe's Cos Inc. Corporate Bond - 11,000 shares 0% Due 02/16/22 7,926 9,295 Masco Corp. Corporate Bond - 19,000 shares 0% Due 07/20/31 7,640 7,839 News America Inc. Corporate Bond - 16,000 shares 0% Due 02/28/21 8,071 7,886 PMI Group Inc. Corporate Bond - 7,000 shares 2.500% Due 07/15/21 7,257 7,430 Royal Caribbean Cruise Corporate Bond - 37,000 shares 0% Due 02/02/21 14,496 11,840 Solectron Corporation Corporate Bond - 15,000 shares 0% Due 05/08/20 10,275 7,970 Thermo Electron Corp. Corporate Bond - 9,000 shares 4.000% Due 01/15/05 7,808 8,510 

38

ALZA CORPORATION TAX DEFERRAL INVESTMENT PLAN
EIN 77-00142070 PLAN NO. 002
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001

( a ) ( b ) ( c ) ( d ) ( e ) Description of Investment Including Identity of Issue, Borrower, Maturity Date, Rate of Interest, Lessor, or Similar Party Collateral, Par or Maturity Value Cost Current Value ------ ------------------------------------- -------------------------------------------- ----------- ------------ Times Mirror Company Corporate Bond - 14,000 shares 0% Due 04/15/17 $ 6,163 $ 8,112 Tyco Internatl Ltd. Corporate Bond - 10,000 shares 0% Due 11/17/20 7,812 7,847 Telefonos DE Mexico S.A. Corporate Bond - 6,000 shares 4.250% Due 06/15/04 7,705 7,651 CMA Money Fund 6,680,064 6,680,064 Cedar Fair Dep Unt Limited Partnership 100,125 123,950 Kaneb Pln Prt Sr Prf Limited Partnership 108,400 163,920 Kinder Morgan Energy Partners Limited Partnership 3,544 7,564 * Participant Loans 6% - 10.5% - 917,581 

* Represents parties-in-interest

39

CONSENT OF MORRIS, DAVIS & CHAN, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-87736) of Johnson & Johnson Corporation pertaining to the ALZA Corporation Tax Deferral Investment Plan of our report dated April 17, 2002 with respect to the financial statements and schedules of the ALZA Corporation Tax Deferral Investment Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2001.

Morris, Davis & Chan LLP
Oakland, California
June 25, 2002

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