What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-13 compared with 2024-02-16 · 638 added, 577 removed, 1837 unchanged (40% of the section changed)

1 unchanged sentence

Index to audited Consolidated Financial Statements

Consolidated b alance s heets

Consolidated s tatements of e arnings

Consolidated s tatements of c omprehensive i ncome

Consolidated s tatements of e quity

Consolidated s tatements of c ash f lows

Notes to c onsolidated f inancial s tatements

Report of i ndependent r egistered p ublic a ccounting f irm (PCAOB ID 238 )

Management’s r eport on i nternal c ontrol o ver f inancial r eporting

Consolidated balance sheets

Consolidated statements of earnings

Consolidated statements of comprehensive income

Consolidated statements of equity

Consolidated statements of cash flows

Notes to consolidated financial statements

Report of independent registered public accounting firm (PCAOB ID 238 )

Management’s report on internal control over financial reporting

2024 Annual Report

Johnson & Johnson and subsidiaries consolidated balance sheets

At December 31, 2023 and January 1, 2023

At December 29, 2024 and December 31, 2023

(Dollars in Millions Except Share and Per Share Amounts) (Note 1)

6 unchanged sentences

Prepaid expenses and other receivables 4,085 4,514

Current assets of discontinued operations (Note 21) — 5,830

Total current assets 55,893 53,495

4 unchanged sentences

Other assets 11,414 14,153

Noncurrent assets of discontinued operations (Note 21) — 21,407

Total assets $ 180,104 167,558

7 unchanged sentences

Accrued taxes on income (Note 8) 3,772 2,993

Current liabilities of discontinued operations (Note 21) — 3,590

Total current liabilities 50,321 46,282

4 unchanged sentences

Other liabilities 17,549 13,398

Noncurrent liabilities of discontinued operations (Note 21) — 2,901

Total liabilities 108,614 98,784

62 unchanged sentences

Comprehensive income $ 14,852 30,412 18,032

The tax effects in other comprehensive income for the fiscal years 2023, 2022 and 2021 respectively:

The tax cost/(benefit) effects in other comprehensive income for the fiscal years 2024, 2023 and 2022 respectively:

Foreign Currency Translation;

$ 797 million, $ 460 million and $ 346 million;

$( 1.1 ) billion, $ 797 million and $( 460 ) million;

Employee Benefit Plans:

2 unchanged sentences

See Notes to Consolidated Financial Statements

Amounts presented have not been recast to exclude discontinued operations

Amounts presented for 2023 and 2022 have not been recast to exclude discontinued operations

Johnson & Johnson and subsidiaries consolidated statements of equity

1 unchanged sentence

Total Retained

Earnings and Additional paid-in capital Accumulated

capital Accumulated

Comprehensive

Income (Loss) Common Stock

Income (Loss) Common

Amount Treasury

12 unchanged sentences

Repurchase of common stock ( 5,054 ) ( 5,054 )

Other ( 25 ) ( 25 )

Kenvue Separation /IPO (Note 21) ( 23,786 ) 2,451 5,181 ( 31,418 )

Other comprehensive income (loss), net of tax ( 4,741 ) ( 4,741 )

Balance, January 1, 2023 76,804 128,345 ( 12,967 ) 3,120 ( 41,694 )

Balance, December 31, 2023 68,774 153,843 ( 12,527 ) 3,120 ( 75,662 )

Net earnings 14,066 14,066

3 unchanged sentences

Repurchase of common stock ( 2,407 ) ( 2,407 )

Other ( 25 ) ( 25 )

Kenvue Separation /IPO (Note 21) ( 23,786 ) 2,451 5,181 ( 31,418 )

Other comprehensive income (loss), net of tax 786 786

11 unchanged sentences

Asset write-downs 405 1,295 1,216

Charge for purchase of in-process research and development assets 483 — —

Charges for acquired in-process research and development assets 1,841 483 —

Gain on Kenvue separation — ( 20,984 ) —

6 unchanged sentences

Increase in accounts payable and accrued liabilities 1,621 2,346 1,098

(Increase)/Decrease in other current and non-current assets ( 3,480 ) 687 ( 1,964 )

Decrease/(Increase) in other current and non-current assets 1,717 ( 3,480 ) 687

Increase/(Decrease) in other current and non-current liabilities 33 5,588 ( 1,979 )

4 unchanged sentences

Acquisitions, net of cash acquired (Note 18) ( 15,146 ) — ( 17,652 )

Purchases of in-process research and development assets (Note 18) ( 470 ) — —

Acquired in-process research and development assets (Note 18) ( 1,783 ) ( 470 ) —

Purchases of investments ( 1,726 ) ( 10,906 ) ( 32,384 )

2 unchanged sentences

Other (including capitalized licenses and milestones) ( 174 ) 12 ( 229 )

Net cash from/(used) by investing activities 878 ( 12,371 ) ( 8,683 )

Net cash (used by)/from investing activities ( 18,599 ) 878 ( 12,371 )

Cash flows from financing activities

8 unchanged sentences

2024 2023 2022

Settlement of convertible debt acquired from Shockwave ( 970 ) — —

Proceeds of short and long-term debt, net of issuance cost, related to the debt that transferred to Kenvue at separation — 8,047 —

22 unchanged sentences

See Notes to Consolidated Financial Statements

Amounts presented have not been recast to exclude discontinued operations.

Amounts presented for 2023 and 2022 have not been recast to exclude discontinued operations.

2024 Annual Report

6 unchanged sentences

Percentages have been calculated using actual, non-rounded figures.

Description of the company and business segments

Description of the company

The Company has approximately 138,100 employees worldwide engaged in the research and development, manufacture and sale of a broad range of products in the healthcare field.

3 unchanged sentences

The excess of the net proceeds from the IPO over the net book value of the Johnson & Johnson divested interest was $ 2.5 billion and was recorded to additional paid-in capital.

As of the closing of the IPO, Johnson & Johnson owned approximately 89.6 % of the total outstanding shares of Kenvue Common Stock and at July 2, 2023, the non-controlling interest of $ 1.3 billion associated with Kenvue was reflected in equity attributable to non-controlling interests in the consolidated balance sheet in the fiscal second quarter of 2023.

As of the closing of the IPO, Johnson & Johnson owned approximately 89.6 % of the total outstanding shares of Kenvue Common Stock and at July 2, 2023, the

non-controlling interest of $ 1.3 billion associated with Kenvue was reflected in equity attributable to non-controlling interests in the consolidated balance sheet in the fiscal second quarter of 2023.

On August 23, 2023, Johnson & Johnson completed the disposition of an additional 80.1 % ownership of the shares of Kenvue through an exchange offer.

Following the exchange offer, the Company owns 9.5 % of the shares of Kenvue which are accounted for as an equity investment carried at fair value within continuing operations.

Following the exchange offer, the Company owned 9.5 % of the shares of Kenvue which were accounted for as an equity investment carried at fair value within continuing operations.

The historical results of the Consumer Health business (which previously represented the Consumer Health business segment) are reflected as discontinued operations in the Company’s Consolidated Financial Statements through the date of the exchange offer (see Note 21 for additional details).

Unless otherwise indicated, the information in the notes to the Consolidated Financial Statements refer only to Johnson & Johnson’s continuing operations.

In the fiscal second quarter of 2024 the Company completed a debt for equity exchange of the retained stake in Kenvue.

Upon completion of the debt for equity exchange, the Company no longer owns any shares of Kenvue Common Stock.

Business segments

Following the completion of the exchange offer, the Company is organized into two business segments:

The Company is organized into two business segments:

Innovative Medicine and MedTech.

The Innovative Medicine segment is focused on the following therapeutic areas, including Immunology, Infectious diseases, Neuroscience, Oncology, Pulmonary Hypertension, and Cardiovascular and Metabolic diseases.

The Innovative Medicine segment is focused on the following therapeutic areas:

Immunology, Infectious Diseases, Neuroscience, Oncology, Pulmonary Hypertension, and Cardiovascular and Metabolic.

Products in this segment are distributed directly to retailers, wholesalers, distributors, hospitals and healthcare professionals for prescription use.

The MedTech segment includes a broad portfolio of products used in the Orthopaedic, Surgery, Interventional Solutions and Vision fields.

The MedTech segment includes a broad portfolio of products used in the Orthopaedic, Surgery, Cardiovascular (previously referred to as Interventional Solutions) and Vision fields.

These products are distributed to wholesalers, hospitals and retailers, and used principally in the professional fields by physicians, nurses, hospitals, eye care professionals and clinics.

1 unchanged sentence

Recently adopted accounting standards

Liabilities-Supplier Finance Programs (Topic 405-50) – Disclosure of Supplier Finance Program Obligations

The Company adopted the standard as of the beginning of fiscal year 2023, which requires that a buyer in a supplier finance program disclose additional information about the program for financial statement users.

The Company has agreements for supplier finance programs with third-party financial institutions.

These programs provide participating suppliers the ability to finance payment obligations from the Company with the third-party financial institutions.

The Company is not a party to the arrangements between the suppliers and the third-party financial institutions.

The Company’s obligations to its suppliers, including amounts due, and scheduled payment dates (which have general payment terms of 90 days), are not affected by a participating supplier’s decision to participate in the program.

As of both December 31, 2023, and January 1, 2023, $ 0.7 billion were valid obligations under the program.

The obligations are presented as Accounts payable on the Consolidated Balance Sheets.

Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures

The Company adopted the standard in the fiscal year 2024, which requires expanded annual and interim disclosures for significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

The standard was applied retrospectively to all periods presented in the financial statements.

As this accounting standard only impacts disclosures, it did not have a material impact on the Company’s Consolidated Financial Statements.

See Note 17 for the required disclosures.

Recently issued accounting standards

Not adopted as of December 29, 2024

Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures

This update requires expanded annual and interim disclosures for significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

This update will be effective for fiscal years beginning after December 15, 2023, and is to be applied retrospectively to all periods presented in the financial statements.

Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

This update requires disclosure of disaggregated information about certain income statement expense line items on an annual and interim basis.

This update will be effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

22 unchanged sentences

The Company utilizes the straight-line method of depreciation over the estimated useful lives of the assets:

Building and building equipment 30 years

Land and leasehold improvements 10 - 20 years

Machinery and equipment 2 - 13 years

Building and building equipment

Land and leasehold improvements

10 - 20 years

Machinery and equipment

The Company capitalizes certain computer software and development costs, included in machinery and equipment, when incurred in connection with developing or obtaining computer software for internal use.

Capitalized software costs are amortized over the estimated useful lives of the software, which generally range from 3 to 8 years.

The Company reviews long-lived assets to assess recoverability using undiscounted cash flows.

When certain events or changes in operating or economic conditions occur, an impairment assessment may be performed on the recoverability of the

2024 Annual Report

carrying value of these assets.

The Company reviews long-lived assets to assess recoverability using undiscounted cash flows.

When certain events or changes in operating or economic conditions occur, an impairment assessment may be performed on the recoverability of the carrying value of these assets.

If the asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value.

7 unchanged sentences

Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well as market conditions, including consideration of competitor pricing.

Rebates are estimated based on contractual terms, historical experience, patient outcomes, trend analysis and projected market conditions in the various markets served.

A significant portion of the liability related to rebates is from the sale of the Company's pharmaceutical products within the U.S., primarily the Managed Care, Medicare and Medicaid programs, which amounted to $ 11.5 billion and $ 9.6 billion as of December 31, 2023 and January 1, 2023, respectively.

Rebates and discounts are estimated based on contractual terms, historical experience, patient outcomes, trend analysis and projected market conditions in the various markets served.

A significant portion of the liability related to rebates is from the sale of the Company's pharmaceutical products within the U.S., primarily the Managed Care, Medicare and Medicaid programs, which amounted to $ 12.3 billion and $ 11.5 billion as of December 29, 2024 and December 31, 2023, respectively.

The Company evaluates market conditions for products or groups of products primarily through the analysis of wholesaler and other third-party sell-through and market research data, as well as internally generated information.

Sales returns are estimated and recorded based on historical sales and returns information.

Products that exhibit unusual sales or return patterns due to dating, competition or other marketing matters are specifically investigated and analyzed as part of the accounting for sales return accruals.

Products that have lost patent exclusivity, or that otherwise exhibit unusual sales or return patterns due to dating, competition or other marketing matters are specifically investigated and analyzed as part of the accounting for sales return accruals.

Sales returns allowances represent a reserve for products that may be returned due to expiration, destruction in the field, or in specific areas, product recall.

The sales returns reserve is based on historical return trends by product and by market as a percent to gross sales.

In accordance with the Company’s accounting policies, the Company generally issues credit to customers for returned goods.

2 unchanged sentences

Sales returns reserves are recorded at full sales value.

Sales returns in the Innovative Medicine segments are almost exclusively not resalable.

Sales returns in the Innovative Medicine segment are almost exclusively not resalable.

Sales returns for certain franchises in the MedTech segment are typically resalable but are not material.

The Company infrequently exchanges products from inventory for returned products.

The sales returns reserve for the total Company has been less than 1.0 % of annual net trade sales during each of the fiscal years 2023, 2022 and 2021.

Promotional programs, such as product listing allowances are recorded in the same period as related sales and include volume-based sales incentive programs.

The sales returns reserve for the total Company has been approximately 1.0 % of annual net trade sales during each of the fiscal years 2024, 2023 and 2022.

Promotional programs, such as product listing allowances are recorded in the same period as related sales and include

volume-based sales incentive programs.

Volume-based incentive programs are based on the estimated sales volumes for the incentive period and are recorded as products are sold.

1 unchanged sentence

The Company also earns profit-share payments through collaborative arrangements of certain products, which are included in sales to customers.

Profit-share payments were less than 2.0 % of the total revenues in fiscal year 2023 and less than 3.0 % of the total revenues in the fiscal years 2022 and 2021 and are included in sales to customers.

Profit-share payments were less than 2.0 % of the total revenues in the fiscal year 2024 and 2023, respectively, and less than 3.0 % of total revenues in the fiscal year 2022 and are included in sales to customers.

See Note 17 to the Consolidated Financial Statements for further disaggregation of revenue.

7 unchanged sentences

The Company completed its annual impairment test for 2024 in the fiscal fourth quarter.

Future impairment

tests will be performed annually in the fiscal fourth quarter, or sooner if warranted.

Purchased in-process research and development is accounted for as an indefinite lived intangible asset until the underlying project is completed, at which point the intangible asset will be accounted for as a definite lived intangible asset.

Future impairment tests will be performed annually in the fiscal fourth quarter, or sooner if warranted.

In-process research and development purchased as part of a business combination is accounted for as an indefinite lived intangible asset until the underlying project is completed, at which point the intangible asset will be accounted for as a definite lived intangible asset.

If warranted the purchased in-process research and development could be written off or partially impaired depending on the underlying program.

4 unchanged sentences

GAAP, all derivative instruments are recorded on the balance sheet at fair value.

Fair value is the exit

price that would be received to sell an asset or paid to transfer a liability.

Fair value is the exit price that would be received to sell an asset or paid to transfer a liability.

Fair value is a market-based measurement determined using assumptions that market participants would use in pricing an asset or liability.

21 unchanged sentences

The Company primarily has operating lease for space, vehicles, manufacturing equipment and data processing equipment.

The ROU asset pertaining to leases from continuing operation was $ 1.0 billion in both fiscal years 2023 and 2022.

The lease liability from continuing operations was $ 1.1 billion in both fiscal years 2023 and 2022.

The ROU asset pertaining to leases from continuing operations was $ 1.1 billion and $ 1.0 billion in fiscal years 2024 and 2023, respectively.

The lease liability from continuing operations was $ 1.2 billion and $ 1.1 billion in fiscal years 2024 and 2023, respectively.

The operating lease costs from continuing operations were $ 0.2 billion in fiscal years 2024, 2023 and 2022.

Cash paid for amounts included in the measurement of lease liabilities from continuing operations were $ 0.2 billion in fiscal years 2024, 2023 and 2022.

2024 Annual Report

Product liability

3 unchanged sentences

To the extent adverse verdicts have been rendered against the Company, the Company does not record an accrual until a loss is determined to be probable and can be reasonably estimated.

2023 Annual Report

The Company has self insurance through a wholly-owned captive insurance company.

19 unchanged sentences

* Milestones are capitalized as intangible assets and amortized to cost of products sold over the useful life.

For all years presented, there was no individual project that represented greater than 5 % of the total annual consolidated research and development expense.

The Company has a number of products and compounds developed in collaboration with strategic partners including XARELTO, co-developed with Bayer HealthCare AG and IMBRUVICA, developed in collaboration and co-marketed with Pharmacyclics LLC, an AbbVie company.

For all years presented, there was no individual project that represented greater than 5 % of the total annual consolidated research and development expense other than the acquired in-process research & development expense of $ 1.25 billion to secure the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition) in fiscal year 2024.

The Company has a number of products and compounds developed in collaboration with strategic partners including XARELTO, co-developed with Bayer HealthCare AG, IMBRUVICA, developed in collaboration and co-marketed with Pharmacyclics LLC, an AbbVie company and CARVYKTI, licensed and developed in collaboration with Legend Biotech USA Inc.

and Legend Biotech Ireland Limited.

Separately, the Company has a number of licensing arrangements for products and compounds including DARZALEX, licensed from Genmab A/S.

3 unchanged sentences

GAAP accounting and tax reporting, recorded as deferred tax assets or liabilities.

estimates deferred tax assets and liabilities based on enacted tax regulations and rates.

The Company estimates deferred tax assets and liabilities based on enacted tax regulations and rates.

Future changes in tax laws and rates may affect recorded deferred tax assets and liabilities in the future.

11 unchanged sentences

This tax is payable over 8 years and will not accrue interest.

These payments began in 2018 and will continue through 2025.

The remaining balance at the end of the 2023 was approximately $ 4.5 billion, of which $ 2.5 billion is classified as noncurrent and reflected as “Long-term taxes payable” on the Company’s balance sheet.

These payments began in fiscal year 2018 and will continue through 2025.

The final payment of $ 2.5 billion will be made in fiscal year 2025.

The TCJA also includes provisions for a tax on global intangible low-taxed income (GILTI).

1 unchanged sentence

shareholder’s total net foreign income over a deemed return on tangible assets, as provided by the TCJA.

In January 2018, the FASB issued guidance that allows companies to elect as an accounting policy whether to record the tax effects of GILTI in the period the tax liability is generated (i.e., “period cost”) or provide for deferred tax assets and liabilities related to basis differences that exist and are expected to effect the amount of GILTI inclusion in future years upon reversal (i.e., “deferred method”).

In January 2018, the FASB issued guidance that allows companies to elect as an accounting policy whether to record the tax effects of GILTI in the period the tax liability is generated (i.e., “period cost”) or provide for deferred tax assets and liabilities related to basis differences that exist and are expected to affect the amount of GILTI inclusion in future years upon reversal (i.e., “deferred method”).

The Company has elected to account for GILTI under the deferred method.

16 unchanged sentences

Actual results may or may not differ from those estimates.

2024 Annual Report

The Company follows the provisions of U.S.

3 unchanged sentences

however, if no estimate in the range is better than any other, the minimum amount is accrued.

Supplier finance program obligations

The Company has agreements for supplier finance programs with third-party financial institutions.

These programs provide participating suppliers the ability to finance payment obligations from the Company with the third-party financial institutions.

The Company is not a party to the arrangements between the suppliers and the third-party financial institutions.

Confirmed obligations under the program as of December 29, 2024, and December 31, 2023, were $ 0.8 billion and $ 0.7 billion, respectively.

The obligations are presented as Accounts payable on the Consolidated Balance Sheets.

The rollforward of the Company's valid obligations under the program were as follows:

(Dollars in Millions)

Confirmed obligations - beginning of the year $ 704

Invoices confirmed during the year 3,048

Confirmed invoices paid during the year 2,964

Confirmed obligations - end of the year $ 788

Annual closing date

1 unchanged sentence

Normally each fiscal year consists of 52 weeks, but every five or six years the fiscal year consists of 53 weeks, and therefore includes additional shipping days, as was the case in fiscal year 2020, and will be the case again in fiscal year 2026.

2023 Annual Report

Cash, cash equivalents and current marketable securities

2 unchanged sentences

Amount Unrecognized

Loss Estimated

Gain Estimated

Fair Value Cash & Cash

4 unchanged sentences

Reverse repurchase agreements 7,100 — 7,100 7,100 —

Corporate debt securities (1)

338 — 338 189 149

Money market funds 6,123 — 6,123 6,123 —

3 unchanged sentences

Gov't Securities $ 6,815 1 6,816 6,796 20

Gov't Agencies 71 ( 1 ) 70 — 70

Other Sovereign Securities 176 — 176 83 93

3 unchanged sentences

Total cash, cash equivalents and current marketable securities

$ 21,859 1,068

(Dollars in Millions) 2023

Carrying Amount Unrecognized Loss Estimated Fair Value Cash & Cash Equivalents Current Marketable Securities

Carrying Amount Unrecognized

Loss Estimated Fair Value Cash & Cash Equivalents Current Marketable Securities

Cash $ 3,340 — 3,340 3,340 —

Sovereign Securities (1)

522 — 522 174 348

Reverse repurchase agreements 4,377 — 4,377 4,377 —

7 unchanged sentences

Gov't Agencies 71 ( 1 ) 70 — 70

Other Sovereign Securities 5 — 5 1 4

Corporate and other debt securities 237 237 43 194

6 unchanged sentences

Fair value of government securities and obligations and corporate debt securities were estimated using quoted broker prices and significant other observable inputs.

2024 Annual Report

The contractual maturities of the available for sale debt securities at December 29, 2024 are as follows:

27 unchanged sentences

The difference, if any, between the net asset value and the proceeds are recorded in earnings.

2023 Annual Report

Intangible assets and goodwill

3 unchanged sentences

Patents and trademarks — gross (1)

$ 44,695 40,417

Less accumulated amortization ( 26,124 ) ( 24,808 )

9 unchanged sentences

Total intangible assets — net $ 37,618 34,175

(1) In September 2024, the Company announced changes to its MedTech brand identity and the $ 1.7 billion of trademarks associated with the DePuy Synthes business were reclassified from indefinite lived to definite lived and will be amortized over a 25 year period.

(2) The majority is comprised of customer relationships

Goodwill as of December 31, 2023 and January 1, 2023, as allocated by segment of business, was as follows:

Goodwill as of December 29, 2024 and December 31, 2023, as allocated by segment of business, was as follows:

(Dollars in Millions) Innovative

4 unchanged sentences

Currency translation/other 223 288 * 511

Goodwill at January 1, 2023 10,184 25,863 36,047

Goodwill at December 31, 2023 10,407 26,151 36,558

Goodwill, related to acquisitions 640 7,569 8,209

5 unchanged sentences

The weighted average amortization period for customer relationships and other intangible assets is approximately 18 years.

The amortization expense of amortizable assets included in Cost of products sold was $ 4.5 billion, $ 3.9 billion and $ 4.2 billion before tax, for the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022, respectively.

The amortization expense of amortizable assets included in Cost of products sold was $ 4.5 billion, $ 4.5 billion and $ 3.9 billion before tax, for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023, respectively.

Intangible asset write-downs are included in Other (income) expense, net.

4 unchanged sentences

See Note 18 to the Consolidated Financial Statements for additional details related to acquisitions and divestitures.

2024 Annual Report

Fair value measurements

2 unchanged sentences

Both types of derivatives are designated as cash flow hedges.

Additionally, the Company primarily uses interest rate swaps as an instrument to manage interest rate risk related to fixed rate borrowings.

Additionally, the Company uses interest rate swaps as an instrument to manage interest rate risk related to fixed rate borrowings.

These derivatives are designated as fair value hedges.

4 unchanged sentences

The Company maintains credit support agreements (CSA) with certain derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements.

As of December 31, 2023 and January 1, 2023, the total amount of cash collateral paid by the Company under the CSA amounted to $ 4.0 billion and $ 0.8 billion net respectively, related to net investment and cash flow hedges.

As of December 29, 2024 and December 31, 2023, the total amount of cash collateral paid by the Company under the CSA amounted to $ 2.2 billion and $ 4.0 billion net respectively, related to net investment and cash flow hedges.

On an ongoing basis, the Company monitors counter-party credit ratings.

2 unchanged sentences

As of December 29, 2024, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ 45.1 billion, $ 40.5 billion and $ 9.0 billion, respectively.

As of January 1, 2023, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ 41.5 billion, $ 36.2 billion and $ 10.0 billion, respectively.

As of December 31, 2023, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ 42.9 billion, $ 39.7 billion and $ 10.0 billion, respectively.

All derivative instruments are recorded on the balance sheet at fair value.

Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether the derivative is designated as part of a hedge transaction, and if so, the type of hedge transaction.

Cash exchanged for derivatives is primarily in cash flows from operating activities.

The designation as a cash flow hedge is made at the entrance date of the derivative contract.

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If and when a derivative is no longer expected to be highly effective, hedge accounting is discontinued.

The Company designated its Euro denominated notes issued in May 2016 with due dates ranging from 2022 to 2035 as a net investment hedge of the Company's investments in certain of its international subsidiaries that use the Euro as their functional currency in order to reduce the volatility caused by changes in exchange rates.

As of December 31, 2023, the balance of deferred net loss on derivatives included in accumulated other comprehensive income was $ 377 million after-tax.

The Company designated its Euro denominated notes with due dates ranging from 2024 to 2044 as a net investment hedge of the Company's investments in certain of its international subsidiaries that use the Euro as their functional currency in order to reduce the volatility caused by changes in exchange rates.

As of December 29, 2024, the balance of deferred net loss on derivatives included in accumulated other comprehensive income was $ 1.7 billion after-tax.

For additional information, see the Consolidated Statements of Comprehensive Income and Note 13.

3 unchanged sentences

Realized gains and losses are ultimately determined by actual exchange rates at maturity of the derivative.

2023 Annual Report

The following table is a summary of the activity related to derivatives and hedges for the fiscal years ended December 31, 2023 and January 1, 2023, net of tax:

December 31, 2023 January 1, 2023

(Dollars in Millions) Sales Cost of Products Sold R&D Expense Interest (Income) Expense Other (Income) Expense Sales Cost of Products Sold R&D Expense Interest (Income) Expense Other (Income) Expense

The following table is a summary of the activity related to derivatives and hedges for the fiscal years ended December 29, 2024 and December 31, 2023, net of tax:

December 29, 2024 December 31, 2023

(Dollars in Millions) Sales Cost of

Expense Interest

Expense Other

Expense Sales Cost of

Expense Interest

Expense Other

The effects of fair value, net investment and cash flow hedging:

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Amount of gain or (loss) recognized in AOCI $ — — — ( 597 ) — — — — ( 156 ) —

As of December 31, 2023 and January 1, 2023, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustment for fair value hedges

Line item in the Consolidated Balance Sheet in which the hedged item is included Carrying Amount of the Hedged Liability Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability

(Dollars in Millions) December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023

2024 Annual Report

As of December 29, 2024 and December 31, 2023, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustment for fair value hedges:

Line item in the Consolidated Balance Sheet

in which the hedged item is included Carrying Amount of the Hedged Liability Cumulative Amount of Fair Value Hedging

Adjustment Included in the Carrying

Amount of the Hedged Liability

(Dollars in Millions) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Long-term Debt $ 7,935 $ 8,862 $( 1,132 ) $( 1,216 )

The following table is the effect of derivatives not designated as hedging instrument for the fiscal years ended December 31, 2023 and January 1, 2023:

(Dollars in Millions) Location of Gain /(Loss) Recognized in Income on Derivative Gain/(Loss)

The following table is the effect of derivatives not designated as hedging instrument for the fiscal years ended

December 29, 2024 and December 31, 2023:

(Dollars in Millions) Location of Gain /(Loss)

Recognized in Income on

Derivative Gain/(Loss)

Recognized In

Income on Derivative

Derivatives Not Designated as Hedging Instruments December 31, 2023 January 1, 2023

Derivatives Not Designated as Hedging Instruments December 29, 2024 December 31, 2023

Foreign Exchange Contracts Other (income) expense $ 8 ( 60 )

The following table is the effect of net investment hedges for the fiscal years ended December 31, 2023 and January 1, 2023:

The following table is the effect of net investment hedges for the fiscal years ended December 29, 2024 and

December 31, 2023:

Recognized In

Accumulated OCI Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income Into Income Gain/(Loss) Reclassified From

Accumulated OCI Location of Gain or

(Loss) Reclassified

from Accumulated Other Comprehensive Income Into Income Gain/(Loss)

Reclassified from

Accumulated OCI

(Dollars in Millions) December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023

(Dollars in Millions) December 29, 2024 December 31, 2023 December 29, 2024 December 31, 2023

Debt $ 282 ( 131 ) Interest (income) expense — —

2 unchanged sentences

The Company measures equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The following table is a summary of the activity related to equity investments for the fiscal years ended December 31, 2023 and January 1, 2023:

January 1, 2023 December 31, 2023

(Dollars in Millions) Carrying Value Changes in Fair Value Reflected in Net Income (1)

Sales/ Purchases/Other (2)

Carrying Value Non Current Other Assets

The following table is a summary of the activity related to equity investments for the fiscal years ended December 29, 2024 and December 31, 2023:

December 31, 2023 December 29, 2024

(Dollars in Millions) Carrying Value Changes in Fair

Value Reflected in

Net Income (1)

Carrying Value Non-Current

Equity Investments with readily determinable value * $ 4,473 ( 17 ) ( 4,005 ) 451 451

Equity Investments without readily determinable value $ 696 ( 197 ) 274 773 773

2023 Annual Report

January 2, 2022 January 1, 2023

(Dollars in Millions) Carrying Value Changes in Fair Value Reflected in Net Income (1)

Sales/ Purchases/Other (2)

Carrying Value Non Current Other Assets

January 1, 2023 December 31, 2023

(Dollars in Millions) Carrying Value Changes in Fair

Value Reflected in

Net Income (1)

Carrying Value Non-Current

Equity Investments with readily determinable value * $ 576 ( 368 ) 4,265 4,473 4,473

2 unchanged sentences

(2) Other includes impact of currency

* Includes the 9.5 % remaining stake in Kenvue and the $ 0.4 billion unfavorable change in fair value of the investment between separation date and the end of the fiscal year.

For the fiscal years ended December 31, 2023 and January 1, 2023 for equity investments without readily determinable market values, $ 1 million and $ 51 million, respectively, of the changes in fair value reflected in net income were the result of impairments.

There were offsetting impacts of $ 27 million and $ 142 million, respectively, of changes in the fair value reflected in net income due to changes in observable prices and gains on the disposal of investments.

* The December 31, 2023 balance includes the 9.5 % remaining stake in Kenvue.

A debt-for-equity exchange was completed in the fiscal second quarter of 2024.

On May 15, 2024, the Company issued $ 3.6 billion aggregate principal amount of commercial paper and received $ 3.6 billion of net cash proceeds to be used for general corporate purposes.

On May 17, 2024, the Company completed a Debt-for-Equity Exchange of its remaining 182,329,550 shares of Kenvue Common Stock for the outstanding Commercial Paper.

Upon completion of the Debt-for-Equity Exchange, the Commercial Paper was satisfied and discharged, and the Company no longer owns any shares of Kenvue Common Stock.

This exchange resulted in a loss of approximately $ 0.4 billion recorded in Other (income) expense.

For the fiscal years ended December 29, 2024 and December 31, 2023 for equity investments without readily determinable market values, $ 171 million and $ 1 million, respectively, of the changes in fair value reflected in net income were the result of impairments.

There were impacts of $ 26 million and $ 27 million, respectively, of changes in the fair value reflected in net income due to changes in observable prices and gains on the disposal of investments.

Fair value is the exit price that would be received to sell an asset or paid to transfer a liability.

11 unchanged sentences

Level 3 — Significant unobservable inputs.

The Company’s significant financial assets and liabilities measured at fair value as of the fiscal year ended December 31, 2023 and January 1, 2023 were as follows:

2024 Annual Report

The Company’s significant financial assets and liabilities measured at fair value as of the fiscal year ended December 29, 2024 and December 31, 2023 were as follows:

(Dollars in Millions) Level 1 Level 2 Level 3 Total Total (1)

27 unchanged sentences

Total Net Liabilities $ 152 433

2023 Annual Report

Summarized information about changes in liabilities for contingent consideration is as follows:

11 unchanged sentences

(4) Classified as cash equivalents and current marketable securities.

(5) Includes $ 1,092 million, $ 1,116 million and $ 520 million, classified as non-current other liabilities as of December 31, 2023, January 1, 2023 and January 2, 2022, respectively.

Includes $ 4 million and $ 13 million classified as current liabilities as of January 1, 2023 and January 2, 2022, respectively.

(5) Includes $ 1,217 million, $ 1,092 million and $ 1,116 million, classified as non-current other liabilities as of December 29, 2024,

December 31, 2023 and January 1, 2023, respectively.

Includes $ 4 million classified as current liabilities as of January 1, 2023.

(6) In fiscal year 2024, the Company recorded $ 105 million of contingent consideration related to Proteologix.

In fiscal year 2022, the Company recorded $ 704 million of contingent consideration related to Abiomed.

See Notes 2 and 7 for financial assets and liabilities held at carrying amount on the Consolidated Balance Sheet.

2024 Annual Report

The components of long-term debt are as follows:

1 unchanged sentence

% 2023 Effective

6.73 % Debentures due 2023

$ — — % $ 250 6.73 %

0.650 % Notes due 2024

2.05 % Notes due 2023

0.650 % Notes due 2024

( 750 MM Euro 1.1090 ) (2) /( 750 MM Euro 1.0651 ) (3)

( 750 MM Euro 1.1090 ) (3)

$ — — % $ 831 (3)

5.50 % Notes due 2024

( 500 MM 1.2756 GBP ) (2) /( 500 MM GBP 1.2037 ) (3)

( 500 MM GBP 1.2756 ) (3)

2.625 % Notes due 2025

14 unchanged sentences

298 7.14 298 7.14

4.80 % Debentures due 2029

1,146 4.83 — —

1.30 % Notes due 2030

2 unchanged sentences

1,145 4.92 — —

3.20 % Debenture due 2032

( 700 M EUR 1.0401 ) (2)

4.95 % Debentures due 2033

499 4.95 499 4.95

4.375 % Notes due 2033

854 4.24 854 4.24

4.95 % Debentures due 2034

1.650 % Notes due 2035

1 unchanged sentence

1.68 1,652 (3)

3.35 % Debentures due 2036

( 800 MM EUR 1.0401 ) (2)

3.587 % Notes due 2036

16 unchanged sentences

496 4.52 496 4.52

3.55 % Debentures due 2044

( 1 B EUR 1.0401 ) (2)

3.73 % Notes due 2046

6 unchanged sentences

808 2.29 826 2.29

5.25 % Debentures due 2054

2.450 % Notes due 2060

5 unchanged sentences

(1) Weighted average effective rate.

2023 Annual Report

(2) Translation rate at December 29, 2024.

(3) Translation rate at January 1, 2023.

(3) Translation rate at December 31, 2023.

(4) The excess of the carrying value over the fair value of debt was $ 2.0 billion and $ 1.0 billion at the end of fiscal year 2024 and fiscal year 2023, respectively.

1 unchanged sentence

The Company has access to substantial sources of funds at numerous banks worldwide.

In September 2023, the Company secured a new 364-day Credit Facility of $ 10 billion, which expires on September 5, 2024.

The Company early terminated the additional 364-day revolving Credit Facility of $ 10 billion, which had an expiration of November 21, 2023.

In June 2024, the Company secured a new 364-day Credit Facility of $ 10 billion, which expires on June 25, 2025.

Interest charged on borrowings under the credit line agreement is based on either the Term SOFR Reference Rate or other applicable market rates as allowed under the terms of the agreement, plus applicable margins.

4 unchanged sentences

The current debt balance as of December 29, 2024 includes $ 4.1 billion of commercial paper which has a weighted average interest rate of 4.46 % and a weighted average maturity of approximately two months .

The current debt balance as of January 1, 2023 includes $ 11.2 billion of commercial paper which has a weighted average interest rate of 4.23 % and a weighted average maturity of approximately two months .

The current debt balance as of December 31, 2023 includes $ 2.0 billion of commercial paper which has a weighted average interest rate of 5.37 % and a weighted average maturity of approximately two months .

Aggregate maturities of long-term debt obligations commencing in 2025 are:

2 unchanged sentences

$ 1,749 1,999 2,385 2,275 1,444 22,548

The provision for taxes on income consists of:

The provision for taxes on income on continuing operations consists of:

(Dollars in Millions) 2024 2023 2022

7 unchanged sentences

Provision for taxes on income $ 2,621 1,736 2,989

2024 Annual Report

A comparison of income tax expense at the U.S.

11 unchanged sentences

( 2.6 ) ( 0.3 ) ( 1.1 )

Tax benefits from loss on capital assets — — ( 1.6 )

state taxes 1.5 1.0 0.3

Tax benefits on share-based compensation ( 0.6 ) ( 0.8 ) ( 1.4 )

1 unchanged sentence

Effective Rate 15.7 % 11.5 15.4

(1) International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly Ireland, Switzerland, Belgium and Puerto Rico, which is a favorable impact on the effective tax rate as compared with the U.S.

(1) International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly Ireland, Switzerland, and Belgium, which is a favorable impact on the effective tax rate as compared with the U.S.

statutory rate.

(2) Includes the impact of the GILTI tax, the Foreign-Derived Intangible Income deduction and other foreign income that is taxable under the U.S.

The 2023 and 2022 amount includes the impact of certain provisions of the 2017 TCJA that became effective in fiscal 2022.

The 2023 amount includes the impact of certain foreign subsidiaries deferred tax remeasurements for legislative elections and the 2021 amounts include the reorganization of international subsidiaries further described below.

(2) Includes the net impact of the GILTI tax, the Foreign-Derived Intangible Income deduction and other foreign income that is taxable under the U.S.

tax code as well as related foreign tax credits.

The fiscal year 2024 effective tax rate increased 4.2 % as compared to the fiscal year 2023 effective tax rate.

The primary drivers of this change are discussed below.

In fiscal year 2024, The Company had more income in higher tax jurisdictions compared to fiscal year 2023, primarily in the U.S.

where the Company recorded a charge of approximately $ 5.1 billion in the fiscal year of 2024 versus approximately $ 7.0 billion in the fiscal year of 2023, both for the talc matters in the United States.

Both charges were recorded at an effective U.S.

tax rate of approximately 21% (for further information see Note 19 to the Consolidated Financial Statements).

Additionally in the fiscal year 2024, the effective tax rate was unfavorably impacted by legislative changes that went into effect for Pillar Two in some of the Company's foreign jurisdictions which are reflected in International operations on the Company’s effective tax rate reconciliation.

Also in fiscal year 2024, the Company generated incremental U.S.

foreign tax credits related to income sourced and taxed outside the United States and is reflected in U.S.

taxes on international income on the Company’s effective tax rate reconciliation.

In 2024, the Company finalized multi-year transfer pricing agreements with the U.S.

Internal Revenue Service (IRS) and certain other foreign jurisdictions.

The U.S portion of the agreements were partially offset by the related tax adjustments in the foreign jurisdictions which are reflected in U.S tax settlements and International operations, respectively, on the Company’s effective rate reconciliation.

The fiscal year 2023 effective tax rate decreased 3.9 % as compared to the fiscal year 2022 effective tax rate as the Company recorded certain non-recurring favorable tax items in fiscal year 2023 when compared to the prior fiscal year.

12 unchanged sentences

• approximately $ 0.3 billion of U.S.

deferred tax benefit on the GILTI deferred tax as a result of an international subsidiary making an election to change the treatment of a local deferred tax asset to a refundable tax credit.

deferred tax benefit on the GILTI deferred tax related to an election made by an international subsidiary resulting in a decrease in local deferred tax assets.

This has been reflected in the U.S.

taxes on international income on the Company’s effective tax rate reconciliation.

The Company’s 2023 and 2022 tax rates benefited from certain provisions of the Tax Cuts and Jobs Act of 2017 that became effective in fiscal 2022.

The Company also had lower income in higher tax jurisdictions vs.

1 unchanged sentence

where the Company recorded an approximately $ 7.0 billion charge related to talc matters in the United States at an effective tax rate of 21.1 % (for further information see Note 19 to the Consolidated Financial Statements).

The fiscal year 2022 effective tax rate increased 8.2 % as compared to the fiscal year 2021 effective tax rate as the Company recorded certain non-recurring favorable tax items in fiscal year 2021 which resulted in an unfavorable impact to the Company’s fiscal 2022 effective tax rate when compared to the prior fiscal year.

These items are described below.

The Company’s 2022 tax rate also benefited from the impairment of bermekimab for AD IPR&D and changes in the fair value of securities in the Company’s investment portfolio, both recorded at the U.S.

statutory rate.

2023 Annual Report

In the fiscal year 2021, the Company reorganized the ownership structure of certain wholly-owned international subsidiaries.

As part of this reorganization, the Company increased the tax basis of certain assets to fair value in accordance with applicable local regulations.

The net impact of this restructuring was approximately $ 0.6 billion net benefit or 3.2 % benefit to the Company’s annual effective tax rate, comprised of the following items:

• approximately $ 2.3 billion of local deferred tax assets to record the remeasurement of the tax basis of these assets to fair value, this benefit has been reflected as International operations on the Company’s effective tax rate reconciliation.

• approximately $ 1.7 billion of U.S.

deferred tax expense relating to the GILTI deferred tax liability resulting from the remeasurement of these deferred tax assets.

This expense has been reflected as U.S.

taxes on international income on the Company’s effective tax rate reconciliation.

Also, in the fiscal fourth quarter of 2021, the Company recognized a loss on certain U.S.

affiliates related to the previously impaired book value of certain intangibles, which reduced the 2021 effective tax rate by approximately 1.6 % which is reflected as a Tax benefits from loss on capital assets on the effective tax rate reconciliation.

Additionally other fiscal 2021 impacts to the rate were primarily driven by litigation and acquisition related items as follows:

• the Company accrued additional legal expenses, of approximately $ 1.6 billion for talc at an effective tax rate of 23.5 % and $ 0.8 billion for Risperdal Gynecomastia settlements at an effective tax rate of 16.4 % (See Note 19 to the Consolidated Financial Statements for more details).

• the Company recorded a partial IPR&D charge of $ 0.9 billion for the Ottava intangible asset (acquired with the Auris Health acquisition in 2019) at an effective rate of 22.4 %.

Temporary differences and carryforwards at the end of fiscal years 2024 and 2023 were as follows:

7 unchanged sentences

Reserves & liabilities 4,444 3,816

Income reported for tax purposes (1)

Net realizable operating loss carryforwards (2)

Inventory related 371 359

Operating loss carryforwards 2,298 2,145

Undistributed foreign earnings 1,931 ( 1,492 ) 1,801 ( 1,695 )

3 unchanged sentences

Total deferred income taxes 16,826 ( 7,175 ) 13,819 ( 6,584 )

(1) In fiscal 2023, the Company changed the presentation of income taxes accrued on intercompany profits on inventory still owned by the Company as part of “Prepaid expenses and other” on the Consolidated Balance Sheet.

(2) Net of valuation allowances of $ 1.1 billion and $ 0.8 billion in 2023 and 2022.

The change in the valuation allowance from 2022 to 2023 was driven by approximately $ 0.1 billion from acquisition related activity and the remainder was due to normal operations during the fiscal year.

Valuation allowances ( 1,638 ) ( 1,149 )

Total deferred income taxes net of valuation allowances 15,188 ( 7,175 ) 12,670 ( 6,584 )

The Company has wholly-owned international subsidiaries that have cumulative net losses.

The Company believes that it is more likely than not that these subsidiaries will generate future taxable income sufficient to utilize these deferred tax assets.

However, in certain jurisdictions, valuation allowances have been recorded against deferred tax assets for loss carryforwards that are not more likely than not to be realized.

The Company believes that it is more likely than not that these subsidiaries will generate future taxable income sufficient to partially utilize these deferred tax assets.

In certain jurisdictions, valuation allowances have been recorded against deferred tax assets for loss carryforwards that are not more likely than not to be realized.

The net operating loss carryforwards for these international subsidiaries that do not have an indefinite carryforward period will begin to expire in 2025 for various amounts.

The following table summarizes the activity related to valuation allowances for continuing operations:

(Dollars in Millions) 2024 2023

Beginning of year $ 1,149 775

Provision 451 355

Utilization — ( 116 )

Foreign currency translation ( 46 ) 25

Net acquisitions / (dispositions/liquidations) 84 110

End of year $ 1,638 $ 1,149

2024 Annual Report

The following table summarizes the activity related to unrecognized tax benefits for continuing operations:

9 unchanged sentences

The Company conducts business and files tax returns in numerous countries and currently has tax audits in progress with a number of tax authorities.

With respect to the United States the Internal Revenue Service has completed its audit for all tax years through 2016.

With respect to the United States, the Internal Revenue Service (IRS) has completed its audit for the tax years through 2016 and has commenced the audit for tax years 2017 through 2020.

The Company recently finalized multi-year transfer pricing agreements with the IRS and certain other foreign jurisdictions in the fiscal fourth quarter of 2024.

In other major jurisdictions where the Company conducts business, the years that remain open to tax audits go back to the year 2013.

The Company believes it is possible that some tax audits may be completed over the next twelve months by taxing authorities in some jurisdictions, including in the United States.

However, the Company is not able to provide a reasonably reliable estimate of the timing of any other future tax payments or change in uncertain tax positions, if any.

The Company believes it is possible that some tax audits may be completed over the next twelve months by taxing authorities in some jurisdictions.

The Company anticipates a change in uncertain tax positions of approximately $ 200 million in certain jurisdictions in the next twelve months due to the expected expiration of the statute of limitations.

However, generally the Company is not able to provide a reasonably reliable estimate of the timing of any other future tax payments, audit settlements, or changes in uncertain tax positions.

The Company classifies liabilities for unrecognized tax benefits and related interest and penalties as long-term liabilities.

13 unchanged sentences

Prepaid employee related obligations of $ 6,046 million and $ 4,992 million for 2024 and 2023, respectively, are included in Other assets on the Consolidated Balance Sheets.

2023 Annual Report

Pensions and other benefit plans

34 unchanged sentences

benefit plans is amortized over the average remaining service to full eligibility age of plan participants at the time of the plan amendment.

2024 Annual Report

The following table represents the weighted-average actuarial assumptions:

19 unchanged sentences

Year the rate reaches the ultimate trend rate 2048 2048

*excludes ongoing negotiations regarding healthcare cost with service providers

The following table sets forth information related to the benefit obligation and the fair value of plan assets at fiscal year-end 2024 and 2023 for the Company’s defined benefit retirement plans and other post-retirement plans:

16 unchanged sentences

Projected benefit obligation — end of year $ 30,317 31,744 4,425 4,108

2023 Annual Report

Change in Plan Assets

23 unchanged sentences

(1) The actuarial (gains)/losses for retirement plans in 2024 and 2023 were primarily driven by changes in the discount rates.

(2) Primarily driven by the Kenvue separation.

(3) Includes approximately $ 800 million transferred to a group annuity contract issued by a third-party insurer for the U.S.

(2) Driven by the Kenvue separation.

(3) The fiscal years 2024 and 2023 includes approximately $ 400 million and $ 800 million, respectively, transferred to a group annuity contract issued by a third-party insurer for the U.S.

Salaried Pension Plan.

10 unchanged sentences

Total recognized in net periodic benefit cost and other comprehensive income $( 1,096 ) 519 869 603

2024 Annual Report

The Company plans to continue to fund its U.S.

39 unchanged sentences

The Company’s retirement plan asset allocation at the end of 2024 and 2023 and target allocations for 2025 are as follows:

2023 Annual Report

Plan Assets Target

2023 2022 2024

Worldwide Retirement Plans 2024 2023 2025

31 unchanged sentences

Other assets that are exchange listed and actively traded are classified as Level 1, while inactively traded assets are classified as Level 2.

2024 Annual Report

The following table sets forth the Retirement Plans' investments measured at fair value as of December 31, 2024 and December 31, 2023:

2 unchanged sentences

Inputs Significant

Investments Measured at Net Asset Value

Measured at Net

(Level 1) (Level 2) (Level 3) Total Assets

1 unchanged sentence

Short-term investment funds $ — 12 511 829 — — — — 511 841

$ 12 26 829 13 — — — — 841 39

Government and agency securities — — 7,885 5,985 — — — — 7,885 5,985

4 unchanged sentences

Investments at fair value $ 7,144 7,776 15,809 15,729 165 135 10,277 9,967 33,395 33,607

$ 7,776 8,872 15,729 13,954 135 68 9,967 8,602 33,607 31,496

(1) The activity for the Level 3 assets is not significant for all years presented.

1 unchanged sentence

commingled funds (Level 2) of $ 93 million and $ 86 million at December 31, 2024 and December 31, 2023, respectively.

The fair value of Johnson & Johnson Common Stock directly held in plan assets was $ 14 million ( 0.0 % of total plan assets) at December 31, 2023 and $ 21 million ( 0.1 % of total plan assets) at December 31, 2022.

The fair value of Johnson & Johnson Common Stock directly held in plan assets was $ 13 million at December 31, 2024 and $ 14 million at December 31, 2023.

The Company has voluntary 401(k) savings plans designed to enhance the existing retirement programs covering eligible employees.

1 unchanged sentence

Total Company matching contributions to the plans were $ 282 million, $ 263 million and $ 257 million in fiscal years 2024, 2023 and 2022, respectively.

2023 Annual Report

Capital and treasury stock

8 unchanged sentences

Repurchase of common stock 31,085 5,079

Balance at January 1, 2023 506,246 41,694

Kenvue share exchange (Note 21) 190,955 31,418

Balance at December 31, 2023 712,765 75,662

Employee compensation and stock option plans ( 15,027 ) ( 2,389 )

Repurchase of common stock 15,183 2,407

Kenvue share exchange (Note 21) 190,955 31,418

Balance at December 29, 2024 712,921 $ 75,680

17 unchanged sentences

Net 2023 changes ( 3,221 ) 26 ( 1,399 ) ( 147 ) ( 4,741 )

January 1, 2023 ( 11,813 ) ( 27 ) ( 897 ) ( 230 ) ( 12,967 )

Net 2023 changes ( 3,221 ) 26 ( 1,399 ) ( 147 ) ( 4,741 )

Kenvue Separation/IPO 4,885 — 296 * — 5,181

December 31, 2023 ( 10,149 ) ( 1 ) ( 2,000 ) ( 377 ) ( 12,527 )

Net 2024 changes 1,708 2 449 ( 1,373 ) 786

December 29, 2024 $( 8,441 ) 1 ( 1,551 ) ( 1,750 ) ( 11,741 )

2024 Annual Report

Amounts in accumulated other comprehensive income are presented net of the related tax impact.

14 unchanged sentences

The other current and non-current assets line within the Statement of Cash flows includes the impact of foreign currency translation.

This equity account includes the results of translating certain balance sheet assets and liabilities at current exchange rates and some accounts at historical rates, except for those located in highly inflationary economies (Argentina and Venezuela).

Beginning in the fiscal second quarter of 2022, the Company also accounted for operations in Turkey as highly inflationary.

Beginning in the fiscal fourth quarter of 2024, the Company also accounted for operations in Egypt as highly inflationary.

The translation of balance sheet accounts for highly inflationary economies are reflected in the operating results.

1 unchanged sentence

Net currency transaction gains and losses included in Other (income) expense were losses of $ 214 million, $ 366 million and $ 286 million in fiscal years 2024, 2023 and 2022, respectively.

2023 Annual Report

Earnings per share

The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022:

The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023:

(In Millions Except Per Share Amounts) 2024 2023 2022

9 unchanged sentences

Total net earnings per share - diluted $ 5.79 13.72 6.73

The diluted net earnings per share calculation for fiscal year 2023 excluded 43 million shares related to stock options, as the exercise price of these options was greater than the average market value of the Company's stock.

The diluted net earnings per share calculation for the fiscal years 2022 and 2021 included all shares related to stock options, as the exercise price of these options was less than the average market value of the Company's stock.

(Shares in Millions)

The diluted net earnings per share calculation excluded the following number of shares related to stock options, as the exercise price of these options was greater than the average market value of the Company’s stock.

54.1 43.0 0.0

Common stock, stock option plans and stock compensation agreements

At December 31, 2023, the Company had one stock-based compensation plan.

The shares outstanding are for contracts under the Company's 2012 Long-Term Incentive Plan and the 2022 Long-Term Incentive Plan.

At December 29, 2024, the Company had one active stock-based compensation plan, the 2022 Long-Term Incentive Plan.

The shares outstanding are for contracts under the Company's 2012 Long-Term Incentive Plan and 2022 Long-Term Incentive Plan.

The 2012 Long-Term Incentive Plan expired on April 26, 2022.

11 unchanged sentences

Treasury shares are replenished through market purchases throughout the year for the number of shares used to settle employee benefit equity issuances.

2024 Annual Report

Stock options

1 unchanged sentence

Options granted under the 2012 Long-Term Incentive Plan were granted at the average of the high and low prices of the Company’s Common Stock on the New York Stock Exchange on the date of grant.

Options granted under the 2022 Long-Term incentive Plan were granted at the closing price of the Company’s Common Stock on the New York Stock Exchange on the date of gran t.

Options granted under the 2022 Long-Term incentive Plan were granted at the closing price of the Company’s Common Stock on the New York Stock Exchange on the date of grant.

The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table.

16 unchanged sentences

(Dollars in Millions)

Shares at January 1, 2023 118,672 $ 134.95 $ 4,949

Shares at December 31, 2023 112,238 $ 139.88 $ 2,239

Options granted 13,917 157.92

3 unchanged sentences

The total intrinsic value of options exercised was $ 560 million, $ 729 million and $ 1,228 million in fiscal years 2024, 2023 and 2022, respectively.

*includes 7,689 shares of options cancelled as a result of the conversion of Johnson & Johnson stock options held by Kenvue employees into Kenvue stock options

2023 Annual Report

The following table summarizes stock options outstanding and exercisable at December 29, 2024:

15 unchanged sentences

(1) Average contractual life remaining in years.

Stock options outstanding at January 1, 2023 and January 2, 2022 were 118,672 and an average life of 5.8 years and 117,361 and an average life of 5.8 years, respectively.

Stock options exercisable at January 1, 2023 and January 2, 2022 were 63,661 at an average price of $ 113.06 and 62,742 at an average price of $ 104.42 , respectively.

Stock options outstanding at December 31, 2023 and January 1, 2023 were 112,238 and an average life of 5.5 years and 118,672 and an average life of 5.8 years, respectively.

Stock options exercisable at December 31, 2023 and January 1, 2023 were 66,998 at an average price of $ 123.39 and 63,661 at an average price of $ 113.06 , respectively.

Restricted share units and performance share units

8 unchanged sentences

Performance Share Units

Shares at January 1, 2023 13,616 2,357

Shares at December 31, 2023 12,938 2,037

Granted 6,331 906

2 unchanged sentences

Shares at December 29, 2024 13,041 2,013

*includes 1,421 shares of restricted share units and 264 shares of performance share units cancelled as a result of the conversion of Johnson & Johnson restricted share units and performance share units held by Kenvue employees into Kenvue restricted share units

The average fair value of the restricted share units granted was $ 147.51 , $ 152.63 and $ 153.67 in fiscal years 2024, 2023 and 2022, respectively, using the fair market value at the date of grant.

5 unchanged sentences

The fair value of performance share units issued was $ 146 million, $ 140 million and $ 94 million in fiscal years 2024, 2023 and 2022, respectively.

2024 Annual Report

Segments of business and geographic areas

Following the separation of the Consumer Health business in the fiscal third quarter of 2023, the Company is now organized into two business segments:

Innovative Medicine (formerly referred to as Pharmaceutical) and MedTech.

Following the separation of the Consumer Health business in the fiscal third quarter of 2023, the Company is now organized into two reportable segments:

Innovative Medicine and MedTech.

The segment results have been recast for all periods to reflect the continuing operations of the Company.

The Company’s chief operating decision maker (CODM) is the Chief Executive Officer (Principal Executive Officer).

For the Innovative Medicine and MedTech segments, the CODM uses segment income before tax to allocate resources (including employees, financial, and capital resources) for each segment predominantly in the annual forecasting process.

The CODM considers planning-to-actual variances on a quarterly basis to assess performance and make decisions about allocating resources to the segments.

Sales to Customers % Change

27 unchanged sentences

COVID-19 VACCINE

0 120 634 * ( 81.1 )

International 198 1,117 2,059 ( 82.4 ) ( 45.8 )

Worldwide 1,117 2,179 2,385 ( 48.8 ) ( 8.6 )

2023 Annual Report

Sales to Customers % Change

(Dollars in Millions) 2024 2023 2022 ’24 vs.

Worldwide 198 1,117 2,179 ( 82.4 ) ( 48.8 )

EDURANT / rilpivirine

2 unchanged sentences

Worldwide 1,272 1,150 1,008 10.6 14.1

PREZISTA / PREZCOBIX / REZOLSTA / SYMTUZA

PREZISTA / PREZCOBIX /

REZOLSTA / SYMTUZA

1,311 1,446 1,494 ( 9.4 ) ( 3.2 )

26 unchanged sentences

Worldwide 20,781 17,661 15,983 17.7 10.5

869 469 133 85.2 *

International 94 30 — * *

2024 Annual Report

Sales to Customers % Change

(Dollars in Millions) 2024 2023 2022 ’24 vs.

Worldwide 963 500 133 92.7 *

6,588 5,277 4,210 24.8 25.4

32 unchanged sentences

Worldwide 281 260 313 7.9 ( 16.7 )

2023 Annual Report

Sales to Customers % Change

14 unchanged sentences

Worldwide 56,964 54,759 52,563 4.0 4.2

Interventional Solutions

Cardiovascular (1)

4,513 3,633 2,169 24.2 67.5

8 unchanged sentences

Worldwide 1,496 1,306 31 14.5 *

OTHER INTERVENTIONAL SOLUTIONS

109 102 106 6.7 ( 3.8 )

SHOCKWAVE (3)

International 122 — — * *

Worldwide 564 — — * *

OTHER CARDIOVASCULAR (1)

120 109 102 10.7 6.7

4 unchanged sentences

Worldwide 9,158 8,942 8,587 2.4 4.1

2024 Annual Report

Sales to Customers % Change

6 unchanged sentences

Worldwide 1,545 1,456 1,359 6.1 7.1

2,013 1,949 1,882 3.3 3.6

International 1,036 1,030 989 0.6 4.1

Worldwide 3,049 2,979 2,871 2.3 3.8

SPINE, SPORTS & OTHER

21 unchanged sentences

Worldwide 1,413 1,370 1,306 3.2 4.9

Sales to Customers % Change

(Dollars in Millions) 2024 2023 2022 ’24 vs.

TOTAL MEDTECH

2 unchanged sentences

Worldwide 31,857 30,400 27,427 4.8 10.8

2023 Annual Report

Sales to Customers % Change

(Dollars in Millions) 2023 2022 2021 ’23 vs.

50,302 46,444 41,981 8.3 10.6

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* percentage greater than 100% or not meaningful

(1) Previously referred to as Pharmaceutical

(2) Inclusive of RISPERDAL CONSTA which was previously disclosed separately

(3) Inclusive of INVOKANA which was previously disclosed separately

(1) Previously referred to as Interventional Solutions

(2) Acquired on December 22, 2022

Income Before Tax Identifiable Assets

(3) Acquired on May 31, 2024

Income Before Tax by Segment

(Dollars in Millions) 2024 (3)

Medicine MedTech Total Innovative

Medicine MedTech Total

Sales to customers $ 56,964 31,857 54,759 30,400 52,563 27,427

Cost of products sold 14,036 13,345 13,715 12,722 14,066 10,397

Selling, marketing and administrative 10,906 10,812 9,842 10,476 9,714 9,537

Research and development expense 13,529 3,703 11,963 3,122 11,642 2,493

Other segment items (1)

( 426 ) 257 993 ( 589 ) 1,494 553

Segment income before tax $ 18,919 3,740 22,659 18,246 4,669 22,915 15,647 4,447 20,094

Expense not allocated to segments (2)

5,972 7,853 735

Worldwide total $ 16,687 15,062 19,359

Identifiable Assets

(Dollars in Millions) 2024 2023

Innovative Medicine $ 57,070 58,324

1 unchanged sentence

Total 141,392 133,034

Expense not allocated to segments (1)

7,853 735 2,780

Discontinued operations — 27,237

General corporate (6)

1 unchanged sentence

Worldwide total $ 180,104 167,558

2024 Annual Report

Additions to Property,

15 unchanged sentences

Segments total 88,821 85,159 79,990 101,119 89,439

Discontinued operations — 27,237

General corporate 1,217 1,192

3 unchanged sentences

Export sales are not significant.

In fiscal year 2023, the Company utilized three wholesalers distributing products for both segments that represented approximately 18.2 %, 15.1 % and 14.2 % of the total consolidated revenues.

In fiscal year 2022, the Company had three wholesalers distributing products for both segments that represented approximately 18.9 %, 15.0 % and 13.8 % of the total consolidated revenues.

In fiscal year 2021, the Company had three wholesalers distributing products for all three segments that represented approximately 16.6 %, 12.6 %, and 12.6 % of the total consolidated revenues.

In fiscal year 2024, the Company utilized three wholesalers distributing products for both segments that represented approximately 20.5 %, 15.6 % and 12.3 % of the total gross revenues.

In fiscal year 2023, the Company had three wholesalers distributing products for both segments that represented approximately 18.2 %, 15.1 % and 14.2 % of the total gross revenues.

In fiscal year 2022, the Company had three wholesalers distributing products for all three segments that represented approximately 18.9 %, 15.0 %, and 13.8 % of the total gross revenues.

(1) Other segment expenses for each reportable segment include charges related to other income and expenses, restructuring activities and impairment charges related to in-process research and development.

(2) Amounts not allocated to segments include interest (income)/expense and general corporate (income)/expense.

Fiscal 2023 includes an approximately $ 7 billion charge related to talc matters (See Note 19, Legal proceedings, for additional details) and $ 0.4 billion related to the unfavorable change in the fair value of the retained stake in Kenvue.

(2) General corporate includes cash, cash equivalents and marketable securities.

(3) Innovative Medicine includes:

The fiscal years 2024 and 2023 include charges for talc matters of approximately $ 5.1 billion and $ 7 billion, respectively (See Note 19, Legal proceedings, for additional details).

The fiscal year 2024 includes a loss of approximately $ 0.4 billion related to the debt to equity exchange of the Company's remaining shares of Kenvue Common Stock.

The fiscal year 2023 includes the unfavorable change in the fair value of the retained stake in Kenvue of approximately $ 0.4 billion.

(3) Innovative Medicine segment income before tax includes:

• Acquired in-process research & development expense of $ 1.25 billion to secure the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition)

• Monetization of royalty rights of $ 0.3 billion

• Litigation expense of $ 0.3 billion primarily related to Risperdal Gynecomastia

• An intangible asset impairment charge of approximately $ 0.2 billion associated with the M710 (biosimilar) asset acquired as part of the acquisition of Momenta Pharmaceuticals in 2020.

• A restructuring related charge of $ 0.1 billion

• One-time COVID-19 Vaccine manufacturing exit related costs of $ 0.1 billion

• Favorable changes in the fair value of securities of $ 0.1 billion

MedTech segment income before tax includes:

• Acquisition and integration related costs of $ 1.0 billion primarily related to the acquisition of Shockwave

• Acquired in-process research and development expense of $ 0.5 billion from the V-Wave acquisition

• A gain of $ 0.2 billion related to the Acclarent divestiture

• A Medical Device Regulation charge of $ 0.2 billion

• A restructuring related charge of $ 0.2 billion

(4) Innovative Medicine segment income before tax includes:

• One-time COVID-19 Vaccine manufacturing exit related costs of $ 0.7 billion

• A restructuring related charge of $ 0.5 billion

• Unfavorable changes in the fair value of securities of $ 0.4 billion

• Favorable litigation related items of $ 0.1 billion

• Loss on divestiture $ 0.2 billion.

• Loss on divestiture of $ 0.2 billion.

• An intangible asset impairment charge of approximately $ 0.2 billion related to market dynamics associated with a non-strategic asset (M710) acquired as part of the acquisition of Momenta Pharmaceuticals in 2020.

MedTech includes:

• Acquired in process research and development asset of $ 0.4 billion related to the Laminar acquisition in 2023

MedTech segment income before tax includes:

• Acquired in-process research and development expense of $ 0.4 billion related to the Laminar acquisition in 2023

• A restructuring related charge of $ 0.3 billion

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• Income from litigation settlements of $ 0.1 billion

(4) Innovative Medicine includes:

(5) Innovative Medicine segment income before tax includes:

• One-time COVID-19 Vaccine manufacturing exit related costs of $ 1.5 billion

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• A restructuring related charge of $ 0.1 billion

MedTech includes:

MedTech segment income before tax includes:

• Litigation expense of $ 0.6 billion primarily for pelvic mesh related costs

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• A Medical Device Regulation charge of $ 0.3 billion

(5) Innovative Medicine includes:

• Litigation expense of $ 0.6 billion, primarily related to Risperdal Gynecomastia

• Divestiture gains of $ 0.6 billion

• Gains of $ 0.5 billion related to the change in the fair value of securities

• A restructuring related charge of $ 0.1 billion

MedTech includes:

• An in-process research and development expense of $ 0.9 billion related to Ottava

• A restructuring related charge of $ 0.3 billion

• A Medical Device Regulation charge of $ 0.2 billion

2023 Annual Report

• Litigation expense of $ 0.1 billion

(6) General corporate includes cash, cash equivalents, marketable securities and other corporate assets.

(7) Long-lived assets include property, plant and equipment, net for fiscal years 2024, and 2023 of $ 20,518 and $ 19,898 , respectively, and intangible assets and goodwill, net for fiscal years 2024 and 2023 of $ 81,818 and $ 70,733 , respectively.

2024 Annual Report

Acquisitions and divestitures

In the fiscal first quarter of 2024, the Company announced it has entered into a definitive agreement to acquire Ambrx Biopharma, Inc., or Ambrx (Nasdaq:

AMAM), a clinical-stage biopharmaceutical company with a proprietary synthetic biology technology platform to design and develop next-generation antibody drug conjugates (ADCs), in an all-cash merger transaction for a total equity value of approximately $ 2.0 billion, or $ 1.9 billion net of estimated cash acquired.

The Company will acquire all of the outstanding shares of Ambrx’s common stock for $ 28.00 per share through a merger of Ambrx with a subsidiary of the Company.

The closing of the transaction is expected to occur in the first half of 2024, subject to receipt of Ambrx shareholder approval, as well as clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.

The Company expects that the transaction will be accounted for as a business combination and the results of operations will be included in the Innovative Medicine segment as of the acquisition date.

Subsequent to the fiscal year end 2024, the Company announced it has entered into a definitive agreement to acquire Intra-Cellular Therapies, Inc.

ITCI), a biopharmaceutical company focused on the development and commercialization of therapeutics for central nervous system (CNS) disorders, for $ 132.00 per share in cash for a total equity value of approximately $ 14.6 billion.

The Company expects to fund the transaction through a combination of cash on hand and debt.

The closing of the transaction is expected to occur later this year subject to applicable regulatory approvals, approval by Intra-Cellular Therapies’ stockholders and other customary closing conditions for a transaction of this type.

The results of operations will be included in the Innovative Medicine segment beginning on the acquisition date.

Business combinations

Acquisitions of a business are accounted for as business combinations applying the acquisition method of accounting.

Under this method, the assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date in the Company’s consolidated financial statements.

The excess of the purchase price over the fair value of the acquired net assets, where applicable, is recorded as goodwill.

The results of operations of these acquisitions have been included in the Company’s financial statements from their respective dates of acquisition.

During the fiscal year 2024, certain businesses were acquired for $ 15.1 billion, net of cash acquired.

The fiscal year 2024 acquisitions primarily included;

Ambrx Biopharma, Inc., Shockwave Medical Inc., and Proteologix, Inc.

The remaining acquisitions were not material.

On June 20, 2024, the Company completed the acquisition of Proteologix, Inc., a privately held biotechnology company focused on bispecific antibodies for immune-mediated diseases, for approximately $ 0.8 billion net of cash acquired, with potential for an additional milestone payment.

The results of operations are included in the Innovative Medicine segment as of the acquisition date.

The fair value of the acquisition was allocated to assets acquired of $ 1.2 billion, primarily non-amortizable intangible assets, inclusive of purchased IPR&D, for $ 0.9 billion, goodwill for $ 0.3 billion, and $ 0.3 billion of liabilities assumed which included $ 0.1 billion related to a contingent consideration.

The preliminary purchase price allocation is subject to any subsequent valuation adjustments within the measurement period.

A probability of success factor ranging from 30 % to 45 % was used in the fair value calculation to reflect inherent regulatory and commercial risk of the IPR&D.

The discount rate applied was approximately 16 %.

The goodwill is primarily attributable to synergies expected to arise from the business acquisition and is not expected to be deductible for tax purposes.

Acquisition related costs before tax for the fiscal 2024 were not material.

On May 31, 2024, the Company completed the acquisition of Shockwave Medical Inc.

(SWAV)(Shockwave), a leading, first-to-market provider of innovative intravascular lithotripsy (IVL) technology for the treatment of calcified coronary artery disease (CAD) and peripheral artery disease (PAD) in an all-cash merger transaction.

The Company acquired all the outstanding shares of Shockwave’s common stock for $ 335.00 per share through a merger of Shockwave with a subsidiary of the Company.

The results of operations were included in the MedTech segment as of the acquisition date.

Details of the fair value amounts recognized for assets acquired and liabilities assumed as of the purchase date and at the end of fiscal year 2024, which includes measurement period adjustments, are included in the table below.

As the acquisition occurred in May 2024, the Company is still finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed.

The allocation of the purchase price included in the current period balance sheet is based on the best estimate of management and is preliminary and subject to change.

(Dollars in Billions) May 31, 2024 December 29, 2024

Assets acquired:

Cash $ 1.1 $ 1.1

Goodwill 7.5 7.6

Amortizable intangibles 5.3 5.3

IPR&D 0.6 0.6

Inventory 0.5 0.5

Other assets 0.5 0.4

Total assets acquired $ 15.5 $ 15.5

Liabilities assumed:

Deferred taxes $ 1.5 $ 1.5

Notes payable* 1.0 1.0

Accrued liabilities** 0.4 0.4

Total liabilities assumed $ 2.9 $ 2.9

Net assets acquired $ 12.6 $ 12.6

Net assets acquired as of May 31, 2024 $ 12.6

Cash acquired 1.1

Equity awards settled 0.6

Settlement of Note payable* 1.0

Total enterprise value as of June 30, 2024 $ 13.1

* Represents the convertible debt which was subsequently paid in the fiscal second quarter of 2024.

** Includes $ 0.2 billion of equity awards

The goodwill is primarily attributable to synergies expected to arise from the business acquisition and is not expected to be deductible for tax purposes.

Acquisition related costs before tax for the fiscal 2024 were $ 0.9 billion of which $ 0.4 billion was related to the fair value of the inventory step-up and was recorded in Cost of products sold and $ 0.5 billion primarily related to equity awards and was recorded in Other (income) expense.

The amortizable intangible assets were primarily comprised of already in-market CAD and PAD IVL products with the average weighted lives of 14 years.

The IPR&D assets were valued for technology programs for unapproved products.

The value of the IPR&D was calculated using a probability-adjusted cash flow projection discounted for the risk inherent in such projects with the weighted average probability of success factors of approximately 50 %.

The discount rate applied was 9.0 %.

On March 7, 2024, the Company completed the acquisition of Ambrx Biopharma, Inc., (Ambrx), a clinical-stage biopharmaceutical company with a proprietary synthetic biology technology platform to design and develop next-generation antibody drug conjugates (ADCs), in an all-cash merger transaction for a total equity value of approximately $ 2.0 billion, or $ 1.8 billion net of cash acquired.

The Company acquired all of the outstanding shares of Ambrx’s common stock for $ 28.00 per share through a merger of Ambrx with a subsidiary of the Company.

The results of operations were included in the Innovative Medicine segment as of the acquisition date.

The fair value of the acquisition was allocated to assets acquired of $ 2.3 billion, primarily non-amortizable intangible assets, inclusive of purchased IPR&D, for $ 1.9 billion, goodwill for $ 0.3 billion and liabilities assumed of $ 0.5 billion, which includes deferred taxes of $ 0.4 billion.

The preliminary purchase price allocation is subject to any subsequent valuation adjustments within the measurement period.

A probability of success factor ranging from 40 % to

2024 Annual Report

70 % was used in the fair value calculation to reflect inherent regulatory and commercial risk of the IPR&D.

The discount rate applied was approximately 17 %.

The goodwill is primarily attributable to synergies expected to arise from the business acquisition and is not expected to be deductible for tax purposes.

Acquisition related costs before tax for the fiscal year 2024 were not material.

During the fiscal year 2023, the Company did not make any acquisitions that qualified as a business combination.

During the fiscal year 2023, there were asset acquisitions of in-process research and development of approximately $ 0.5 billion in cash, primarily consisting of the acquisition of Laminar Inc.

for $ 0.4 billion which was closed on November 30, 2023.

is a privately-held medical device company focused on eliminating the left atrial appendage (LAA) in patients with non-valvular atrial fibrillation (AFib).

During the fiscal year 2022, certain businesses were acquired for $ 17.7 billion in cash and $ 1.1 billion of liabilities assumed.

These acquisitions were accounted for using the acquisition method and, accordingly, results of operations have been included in the financial statements from their respective dates of acquisition.

The excess of purchase price over the estimated fair value of tangible assets acquired amounted to $ 17.3 billion and has been assigned to identifiable intangible assets, with any residual recorded to goodwill.

During the fiscal year 2022, certain businesses were acquired for $ 17.7 billion, net of cash acquired.

The fiscal year 2022 acquisitions primarily included Abiomed, Inc.

2 unchanged sentences

The transaction broadens the Company’s position as a growing cardiovascular innovator, advancing the standard of care in heart failure and recovery, one of healthcare’s largest areas of unmet need.

The transaction was accounted for as a business combination and the results of operations were included in the MedTech segment as of the date of the acquisition.

The results of operations were included in the MedTech segment as of the date of the acquisition.

The acquisition was completed through a tender offer for all outstanding shares.

6 unchanged sentences

During the fiscal fourth quarter of 2023, the Company finalized the purchase price allocation.

In the fiscal 2023, there were purchase price allocation adjustments netting to approximately $ 0.2 billion with an offsetting increase to goodwill.

liabilities assumed of $ 3.0 billion, which includes the fair value of the contingent consideration mentioned above for $ 0.7 billion and deferred taxes of $ 2.0 billion.

In fiscal 2023, there were purchase price allocation adjustments netting to approximately $ 0.2 billion with an offsetting increase to goodwill.

The fair value of the acquisition was allocated to assets acquired of $ 20.1 billion (net of $ 0.3 billion cash acquired), primarily to goodwill for $ 11.1 billion, amortizable intangible assets for $ 6.6 billion, IPR&D for $ 1.1 billion, marketable securities of $ 0.6 billion and liabilities assumed of $ 3.0 billion, which includes the fair value of the contingent consideration mentioned above for $ 0.7 billion and deferred taxes of $ 2.0 billion.

The goodwill is primarily attributable to the commercial acceleration and expansion of the portfolio and is not expected to be deductible for tax purposes.

5 unchanged sentences

The discount rate applied was 9.5 %.

In 2023, the Company recorded acquisition related costs before tax of approximately $ 0.2 billion, which was primarily recorded in Other (income)/expense.

In 2022, the Company recorded acquisition related costs before tax of approximately $ 0.3 billion, which was recorded in Other (income)/expense.

During fiscal year 2021, the Company did not make any material acquisitions that qualified as a business combination.

In the fiscal years 2024, 2023 and 2022, the Company recorded acquisition related costs before tax of approximately $ 0.3 billion, $ 0.2 billion and $ 0.3 billion, which was primarily recorded in Other (income)/expense.

In accordance with U.S.

GAAP standards related to business combinations, and goodwill and other intangible assets, supplemental pro forma information for fiscal years 2024, 2023 and 2022 is not provided, as the impact of the aforementioned acquisitions did not have a material effect on the Company’s results of operations.

Asset acquisitions

Acquired In-process research and development (IPR&D) in an asset acquisition is immediately expensed as research and development expense in the Company's consolidated financial statements.

Milestone payments incurred prior to regulatory approval are expensed as research and development expense when the milestone event occurs.

The fiscal year 2024 asset acquisitions expensed as research and development included V-Wave Ltd.

and the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition).

The remaining activity was not material.

On October 8, 2024, the Company completed the acquisition of V-Wave Ltd, a privately-held company focused on developing innovative treatment options for patients with heart failure, for an upfront payment of $ 0.6 billion, with the potential for additional regulatory and commercial milestone payments up to approximately $ 1.1 billion.

The Company recorded an IPR&D charge of approximately $ 0.5 billion, net of a gain recorded on the Company's existing investment in V-Wave and the results of operations are included in the MedTech segment as of the acquisition date.

On July 11, 2024, the Company completed the acquisition of Yellow Jersey, a demerged subsidiary of Numab Therapeutics AG, to secure the global rights to NM26, a novel, investigational first-in-class bispecific antibody targeting two clinically proven pathways in atopic dermatitis (AD), in an all-cash transaction for approximately $ 1.25 billion.

The Company recorded an IPR&D charge of approximately $ 1.25 billion, and the results of operations are included in the Innovative Medicine segment as of the acquisition date.

The fiscal year 2023 asset acquisitions expensed as research and development included Laminar Inc.

The remaining activity was not material.

During the fiscal year 2023, the Company completed the acquisition of Laminar Inc., a privately-held medical device company focused on eliminating the left atrial appendage (LAA) in patients with non-valvular atrial fibrillation (AFib), for an upfront payment of $ 0.4 billion.

The Company recorded an IPR&D charge of approximately $ 0.4 billion and the results of operations are included in the MedTech segment as of the acquisition date.

There were no significant asset acquisitions in 2022.

During the fiscal year 2024, the Company completed the divestiture of Acclarent resulting in approximately $ 0.3 billion in proceeds and the divestiture of Ponvory outside of the U.S.

resulting in approximately $ 0.2 billion in proceeds.

All other divestitures were not material.

During the fiscal year 2023, the Company executed divestitures resulting in approximately $ 0.2 billion in proceeds resulting in gains or losses that were not material.

At fiscal year end 2023, the Company held assets, primarily intangibles, on its Consolidated Balance Sheet that it expects to divest of approximately $ 0.3 billion primarily related to Acclarent and Ponvory.

At fiscal year end 2023, the Company held assets, primarily intangibles, on its Consolidated Balance Sheet of approximately $ 0.3 billion, primarily related to Acclarent and Ponvory, that were subsequently divested in fiscal 2024.

During fiscal year 2022, the Company did not make any material divestitures.

During fiscal year 2021, in separate transactions, the Company divested two brands outside the U.S.

within the Innovative Medicine segment.

The Company recognized a pre-tax gain recorded in Other (income) expense, net, of approximately $ 0.6 billion.

Legal proceedings

4 unchanged sentences

and other legal proceedings that arise from time to time in the ordinary course of their business.

The Company records accruals for loss contingencies associated with these legal matters when it is probable that a liability

will be incurred, and the amount of the loss can be reasonably estimated.

The Company records accruals for loss contingencies associated with these legal matters when it is probable that a liability will be incurred, and the amount of the loss can be reasonably estimated.

As of December 29, 2024, the Company has determined that the liabilities associated with certain litigation matters are probable and can be reasonably estimated.

The Company has accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ASC 450-20-25, Contingencies.

For these and other litigation and regulatory matters discussed below for which a loss is probable or reasonably possible, the Company is unable to estimate the possible loss or range of loss beyond the amounts accrued.

6 unchanged sentences

procedural or jurisdictional issues;

the uncertainty and unpredictability of the number of potential claims;

the uncertainty and unpredictability of the number of

2024 Annual Report

potential claims;

ability to achieve comprehensive multi-party settlements;

4 unchanged sentences

However, the resolution of, or increase in accruals for, one or more of these matters in any reporting period may have a material adverse effect on the Company’s results of operations and cash flows for that period.

2023 Annual Report

Matters concerning talc

A significant number of personal injury claims alleging that talc causes cancer have been asserted against Johnson & Johnson Consumer Inc., its successor LTL Management LLC (now known as LLT Management LLC) and the Company arising out of the use of body powders containing talc, primarily JOHNSON’S Baby Powder.

In talc cases that previously have gone to trial, the Company has obtained a number of defense verdicts, but there also have been verdicts against the Company, many of which have been reversed on appeal.

A significant number of personal injury claims alleging that talc causes cancer have been asserted against the Company and its affiliates arising out of the use of body powders containing talc, primarily JOHNSON’S Baby Powder.

In talc cases that have gone to trial, the Company has obtained a number of defense verdicts, but there also have been verdicts against the Company, many of which have been reversed on appeal.

In June 2020, the Missouri Court of Appeals reversed in part and affirmed in part a July 2018 verdict of $ 4.7 billion in Ingham v.

7 unchanged sentences

Notwithstanding the Company’s confidence in the safety of its talc products, in certain circumstances the Company has settled cases.

In June 2014, the Mississippi Attorney General filed a complaint against the Company alleging violation of the Mississippi Consumer Protection Act by failing to disclose alleged health risks associated with female consumers’ use of talc contained in JOHNSON’S Baby Powder and JOHNSON’S Shower to Shower (a product divested in 2012).

The Company has reached an agreement to resolve this matter.

In January 2020, the State of New Mexico filed a consumer protection case alleging that the Company deceptively marketed and sold its talcum powder products by making misrepresentations about the safety of the products and the presence of carcinogens, including asbestos.

The Company has reached an agreement to resolve this matter.

Forty-two states and the District of Columbia commenced a joint investigation into the Company’s marketing of its talcum powder products.

In January 2024, the Company reached an agreement in principle with the multi-state group of state Attorneys General, subject to ongoing negotiation of non-monetary terms.

In June 2024, the settlements were finalized.

In October 2021, Johnson & Johnson Consumer Inc.

6 unchanged sentences

In October 2021, notwithstanding the Company’s confidence in the safety of its talc products, the Debtor filed a voluntary petition with the United States Bankruptcy Court for the Western District of North Carolina, Charlotte Division, seeking relief under Chapter 11 of the Bankruptcy Code (the LTL Bankruptcy Case).

All litigation against LTL, Old JJCI, New JJCI, the Company, other of their corporate affiliates, identified retailers, insurance companies, and certain other parties (the Protected Parties) was stayed, although LTL did agree to lift the stay on a small number of appeals where appeal bonds had been filed.

The LTL Bankruptcy Case was transferred to the United States Bankruptcy Court for the District of New Jersey.

2 unchanged sentences

On January 30, 2023, the Third Circuit reversed the Bankruptcy Court’s ruling and remanded to the Bankruptcy Court to dismiss the LTL bankruptcy.

LTL filed a petition for rehearing of the Third Circuit’s decision, which was denied in March 2023.

LTL subsequently filed a motion in the Third Circuit to stay the mandate directing the New Jersey Bankruptcy Court to dismiss the LTL bankruptcy pending filing and disposition of a petition for writ of certiorari to the United States Supreme Court.

The Third Circuit denied the motion to stay the mandate and issued the mandate.

In April 2023, the New Jersey Bankruptcy Court dismissed the LTL Bankruptcy Case, effectively lifting the stay as to all parties and returning the talc litigation to the tort system.

4 unchanged sentences

The LTL 2 Preliminary Injunction remained in force until late August 2023, following the Bankruptcy Court’s extension of the initial LTL 2 Preliminary Injunction in June 2023.

Under the LTL 2 Preliminary Injunction, except for in those cases filed in the federal court ovarian cancer multi-district litigation, discovery in all personal injury and wrongful death matters was permitted to proceed.

Under the LTL 2 Preliminary Injunction, except for those cases filed in the federal court ovarian cancer multi-district litigation, discovery in all personal injury and wrongful death matters was permitted to proceed.

Furthermore, in April 2023, the Talc Claimants' Committee filed a motion to dismiss the LTL 2 Bankruptcy followed by similar motions from other claimants.

Hearings on the motions to dismiss occurred in June 2023.

On July 28, 2023, the court dismissed the LTL 2 Bankruptcy case and, the same day, the Company stated its intent to appeal the decision and to continue its efforts to obtain a resolution of the talc claims.

In July 2023, the court dismissed the LTL 2 Bankruptcy case and, the same day, the Company stated its intent to appeal the decision and to continue its efforts to obtain a resolution of the talc claims.

In September 2023, the Bankruptcy Court entered an order granting LTL leave to seek a direct appeal to the Third Circuit Court of Appeals.

In October 2023, the Third Circuit granted LTL’s petition for a direct appeal.

Briefing is ongoing.

Following the dismissal of LTL 2, new lawsuits were filed and cases across the country that had been stayed were reactivated.

In July 2024, the Third Circuit issued a non-precedential opinion affirming the Bankruptcy Court's decision to dismiss the LTL Bankruptcy case.

In October 2023, the Company stated that it was pursuing the following four parallel and alternative pathways to achieve a comprehensive and final resolution of the talc claims:

(i) the appeal of the LTL 2 dismissal decision;

(ii) pursuing a consensual “prepackaged” bankruptcy case, as “strongly encouraged” by the Bankruptcy Court in its dismissal decision;

(iii) aggressively litigating the talc claims in the tort system;

and (iv) pursuing affirmative claims against experts for false and defamatory narratives regarding the Company’s talc powder products.

In December 2023, LTL changed its state of formation to Texas and its name to LLT Management LLC ("LLT").

Following the dismissal of LTL 2, new lawsuits were filed, cases across the country that had been stayed were reactivated, and trials have commenced.

The majority of the cases are pending in federal court, organized in a multi-district litigation (MDL) in the United States District Court for the District of New Jersey.

In the MDL, case-specific discovery is proceeding with an expectation that a trial will occur in early 2025.

Separately, discovery and pre-trial activity is underway in various individually filed and set cases around the country, with most activity for such cases centralized in New Jersey and California.

In the original bankruptcy case, the Company agreed to provide funding to LTL for the payment of amounts the New Jersey Bankruptcy Court determines are owed by LTL and the establishment of a $ 2 billion trust in furtherance of this purpose.

The Company established a reserve for approximately $ 2 billion in connection with the aforementioned trust.

During the bankruptcy proceedings LTL had been de-consolidated by the Company.

In the LTL 2 Bankruptcy Case, the Company had agreed to contribute an additional amount which, when added to the prior $ 2 billion, would be a total reserve of approximately $ 9 billion payable over 25 years (nominal value approximately $ 12 billion discounted at a rate of 4.41 %), to resolve all the current and future talc claims.

The approximate $ 9 billion reserve encompasses actual and contemplated settlements, of which approximately one-third is recorded as a current liability.

The recorded amount remains the Company’s best estimate of probable loss after the dismissal.

The parties have not yet reached a resolution of all talc matters and the Company is unable to estimate the possible loss or range of loss beyond the amount accrued.

A class action advancing claims relating to industrial talc was filed against the Company and others in New Jersey state court in May 2022 (the Edley Class Action).

The Edley Class Action asserts, among other things, that the Company fraudulently defended past asbestos personal injury lawsuits arising from exposure to industrial talc mined, milled, and manufactured before January 6, 1989 by the Company’s then wholly owned subsidiary, Windsor Minerals, Inc., which is currently a debtor in the Imerys Bankruptcy described hereafter.

The Company removed the Edley Class Action to federal court in the District of New Jersey.

In October 2022, the Company filed motions to dismiss and to deny certification of a class to pursue the Edley Class Action in the New Jersey District Court.

Argument on the motions was heard in November 2023.

Thereafter, the Company resolved this matter.

In the MDL, case-specific discovery proceeded.

The MDL proceedings have been stayed by order of the bankruptcy court in the Red River Bankruptcy case discussed below.

In March 2024, the court granted the Company's motion for a renewed Daubert hearing prior to the trial.

The briefing on the renewed Daubert issues was completed in August 2024.

In May 2024, the Company commenced a three-month solicitation period of its proposed consensual “prepackaged” Chapter 11 bankruptcy plan (the “Proposed Plan”) for the comprehensive and final resolution of all current and future claims related to cosmetic talc in the United States, excluding claims related to mesothelioma or State consumer protection claims, in exchange for the payment by the Company of present value of approximately $ 6.475 billion payable over 25 years (nominal value of approximately $ 8.0 billion, discounted at a rate of 4.4 %).

The claims encompassed by the Proposed Plan constitute 99.75 % of pending lawsuits against the Company relating to its talc powder products.

In August 2024, LLT engaged in a restructuring that resulted in the creation of three new Texas limited liability companies:

(a) Red River Talc, LLC ("Red River");

(b) Pecos River Talc LLC ("Pecos River");

and (3) New Holdco (Texas) LLC.

As a result of this restructuring, all claims related to ovarian and other gynecological cancers were separated and allocated to Red River, and mesothelioma, governmental unit and certain other claims were allocated to Pecos River.

In September 2024, while reiterating the Company's continued confidence in the safety of its talc products, Red River filed a voluntary petition with the United States Bankruptcy Court for the Southern District of Texas, seeking relief under Chapter 11 of the Bankruptcy Code (the Red River Bankruptcy Case), in furtherance of the Company's consensual "prepackaged" Proposed Plan.

Red River also filed a motion for a temporary restraining order, seeking to extend the automatic stay to additional non-debtor entities.

Prior to filing, the initial proposed plan was amended to, among other things, increase the proposed resolution by $ 1.75 billion.

2024 Annual Report

Shortly after Red River filed its Chapter 11 petition, the U.S.

Trustee's office filed a motion to transfer venue in the New Jersey Bankruptcy Court, and thereafter, a motion to transfer venue and a motion to dismiss in the Texas Bankruptcy Court.

A coalition of six plaintiff law firms also filed a motion to transfer venue and a motion to dismiss in the Texas Bankruptcy Court.

In September 2024, the Texas Bankruptcy Court entered a temporary order enjoining the commencement or prosecution of all claims against Red River and certain non-debtor entities, including the Company, until October 11, 2024.

The temporary order was extended in October 2024 and again in December 2024.

The commencement and prosecution of all claims against Red River and certain non-debtor entities are currently enjoined until March 15, 2025.

Also in September 2024, the New Jersey Bankruptcy Court denied the U.S.

Trustee's motion to transfer venue without prejudice.

In October 2024, the Texas Bankruptcy Court denied the motion to transfer venue from Texas to New Jersey Bankruptcy Court.

A consolidated hearing to address, among other things, the motions to dismiss and plan confirmation is currently scheduled to begin on February 18, 2025.

Mesothelioma and State consumer protection claims are being addressed outside the Proposed Plan.

The Company separately has resolved 95 % of the mesothelioma lawsuits filed to date and has resolved the State claims.

To account for these settlements and the contemplated comprehensive resolution through the Proposed Plan, the Company recorded a cumulative incremental charge of approximately $ 5.0 billion, through the fourth fiscal quarter 2024.

As of December 29, 2024, the total present value of the reserve is approximately $ 11.6 billion (or nominal value of approximately $ 13.5 billion), net of payments made in fiscal 2024.

Approximately ten percent of the reserve is recorded as a current liability.

The recorded amount remains the Company's best estimate of probable loss.

In February 2019, the Company’s talc supplier, Imerys Talc America, Inc.

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The Cyprus Plan contemplates a settlement with Imerys and talc claimants where Cyprus would make a monetary contribution to a trust established under the Imerys Plan in exchange for an injunction against talc claims asserted against it and certain affiliated parties.

The Imerys Plan proceeded to solicitation in early 2021.

However, the Imerys Plan did not receive the requisite number of votes to be confirmed after the Bankruptcy Court ruled certain votes cast in favor of the Imerys Plan should be disregarded.

Imerys subsequently canceled its confirmation hearing.

Imerys, the Imerys Tort Claimants’ Committee, and the Imerys Future Claimants’ Representative, along with Cyprus, the Cyprus Tort Claimants’ Committee, and the Cyprus Future Claimants’ Representative (collectively the Mediation Parties) have been engaged in mediation since shortly after the confirmation hearing was canceled in October 2021.

In September 2023, the Bankruptcy Court entered an order extending the term of the mediation among the Mediation Parties through the end of December 2023.

The Bankruptcy Court also authorized Imerys and Cyprus to proceed with mediation with certain of their insurers through the end of December 2023.

Cyprus also asserts it has claims for indemnity against the Company arising out of talc personal injury claims.

Under the Cyprus Plan, Cyprus would also contribute its alleged indemnification rights to the trust.

In September 2023, Imerys and Cyprus filed amended plans of reorganization.

The amended plans contemplate a similar construct as the prior Imerys and Cyprus Plans, including all talc claims against Imerys and Cyprus (and certain other protected parties) being channeled to a trust along with Imerys’s and Cyprus’s alleged indemnification rights against the Company.

In January 2024, Imerys and Cyprus filed revised TDP.

In February 2024, Imerys and Cyprus filed certain motions related to their Disclosure Statement.

The Company opposed both plans on the basis that the plans inflated Imerys’s and Cyprus’s liability for talc claims and had the potential effect of imposing those inflated liabilities on the Company through the Company’s alleged indemnification obligations.

In July 2024, the Company, Imerys, and Cyprus and certain of their affiliates (including their parent entities), and the tort claimants' committees and future claimants' representatives appointed in their respective Chapter 11 cases entered into a global settlement agreement (the Imerys Settlement Agreement) to resolve their ongoing disputes, including disputes raised in the Imerys and Cyprus bankruptcies.

In August 2024, Imerys and Cyprus filed amended Chapter 11 plans and disclosure statements incorporating the terms of the settlement with the Company.

In October 2024, the Imerys Bankruptcy Court entered an order approving the Imerys Settlement Agreement (the Settlement Order).

The effectiveness of certain provisions of the settlement, including mutual releases, are subject to certain conditions, including the Imerys and Cyprus Plans being accepted by a sufficient number and amount of voting creditors to be confirmed under the Bankruptcy Code.

Certain insurers have appealed the Settlement Order and sought a stay of the order pending appeal, which the Court denied on January 13, 2025.

The briefing of the appeal in the District Court is scheduled to be completed in April 2025.

On January 5, 2025, Imerys and Cyprus each filed a certification of voting results, indicating that their respective plan had been accepted by each voting class of creditors.

A joint confirmation hearing for the plans is scheduled for April 2025.

In February 2018, a securities class action lawsuit was filed against the Company and certain named officers in the United States District Court for the District of New Jersey, alleging that the Company violated the federal securities laws by failing to disclose alleged asbestos contamination in body powders containing talc, primarily JOHNSON’S Baby Powder, and that purchasers of the Company’s shares suffered losses as a result.

In April 2019, the Company moved to dismiss the complaint.

2023 Annual Report

December 2019, the Court denied, in part, the motion to dismiss.

In April 2021, briefing on Plaintiff’s motion for class certification was completed.

In December 2019, the Court denied, in part, the motion to dismiss.

The case was stayed in May 2022 pursuant to the LTL Bankruptcy Case and was reopened in May 2023.

In December 2023, the Court granted Plaintiff’s motion for class certification.

In January 2024, Defendants filed a petition with the Third Circuit under Federal Rule of Civil Procedure 23(f) for permission to appeal the Court’s order granting class certification.

Fact discovery is proceeding.

A lawsuit was brought against the Company in the Superior Court of California for the County of San Diego alleging violations of California’s Consumer Legal Remedies Act (CLRA) relating to JOHNSON’S Baby Powder.

In that lawsuit, the plaintiffs allege that the Company violated the CLRA by failing to provide required Proposition 65 warnings.

In July 2019, the Company filed a notice of removal to the United States District Court for the Southern District of California and plaintiffs filed a second amended complaint shortly thereafter.

In October 2019, the Company moved to dismiss the second amended complaint for failure to state a claim upon which relief may be granted.

In response to those motions, plaintiffs filed a third amended complaint.

In December 2019, the Company moved to dismiss the third amended complaint for failure to state a claim upon which relief may be granted.

In April 2020, the Court granted the motion to dismiss but granted leave to amend.

In May 2020, plaintiffs filed a Fourth Amended Complaint but indicated that they would be filing a motion for leave to file a fifth amended complaint.

Plaintiffs filed a Fifth Amended Complaint in August 2020.

The Company moved to dismiss the Fifth Amended Complaint for failure to state a claim upon which relief may be granted.

In January 2021, the Court issued an Order and opinion ruling in the Company’s favor and granting the motion to dismiss with prejudice.

In February 2021, Plaintiffs filed a Notice of Appeal with the Ninth Circuit.

Plaintiffs filed their opening brief in July 2021.

The company filed its responsive brief in October 2021.

After the Notice of Suggestion of Bankruptcy was filed with the Ninth Circuit, a stay was imposed, and the Court held the reply deadline in abeyance.

In September 2023, the stay lifted.

With briefing complete, the Court is expected to either schedule oral argument or issue its decision at any time.

In June 2014, the Mississippi Attorney General filed a complaint in Chancery Court of The First Judicial District of Hinds County, Mississippi against the Company and Johnson & Johnson Consumer Companies, Inc.

(now known as Johnson & Johnson Consumer Inc.) (collectively, JJCI).

The complaint alleges that JJCI violated the Mississippi Consumer Protection Act by failing to disclose alleged health risks associated with female consumers’ use of talc contained in JOHNSON’S Baby Powder and JOHNSON’S Shower to Shower (a product divested in 2012) and seeks injunctive and monetary relief.

In February 2022, the trial court set the case for trial to begin in February 2023.

However, in October 2022, the LTL bankruptcy court issued an order staying the case.

In March 2023, the Third Circuit issued the mandate to dismiss the LTL Bankruptcy Case and in April 2023, the New Jersey Bankruptcy Court dismissed the LTL Bankruptcy Case, effectively lifting the stay as to this matter.

The State requested a new trial setting.

Later in April 2023, the trial court set a new trial date for April 2024.

The Company filed summary judgment and Daubert motions.

The State filed a limited Daubert motion.

The parties agreed to the Court's request for mediation.

A pretrial conference is set for February 2024 and trial is scheduled for April 2024.

However, the Company is actively engaged in resolution discussions concerning this matter.

In March 2022, the New Mexico court denied the Company’s motion to compel the State of New Mexico to engage in discovery of state agencies and denied the Company’s request for interlocutory appeal of that decision.

The Company then filed a Petition for Writ of Superintending Control and a Request for a Stay to the New Mexico Supreme Court on the issue of the State of New Mexico’s discovery obligations.

In April 2022, in view of the efforts to resolve talc-related claims in the LTL Bankruptcy Case, the Company and the State agreed to a 60-day stay of all matters except for the pending writ before the New Mexico Supreme Court, which expired in June 2022.

Thereafter, the Company moved to enjoin prosecution of the case in the LTL Bankruptcy Case.

In October 2022, the bankruptcy court issued an order staying the case.

In December 2022, the State filed an appeal to the Third Circuit concerning the stay order.

Separately, in September 2022, the New Mexico Supreme Court granted the Company's request for a stay pending further briefing on the scope of the State of New Mexico’s discovery obligations.

While the State notified the New Mexico Supreme Court of the lifted stay of litigation in April 2023, the Court has not taken any action since being notified of the lifting of the stay and it remains in effect.

Forty-two states and the District of Columbia (including Mississippi and New Mexico) have commenced a joint investigation into the Company’s marketing of its talcum powder products.

At this time, the multi-state group has not asserted any claims against the Company.

Five states have issued Civil Investigative Demands seeking documents and other information.

The Company has produced documents to Arizona, North Carolina, Texas, and Washington and entered into confidentiality agreements.

The Company has not received any follow up requests from those states.

In March 2022, each of the forty-two states agreed to mediation of their claims in the LTL Bankruptcy Case.

In July 2022, New Mexico and Mississippi indicated they would no longer voluntarily submit to further mediation in the LTL Bankruptcy and would proceed with their respective cases in state court.

In March 2023, the mediation was terminated.

In January 2024, the Company reached an agreement in principle with the multi-state group of state Attorneys General, subject to ongoing negotiation of non-monetary terms.

The unique procedural history and status of the New Mexico and Mississippi matters specifically have been discussed above.

In addition, the Company has received inquiries, subpoenas, and requests to produce documents regarding talc matters and the LTL Bankruptcy Case from various governmental authorities.

The Company has produced documents and responded to inquiries, and will continue to cooperate with government inquiries.

In January 2024, Defendants filed a petition with the Third Circuit under Federal Rule of Civil Procedure 23(f) for permission to appeal the Court’s order granting class certification, and in February 2024, the Third Circuit granted Defendants' petition.

In February 2024, fact discovery closed, the Court ordered the parties to mediate, and stayed the case pending mediation.

In May 2024, the parties participated in an unsuccessful mediation.

In June 2024, at the parties' request, the Court lifted the stay for certain limited discovery, but otherwise kept the stay in place pending a decision from the Third Circuit on the 23(f) petition.

Briefing on the 23(f) petition was completed in September 2024.

In January 2025, the Third Circuit listed the appeal for oral argument in March 2025.

Matters concerning opioids

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(JPI), along with other pharmaceutical companies, have been named in close to 3,500 lawsuits related to the marketing of opioids, including DURAGESIC, NUCYNTA and NUCYNTA ER.

The majority of the cases have been filed by state and local governments.

Similar lawsuits have also been filed by private plaintiffs and organizations, including but not limited to the following:

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To date, the Company and JPI have litigated two of the cases to judgment and have prevailed in both, either at trial or on appeal.

In October 2019, the Company announced a proposed agreement in principle with a negotiating committee of state Attorneys General to settle all remaining government opioid litigation claims nationwide.

Under the final national settlement agreement, which was announced in July 2021, the Company agreed to pay up to $ 5.0 billion to resolve all opioid lawsuits and future opioid claims by states, cities, counties, local school districts and other special districts, and tribal governments, contingent on sufficient participation by eligible government entities, and with credits back for entities that declined or were ineligible to participate.

In July 2021, the Company announced that the terms of the agreement to settle the state and subdivision claims had been finalized and approximately 60 % of the all-in settlement was paid by the end of fiscal 2023.

The expected payment schedule provides that approximately $ 0.7 billion of payments are to be paid by the end of fiscal 2024.

The agreement is not an admission of liability or wrongdoing, and it provides for the release of all opioid-related claims against the Company, JPI, and their affiliates (including the Company’s former subsidiaries Tasmanian Alkaloids Pty, Ltd.

and Noramco, Inc.).

As of January 2024, the Company and JPI have settled or otherwise resolved the opioid claims advanced by all government entity claimants except the City of Baltimore, a number of school districts and other claimants.

The Company and JPI continue to defend the cases brought by the remaining government entity litigants as well as the cases brought by private litigants, including NAS claimants, hospitals, and health insurers/payors.

Counting the private litigant cases, there are approximately 35 remaining opioid cases against the Company and JPI in various state courts, 430 remaining cases in the Ohio MDL, and 4 additional cases in other federal courts.

Some of these cases have been dismissed and are being appealed by the plaintiffs and certain others are scheduled for trial in 2024 or 2025.

In addition, the Province of British Columbia filed suit against the Company and its Canadian affiliate Janssen Inc., and many other industry members, in Canada, and is seeking to have that action certified as an opt in class action on behalf of other provincial/territorial and the federal governments in Canada.

In July 2021, the Company announced finalization of an agreement to settle the state and subdivision claims for up to $ 5.0 billion.

Approximately 70 % of the all-in settlement was paid by the end of fiscal fourth quarter 2024.

A few government entities opted out of the settlement.

In September 2024, the Company reached an agreement to resolve the hospital cases.

The Company and JPI continue to defend the cases brought by the remaining government entity litigants as well as the cases brought by private litigants.

In total, there are approximately 35 remaining opioid cases against the Company and JPI in various state courts, 390 remaining cases in the Ohio multi-district litigation (MDL), and 4 additional cases in other federal courts.

In addition, the Province of British Columbia filed suit against the Company and its Canadian affiliate Janssen Inc., and many other industry members, in Canada.

That action was certified as an opt in class action on behalf of other provincial/territorial and the federal governments in Canada in January 2025.

Additional proposed class actions have been filed in Canada against the Company and Janssen Inc., and many other industry members, by and on behalf of people who used opioids (for personal injuries), municipalities and First Nations bands.

These actions allege a variety of claims related to opioid marketing practices, including false advertising, unfair competition, public nuisance, consumer fraud violations, deceptive acts and practices, false claims and unjust enrichment.

An adverse judgment in any of these lawsuits could result in the imposition of large monetary penalties and significant damages including, punitive damages, cost of abatement, substantial fines, equitable remedies and other sanctions.

From June 2017 through December 2019, the Company’s Board of Directors received a series of shareholder demand letters alleging breaches of fiduciary duties related to the marketing of opioids.

The Board retained independent counsel to investigate the allegations in the demands, and in April 2020, independent counsel delivered a report to the Board recommending that the Company reject the shareholder demands and take the steps that are necessary or appropriate to secure dismissal of related derivative litigation.

The Board unanimously adopted the recommendations of the independent counsel’s report.

In November 2019, one of the shareholders who sent a demand filed a derivative complaint against the Company as the nominal defendant and certain current and former directors and officers as defendants in the Superior Court of New Jersey.

The proposed class action in Quebec on behalf of residents diagnosed with opioid use disorder was authorized to proceed against Janssen Inc.

and other industry members in April 2024;

and leave to appeal was denied in October 2024.

Starting in November 2019, a series of shareholder derivative complaints were filed against the Company as the nominal defendant and certain current and former directors and officers as defendants in the Superior Court of New Jersey.

The complaint alleges breaches of fiduciary duties related to the marketing of opioids, and that the Company has suffered damages as a result of those alleged breaches.

A series of additional derivative complaints making similar allegations against the same and similar defendants were filed in New Jersey state and federal courts in 2019 and 2020.

By 2022, all but two state court cases had been voluntarily dismissed.

In February 2022, the state court granted the Company’s motion to dismiss one of the two cases, and the shareholder that brought the second case filed a notice of dismissal.

The shareholder whose complaint was dismissed filed a motion for reconsideration.

In May 2022, the state court held oral argument on the motion for reconsideration and subsequently denied the motion.

The shareholder has appealed the state court’s dismissal order.

2023 Annual Report

As of September 2024, all the complaints had been dismissed, and all appeals exhausted.

Product liability

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Changes to the accruals may be required in the future as additional information becomes available.

2024 Annual Report

The table below contains the most significant of these cases and provides the approximate number of plaintiffs in the United States with direct claims in pending lawsuits regarding injuries allegedly due to the relevant product or product category as of December 29, 2024:

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ETHICON PHYSIOMESH Flexible Composite Mesh 130

RISPERDAL 200

ELMIRON 2,170

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Cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Northern District of Ohio.

Litigation has also been filed in countries outside of the United States, primarily in the United Kingdom, Canada, Australia, Ireland, Germany, India and Italy.

In November 2013, DePuy reached an agreement with a Court-appointed committee of lawyers representing ASR Hip plaintiffs to establish a program to settle claims with eligible ASR Hip patients in the United States who had surgery to replace their ASR Hips, known as revision surgery, as of August 2013.

DePuy reached additional agreements in February 2015 and March 2017, which further extended the settlement program to include ASR Hip patients who had revision surgeries after August 2013 and prior to February 15, 2017.

Litigation has also been filed in countries outside of the United States, primarily in the United Kingdom, Ireland, India and Italy.

This settlement program has resolved more than 10,000 claims, thereby bringing to resolution significant ASR Hip litigation activity in the United States.

However, lawsuits in the United States remain, and the settlement program does not address litigation outside of the United States.

In Australia, a class action settlement was reached that resolved the claims of the majority of ASR Hip patients in that country.

In Canada, the Company has reached agreements to settle the class actions filed in that country.

The Company continues to receive information with respect to potential additional costs associated with this recall on a worldwide basis.

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Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases.

Most cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States

District Court for the Northern District of Texas (Texas MDL).

Most cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Northern District of Texas (Texas MDL).

Beginning on June 1, 2022, the Judicial Panel on Multidistrict Litigation ceased transfer of new cases into the Texas MDL, and there are now cases pending in federal court outside the Texas MDL.

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The Company has settled or otherwise resolved the majority of the United States cases and the estimated costs associated with these settlements and the remaining cases are reflected in the Company’s accruals.

In addition, class actions and individual personal injury cases or claims seeking damages for alleged injury resulting from Ethicon’s pelvic mesh devices have been commenced in various countries outside of the United States, including claims and cases in the United Kingdom, the Netherlands, Belgium, France, Ireland, Italy, Spain and Slovenia and class actions in Israel, Australia, Canada and South Africa.

In November 2019, the Federal Court of Australia issued a judgment regarding its findings with respect to liability in relation to the three Lead Applicants and generally in relation to the design, manufacture, pre and post-market assessments and testing, and supply and promotion of the devices in Australia used to treat stress urinary incontinence and pelvic organ prolapse.

In September 2022, after exhausting its appeals, the Company reached an in-principle agreement to resolve the two pelvic mesh class actions in Australia and in March 2023 the Federal Court approved the settlement.

The class actions in Canada were discontinued in 2020 as a result of a settlement of a group of cases and an agreement to resolve the Israeli class action was reached in May 2021.

The parties in the Israeli class action are currently finalizing the terms of the settlement.

A motion to approve the settlement was filed with the Court.

In addition, class actions and individual personal injury cases or claims seeking damages for alleged injury resulting from Ethicon’s pelvic mesh devices have been commenced in

various countries outside of the United States, including claims and cases in the United Kingdom, the Netherlands, and Ireland, and class actions in Israel, Australia, Canada and South Africa.

The vast majority of these actions are now resolved.

The Company has established accruals with respect to product liability litigation associated with Ethicon’s pelvic mesh products.

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A master settlement agreement (MSA) was entered into in September 2021 and includes 3,729 cases in the MDL and MCL.

All deadlines and trial settings in those proceedings are currently stayed pending the completion of the settlement agreement.

Of the cases subject to the MSA, 3,390 have been dismissed with prejudice.

Ethicon has received releases from 3,584 plaintiffs, and releases continue to be submitted as part of the settlement process.

Post-settlement cases in the Physiomesh MDL and MCL are subject to docket control orders requiring early expert reports and discovery requirements.

In May 2023, Ethicon entered an additional settlement to resolve the claims of 292 Physiomesh claimants.

That settlement is proceeding, and releases are being returned.

As of December 31, 2023, there were 5 Physiomesh cases in the MDL and 3 in the New Jersey MCL which are not included in either settlement and which remain subject to the docket control orders.

Other than a small number of cases still pending in the MDL, all Physiomesh matters in the United States have been resolved or are undergoing formal review for purposes of settlement.

Claims have also been filed against Ethicon and the Company alleging personal injuries arising from the PROCEED Mesh and PROCEED Ventral Patch hernia mesh products.

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Future cases that are filed in the New Jersey MCLs will be subject to docket control orders requiring early expert reports and discovery requirements.

2023 Annual Report

The Company has established accruals with respect to product liability litigation associated with Ethicon Physiomesh Flexible Composite Mesh, PROCEED Mesh and PROCEED Ventral Patch, and PROLENE Polypropylene Hernia System products.

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Other actions are pending in various courts in the United States and Canada.

Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases.

The Company continues to defend RISPERDAL product liability lawsuits, and continues to evaluate potential costs related to those claims.

The Company has successfully defended a number of these cases but there have been verdicts against the Company, including a verdict in October 2019 of $ 8.0 billion of punitive damages related to one plaintiff, which the trial judge reduced to $ 6.8 million in January 2020.

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These lawsuits, which allege that ELMIRON contributes to the development of permanent retinal injury and vision loss, have been filed in both state and federal courts across the United States.

In December 2020, lawsuits filed in federal courts in the United States, including putative class action cases seeking medical monitoring, were organized as a multi-district litigation in the United States District Court for the District of New Jersey.

All cases in the multi-district litigation are in active discussions regarding resolution, and as a result, all activity is stayed.

2024 Annual Report

Jersey (MDL).

In addition, cases have been filed in various state courts of New Jersey, which have been coordinated in a multi-county litigation in Bergen County, as well as the Court of Common Pleas in Philadelphia, which have been coordinated and granted mass tort designation.

No activity has taken place in the New Jersey state court litigation;

however, three bellwether trials have been set in Philadelphia for March, April and May 2024.

In addition, three class action lawsuits have been filed in Canada.

Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases.

The Company continues to defend ELMIRON product liability lawsuits and continues to evaluate potential costs related to those claims.

based ELMIRON matters have been resolved or are undergoing formal review for purposes of settlement.

The Company has established accruals for defense and indemnity costs associated with ELMIRON related product liability litigation.

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Certain subsidiaries of the Company are subject, from time to time, to legal proceedings and claims related to patent, trademark and other intellectual property matters arising out of their businesses.

Many of these matters involve challenges to the coverage and/or validity of the patents on various products and allegations that certain of the Company’s products infringe the patents of third parties.

Many of these matters involve challenges to the scope and/or validity of patents that relate to various products and allegations that certain of the Company’s products infringe the intellectual property rights of third parties.

Although these subsidiaries believe that they have substantial defenses to these challenges and allegations with respect to all significant patents, there can be no assurance as to the outcome of these matters.

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In the event the Company’s subsidiaries are not successful in an action, or any automatic statutory stay expires before the court rulings are obtained, the generic companies involved would have the ability, upon regulatory approval, to introduce generic versions of their products to the market, resulting in the potential for substantial market share and revenue losses for the applicable products, and which may result in a non-cash impairment charge in any associated intangible asset.

In addition, from time to time, the Company’s subsidiaries may settle these types of actions

and such settlements can involve the introduction of generic versions of the products at issue to the market prior to the expiration of the relevant patents.

In addition, from time to time, the Company’s subsidiaries may settle these types of actions and such settlements can involve the introduction of generic versions of the products at issue to the market prior to the expiration of the relevant patents.

The Inter Partes Review (IPR) process with the United States Patent and Trademark Office (USPTO), created under the 2011 America Invents Act, is also being used at times by generic companies in conjunction with ANDAs and lawsuits to challenge the applicable patents.

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Auson Pharmaceuticals Inc.;

Macleods Pharmaceuticals Ltd;

Macleods Pharma USA, Inc.;

Indoco Remedies Limited;

FPP Holding Company LLC;

Umedica Laboratories Pvt.

Aurobindo Pharma Limited;

Aurobindo Pharma USA, Inc.;

Shanghai Auson Pharmaceuticals Co.

Cipla USA Inc.;

and InvaGen Pharmaceuticals, Inc.

InvaGen Pharmaceuticals, Inc.;

Prinston Pharmaceuticals, Inc.;

Ascent Pharmaceuticals, Inc.;

and Hetero Labs Limited.

In October 2024, the Company entered into a confidential settlement agreement with Auson Pharmaceuticals Inc.

and Shanghai Auson Pharmaceuticals Co., Ltd.

and the case was dismissed.

In November 2024, the Company entered into confidential settlement agreements with Ascent Pharmaceuticals Inc.

that resulted in dismissal of litigation against Ascent Pharmaceuticals, Inc.

and Hetero Labs Limited.

In January 2025, the Company entered into a confidential settlement agreement with Prinston Pharmaceutical, Inc.

The following U.S.

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Court of Appeals for the Federal Circuit.

Beginning in January 2023 Actelion Pharmaceuticals Ltd and Actelion Pharmaceuticals US, Inc.

filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of OPSUMIT before expiration of certain Orange Book Listed Patents.

The following entities are named defendants:

Sun Pharmaceutical Industries Limited;

Sun Pharmaceutical Industries, Inc.;

MSN Laboratories Private Limited;

MSN Pharmaceuticals Inc.;

and Mylan Pharmaceuticals Inc.

The following U.S.

patents are included in one or more cases:

and 10,946,015.

In November 2023, the Company entered into a confidential settlement agreement with MSN Laboratories Private Limited and MSN Pharmaceuticals Inc.

In December 2023, the Company entered into a confidential settlement agreement with Sun Pharmaceutical Industries Limited and Sun Pharmaceuticals Industries, Inc.

INVEGA SUSTENNA

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Tolmar, Inc.;

and Accord Healthcare, Inc.

Accord Healthcare, Inc.;

Qilu Pharmaceutical Co.

and Qilu Pharma Inc.

The following U.S.

patent is included in one or more cases:

In October 2020, the district court issued a decision in the case against Teva Pharmaceuticals USA, Inc., finding that United States Patent No.

9,439,906 is not invalid.

Teva previously stipulated to infringement.

Teva appealed the decision, and, in April 2024, the United States Court of Appeals for the Federal Circuit vacated and remanded the case to the district court for further proceedings.

In November 2024, the district court issued its decision on remand, finding that United States Patent No.

9,439,906 is not invalid.

Teva appealed to the Court of Appeals for the Federal Circuit, and oral argument is scheduled for April 2025.

In February 2024, the district court issued a decision in the case against Tolmar Inc.

finding that United States Patent No.

9,439,906 is not invalid.

Tolmar previously stipulated to infringement.

Tolmar has appealed the decision.

Beginning in February 2018, Janssen Inc.

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The following Canadian patent is included in one or more cases:

In June 2024, the Supreme Court dismissed the Apotex case.

In September 2024, the Supreme Court granted Pharmascience's motion to appeal the Federal Court's decision that the 2,655,335 Patent is not invalid.

INVEGA TRINZA

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In May 2023, the District Court issued a decision finding that Mylan’s proposed generic product infringes the asserted patent and that the patent is not invalid.

Mylan has appealed the verdict.

Mylan has appealed the decision.

Oral argument before the Court of Appeals for the Federal Circuit was held in February 2025.

Beginning in November 2021, Janssen Products, L.P., Janssen Sciences Ireland Unlimited Company, Gilead Sciences, Inc.

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Lupin Pharmaceuticals, Inc.;

MSN Laboratories

2023 Annual Report

Private Ltd.;

MSN Laboratories Private Ltd.;

MSN Life Sciences Private Ltd.;

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10,039,718 and 10,786,518.

A trial is scheduled to begin in February 2025.

Beginning in May 2022, Aragon Pharmaceuticals, Inc., Janssen Biotech, Inc.

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The following entities are named defendants:

Lupin Limited;

Lupin Pharmaceuticals, Inc.;

Zydus Worldwide DMCC;

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Zydus Lifesciences Limited;

Eugia Pharma Specialities Limited;

Aurobindo Pharma USA, Inc.;

Auromedics Pharma LLC;

Hetero Labs Limited Unit V;

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10,052,314 (which reissued as RE49,353);

and RE49,353.

In December 2023, Janssen and SKI voluntarily dismissed their case against Lupin Limited and Lupin Pharmaceuticals, Inc.

Beginning in November 2022, Actelion Pharmaceuticals US Inc., Actelion Pharmaceuticals Ltd and Nippon Shinyaku Co., Ltd.

filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of UPTRAVI intravenous before expiration of certain Orange Book Listed Patents.

The following entities are named defendants:

Alembic Pharmaceuticals Limited, Alembic Pharmaceuticals Inc.;

Lupin Pharmaceuticals, Inc.;

Cipla Limited;

Cipla USA Inc.;

MSN Laboratories Private Ltd.;

and MSN Pharmaceuticals Inc.

The following U.S.

patents are included in one or more cases:

and 11,963,952.

In November 2023, the Company entered into a confidential settlement agreement with Alembic Pharmaceuticals Limited and Alembic Pharmaceuticals Inc.

In October 2024, Janssen, The Regents of the University of California, SKI, Hetero Labs Limited Unit V, and Hetero USA, Inc.

entered into a confidential settlement, and the case was dismissed.

In November 2024, Janssen, The Regents of the University of California, Zydus Worldwide DMCC, Zydus Pharmaceuticals (USA), Inc., and Zydus Lifesciences Limited entered into confidential settlements, and the cases were dismissed.

Beginning in May 2023, Janssen Pharmaceuticals, Inc.

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The following entities are named defendants:

2024 Annual Report

Hikma Pharmaceuticals Inc.

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and 11,446,260.

In November 2023, Biocon Biologics Inc.

filed a Petition for Inter Partes Review with the USPTO seeking review of U.S.

10,961,307 related to methods of treating ulcerative colitis with ustekinumab.

Beginning in January 2024, Janssen Inc.

and Mitsubishi Tanabe Pharma Corporation initiated Statements of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against generic manufacturers who filed ANDSs seeking approval to market generic versions of INVOKANA before expiration of the listed patents.

The following entities are named defendants:

Jamp Pharma Corporation and Apotex Inc.

The following Canadian patents are included in one or more cases:

2,534,024 and 2,671,357.

Trial in the Jamp action is scheduled for September 2025, and trial in the Apotex action is scheduled for December 2025.

In March 2016, Abiomed, Inc.

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The authorities appear to be investigating allegations of possible anti-competitive behavior and possible improper payments in the medical device industry.

The Company continues to respond to inquiries regarding the Foreign

Corrupt Practices Act from the United States Department of Justice and the United States Securities and Exchange Commission.

In July 2023, the U.S.

Department of Justice (“DOJ”) issued Civil Investigative Demands to the Company, Johnson & Johnson Surgical Vision, Inc., and Johnson & Johnson Vision Care, Inc.

The Company continues to respond to inquiries regarding the Foreign Corrupt Practices Act from the United States Department of Justice (DOJ) and the United States Securities and Exchange Commission.

The Company has been informed DOJ has closed its investigation.

In July 2023, the DOJ issued Civil Investigative Demands to the Company, Johnson & Johnson Surgical Vision, Inc., and Johnson & Johnson Vision Care, Inc.

(collectively, J&J Vision) in connection with a civil investigation under the False Claims Act relating to free or discounted intraocular lenses and equipment used in eye surgery, such as phacoemulsification and laser systems.

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The Court denied summary judgment on all claims in December 2021.

Daubert motions were granted in part and denied in part in January 2022, and the case is proceeding to trial.

Trial is scheduled for May 2024.

Daubert motions were granted in part and denied in part in January 2022, and trial commenced in May 2024.

On June 13, 2024, a jury found no liability regarding the anti-kickback violations but found liability for a portion of the off-label promotion claims.

The Company is pursuing post-trial briefing challenging the verdict on the off-label claims.

In March 2017, Janssen Biotech, Inc.

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Subsequently, the United States District Court for the District of Massachusetts unsealed a qui tam False Claims Act complaint, which was served on the Company.

The Department of Justice had declined to intervene in the qui tam lawsuit in August 2019.

The Department of Justice

had declined to intervene in the qui tam lawsuit in August 2019.

The Company filed a motion to dismiss, which was granted in part and denied in part.

Discovery is underway.

From time to time, the Company has received requests from a variety of United States Congressional Committees to produce information relevant to ongoing congressional inquiries.

It is the policy of Johnson & Johnson to cooperate with these inquiries by producing the requested information.

General litigation

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In June 2023, defendants filed a petition for a writ of certiorari to the United States Supreme Court.

In February 2024, a putative class action was filed against the Company, the Pension & Benefits Committee of Johnson & Johnson, and certain named officers and employees, in United States District Court for the District of New Jersey.

In June 2024, the Supreme Court vacated the D.C.

Circuit's decision and remanded the case to the D.C.

Oral argument was held in November 2024.

In February 2024, a putative class action was filed against the Company, the Pension & Benefits Committee of Johnson & Johnson (Committee), and certain named officers and employees, in United States District Court for the District of New Jersey.

In May 2024, the plaintiff filed an amended complaint against the Company and the Committee.

The complaint alleges that defendants breached fiduciary duties under the Employee Retirement Income Security Act (ERISA) by allegedly mismanaging the Company’s prescription-drug benefits program.

The complaint seeks damages and other relief.

In January 2025, the Court granted in part and denied in part defendants’ motion to dismiss.

In October 2020, Fortis Advisors LLC (Fortis), in its capacity as representative of the former stockholders of Auris Health Inc.

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All claims against the individual defendants were dismissed.

The trial was held in January 2024 and the decision is pending.

2023 Annual Report

The trial occurred in January 2024.

In September 2024, the court found liability with respect to certain claims and no liability with respect to other claims.

The Company has appealed the decision.

In October 2019, Innovative Health, LLC filed a complaint against Biosense Webster, Inc (BWI) in the United States District Court for the Central District of California.

The complaint alleges that certain of BWI's business practices and contractual terms violate the antitrust laws of the United States and the State of California by restricting competition in the sale of High Density Mapping Catheters and Ultrasound Catheters.

Trial is scheduled for April 2025.

Innovative Medicine

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Janssen has produced documents and information responsive to the Civil Investigative Demands.

Janssen is in ongoing discussions with the FTC staff regarding the inquiry.

In June 2022, Genmab A/S filed a Notice for Arbitration with International Institute for Conflict Prevention and Resolution (CPR) against Janssen Biotech, Inc.

seeking milestones and an extended royalty term for Darzalex FASPRO.

In April 2023, the Arbitration Panel ruled in Janssen's favor and dismissed Genmab’s claims.

In January 2024, Genmab’s appeal of this dismissal was denied.

In January 2025, the FTC Bureau of Consumer Protection informed Janssen that it was closing its investigation.

2024 Annual Report

In October 2018, two separate putative class actions were filed against Actelion Pharmaceutical Ltd., Actelion Pharmaceuticals U.S., Inc., and Actelion Clinical Research, Inc.

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In January 2019, the plaintiffs dismissed the District of Columbia case and filed a consolidated complaint in the United States District Court for the District of Maryland.

In September 2024, the district court granted plaintiff's motion for class certification.

Trial is scheduled for March 2026.

In December 2023, a putative class action lawsuit was filed against the Company and Janssen Biotech Inc.

(collectively Janssen) in the United States District Court for the Eastern District of Virginia.

The complaint alleges that Janssen violated federal and state antitrust laws and other state laws by delaying biosimilar competition with STELARA through the Janssen's enforcement of patent rights covering STELARA.

The complaint alleges that Janssen violated federal and state antitrust laws and other state laws by delaying biosimilar competition with STELARA through Janssen's enforcement of patent rights covering STELARA.

The complaint seeks damages and other relief.

In June 2022, Janssen Pharmaceuticals, Inc.

filed a Demand for Arbitration against Emergent Biosol utions Inc.

(EBSI) with the American Arbitration Association, alleging that EBSI breached the parties’ Manufacturing Services Agreement for the Company’s COVID-19 vaccine.

In July 2022, Emergent filed its answering statement and counterclaims .

The hearing is scheduled for July 2024.

In February 2024, plaintiffs filed an amended complaint, which Janssen moved to dismiss in March 2024.

In August 2024, the court granted in part and denied in part Janssen's motion to dismiss.

In December 2018, Janssen Biotech, Inc., Janssen Oncology, Inc., Janssen Research & Development, LLC, and Johnson & Johnson (collectively, Janssen) were served with a qui tam complaint on behalf of the United States, certain states, and the District of Columbia.

The complaint alleges that Janssen violated the federal False Claims Act and state law when providing pricing information for ZYTIGA to the government in connection with direct sales and reimbursement programs.

At this time, the federal and state governments have declined to intervene.

In December 2021, the United States District Court for the District of New Jersey denied Janssen's motion to dismiss.

Restructuring

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The R&D program exits are primarily in infectious diseases and vaccines including the discontinuation of its respiratory syncytial virus (RSV) adult vaccine program, hepatitis and HIV development.

Pre- tax Restructuring expenses of $ 479 million in the fiscal year 2023, included the termination of partnered and non-partnered development program costs and asset impairments.

The estimated costs of these total activities is between $ 500 million - $ 600 million and is expected to be completed by the end of fiscal year 2024.

Pre-tax Restructuring expenses of $ 0.1 billion in the fiscal year 2024, included the termination of partnered and non-partnered development program costs, asset impairments and asset divestments.

Pre-tax Restructuring expenses of $ 0.5 billion in the fiscal year 2023, included the termination of partnered and non-partnered development program costs and asset impairments.

Total project costs of approximately $ 0.6 billion have been recorded since the restructuring was announced.

The program was completed in the fiscal fourth quarter of 2024.

In fiscal 2023, the Company initiated a restructuring program of its Orthopaedics franchise within the MedTech segment to streamline operations by exiting certain markets, product lines and distribution network arrangements.

The pre-tax restructuring expense of $ 319 million in the fiscal year 2023 primarily included inventory and instrument charges related to market and product exits.

The estimated costs of the total program are between $ 700 million - $ 800 million and is expected to be completed by the end of fiscal year 2025.

The following table summarizes the restructuring expenses for the fiscal year 2023:

The pre-tax restructuring expense of $ 0.2 billion in the fiscal year 2024 primarily included costs related to market and product exits.

The pre-tax restructuring expense of $ 0.3 billion in the fiscal year 2023 primarily included inventory and instrument charges related to market and product exits.

Total project costs of approximately $ 0.5 billion have been recorded since the restructuring was announced.

The estimated costs of the total program are between $ 0.7 billion - $ 0.8 billion and is expected to be completed by the end of fiscal year 2025.

The following table summarizes the restructuring expenses for the fiscal years 2024 and 2023:

(Pre-tax Dollars in Millions) 2024 2023

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Total Programs $ 269 $ 798

(1) Included $ 449 million in Restructuring and $ 30 million in Cost of products sold on the Consolidated Statement of Earnings

(2) Included $ 40 million in Restructuring and $ 279 million in Cost of products sold on the Consolidated Statement of Earnings

Restructuring reserves as of December 31, 2023 and January 1, 2023 were insignificant.

2023 Annual Report

(1) The fiscal year of 2024 included $ 102 million in Restructuring on the Consolidated Statement of Earnings.

The fiscal year of 2023 included $ 449 million in Restructuring and $ 30 million in Cost of products sold on the Consolidated Statement of Earnings.

(2) The fiscal year of 2024 included $ 132 million in Restructuring and $ 35 million in Cost of products sold on the Consolidated Statement of Earnings.

The fiscal year of 2023 Included $ 40 million in Restructuring and $ 279 million in Cost of products sold on the Consolidated Statement of Earnings.

Restructuring reserves as of December 29, 2024 and December 31, 2023 were insignificant.

Kenvue separation and discontinued operations

The results of the Consumer Health business (previously reported as a separate business segment) have been reflected as discontinued operations in the Company’s consolidated statements of earnings as Net earnings from discontinued operations, net of taxes through August 23, 2023, the date of the exchange offer.

Prior periods have been recast to reflect this presentation.

On May 15, 2024, the Company issued $ 3.6 billion aggregate principal amount of commercial paper and received $ 3.6 billion of net cash proceeds to be used for general corporate purposes.

On May 17, 2024, the Company completed a Debt-for-Equity Exchange of its remaining 182,329,550 shares of Kenvue Common Stock for the outstanding Commercial Paper.

Upon completion of the Debt-for-Equity Exchange, the Commercial Paper was satisfied and discharged and the Company no longer owns any shares of Kenvue Common Stock.

This exchange resulted in a loss of approximately $ 0.4 billion recorded in Other (income) expense.

On May 8, 2023, Kenvue, completed an initial public offering (the IPO) resulting in the issuance of 198,734,444 shares of its common stock, par value $ 0.01 per share (the “Kenvue Common Stock”), at an initial public offering of $ 22.00 per share for net proceeds of $ 4.2 billion.

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The $ 31.4 billion of Johnson & Johnson common stock received in the exchange offer is recorded in Treasury stock.

Following the exchange offer, the Company owns 9.5 % of the total outstanding shares of Kenvue Common Stock that was recorded in other assets within continuing operations at the fair market value of $ 4.3 billion as of August 23, 2023.

Following the exchange offer, the Company owned 9.5 % of the total outstanding shares of Kenvue Common Stock that was recorded in other assets within continuing operations at the fair market value of $ 4.3 billion as of August 23, 2023.

Subsequent changes are reflected in other income/expense and amounted to $ 0.4 billion expense through December 31, 2023.

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The terms of the TMAs range in initial duration from 3 months to 5 years.

Amounts related to the TSAs and TMAs included in the consolidated statements of earnings were immaterial for the fiscal year 2023.

Amounts related to the TSAs and TMAs included in the consolidated statements of earnings were immaterial for both fiscal years 2024 and 2023.

Additionally, the amounts due to and from Kenvue for the above agreements was not material as of December 31, 2023.

The results of the Consumer Health business (previously reported as a separate business segment), as well as the associated gain, have been reflected as discontinued operations in the Company’s consolidated statements of earnings as Net earnings from discontinued operations, net of taxes.

Prior periods have been recast to reflect this presentation.

As a result of the separation of Kenvue, Johnson & Johnson incurred separation costs of $ 986 million, $ 1,089 million and $ 67 million in the fiscal years 2023, 2022 and 2021, respectively, which are also included in Net earnings from discontinued operations, net of taxes.

These costs were primarily related to external advisory, legal, accounting, contractor and other incremental costs directly related to separation activities.

As a result of the separation of Kenvue, Johnson & Johnson incurred separation costs of $ 145 million in the fiscal year 2024, which was included in Net Earnings and incurred separation costs of $ 986 million and $ 1,089 million in the fiscal years 2023 and 2022, respectively, which were included in Net earnings from discontinued operations, net of taxes.

These costs were primarily related to external advisory, legal, accounting, contractor and other

2024 Annual Report

incremental costs directly related to separation activities.

In the fiscal 2022, as part of the planned separation of the Company’s Consumer Health business, the Company recognized approximately $ 0.5 billion in net incremental tax costs.

As of January 1, 2023, the assets and liabilities associated with the Consumer Health business were classified as assets and liabilities of discontinued operations in the consolidated balance sheets.

Details of Net Earnings from Discontinued Operations, net of taxes are as follows:

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Capital expenditures $ 162 303

2023 Annual Report

Details of assets and liabilities of discontinued operations were as follows:

January 1, 2023

Cash and cash equivalents $ 1,238

Accounts receivable trade, less allowances for doubtful accounts 2,121

Inventories 2,215

Prepaid expenses and other receivables 256

Total current assets of discontinued operations 5,830

Property, plant and equipment, net 1,821

Intangible assets, net 9,836

Goodwill 9,184

Deferred taxes on income 176

Other assets 390

Total noncurrent assets of discontinued operations $ 21,407

Loans and notes payable $ 15

Accounts payable 1,814

Accrued liabilities including accrued taxes on income 644

Accrued rebates, returns and promotions 838

Accrued compensation and employee related obligations 279

Total current liabilities of discontinued operations 3,590

Long-term debt 2

Deferred taxes on income 2,383

Employee related obligations 225

Other liabilities 291

Total noncurrent liabilities of discontinued operations $ 2,901

Selected quarterly financial data (unaudited)

Selected unaudited quarterly financial data has been recast for discontinued operations for the years 2023 and 2022 and is summarized below:

(Dollars in Millions Except Per Share Data)

First Quarter (1)

Second Quarter Third Quarter (2)

Fourth Quarter (3)

First Quarter (4)

Second Quarter Third Quarter Fourth Quarter (5)

Segment sales to customers

Innovative Medicine $ 13,413 13,731 13,893 13,722 12,869 13,317 13,214 13,163

MedTech 7,481 7,788 7,458 7,673 6,971 6,898 6,782 6,776

Total sales 20,894 21,519 21,351 21,395 19,840 20,215 19,996 19,939

Gross profit 14,207 15,057 14,745 14,597 13,822 13,893 13,824 13,855

Earnings (Loss) before provision for taxes on income ( 1,287 ) 6,306 5,217 4,826 5,203 5,144 5,172 3,840

Net earnings (loss) from continuing operations ( 491 ) 5,376 4,309 4,132 4,571 4,262 4,310 3,227

Net earnings (loss) from discontinued operations, net of tax 423 ( 232 ) 21,719 ( 83 ) 578 552 148 293

Net earnings (loss) ( 68 ) 5,144 26,028 4,049 5,149 4,814 4,458 3,520

Basic net earnings(loss) per share:

Basic net earnings (loss) per share from continuing operations ( 0.19 ) 2.07 1.71 1.71 1.74 1.62 1.64 1.24

Basic net earnings (loss) per share from discontinued operations 0.16 ( 0.09 ) 8.61 ( 0.03 ) 0.22 0.21 0.06 0.11

Basic net earnings (loss) per share ( 0.03 ) 1.98 10.32 1.68 1.96 1.83 1.70 1.35

Diluted net earnings (loss) per share:

Diluted net earnings (loss) per share from continuing operations ( 0.19 ) 2.05 1.69 1.70 1.71 1.60 1.62 1.22

Diluted net earnings (loss) per share from discontinued operations 0.16 ( 0.09 ) 8.52 ( 0.03 ) 0.22 0.20 0.06 0.11

Diluted net earnings (loss) per share ( 0.03 ) 1.96 10.21 1.67 1.93 1.80 1.68 1.33

(1) The fiscal first quarter of 2023 includes a $ 6.9 billion charge related to talc matters.

(2) The fiscal third quarter of 2023 includes;

a non-cash gain on the exchange offer of $ 21.0 billion that was recorded in Net earnings from discontinued operations, net of taxes;

$ 0.6 billion related to the unfavorable change in the fair value of the retained stake in Kenvue and $ 0.4 billion related to the partial impairment of Idorsia convertible debt and the change in the fair value of the Idorsia equity securities held.

(3) The fourth quarter of 2023 includes favorable changes in the fair value of securities of $ 0.4 billion

(4) In the fiscal first quarter of 2022, the Company recorded an intangible asset impairment charge of approximately $ 0.6 billion related to an in-process research and development asset, bermekimab (JnJ-77474462).

(5) The fiscal fourth quarter of 2022 includes one-time COVID-19 Vaccine related exit costs of $ 0.8 billion.

2023 Annual Report

Report of Independent Registered Public Accounting Firm

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Johnson & Johnson and its subsidiaries (the “Company”) as of December 31, 2023 and January 1, 2023, and the related consolidated statements of earnings, of comprehensive income, of equity and of cash flows for each of the three fiscal years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Johnson & Johnson and its subsidiaries (the “Company”) as of December 29, 2024 and December 31, 2023, and the related consolidated statements of earnings, of comprehensive income, of equity and of cash flows for each of the three fiscal years in the period ended December 29, 2024, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and January 1, 2023, and the results of its operations and its cash flows for each of the three fiscal years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 29, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the three fiscal years in the period ended December 29, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s report on internal control over financial reporting, management has excluded Shockwave Medical, Inc., (“Shockwave”) from its assessment of internal control over financial reporting as of December 29, 2024 because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded Shockwave from our audit of internal control over financial reporting.

Shockwave is a wholly-owned subsidiary whose total assets and total sales excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% of each of the related consolidated financial statement amounts as of and for the fiscal year ended December 29, 2024.

2024 Annual Report

Definition and Limitations of Internal Control over Financial Reporting

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

pharmaceutical rebate reserves – managed care, medicare and medicaid

Innovative Medicine Rebate Reserves – Managed Care, Medicare and Medicaid

As described in Note 1 to the consolidated financial statements, the Company recognizes revenue from product sales when obligations under the terms of a contract with the customer are satisfied.

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The liability for such rebates and discounts is recognized within Accrued rebates, returns, and promotions on the consolidated balance sheet.

A significant portion of the liability related to rebates is from the sale of pharmaceutical goods within the U.S., primarily the Managed Care, Medicare and Medicaid programs, which amounted to $11.5 billion as of December 31, 2023.

A significant portion of the liability related to rebates is from the sale of pharmaceutical products within the U.S., primarily the Managed Care, Medicare and Medicaid programs, which amounted to $12.3 billion as of December 29, 2024.

For significant rebate programs, which include the U.S.

Managed Care, Medicare and Medicaid rebate programs, rebates and discounts estimated by management are based on contractual terms, historical experience, patient outcomes, trend analysis, and projected market conditions in the U.S.

pharmaceutical market.

The principal considerations for our determination that performing procedures relating to U.S.

pharmaceutical rebate reserves - Managed Care, Medicare and Medicaid is a critical audit matter are the significant judgment by management due to the significant measurement uncertainty involved in developing these reserves and the high degree of auditor judgment, subjectivity and audit effort in performing procedures and evaluating the assumptions related to contractual terms, historical experience, patient outcomes, trend analysis, and projected market conditions in the U.S.

Innovative Medicine rebate reserves - Managed Care, Medicare and Medicaid is a critical audit matter are (i) the significant judgment by management due to the significant measurement uncertainty when developing the estimate of these reserves and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the assumptions related to contractual terms, historical experience, patient outcomes, trend analysis, and projected market conditions in the U.S.

pharmaceutical market.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to U.S.

pharmaceutical rebate reserves - Managed Care, Medicare and Medicaid, including controls over the assumptions used to estimate these rebates.

These procedures included testing the effectiveness of controls relating to management’s estimate of the U.S.

Innovative Medicine rebate reserves - Managed Care, Medicare and Medicaid, including controls over the assumptions used to estimate these rebates.

These procedures also included, among others (i) developing an independent estimate of the rebates by utilizing third party information on price and market conditions in the U.S.

pharmaceutical market, the terms of the specific rebate programs, and the historical experience and trend analysis of actual rebate claims paid;

(ii) testing rebate claims processed by the Company, including evaluating those claims for consistency with the contractual and mandated terms of the Company’s rebate arrangements;

and (iii) comparing the independent estimates to management’s estimates.

(ii) testing, on a sample basis, rebate claims processed by the Company, including evaluating those claims for consistency with the contractual and mandated terms of the Company’s rebate arrangements;

and (iii) comparing the independent estimates to management’s estimates to evaluate the reasonableness of management’s estimates.

Litigation Contingencies – Talc

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Notwithstanding management’s confidence in the safety of the Company’s talc products, in certain circumstances the Company has settled cases.

The Company has recognized a total provision of approximately $9 billion, of which approximately one-third is recorded as a current liability and which encompasses actual and contemplated settlements.

The recorded amount remains the Company's best estimate of probable loss after the dismissal.

The parties have not yet reached a full resolution of all talc matters and the Company is unable to estimate the possible loss or range of loss beyond the remaining amount accrued.

The principal considerations for our determination that performing procedures relating to the talc litigation is a critical audit matter are the significant judgment by management when assessing the likelihood of a loss being incurred, when determining whether a reasonable estimate of the loss or range of loss for the future and existing talc claims can be made, and when determining the timing of any settlement payments, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s assessment of the loss contingencies associated with this litigation.

2023 Annual Report

In May 2024, the Company proposed a consensual “prepackaged” Chapter 11 bankruptcy plan (the “Proposed Plan”) for the final resolution of all current and future claims related to cosmetic talc in the United States, excluding claims related to mesothelioma or State consumer protection claims.

In September 2024, the Company’s subsidiary Red River Talc, LLC filed a voluntary petition, seeking relief under Chapter 11 of the Bankruptcy Code, in furtherance of the Company’s consensual “prepackaged” Proposed Plan.

As of December 29, 2024, the total present value of the reserve to resolve the talc claims is approximately $11.6 billion, of which approximately ten percent is recorded as a current liability.

The recorded amount remains the Company's best estimate of probable loss.

The Company is unable to estimate the possible loss or range of loss beyond the amounts accrued.

The principal considerations for our determination that performing procedures relating to the litigation contingencies - talc is a critical audit matter are (i) the significant judgment by management when assessing the likelihood of a loss being incurred for the remaining unresolved talc claims, when determining whether a reasonable estimate of the loss or range of loss for the remaining unresolved talc claims can be made, and when determining the timing of settlement payments for the remaining unresolved talc claims, and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s assessment of the loss contingencies associated with the talc litigation.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s evaluation of the talc litigation, including controls over determining whether a loss is probable and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures.

These procedures included testing the effectiveness of controls relating to management’s assessment of the litigation contingencies – talc, including controls over determining whether a loss is probable and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures.

These procedures also included, among others (i) gaining an understanding of the Company’s process around the accounting and reporting for the talc litigation;

(ii) obtaining and evaluating certain executed settlement agreements related to the talc litigation (iii) discussing the status of significant known actual and potential litigation and settlements activity with the Company’s in-house legal counsel, as well as external counsel when deemed necessary;

(iv) obtaining and evaluating the letters of audit inquiry with internal and external legal counsel for significant litigation;

(ii) obtaining and evaluating certain executed settlement agreements related to the talc litigation;

(iii) discussing the status of significant known actual and potential litigation and settlements activity with the Company’s in-house legal counsel, as well as external counsel when deemed necessary;

(iv) obtaining and evaluating the letters of audit inquiry with internal and external legal counsel related to the talc litigation;

(v) evaluating the reasonableness of management’s assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably estimable;

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We have not been able to determine the specific year we began serving as auditor of the Company.

2024 Annual Report

Management’s report on internal control over financial reporting

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The Company’s assessment included extensive documenting, evaluating and testing the design and operating effectiveness of its internal controls over financial reporting.

The Company acquired Shockwave Medical, Inc.

(Shockwave), in a business combination in May 2024.

Shockwave’s total assets, excluding intangible assets and goodwill, and total sales represented less than 1% of each of the related consolidated financial statement amounts as of and for the fiscal year ended December 29, 2024.

As the acquisition occurred in the fiscal year 2024, the scope of the Company's assessment of the design and effectiveness of internal control over financial reporting for the fiscal year 2024 excluded the above mentioned acquisition.

This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from the scope in the year of acquisition.

Based on the Company’s processes and assessment, as described above, management has concluded that, as of December 29, 2024, the Company’s internal control over financial reporting was effective.

3 unchanged sentences

Chief Executive Officer

2023 Annual Report

Shareholder return performance graphs

14 unchanged sentences

S&P Healthcare Equipment Index $100.00 $117.63 $140.40 $113.92 $124.22 $137.81

2024 Annual Report

10 Year Shareholder Return Performance J&J vs.

11 unchanged sentences

S&P Healthcare Equipment Index $100.00 $105.97 $112.85 $147.71 $171.70 $222.04 $261.19 $311.74 $252.95 $275.82 $306.00

2023 Annual Report

Changes in and disagreements with accountants on accounting and financial disclosure

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data