Filed Pursuant to Rule 424(b)(5)
Registration No. 333-104821
Prospectus Supplement to Prospectus dated October 18, 1994.
$1,000,000,000
LOGO
$500,000,000 3.80% Debentures due May 15, 2013
$500,000,000 4.95% Debentures due May 15, 2033
Johnson & Johnson will pay interest on the Debentures on May 15 and
November 15 of each year. The first such payment will be made on November 15,
2003. The Debentures will be issued only in denominations of $1,000 and integral
multiples of $1,000. Our principal office is located at One Johnson & Johnson
Plaza, New Brunswick, NJ 08933. Our telephone number is (732) 524-0400.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE DEBENTURES OR DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE ATTACHED PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Per 3.80% Per 4.95%
Debenture Total Debenture Total
------ ------------ ------ ------------
Initial public offering price....... 99.844% $499,220,000 99.955% $499,775,000
Underwriting discount............... 0.450% $ 2,250,000 0.875% $ 4,375,000
Proceeds, before expenses, to
Johnson & Johnson................. 99.394% $496,970,000 99.080% $495,400,000
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Debentures will accrue from May 22, 2003 and
must be paid by the purchaser if the Debentures are delivered after May 22,
2003.
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The Underwriters expect to deliver the Debentures in book-entry form only
through the facilities of The Depository Trust Company, Clearstream or the
Euroclear System against payment in New York, New York on May 22, 2003.
Joint Book-Running Managers
GOLDMAN, SACHS & CO. JPMORGAN
BANC OF AMERICA SECURITIES LLC
CITIGROUP
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANK SECURITIES
THE WILLIAMS CAPITAL GROUP, L.P.
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Prospectus Supplement dated May 19, 2003.
In making your investment decision, you should rely only on the information
contained or incorporated by reference in this Prospectus Supplement and the
attached Prospectus. We have not authorized anyone to provide you with any other
information. If you receive any unauthorized information, you must not rely on
it.
We are offering to sell the Debentures only in places where sales are
permitted.
You should not assume that the information contained or incorporated by
reference in this Prospectus Supplement or the attached Prospectus is accurate
as of any date other than its respective date.
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FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus include and
incorporate by reference certain statements which may be deemed to be
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements do not relate strictly
to historical or current facts and anticipate results based on management's
plans that are subject to uncertainty. Forward-looking statements may be
identified by the use of words like "plans," "expects," "will," "anticipates,"
"estimates" and other words of similar meaning in conjunction with, among other
things, discussions of future operations, financial performance, our strategy
for growth, product development, regulatory approvals, market position and
expenditures.
Forward-looking statements are based on current expectations of future
events. We cannot guarantee that any forward-looking statement will be accurate,
although we believe that we have been reasonable in our expectations and
assumptions. Investors should realize that if underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual results could
vary materially from our expectations and projections. Investors are therefore
cautioned not to place undue reliance on any forward-looking statements.
Furthermore, we assume no obligation to update any forward-looking statements as
a result of new information or future events or developments.
Some important factors that could cause our actual results to differ from
our expectations in any forward-looking statements are as follows:
Economic factors, including inflation and fluctuations in interest rates
and foreign currency exchange rates and the potential effect of such
fluctuations on revenues, expenses and resulting margins;
Competitive factors, including technological advances achieved and patents
attained by competitors as well as new products introduced by competitors,
including the fact that there is new competition in the U.S. for PROCRIT, the
top-selling product in our portfolio;
Challenges to our patents by competitors, which could potentially affect
our ability to sell the products in question and require the payment of past
damages and future royalties, and by generic pharmaceutical firms, which can
result in the introduction of generic versions of products and the ensuing loss
of market share;
Financial distress and bankruptcies experienced by significant customers
and suppliers that could impair their ability, as the case may be, to purchase
our products, pay for products previously purchased or meet their obligations to
us under supply arrangements;
The impact on political and economic conditions due to terrorist attacks in
the U.S. and other parts of the world or U.S. military action overseas, as well
as instability in the financial markets which could result from such terrorism
or military actions;
Interruptions of computer and communications systems, including computer
viruses, that could impair our ability to conduct business and communicate
internally and with our customers;
Domestic and foreign health care changes resulting in pricing pressures,
including the continued consolidation among health care providers, trends toward
managed care and health care cost containment and government laws and
regulations relating to sales and promotion, reimbursement and pricing
generally;
Government laws and regulations, affecting domestic and foreign operations,
including those relating to trade, monetary and fiscal policies, taxes, price
controls, regulatory approval of new products, licensing and patent rights;
Competition in research, involving the development and the improvement of
new and existing products and processes, is particularly significant and results
from time to time in product and
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process obsolescence. The development of new and improved products is important
to our success in all areas of our business;
Difficulties inherent in product development, including the potential
inability to successfully continue technological innovation, complete clinical
trials, obtain regulatory approvals in the United States and abroad, gain and
maintain market approval of products and the possibility of encountering
infringement claims by competitors with respect to patent or other intellectual
property rights which can preclude or delay commercialization of a product;
Significant litigation adverse to us including product liability claims,
patent infringement claims, and antitrust claims;
Product efficacy or safety concerns resulting in product recalls,
regulatory action on the part of the FDA (or foreign counterparts) or declining
sales;
The impact of business combinations, including acquisitions and
divestitures, both internally for us and externally in the pharmaceutical and
health care industries; and
Issuance of new or revised accounting standards by the American Institute
of Certified Public Accountants, the Financial Accounting Standards Board or the
Securities and Exchange Commission.
The foregoing list sets forth many, but not all, of the factors that could
impact upon our ability to achieve results described in any forward-looking
statements. Investors should understand that it is not possible to predict or
identify all such factors and should not consider this list to be a complete
statement of all potential risks and uncertainties. We have identified the
factors on this list as permitted by the Private Securities Litigation Reform
Act of 1995.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges represents our historical ratio and
is calculated on a total enterprise basis. The ratio is computed by dividing the
sum of earnings before provision for taxes and fixed charges (excluding
capitalized interest) by fixed charges. Fixed charges represent interest
(including capitalized interest) and amortization of debt discount and expense
and the interest factor of all rentals, consisting of an appropriate interest
factor on operating leases.
FISCAL
QUARTER FISCAL YEAR ENDED
ENDED ----------------------------------------------------------------------
MARCH 30, DECEMBER 29, DECEMBER 30, DECEMBER 31, JANUARY 2, JANUARY 3,
2003 2002 2001 2000 2000 1999
--------- ------------ ------------ ------------ ---------- ----------
Ratio of Earnings to Fixed
Charges..................... 35.20 26.75 23.95 18.41 14.76 13.46
DESCRIPTION OF THE DEBENTURES
The following description of the particular terms of the 3.80% Debentures
due May 15, 2013 and the 4.95% Debentures due May 15, 2033 offered hereby
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth under the
heading "Description of Debt Securities" in the accompanying Prospectus, to
which description reference is hereby made.
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GENERAL
The Debentures offered hereby will be our unsecured obligations and will be
issued under an Indenture dated as of September 15, 1987 between us and BNY
Midwest Trust Company (formerly known as Harris Trust and Savings Bank),
Chicago, Illinois, as Trustee (the "Trustee"), as amended by a First
Supplemental Indenture dated as of September 1, 1990 (the "Indenture"). The
3.80% Debentures will mature on May 15, 2013. The 4.95% Debentures will mature
on May 15, 2033.
The Debentures will bear interest from May 22, 2003 or from the most recent
interest payment date to which interest has been paid or provided for, payable
semiannually on May 15 and November 15 of each year, beginning November 15,
2003, to the beneficial owners of the Debentures at the close of business on the
applicable record date, which is the May 1 or November 1 next preceding such
interest payment date (the "Record Date"). The 3.80% Debentures will bear
interest at the rate of 3.80% per annum and the 4.95% Debentures will bear
interest at the rate of 4.95% per annum.
The Debentures will be entitled to the benefits of our covenants described
under the caption "Description of Debt Securities -- Certain Covenants" in the
accompanying Prospectus.
We may not redeem the Debentures prior to their maturity. The Debentures do
not have the benefit of a sinking fund.
FURTHER ISSUES
We may from time to time, without notice to, or the consent of, the
registered holders of either series of Debentures, create and issue further
debentures equal in rank to either series of the Debentures offered by this
Prospectus Supplement in all respects (or in all respects except for the payment
of interest accruing prior to the issue date of the further debentures or except
for the first payment of interest following the issue date of the further
debentures). These further debentures may be consolidated and form a single
series with either existing series of Debentures and will have the same terms as
to status, redemption or otherwise as that existing series of Debentures.
BOOK-ENTRY SYSTEM
The Debentures will be issued in fully registered form and will be
represented by a global certificate or certificates (the "Global Security")
registered in the name of a nominee of The Depository Trust Company ("DTC" or
the "Depositary"). The Global Security representing the Debentures will be
deposited with, or on behalf of, the Depositary. Investors may elect to hold
interests in the Global Security through the Depositary, Clearstream Banking,
Societe Anonyme, which we refer to as "Clearstream, Luxembourg," or Euroclear
Bank S.A./N.V., as operator of the Euroclear System, which we refer to as
"Euroclear," if they are participants in such systems, or indirectly through
organizations which are participants in such systems. Clearstream, Luxembourg
and Euroclear will hold interests on behalf of their participants through
customers' securities accounts in Clearstream, Luxembourg's and Euroclear's
names on the books of their respective depositaries, which in turn will hold
such interests in customers' securities accounts in the depositaries' names on
the books of the Depositary, Citibank, N.A. will act as depositary for
Clearstream, Luxembourg and JPMorgan Chase Bank will act as depositary for
Euroclear, which we refer to in such capacities as the "U.S. Depositaries." The
Debentures will not be exchangeable for certificates issued in definitive,
registered form ("Certificated Debentures") at the option of the holder and,
except as set forth below, will not otherwise be issuable in definitive form.
DTC has advised us and the Underwriters as follows: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing
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corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct Participants" include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission. More
information about DTC can be found at www.dtc.com.
Clearstream, Luxembourg advises that it is incorporated under the laws of
Luxembourg as a bank. Clearstream, Luxembourg holds securities for its
customers, which we refer to as "Clearstream, Luxembourg Customers," and
facilitates the clearance and settlement of securities transactions between
Clearstream, Luxembourg Customers through electronic book-entry transfers
between their accounts. Clearstream, Luxembourg provides to Clearstream,
Luxembourg Customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream, Luxembourg interfaces with
domestic securities markets in over 30 countries through established depository
and custodial relationships. As a bank, Clearstream, Luxembourg is subject to
regulation by the Luxembourg Commission for the Supervision of the Financial
Sector, also known as the Commission de Surveillance du Secteur Financier.
Clearstream, Luxembourg Customers are recognized financial institutions around
the world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. Clearstream,
Luxembourg Customers in the United States are limited to securities brokers and
dealers and banks. Indirect access to Clearstream, Luxembourg is also available
to other institutions such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Clearstream,
Luxembourg Customer.
Distributions with respect to the Debentures held through Clearstream,
Luxembourg will be credited to cash accounts of Clearstream, Luxembourg
Customers in accordance with its rules and procedures, to the extent received by
the U.S. Depositary of Clearstream, Luxembourg.
Euroclear advises that it was created in 1968 to hold securities for its
participants, which we refer to as "Euroclear Participants," and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Euroclear provides various other services,
including securities lending and borrowing and interfaces with domestic markets
in several countries. Euroclear is operated by Euroclear Bank S.A./N.V., which
we refer to as the "Euroclear Operator," under contract with Euroclear Clearance
Systems, S.C., a Belgian cooperative corporation, which we refer to as the
"Cooperative." All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks, including central banks, securities brokers and dealers and other
professional financial intermediaries and may include the underwriters. Indirect
access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either directly
or indirectly.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law, which we refer to collectively as the "Terms
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and Conditions." The Terms and Conditions govern transfers of securities and
cash within Euroclear, withdrawals of securities and cash from Euroclear, and
receipts of payments with respect to securities in Euroclear. All securities in
Euroclear are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear Operator
acts under the Terms and Conditions only on behalf of Euroclear Participants and
has no record of or relationship with persons holding through Euroclear
Participants.
Distributions with respect to the Debentures held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
Depositary for Euroclear.
Euroclear further advises that investors that acquire, hold and transfer
interests in the Debentures by book-entry through accounts with the Euroclear
Operator or any other securities intermediary are subject to the laws and
contractual provisions governing their relationship with their intermediary, as
well as the laws and contractual provisions governing the relationship between
such an intermediary and each other intermediary, if any, standing between
themselves and the Global Security.
The Euroclear Operator advises that under Belgian law, investors that are
credited with securities on the records of the Euroclear Operator have a
co-property right in the fungible pool of interests in securities on deposit
with the Euroclear Operator in an amount equal to the amount of interests in
securities credited to their accounts. In the event of the insolvency of the
Euroclear Operator, Euroclear Participants would have a right under Belgian law
to the return of the amount and type of interests in securities credited to
their accounts with the Euroclear Operator. If the Euroclear Operator did not
have a sufficient amount of interests in securities on deposit of a particular
type to cover the claims of all Euroclear Participants credited with such
interests in securities on the Euroclear Operator's records, all Participants
having an amount of interests in securities of such type credited to their
accounts with the Euroclear Operator would have the right under Belgian law to
the return of their pro rata share of the amount of interest in securities
actually on deposit.
Under Belgian law, the Euroclear Operator is required to pass on the
benefits of ownership in any interests in securities on deposit with it, such as
dividends, voting rights and other entitlements, to any person credited with
such interests in securities on its records.
Purchases of Debentures under the DTC system must be made by or through
Direct Participants. Upon the issuance by us of the Debentures, DTC will credit,
on its book-entry system, the respective principal amounts of the Debentures to
the accounts of Participants. The accounts to be credited shall be designated by
the Underwriters. The ownership interest of each actual purchaser of each
Debenture (a "Beneficial Owner") will be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owners entered into the transaction. Transfers of ownership
interests in the Debentures are expected to be effected by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests in
Debentures, except as set forth below. To facilitate subsequent transfers, all
Debentures deposited by Participants with DTC will be registered in the name of
DTC's partnership nominee, Cede & Co. The deposit of Debentures with DTC and
their registration in the name of Cede & Co. will not effect any change in
beneficial ownership. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in the Global
Security.
Title to book-entry interests in the Debentures will pass by book-entry
registration of the transfer within the records of Clearstream, Luxembourg,
Euroclear or DTC, as the case may be,
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in accordance with their respective procedures. Book-entry interests in the
Debentures may be transferred within Clearstream, Luxembourg and within
Euroclear and between Clearstream, Luxembourg and Euroclear in accordance with
procedures established for these purposes by Clearstream, Luxembourg and
Euroclear. Book-entry interests in the Debentures may be transferred within DTC
in accordance with procedures established for this purpose by DTC. Transfers of
book-entry interests in the Debentures among Clearstream, Luxembourg and
Euroclear and DTC may be effected in accordance with procedures established for
this purpose by Clearstream, Luxembourg, Euroclear and DTC.
So long as the Depositary for the Global Security, or its nominee, is the
registered owner of the Global Security, the Depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the Debentures for
all purposes under the Indenture. Except as provided below, Beneficial Owners of
the Debentures will not be entitled to have the Debentures registered in their
names, will not receive or be entitled to receive physical delivery of
Debentures in definitive form and will not be considered the owners or holders
thereof under the Indenture. Unless and until it is exchanged in whole or in
part for individual certificates evidencing the Debentures represented thereby,
the Global Security may not be transferred except as a whole by the Depositary
for the Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any nominee to a successor Depositary or any nominee of such
successor.
We expect that conveyance of notices and other communications by the
Depositary to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. In addition,
neither the Depositary nor Cede & Co. will consent or vote with respect to
Debentures. We have been advised that the Depositary's usual procedure is to
mail an omnibus proxy to us as soon as possible after the record date with
respect to such consent or vote. The omnibus proxy would assign Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Debentures are credited on such record date (identified in a listing attached to
the omnibus proxy).
Until the Debentures are paid or payment thereof is duly provided for, we
will, at all times, maintain a paying agent in The City of New York capable of
performing the duties described herein to be performed by the Paying Agent. We
have appointed the Trustee and The Bank of New York as Paying Agents. An office
of a Paying Agent in The City of New York for all purposes relating to the
Debentures is located at the date hereof at 101 Barclay Street, New York, New
York 10286.
Payments of principal of and interest, if any, on the Debentures registered
in the name of the Depositary or its nominee will be made by us through a Paying
Agent to the Depositary or its nominee, as the case may be, as the registered
owner of the Global Security. Neither we, the Trustee, any Paying Agent nor the
registrar for the Debentures will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
We have been advised that the Depositary will credit the accounts of Direct
Participants with payment in amounts proportionate to their respective holdings
in principal amount of interest in the Global Security as shown on the records
of the Depositary. We have been advised that the Depositary's practice is to
credit Direct Participants' accounts on the applicable payment date unless the
Depositary has reason to believe that it will not receive payment on such date.
We expect that payments by Participants to Beneficial Owners will be governed by
standing customer instructions and customary practices, as is now the case with
securities held for the accounts of customers. Such payments will be the
responsibility of such Participants.
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If the Depositary with respect to the Global Security is at any time
unwilling or unable to continue as Depositary and a successor Depositary is not
appointed by us within 90 days, we will issue Certificated Debentures in
exchange for the Debentures represented by such Global Security. In addition, we
may at any time and in its sole discretion determine not to use the Depositary's
book-entry system, and, in such event, will issue Certificated Debentures in
exchange for the Debentures represented by such Global Security.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the Debentures will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with the Depositary's rules and will be settled in
immediately available funds using the Depositary's Same-Day Funds Settlement
System. Secondary market trading between Clearstream, Luxembourg Customers
and/or Euroclear Participants will occur in the ordinary way in accordance with
the applicable rules and operating procedures of Clearstream, Luxembourg and
Euroclear and will be settled using the procedures applicable to conventional
Eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depositary on the one hand, and directly or indirectly through
Clearstream, Luxembourg Customers or Euroclear Participants, on the other, will
be effected in the Depositary in accordance with the Depositary's rules on
behalf of the relevant European international clearing system by its U.S.
Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines, in European time. The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its U.S. Depositary to take action to
effect final settlement on its behalf by delivering interests in the Debentures
to or receiving interests in the Debentures from the Depositary, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to the Depositary. Clearstream, Luxembourg Customers and
Euroclear Participants may not deliver instructions directly to their respective
U.S. Depositaries.
Because of time-zone differences, credits of interests in the Debentures
received in Clearstream, Luxembourg or Euroclear as a result of a transaction
with a DTC participant will be made during subsequent securities settlement
processing and dated the business day following the Depositary settlement date.
Such credits or any transactions involving interests in such Debentures settled
during such processing will be reported to the relevant Clearstream, Luxembourg
Customers or Euroclear Participants on such business day. Cash received in
Clearstream, Luxembourg or Euroclear as a result of sales of interests in the
Debentures by or through a Clearstream, Luxembourg Customer or a Euroclear
Participant to a DTC participant will be received with value on the Depositary
settlement date but will be available in the relevant Clearstream, Luxembourg or
Euroclear cash account only as of the business day following settlement in the
Depositary.
Although the Depositary, Clearstream, Luxembourg and Euroclear have agreed
to the foregoing procedures in order to facilitate transfers of interests in the
Debentures among participants of the Depositary, Clearstream, Luxembourg and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be changed or discontinued at any time.
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UNITED STATES TAXATION
GENERAL
This section summarizes the material U.S. federal tax consequences of
ownership and disposition of the Debentures. However, the discussion is limited
in the following ways:
- The discussion only covers you if you buy your Debentures in the initial
offering at the price set forth on the cover page.
- The discussion only covers you if you hold your Debentures as capital
assets (that is, for investment purposes), and if you do not have a
special tax status such as:
- certain financial institutions;
- insurance companies;
- dealers in securities or foreign currencies;
- persons holding the Debentures as part of a hedge;
- U.S. Holders whose functional currency is not the U.S. dollar;
- partnerships or other entities classified as partnerships for U.S.
federal income tax purposes; or
- persons subject to the alternative minimum tax.
- The discussion does not cover tax consequences that depend upon your
particular tax situation in addition to your ownership of Debentures.
- The discussion is based on current law. Changes in the law may change the
tax treatment of the Debentures possibly with a retroactive effect.
- The discussion does not cover state, local or foreign law.
- We have not requested a ruling from the United States Internal Revenue
Service (the "IRS") on the tax consequences of owning and disposing of
the Debentures. As a result, the IRS could disagree with portions of this
discussion.
IF YOU ARE CONSIDERING BUYING DEBENTURES, WE SUGGEST THAT YOU CONSULT YOUR
TAX ADVISOR ABOUT THE TAX CONSEQUENCES OF HOLDING THE DEBENTURES IN YOUR
PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS
OF ANY STATE, LOCAL OR FOREIGN JURISDICTION.
TAX CONSEQUENCES TO U.S. HOLDERS
This section applies to you if you are a "U.S. Holder." A "U.S. Holder" is
a beneficial owner of a Debenture that is for U.S. federal income tax purposes:
- an individual U.S. citizen or resident alien;
- a corporation -- or entity taxable as a corporation for U.S. federal
income tax purposes -- that was created under U.S. law (federal or
state); or
- an estate or trust whose world-wide income is subject to U.S. federal
income tax.
If a partnership holds Debentures, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. If you are a partner of a partnership holding Debentures, we
suggest that you consult your tax advisor.
INTEREST
- If you are a cash method taxpayer (including most individual holders),
you must report interest on the Debentures as ordinary income when you
receive it.
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- If you are an accrual method taxpayer, you must report interest on the
Debentures as ordinary income as it accrues.
SALE OR RETIREMENT OF DEBENTURES
On your sale, redemption or retirement of your Debenture:
- You will have taxable gain or loss equal to the difference between the
amount received by you and your tax basis in the Debenture. Your tax
basis in the Debenture is your cost, subject to certain adjustments.
- Your gain or loss will generally be capital gain or loss, and will be
long term capital gain or loss if you held the Debenture for more than
one year. For an individual, the maximum tax rate on long term capital
gains is 20% (or 18% if the Debenture is held for more than five years).
- If you sell the Debenture between interest payment dates, a portion of
the amount you receive reflects interest that has accrued on the
Debenture but has not yet been paid by the sale date. That amount is
treated as ordinary interest income as described above under
"-- Interest."
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under the tax rules concerning information reporting to the IRS:
- Assuming you hold your Debentures through a broker or other securities
intermediary, the intermediary must provide information to the IRS and to
you on IRS Form 1099 concerning interest and retirement proceeds on your
Debentures as well as on proceeds from sale or other disposition of the
Debentures, unless an exemption applies.
- Similarly, unless an exemption applies, you must provide the intermediary
with your Taxpayer Identification Number for its use in reporting
information to the IRS. If you are an individual, this is your social
security number. You are also required to comply with other IRS
requirements concerning information reporting.
- If you are subject to these requirements but do not comply, the
intermediary must withhold at a rate not to exceed 31% of all amounts
payable to you on the Debentures (including principal payments and sale
proceeds). This is called "backup withholding". If the intermediary
withholds payments, you may use the withheld amount as a credit against
your federal income tax liability.
- All individuals are subject to these requirements. Some holders,
including all corporations, tax-exempt organizations and individual
retirement accounts, are exempt from these requirements.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
This section applies to you if you are a "Non-U.S. Holder." A "Non-U.S.
Holder" is a beneficial owner of a Debenture that is not a U.S. Holder.
WITHHOLDING TAXES
Generally, payments of principal and interest on the Debentures will not be
subject to U.S. withholding taxes.
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However, in the case of interest, for the exemption from withholding taxes
to apply to you, you must meet one of the following requirements:
- You provide a completed Form W-8BEN (or substitute form) to the bank,
broker or other intermediary through which you hold your Debentures. The
Form W-8BEN contains your name, address and a statement that you are the
beneficial owner of the Debentures and that you are not a U.S. Holder.
- You hold your Debenture directly through a "qualified intermediary," and
the qualified intermediary has sufficient information in its files
indicating that you are not a U.S. Holder. A qualified intermediary is a
bank, broker or other intermediary that (1) is either a U.S. or non-U.S.
entity, (2) is acting out of a non-U.S. branch or office and (3) has
signed an agreement with the IRS providing that it will administer all or
part of the U.S. tax withholding rules under specified procedures.
- You are entitled to an exemption from withholding tax on interest under a
tax treaty between the U.S. and your country of residence. To claim this
exemption, you must generally complete Form W-8BEN and claim this
exemption on the form.
- The interest income on the Debentures is effectively connected with the
conduct of your trade or business in the U.S., and is not exempt from
U.S. tax under a tax treaty. To claim this exemption, you must complete
Form W-8ECI.
Even if you meet one of the above requirements, interest paid to you will
be subject to withholding tax under any of the following circumstances:
- The withholding agent or an intermediary knows or has reason to know that
you are not entitled to an exemption from withholding tax. Specific rules
apply for this test.
- The IRS notifies the withholding agent that information that you or an
intermediary provided concerning your status is false.
- An intermediary through which you hold the Debentures fails to comply
with the procedures necessary to avoid withholding taxes on the
Debentures.
- You own 10% or more of the voting stock of Johnson & Johnson, are a
"controlled foreign corporation" related directly or indirectly to
Johnson & Johnson through stock ownership, or are a bank making a loan in
the ordinary course of its business. In these cases, you will be exempt
from withholding taxes only if you are eligible for a treaty exemption or
if the interest income is effectively connected with your conduct of a
trade or business in the U.S. and you provide us with a properly executed
form W-8ECI as discussed above.
The rules regarding withholding are complex and vary depending on your
individual situation. They are also subject to change. In addition, special
rules apply to certain types of Non-U.S. Holders of Debentures, including
partnerships, trusts and other entities treated as pass-through entities for
U.S. federal income tax purposes. We suggest that you consult with your tax
advisor regarding the specific methods for satisfying these requirements.
SALE OF DEBENTURES
If you sell a Debenture, you will not be subject to U.S. federal income tax
on any gain unless one of the following applies:
- The gain is connected with a trade or business that you conduct in the
U.S.
- You are an individual, you are present in the U.S. for at least 183 days
during the taxable year in which you dispose of the Debenture, and
certain other conditions are satisfied.
- The gain represents accrued interest, in which case the rules for
interest would apply.
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U.S. TRADE OR BUSINESS
If you hold your Debenture in connection with a trade or business that you
are conducting in the U.S.:
- Any interest on the Debenture, and any gain from disposing of the
Debenture, generally will be subject to income tax as if you were a U.S.
Holder.
- If you are a corporation, you may be subject to the "branch profits tax"
on your earnings that are connected with your U.S. trade or business,
including earnings from the Debenture. This tax rate is 30%, but may be
reduced or eliminated by an applicable income tax treaty.
ESTATE TAXES
If you are an individual, your Debentures will not be subject to U.S.
estate tax when you die. However, this rule only applies if, at your death,
payments on the Debentures were not connected to a trade or business that you
were conducting in the U.S. or you did not own, actually or constructively, 10%
or more of the total combined voting power of Johnson & Johnson.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. rules concerning information reporting and backup withholding are
described above. These rules apply to Non-U.S. Holders as follows:
- Principal and interest payments you receive will be automatically exempt
from the usual rules if you provide the tax certifications needed to
avoid withholding tax on interest, as described above under
"-- Withholding Taxes". The exemption does not apply if the withholding
agent or an intermediary knows or has reason to know that you should be
subject to the usual information reporting or backup withholding rules.
In addition, interest payments made to you will generally be reported to
the IRS on Form 1042-S.
- Sale proceeds you receive on a sale of your Debentures through a broker
may be subject to information reporting and/or backup withholding if you
are not eligible for an exemption. In particular, information reporting
and backup reporting may apply if you use the U.S. office of a broker,
and information reporting (but not backup withholding) may apply if you
use the foreign office of a broker that has certain connections to the
U.S. In general, you may file Form W-8BEN to claim an exemption from
information reporting and backup withholding. We suggest that you consult
your tax advisor concerning information reporting and backup withholding
on a sale.
POSSIBLE EUROPEAN UNION REQUIREMENTS
The European Union is considering new procedures that would apply to you if
you are a tax resident of a "member state" and you receive interest on the
Debentures from a paying agent located in another member state. Under these
procedures, the paying agent's member state would adopt one of the following
rules:
- the paying agent would be required to withhold tax on interest paid to
you on the Debentures, unless you follow specified procedures to show
that you have reported the interest to the tax authorities in your state
of residence; or
- the interest paid to you would be reported to the tax authorities in your
state of residence by the paying agent's member state.
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No decision has been made whether to adopt these requirements. Even if they
are adopted, it is not clear what their effective date will be. We advise you to
consult your tax advisor about the possible implications of these requirements.
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UNDERWRITING
We and the Underwriters have entered into an Underwriting Agreement
relating to the offering and sale of the Debentures (the "Underwriting
Agreement"). In the Underwriting Agreement, we have agreed to sell to each
Underwriter, and each Underwriter has agreed to purchase from us, the principal
amount of Debentures that appears opposite its name in the table below:
Principal Amount Principal Amount
Underwriter of 3.80% Debentures of 4.95% Debentures
----------- -------------------- --------------------
Goldman, Sachs & Co. ............... $125,000,000 $125,000,001
J.P. Morgan Securities Inc.......... 125,000,001 125,000,000
Banc of America Securities LLC...... 75,000,000 75,000,000
Citigroup Global Markets Inc. ...... 75,000,000 75,000,000
Credit Suisse First Boston LLC...... 33,333,333 33,333,333
Deutsche Bank Securities Inc........ 33,333,333 33,333,333
The Williams Capital Group, L.P..... 33,333,333 33,333,333
------------ ------------
Total..................... $500,000,000 $500,000,000
============ ============
The obligations of the Underwriters under the Underwriting Agreement,
including their agreement to purchase Debentures from us, are several and not
joint. Those obligations are also subject to certain conditions in the
Underwriting Agreement being satisfied. The Underwriters have agreed to purchase
all of the Debentures if any of them are purchased.
The Underwriters have advised us that they propose to offer the Debentures
to the public at the public offering price that appears on the cover page of
this Prospectus Supplement. The Underwriters may offer the Debentures to
selected dealers at the public offering price minus a selling concession of up
to 0.30% of the principal amount of 3.80% Debentures and up to 0.50% of the
principal amount of 4.95% Debentures. In addition, the Underwriters may allow,
and those selected dealers may reallow, a selling concession of up to 0.15% of
the principal amount of 3.80% Debentures and up to 0.25% of the principal amount
of 4.95% Debentures to certain other dealers. After the initial public offering,
the Underwriters may change the public offering price and any other selling
terms.
We will pay our expenses related to the offering, which we estimate will be
$300,000. We will indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
The Debentures are a new issue of securities, and there is currently no
established trading market for the Debentures. In addition, we do not intend to
apply for the Debentures to be listed on any securities exchange or to arrange
for the Debentures to be quoted on any quotation system. The Underwriters have
advised us that they intend to make a market in the Debentures, but they are not
obligated to do so. The Underwriters may discontinue any market making in the
Debentures at any time in their sole discretion. Accordingly, we cannot assure
you that a liquid trading market will develop for the Debentures, that you will
be able to sell your Debentures at a particular time or that the prices that you
receive when you sell will be favorable.
The Underwriters may also impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because another Underwriter has repurchased Debentures
sold by or for the account of such Underwriter in stabilizing or short covering
transactions.
In connection with the offering of the Debentures, the Underwriters may
engage in overallotment, stabilizing transactions and syndicate covering
transactions in accordance with Regulation M under the Securities Exchange Act
of 1934, as amended. Overallotment involves
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sales in excess of the offering size, which creates a short position for the
Underwriters. Stabilizing transactions involve bids to purchase the Debentures
in the open market for the purpose of pegging, fixing or maintaining the price
of the Debentures. Syndicate covering transactions involve purchases of the
Debentures in the open market after the distribution has been completed in order
to cover short positions. Stabilizing transactions and syndicate covering
transactions may cause the price of the Debentures to be higher than it would
otherwise be in the absence of those transactions. If the Underwriters engage in
stabilizing or syndicate covering transactions, they may discontinue them at any
time.
J.P. Morgan Securities Inc. ("JPMorgan") will make the Debentures available
for distribution on the Internet through a proprietary Web site and/or a
third-party system operated by Market Axess Inc., an Internet-based
communications technology provider. Market Axess Inc. is providing the system as
a conduit for communications between JPMorgan and its customers and is not a
party to any transactions. Market Axess Inc., a registered broker-dealer, will
receive compensation from JPMorgan based on transactions JPMorgan conducts
through the system. JPMorgan will make the Debentures available to its customers
through the Internet distributions, whether made through a proprietary or
third-party system, on the same terms as distributions made through other
channels.
Each Underwriter has represented, warranted and agreed that (i) it has not
offered or sold and, prior to the expiry of a period of six months from the
Closing date, will not offer or sell any Debentures to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has only communicated or caused to be communicated and will only communicate or
cause to be communicated any invitation or inducement to engage in investment
activity (within the meaning of section 21 of the Financial Services and Markets
Act 2000 ("FSMA")) received by it in connection with the issue or sale of any
Debentures in circumstances in which section 21(1) of the FSMA does not apply to
the Issuer, and (iii) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in relation to the
Debentures in, from or otherwise involving the United Kingdom.
The Debentures may not be offered, sold, transferred or delivered in or
from The Netherlands, as part of their initial distribution or as part of any
re-offering, and neither this Prospectus Supplement circular nor any other
document in respect of the offering may be distributed or circulated in The
Netherlands, other than to individuals or legal entities which include, but are
not limited to, banks, brokers, dealers, institutional investors and
undertakings with a treasury department, who or which trade or invest in
securities in the conduct of a business or profession.
No syndicate member has offered or sold, or will offer or sell, in Hong
Kong, by means of any document, any Debentures other than to persons whose
ordinary business it is to buy or sell securities, whether as principal or
agent, or under circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, nor has it
issued or had in its possession for the purpose of issue, nor will it issue or
have in its possession for the purpose of issue, any invitation or advertisement
relating to the Debentures in Hong Kong (except as permitted by the securities
laws of Hong Kong) other than with respect to Debentures which are intended to
be disposed of to persons outside Hong Kong or to be disposed of only to persons
whose business involves the acquisition, disposal, or holding of securities
(whether as principal or as agent).
This Prospectus has not been registered as a prospectus with the Monetary
Authority of Singapore. Accordingly, this Prospectus and any other document or
material in connection with the offer or sale, or invitation or subscription or
purchase, of the Debentures may not be
S-16
circulated or distributed, nor may the Debentures be offered or sold, or be made
the subject of an invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than under circumstances in which such
offer, sale or invitation does not constitute an offer or sale, or invitation
for subscription or purchase, of the Debentures to the public in Singapore.
Each Underwriter has acknowledged and agreed that the Debentures have not
been registered under the Securities and Exchange Law of Japan and are not being
offered or sold and may not be offered or sold, directly or indirectly, in Japan
or to or for the account of any resident of Japan, except (i) pursuant to an
exemption from the registration requirements of the Securities and Exchange Law
of Japan and (ii) in compliance with any other applicable requirements of
Japanese law.
Certain of the Underwriters and their affiliates engage in various general
financing and banking transactions with, and perform certain financial and
banking services for, us and our affiliates.
EXPERTS
The consolidated financial statements and financial statement schedule of
Johnson & Johnson and its subsidiaries as of December 31, 2000 and December 30,
2001 and for each of the three fiscal years in the period ended December 29,
2002 incorporated in this Prospectus Supplement by reference to the Johnson &
Johnson Annual Report on Form 10-K for the year ended December 29, 2002 have
been so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL OPINIONS
The legality of the Debentures will be passed upon for the Company by James
R. Hilton, an Associate General Counsel of the Company. Certain legal matters
will be passed upon for the Underwriters by Cravath, Swaine & Moore LLP,
Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019. Mr. Hilton is paid
salary by us, participates in various employee benefit plans offered to our
employees generally, and owns and has options to purchase shares of our Common
Stock. Cravath, Swaine & Moore LLP has performed and may in the future perform
legal services for us.
S-17
PROSPECTUS
LOGO
DEBT SECURITIES
AND WARRANTS
Johnson & Johnson (the "Company") may from time to time offer its Debt
Securities and Warrants to purchase Debt Securities for proceeds up to
$2,585,000,000 or the equivalent in foreign currency or foreign currency units
on terms determined by market conditions at the time of sale. The designation,
currency, principal amount, offering price, maturity, interest rate and any
redemption provisions of the Debt Securities and the duration, currency,
offering price, exercise price and detachability of the Warrants are described
in the accompanying Prospectus Supplement, together with other terms and matters
related to the offering.
The Debt Securities and Warrants may be sold directly or through agents,
underwriters or dealers. If agents of the Company or underwriters are involved
in the sale of the Debt Securities or Warrants, their names and descriptions of
their compensation and indemnification arrangements are contained in the
Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER 18, 1994
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR THE
ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, ANY SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY AGENT, DEALER OR UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER
OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN OR IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THEREOF OR THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THEREOF. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING PROSPECTUS SUPPLEMENT
CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission, which can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street N.W., Washington, D.C., at its New York Regional
Office, 75 Park Place, New York, New York, and at its Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street (Suite 1400), Chicago,
Illinois. Copies of such material can be obtained at prescribed rates by writing
to the Securities and Exchange Commission, Public Reference Section, Washington,
D.C. 20549. The Common Stock of the Company is listed on the New York Stock
Exchange. Reports, proxy statements and other information about the Company can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005. This Prospectus does not contain all the
information set forth in the related registration statement and exhibits thereto
which the Company has filed with the Securities and Exchange Commission under
the Securities Act of 1933 and to which reference is hereby made.
INCORPORATION BY REFERENCE
The Annual Report on Form 10-K for the fiscal year ended January 2, 1994,
the Quarterly Reports on Form 10-Q for the fiscal quarters ended April 3, 1994
and July 3, 1994, and the Current Report on Form 8-K dated October 5, 1994,
filed by the Company with the Securities and Exchange Commission, are hereby
incorporated by reference in this Prospectus.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the date of this Prospectus
and prior to the termination of the offering of the Debt Securities and Warrants
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the respective dates of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein or in any Prospectus Supplement modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents that have been
incorporated by reference in this Prospectus (not including exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed to the Office of the Secretary,
Johnson & Johnson, One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933
(Telephone 908-524-2455).
2
THE COMPANY
The Company, incorporated in New Jersey since 1887, employs approximately
81,600 people worldwide and is engaged in the manufacture and sale of a broad
range of products in the health care field in many countries of the world. Its
principal business segments are: consumer products, consisting of toiletries and
hygienic products including dental and baby care products, first-aid products,
non-prescription drugs, sanitary protection products and adult incontinence
products; pharmaceutical products consisting principally of prescription drugs;
and professional products consisting of sutures, mechanical wound closure
products, less invasive surgical instruments, diagnostic products, ophthalmic
equipment and devices, medical equipment and devices, surgical instruments,
joint replacements and products for wound management and infection, which
professional products are used principally in the professional fields by
physicians, nurses, therapists, hospitals, diagnostic laboratories and clinics.
All references herein to the Company include Johnson & Johnson and its
subsidiaries, unless the context otherwise requires.
The principal executive offices of the Company are located at One Johnson &
Johnson Plaza, New Brunswick, New Jersey 08933. The telephone number is
908-524-0400.
RECENT DEVELOPMENTS
On August 22, 1994, the Company announced that it had entered into an
agreement with Neutrogena Corporation ("Neutrogena") pursuant to which it would
acquire for a net price of approximately $924 million all of the outstanding
shares of common stock and options to purchase shares of common stock of
Neutrogena through a tender offer and subsequent merger. During the week of
September 26, 1994, the Company acquired and made payment for the Neutrogena
common stock tendered in the tender offer, which represented approximately 98.6%
of the Neutrogena common stock outstanding. On October 3, 1994, the Company
consummated a short form merger pursuant to which the remaining shares of
Neutrogena common stock were acquired at the same price per share paid pursuant
to the tender offer.
On September 6, 1994, the Company announced that it had entered into an
agreement with Eastman Kodak Company ("Kodak") to purchase Kodak's clinical
diagnostics business for $1.008 billion. It is anticipated that the closing of
such acquisition will occur during the fourth quarter of 1994. Such acquisition
is subject to customary conditions.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges represents the historical ratio of
the Company and is calculated on a total enterprise basis. The ratio is computed
by dividing the sum of earnings before provision for taxes and fixed charges
(excluding capitalized interest) by fixed charges. Fixed charges represent
interest (including capitalized interest) and amortization of debt discount and
expense and the interest factor of all rentals, consisting of an appropriate
interest factor on operating leases.
FISCAL YEARS
FISCAL QUARTER --------------------------------
ENDED JULY 3, 1994 1993 1992 1991 1990 1989
------------------ ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges............ 11.94 9.82 9.19 8.81 6.01 6.78
3
USE OF PROCEEDS
Unless otherwise indicated in the Prospectus Supplement, the net proceeds
to be received by the Company from sales of the Debt Securities and Warrants and
the exercise of Warrants will be used for general corporate purposes, including
working capital, capital expenditures, stock repurchase programs, repayment and
refinancing of borrowings and acquisitions.
4
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under the Indenture dated as of
September 15, 1987 between the Company and Harris Trust and Savings Bank,
Chicago, Illinois, as Trustee, as amended by the First Supplemental Indenture
dated as of September 1, 1990 (as so amended, the "Indenture"). The Indenture is
filed as an exhibit to the registration statement relating hereto. Certain
provisions of the Indenture are referred to and summarized below. The summaries
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Indenture.
GENERAL
The aggregate principal amount of Debt Securities which can be issued under
the Indenture is unlimited (Section 2.01). As of the date of this Prospectus,
$2,165,000,000 aggregate principal amount of Debt Securities have been issued
under the Indenture. The Debt Securities to which this Prospectus relates will
be issued from time to time in amounts the proceeds of which, together with the
proceeds of the Warrants, will aggregate up to $2,585,000,000 or the equivalent
thereof in foreign currency or foreign currency units, such as European Currency
Units, and will be offered to the public on terms determined by market
conditions at the time of sale. The Debt Securities may be issued in one or more
series with the same or various maturities and may be sold at par or at an
original issue discount. Debt Securities sold at an original issue discount may
bear no interest or interest at a rate which is below market rates. The Debt
Securities will be unsecured obligations of the Company issued in fully
registered form without coupons or in bearer form with coupons (Recital and
Sections 2.01 and 9.01).
Reference is made to the Prospectus Supplement for the following terms to
the extent they are applicable to the Debt Securities: (a) designation,
aggregate principal amount and denomination; (b) date of maturity; (c) currency
or currencies for which Debt Securities may be purchased and currency or
currencies in which principal and interest may be payable; (d) if the currency
for which Debt Securities may be purchased or in which principal and interest
may be payable is at the purchaser's election, the manner in which such an
election may be made; (e) interest rate; (f) the times at which interest will be
payable; (g) redemption date and redemption price; (h) federal income tax
consequences; (i) whether such Debt Securities are to be issued in book-entry
form, and if so, the identity of the depository and information with respect to
book-entry procedures; and (j) other terms of the Debt Securities.
CERTAIN COVENANTS
Unless otherwise provided in the Debt Securities, the Company will covenant
not to create, assume or suffer to exist any lien on any Restricted Property
(described below) to secure any debt of the Company, any subsidiary or any other
person, or permit any subsidiary so to do, without securing the Debt Securities
of any series having the benefit of the covenant by such lien equally and
ratably with such debt for so long as such debt shall be so secured, subject to
certain exceptions specified in the Indenture. Exceptions include: (a) existing
liens or liens on facilities of corporations at the time they become
subsidiaries; (b) liens existing on facilities when acquired, or incurred to
finance the purchase price, construction or improvement thereof; (c) certain
liens in favor of or required by contracts with governmental entities; and (d)
liens otherwise prohibited by such covenant, securing indebtedness which,
together with the aggregate amount of outstanding indebtedness secured by liens
otherwise prohibited by such covenant and the value of certain sale and
leaseback transactions, does not exceed 10% of the Company's consolidated net
tangible assets (defined in the Indenture as total assets less current
liabilities and intangible assets) (Section 4.04).
Unless otherwise provided in the Debt Securities, the Company will also
covenant not to, and not to permit any subsidiary to, enter into any sale and
leaseback transaction covering any
5
Restricted Property unless (a) the Company would be entitled under the
provisions described above to incur debt equal to the value of such sale and
leaseback transaction, secured by liens on the facilities to be leased, without
equally and ratably securing the Debt Securities, or (b) the Company, during the
six months following the effective date of such sale and leaseback transaction,
applies an amount equal to the value of such sale and leaseback transaction to
the voluntary retirement of long-term indebtedness or to the acquisition of
Restricted Property (Section 4.04).
Because the covenants described above cover only manufacturing facilities
in the continental United States, the Company's manufacturing facilities in
Puerto Rico (accounting for approximately 5% of the Company's manufacturing
facilities worldwide) are excluded from the operation of the covenants.
The Indenture defines Restricted Property as (a) any manufacturing facility
(or portion thereof) owned or leased by the Company or any subsidiary and
located within the continental United States which, in the opinion of the Board
of Directors, is of material importance to the business of the Company and its
subsidiaries taken as a whole, but no such manufacturing facility (or portion
thereof) shall be deemed of material importance if its gross book value (before
deducting accumulated depreciation) is less than 2% of the Company's
consolidated net tangible assets, or (b) any shares of capital stock or
indebtedness of any subsidiary owning any such manufacturing facility (Section
4.04).
There are no liens prohibited by the covenants described above on, or any
sale and leaseback transactions prohibited by such covenants covering, any
property which would qualify as Restricted Property. As such, the Company does
not keep records identifying which of its properties, if any, would qualify as
Restricted Property. The Company will amend this Prospectus to disclose or
disclose in any Prospectus Supplement the existence of any lien on or any sale
and leaseback transaction covering any Restricted Property, which would require
the Company to secure the Debt Securities or apply certain amounts to retirement
of indebtedness or acquisitions of property, as provided in such covenants.
The Indenture contains no other restrictive covenants, including those that
would afford holders of the Debt Securities protection in the event of a highly
leveraged transaction involving the Company or any of its affiliates, or any
covenants relating to total indebtedness, interest coverage, stock repurchases,
recapitalizations, dividends and distributions to shareholders, current ratios
and acquisitions and divestitures.
AMENDMENT AND WAIVER
Other than amendments not adverse to holders of the Debt Securities,
amendments of the Indenture or the Debt Securities may be made only with the
consent of the holders of a majority in principal amount of the Debt Securities
affected (acting as one class). Waivers of compliance with any provision of the
Indenture or the Debt Securities with respect to any series of Debt Securities
may be made only with the consent of the holders of a majority in principal
amount of the Debt Securities of that series. The consent of all holders of
affected Debt Securities will be required to (a) make any Debt Security payable
in a currency not specified or described in the Debt Security, (b) change the
stated maturity thereof, (c) reduce the principal amount thereof, (d) reduce the
rate or change the time of payment of interest thereon, or (e) impair the right
to institute suit for the payment of principal thereof or interest thereon
(Section 9.02). The holders of a majority in aggregate principal amount of Debt
Securities affected may waive any past default under the Indenture and its
consequences, except a default (1) in the payment of the principal of or
interest on such Debt Securities, or (2) in respect of a provision which cannot
be waived or amended without the consent of all holders of Debt Securities
affected (Sections 6.04 and 9.02).
6
EVENTS OF DEFAULT
Events of Default with respect to any series of Debt Securities under the
Indenture will include: (a) default in payment of any principal on such series;
(b) default in the payment of any installment of interest on such series and
continuance of such default for a period of 30 days; (c) default in the
performance of any other covenant in the Indenture or in the Debt Securities and
continuance of such default for a period of 90 days after receipt by the Company
of notice of such default from the Trustee or the holders of at least 25% in
principal amount of Debt Securities of such series; or (d) certain events of
bankruptcy, insolvency or reorganization in respect of the Company (Section
6.01). The Trustee may withhold notice to the holders of a series of Debt
Securities of any default (except in the payment of principal of or interest on
such series of Debt Securities) if it considers such withholding to be in the
interest of holders of the Debt Securities (Section 7.05). Not all Events of
Default with respect to a particular series of Debt Securities issued under the
Indenture necessarily constitute Events of Default with respect to any other
series of Debt Securities.
On the occurrence of an Event of Default with respect to a series of Debt
Securities, the Trustee or the holders of at least 25% in principal amount of
Debt Securities of such series then outstanding may declare the principal (or in
the case of Debt Securities sold at an original issue discount, the amount
specified in the terms thereof) and accrued interest thereon to be due and
payable immediately (Section 6.02).
Within 120 days after the end of each fiscal year, an officer of the
Company must inform the Trustee whether such officer knows of any default,
describing any such default and the status thereof (Section 4.03). Subject to
provisions relating to its duties in case of default, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
direction of any holders of Debt Securities unless the Trustee shall have
received a satisfactory indemnity (Section 7.01).
DEFEASANCE OF THE INDENTURE AND DEBT SECURITIES
The Indenture provides that the Company, at the Company's option, (a) will
be discharged from all obligations in respect of the Debt Securities of a series
(except for certain obligations to register the transfer or exchange of Debt
Securities, replace stolen, lost or destroyed Debt Securities, maintain paying
agencies and hold moneys for payment in trust), or (b) need not comply with
certain restrictive covenants of the Indenture (including those described under
"Certain Covenants"), in each case if the Company irrevocably deposits in trust
with the Trustee money or eligible government obligations which through the
payment of interest thereon and principal thereof in accordance with their terms
will provide money, in an amount sufficient to pay all the principal of
(including any mandatory redemption payments) and interest on the Debt
Securities of such series on the dates such payments are due in accordance with
the terms of such Debt Securities. Eligible government obligations are those
backed by the full faith and credit of the government which issues the currency
or foreign currency unit in which the Debt Securities are denominated. To
exercise either option, the Company is required to deliver to the Trustee an
opinion of nationally recognized independent tax counsel to the effect that the
deposit and related defeasance would not cause the holders of the Debt
Securities of such series to recognize income, gain or loss for Federal income
tax purposes. To exercise the option described in clause (a) above, such opinion
must be based on a ruling of the Internal Revenue Service, a regulation of the
Treasury Department or a provision of the Internal Revenue Code (Section 8.01).
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of a global
security which is deposited with and registered in the name of the depositary
(or a nominee of the depositary) specified in the accompanying Prospectus
Supplement. So long as the depositary for a global security, or its nominee, is
the registered owner of the global security, the depositary or its nominee, as
the case
7
may be, will be considered the sole owner or holder of the Debt Securities
represented by such global security for all purposes under the Indenture. Except
as provided in the Indenture, owners of beneficial interests in Debt Securities
represented by a global security will not (a) be entitled to have such Debt
Securities registered in their names, (b) receive or be entitled to receive
physical delivery of certificates representing such Debt Securities in
definitive form, (c) be considered the owners or holders thereof under the
Indenture and (d) have any rights under the Indenture with respect to such
global security (Sections 2.06A and 2.13). Unless and until it is exchanged in
whole or in part for individual certificates evidencing the Debt Securities
represented thereby, a global security may not be transferred except as a whole
by the depositary for such global security to a nominee of such depositary or by
a nominee of such depositary to such depositary or another nominee of such
depositary or by the depositary or any nominee to a successor depositary or any
nominee of such successor. The Company, in its sole discretion, may at any time
determine that any series of Debt Securities issued or issuable in the form of a
global security shall no longer be represented by such global security and such
global security shall be exchanged for securities in definitive form pursuant to
the Indenture (Section 2.06A).
Upon the issuance of a global security, the depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
such global security to the accounts of participants. Ownership of interests in
a global security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the depositary (with respect to
interests of participants in the depositary), or by participants in the
depositary or persons that may hold interests through such participants (with
respect to persons other than participants in the depositary). Ownership of
beneficial interests in a global security will be limited to participants or
persons that hold interests through participants.
INFORMATION CONCERNING THE TRUSTEE
The Trustee has extended credit facilities to the Company, and the Company
maintains deposit accounts and conducts other banking transactions with the
Trustee.
8
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities.
Warrants may be issued independently or together with any Debt Securities
offered by any Prospectus Supplement and may be attached to or separate from
such Debt Securities. The Warrants are to be issued under Warrant Agreements to
be entered into between the Company and a bank or trust company, as Warrant
Agent, all as set forth in the Prospectus Supplement relating to the particular
issue of Warrants. The Warrant Agent will act solely as an agent of the Company
in connection with the Warrant Certificates and will not assume any obligation
or relationship of agency or trust for or with any holders of Warrant
Certificates or beneficial owners of Warrants. Copies of the forms of Warrant
Agreements, including the forms of Warrant Certificates representing the
Warrants, are filed as exhibits to the registration statement relating hereto.
The following summaries of certain provisions of the Warrant Agreements and
Warrant Certificates do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Warrant
Agreements and the Warrant Certificates.
GENERAL
If Warrants are offered, the Prospectus Supplement will describe the terms
of the Warrants, including the following: (a) the offering price; (b) the
currency for which Warrants may be purchased; (c) the designation, aggregate
principal amount, currency and terms of the Debt Securities purchasable upon
exercise of the Warrants; (d) the designation and terms of the Debt Securities
with which the Warrants are issued and the number of Warrants issued with each
such Debt Security; (e) the date after which the Warrants and the related Debt
Securities will be separately transferable; (f) the principal amount of Debt
Securities purchasable upon exercise of a Warrant and the price at and currency
in which such principal amount of Debt Securities may be purchased upon such
exercise; (g) the date on which the right to exercise the Warrants shall
commence and the date on which such right shall expire; (h) federal income tax
consequences; (i) whether the Warrants represented by the Warrant Certificates
will be issued in registered or bearer form; and (j) any other terms of the
Warrants.
Prior to the exercise of their Warrants, holders of Warrants will not have
any of the rights of holders of the Debt Securities purchasable upon such
exercise, including the right to receive payments of principal of or interest on
the Debt Securities purchasable upon such exercise or to enforce convenants in
the Indenture.
Warrant Certificates may be exchanged for new Warrant Certificates of
different denominations, may (if in registered form) be presented for
registration of transfer, and may be exercised at the corporate trust office of
the Warrant Agent or any other office indicated in the Prospectus Supplement.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
Debt Securities at such exercise price as shall in each case be described in the
Prospectus Supplement relating to the Warrants. Warrants may be exercised at any
time up to 5:00 P.M. New York time on the expiration date set forth in the
Prospectus Supplement relating to such Warrants. After the close of business on
the expiration date (or such later date to which such expiration date may be
extended by the Company), unexercised Warrants will become void.
Warrants may be exercised by delivery to the Warrant Agent of payment as
provided in the Prospectus Supplement of the amount required to purchase the
Debt Securities purchasable upon such exercise together with certain information
set forth on the reverse side of the Warrant Certificate. Warrants will be
deemed to have been exercised upon receipt of the exercise price, subject to the
receipt within five business days of the Warrant Certificate evidencing such
Warrants. Upon receipt of such payment and the Warrant Certificate properly
completed and duly executed at
9
the corporate trust office of the Warrant Agent or any other office indicated in
the Prospectus Supplement, the Company will, as soon as practicable, issue and
deliver the Debt Securities purchasable upon such exercise. If fewer than all of
the Warrants represented by such Warrant Certificate are exercised, a new
Warrant Certificate will be issued for the remaining amount of Warrants.
10
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities and Warrants (a) directly to
purchasers, (b) through agents, (c) to dealers as principals, and (d) through
underwriters.
Offers to purchase Debt Securities and Warrants may be solicited directly
by the Company or by agents designated by the Company from time to time. Any
such agent, who may be deemed to be an underwriter as that term is defined in
the Securities Act of 1933, involved in the offer or sale of the Debt Securities
and Warrants is named, and any commissions payable by the Company to such agent
are set forth, in the Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis.
If a dealer is utilized in the sale of the Debt Securities and Warrants,
the Company will sell such Debt Securities and Warrants to the dealer as
principal. The dealer may then resell such Debt Securities and Warrants to the
public at varying prices to be determined by such dealer at the time of resale.
If an underwriter or underwriters are utilized in the sale of the Debt
Securities and Warrants, the Company will enter into an underwriting agreement
with such underwriters at the time of sale to them. The names of the
underwriters and the terms of the transaction are set forth in the Prospectus
Supplement, which will be used by the underwriters to make resales of the Debt
Securities and Warrants.
Agents, dealers or underwriters may be entitled under agreements which may
be entered into with the Company to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act of
1933, and may be customers of, engage in transactions with or perform services
for the Company in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or agents to solicit offers by certain institutions to purchase
Debt Securities and Warrants from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to Delayed Delivery Contracts
providing for amounts, payment and delivery as described in the Prospectus
Supplement. Institutions with whom the contracts may be made include commercial
and savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and other institutions, but shall in all
cases be subject to the approval of the Company. A commission described in the
Prospectus Supplement will be paid to underwriters and agents soliciting
purchases of Debt Securities and Warrants pursuant to contracts accepted by the
Company. Contracts will not be subject to any conditions except that (a) the
purchase by an institution of the Debt Securities and Warrants covered by its
contract shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject and (b)
the Company shall have sold and delivered to any underwriters named in the
Prospectus Supplement that portion of the issue of Debt Securities and Warrants
as is set forth therein. The underwriters and agents will not have any
responsibility in respect of the validity or the performance of the contracts.
The place and time of delivery for the Debt Securities and Warrants are set
forth in the Prospectus Supplement.
EXPERTS
The Consolidated Financial Statements of the Company incorporated herein by
reference to the Company's Annual Report on Form 10-K have been so incorporated
in reliance on the report of Coopers & Lybrand, independent accountants, given
on their authority as experts in auditing and accounting.
11
LEGAL OPINIONS
The legality of the Debt Securities and Warrants will be passed upon for
the Company by George S. Frazza, Esq., General Counsel of the Company, or Joseph
S. Orban, Esq., Associate General Counsel of the Company, and for the
underwriters, if any, by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, New York 10019. Messrs. Frazza and Orban are paid salaries by
the Company, are participants in various employee benefit plans offered to
employees of the Company generally, and each owns and has options to purchase
shares of Common Stock of the Company. Cravath, Swaine & Moore has performed
legal services for the Company from time to time.
12
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No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the Debentures offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of its date.
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TABLE OF CONTENTS
Prospectus Supplement
Page
----
Forward Looking Statements........... S-3
Ratio of Earnings to Fixed Charges... S-4
Description of the Debentures........ S-4
United States Taxation............... S-10
Underwriting......................... S-15
Experts.............................. S-17
Legal Opinions....................... S-17
Prospectus
Available Information................ 2
Incorporation by Reference........... 2
The Company.......................... 3
Recent Developments.................. 3
Ratio of Earnings to Fixed Charges... 3
Use of Proceeds...................... 4
Description of Debt Securities....... 5
Description of Warrants.............. 9
Plan of Distribution................. 11
Experts.............................. 11
Legal Opinions....................... 12
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$1,000,000,000
[JOHNSON & JOHNSON LOGO]
$500,000,000 3.80% Debentures
due May 15, 2013
$500,000,000 4.95% Debentures
due May 15, 2033
----------------------
[JOHNSON & JOHNSON LOGO]
----------------------
GOLDMAN, SACHS & CO.
JPMORGAN
BANC OF AMERICA SECURITIES LLC
CITIGROUP
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANK SECURITIES
THE WILLIAMS CAPITAL GROUP, L.P.
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