SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): DECEMBER 2, 1994
JOHNSON & JOHNSON
(Exact name of registrant as specified in its charter)
NEW JERSEY 1-3215 22-1024240
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
ONE JOHNSON & JOHNSON PLAZA, NEW BRUNSWICK, NEW JERSEY 08933
(Address of principal executive offices) (zip code)
Registrant's telephone number including area code: (908) 524-0400
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Item 5. Other Events
On August 22, 1994, Johnson & Johnson (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. The acquisition was accounted for as a
purchase, with the results of Neutrogena included in the Company's financial
statements since the date of acquisition.
On November 30, 1994, the Company consummated the purchase of the clinical
diagnostics division of Eastman Kodak Company for $1.008 billion.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information
Page
----
(1) Description of Unaudited Pro Forma
Condensed Consolidated Financial Statements 4
(2) Unaudited Pro Forma Condensed Consolidated
Statement of Income for the nine months
ended October 2, 1994 6
(3) Unaudited Pro Forma Condensed Consolidated
Statement of Income for the year ended
January 2, 1994 7
(4) Notes to Unaudited Pro Forma Condensed
Consolidated Statements of Income 8
(5) Unaudited Pro Forma Condensed Consolidated
Balance Sheet as of October 2, 1994 10
(6) Notes to Unaudited Pro Forma Condensed
Consolidated Balance Sheet 11
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DESCRIPTION OF UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
October 2,1994, and the Unaudited Pro Forma Condensed Consolidated Statements
of Income for the year ended January 2,1994 and the nine months ended October
2,1994, give effect to the acquisitions accounted for under the purchase method
of accounting. The Unaudited Pro Forma Condensed Consolidated Financial
Statements are based on the historical Consolidated Financial Statements of
Johnson & Johnson ("J&J"), Neutrogena Corporation ("Neutrogena"), and the
Clinical Diagnostics Division ("CDD") of Eastman Kodak Company ("Kodak") under
the assumptions and adjustments set forth in the accompanying Notes to the
Unaudited Pro Forma Condensed Consolidated Financial Statements.
The 1993 fiscal year ended on January 2, 1994 for J&J, December 31, 1993 for
CDD and October 31, 1993 for Neutrogena. The Unaudited Pro Forma Condensed
Consolidated Balance Sheet assumes that the CDD transaction was consummated on
October 2,1994. (Since the Neutrogena transaction was completed on September
26, 1994, it is included in the J&J October 2, 1994 Unaudited Condensed
Consolidated Balance Sheet.) The Unaudited Pro Forma Condensed Consolidated
Statements of Income assume that the transactions were consummated on January
4, 1993 for the fiscal year ended January 2, 1994 and January 3, 1994 for the
nine month period ended October 2, 1994. The historical Statements of Income
for Neutrogena which were used in preparing the Unaudited Pro Forma Condensed
Consolidated Statements of Income are: November 1, 1992 - October 31, 1993 for
the fiscal year 1993 and January 1, 1994 - September 26, 1994 for the nine
months ended October 2, 1994.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The allocations of the
purchase price assigned to the assets acquired, including their related
amortizations, and the liabilities assumed in the accompanying Unaudited Pro
Forma Condensed Consolidated Financial Statements are based upon preliminary
estimates and will be revised when the final fair value allocations are
determined, as will the related income tax effects of the pro forma adjustments.
For purposes of developing the Unaudited Pro Forma Condensed Consolidated
Balance Sheet, the book value of Neutrogena's and CDD's assets are assumed to
approximate fair market value, and the excess purchase price has been allocated
to goodwill; $819 million and $669 million for Neutrogena and CDD, respectively.
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The Unaudited Pro Forma Condensed Consolidated Statements of Income exclude any
nonrecurring costs for merging the companies. The amount of these costs cannot
be determined until the transactions are completed. Also excluded from the
Unaudited Pro Forma Condensed Consolidated Statements of Income are any benefits
that could have resulted from the transactions due to synergies that may have
been derived and from the elimination of duplicate efforts.
The Unaudited Pro Forma Condensed Consolidated Financial Statements may not be
indicative of the results that actually would have occurred if the transactions
had been in effect on the dates indicated or that may be obtained in the future,
due to the hypothetical nature of the pro forma information. The Unaudited Pro
Forma Condensed Consolidated Income Statement for the year ended January 2, 1994
is based on the historical audited Consolidated Financial Statements for J&J,
Neutrogena and the unaudited divisional historical results and account balances
of CDD. The Unaudited Pro Forma Condensed Consolidated Income Statement for the
nine months ended October 2, 1994 and the Unaudited Pro Forma Condensed
Consolidated Balance Sheet as of October 2, 1994 are based on unaudited interim
results for J&J, Neutrogena, and CDD. CDD has been operated by Kodak as a
division, hence the historical results and account balances were not audited as
if it were a separate company. Various allocations and "carve out" adjustments
have been made in the preparation of the results of CDD.
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<TABLE>
<CAPTION>
JOHNSON & JOHNSON
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED OCTOBER 2, 1994
(In Millions, Except Per Share Amount)
SUBTOTAL PRO PRO
JOHNSON & ACQUIRED FORMA FORMA
JOHNSON BUSINESSES ADJUSTMENTS COMBINED
--------- ---------- ----------- --------
(Note A) (Note B) (Note C)
<S> <C> <C> <C> <C>
Sales to Customers $11,644 $ 593 $12,237
Cost of Products Sold 3,832 214 4,046
Selling, Marketing, & Administrative Exp. 4,639 239 4,878
Research Expense 918 57 975
Other (Income) Expense, Net 44 6 28 (1)
86 (2) 164
------- ----- ----- -------
Total Costs and Expenses 9,433 516 114 10,063
------- ----- ----- -------
Earnings Before Provision for Taxes on Income 2,211 77 (114) 2,174
Provision for Taxes on Income 583 10 (21)(3) 572
------- ----- ----- -------
Net Earnings $ 1,628 $ 67 $ (93) $ 1,602
======= ===== ===== =======
Net Earnings Per Share $ 2.53 (4) $ 2.49
======= =======
Weighted Average Number of Common Shares Outstanding 643.2 643.2
======= =======
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income.
</TABLE>
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<TABLE>
<CAPTION>
JOHNSON & JOHNSON
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED JANUARY 2, 1994
(In Millions, Except Per Share Amount)
SUBTOTAL PRO PRO
JOHNSON & ACQUIRED FORMA FORMA
JOHNSON BUSINESSES ADJUSTMENTS COMBINED
--------- ---------- ----------- --------
(Note A) (Note B) (Note C)
<S> <C> <C> <C> <C>
Sales to Customers $14,138 $ 817 $ 14,955
Cost of Products Sold 4,791 300 5,091
Selling, Marketing, & Administrative Exp. 5,771 304 6,075
Research Expense 1,182 79 1,261
Other (Income) Expense, Net 62 12 38 (1)
101 (2) 213
------- ----- ------ -------
Total Costs and Expenses 11,806 695 139 12,640
------- ----- ------ -------
Earnings Before Provision for Taxes on Income
and Cumulative Effect of Accounting Changes 2,332 122 (139) 2,315
Provision for Taxes on Income 545 15 (16)(3) 544
------- ----- ------ -------
Net Earnings Before Cumulative Effect of
Accounting Changes $ 1,787 $ 107 $ (123) $ 1,771
======= ===== ====== =======
Net Earnings Per Share Before Cumulative
Effect of Accounting Changes $ 2.74 (4) $ 2.72
======= =======
Weighted Average Number of Common
Shares Outstanding 651.7 651.7
======= =======
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income.
</TABLE>
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
The Unaudited Pro Forma Condensed Consolidated Statements of Income have been
prepared to reflect the transactions as if they occurred on January 4, 1993 for
the fiscal year ended January 2, 1994 and January 3, 1994 for the nine months
ended October 2, 1994. The acquisitions have been accounted for under the
purchase method of accounting. The excess of the purchase price over the net
assets acquired is being amortized on a straight-line basis over a 40-year
period for the Neutrogena acquisition and over a 30-year period for the CDD
acquisition. Since the acquisitions of Neutrogena and CDD were just completed,
information is not yet available to assign a fair market value to the individual
assets.
The following is a summary of reclassifications and adjustments reflected in the
Unaudited Pro Forma Condensed Consolidated Statements of Income:
Note A: Represents the historical consolidated results of J&J for
the year ended January 2, 1994 and the nine months ended
October 2, 1994, which includes the results of Neutrogena
for the period September 27, 1994 to October 2, 1994.
Note B: * Represents the historical consolidated results of
Neutrogena for the year ended October 31, 1993
(11/1/92 - 10/31/93) and the nine months ended
September 26, 1994 (1/1/94 - 9/26/94).
* Represents the historical results for CDD for the
year ended December 31, 1993 and the nine months
ended September 30, 1994.
Note C: Represents the effects of pro forma adjustments. The
adjustments are as follows:
1) Represents the amortization of the excess purchase
price over the net assets acquired for the
acquisitions.
2) Represents the increase in interest expense based on
issuance of floating rate short-term debt at an
assumed interest rate of 3.1% in 1993 and 4.0% in
1994 and fixed rate debt at an assumed interest
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rate of 5.9% in 1993 and 7.0% in 1994. Also included
is the amortization of debt issuance costs to
finance the transactions. For purposes of the
Unaudited Pro Forma Condensed Consolidated Statement
of Income for the nine months ending October 2,
1994, it is assumed that the full amount of debt due
to the transactions is outstanding as of January 2,
1994, and that no debt was paid down in 1993.
In addition, this represents a decrease in interest
income due to the assumed use of $200 million of
cash in overseas accounts to fund the acquisitions,
assuming an interest income rate of 8.1% in 1993 and
5.7% in 1994.
3) Represents the tax effect of the Unaudited Pro Forma
Condensed Consolidated Statements of Income
adjustments based on the statutory rate in effect
for the periods shown. An actual tax provision was
not made for CDD since it was part of Kodak's
consolidated tax return, therefore the pro forma
adjustments include an imputed provision for taxes,
at the statutory rate.
4) Pro Forma combined earnings per share amounts as
presented in the accompanying Unaudited Pro Forma
Condensed Consolidated Statements of Income are
based on the combined weighted average number of
J&J shares outstanding for each period presented.
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<TABLE>
<CAPTION>
JOHNSON & JOHNSON
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF OCTOBER 2, 1994
(In Millions)
SUBTOTAL PRO PRO
JOHNSON & ACQUIRED FORMA FORMA
JOHNSON BUSINESS ADJUSTMENTS COMBINED
--------- -------- ----------- --------
(Note D) (Note E) (Note F)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash & Cash Equivalents $ 866 $ (200)(7) $ 666
Marketable Securities 67 67
Accounts Receivable - Trade, Net 2,546 141 2,687
Inventories 2,038 110 2,148
Other Current Assets 1,143 2 1,145
------- ---- ---- -------
Total Current Assets 6,660 253 (200) 6,713
Marketable Securities - Non Current 445 445
Property, Plant, and Equipment, Net 4,600 116 4,716
Intangible Assets, Net 1,591 34 669 (5) 2,294
Other Assets 1,537 29 1,566
------- ---- ---- -------
Total Assets $14,833 $432 $469 $15,734
======= ==== ==== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Loans and Notes Payble $ 1,142 $ 1,142
Accounts Payable 858 15 873
Accrued and Other Liabilities 2,407 48 2,455
------- ---- ---- -------
Total Current Liabilities 4,407 63 4,470
Long Term Debt 1,258 813 (6) 2,071
Other Liabilities 2,175 25 2,200
------- ---- ---- -------
Total Liabilities 7,840 88 813 8,741
------- ---- ---- -------
Stockholders' Equity
Common Stock 767 157 (157)(8) 767
Additional Capital 3 (3)(8)
Notes Receivable from Employee Stock
Ownership Plan (73) (73)
Cumulative Translation Adjustment 32 4 (4)(8) 32
Retained Earnings 8,771 180 (180)(8) 8,771
Less: Common Stock Held in Treasury 2,504 2,504
------- ---- ---- -------
Total Stockholders' Equity 6,993 344 (344) 6,993
------- ---- ---- -------
Total Liabilities and Stockholders' Equity $14,833 $432 $469 $15,734
======= ==== ==== =======
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
</TABLE>
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
The preceding Unaudited Pro Forma Condensed Consolidated Balance Sheet presents
the consolidated financial position of J&J as of October 2, 1994, and after
giving affect to the acquisitions and adjustments described below.
The following is a summary of reclassifications and adjustments reflected in the
Unaudited Pro Forma Condensed Consolidated Balance Sheet:
Note D: Represents the historical consolidated unaudited balance
sheet of J&J as of October 2, 1994. Since the Neutrogena
acquisition was closed on September 26, 1994, these balances
also include the consolidated unaudited account balances of
Neutrogena.
Note E: Represents the historical unaudited account balances for CDD
as of September 30, 1994.
Note F: Represents the effects of pro forma adjustments. The
adjustments are as follows:
5) Represents the preliminary estimate of excess
purchase price over the fair value of the assets
acquired for the CDD acquisition.
6) Represents the issuance of long-term debt to finance
the acquisition of the assets of CDD.
7) Represents $200 million of cash and cash equivalents
in overseas accounts used to fund the acquisition.
8) Represents the elimination of CDD historical equity.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 2, 1994 JOHNSON & JOHNSON
By: /s/ John A. Papa
-----------------
John A. Papa
Assistant Treasurer
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