PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED OCTOBER 18, 1994)
$300,000,000
JOHNSON & JOHNSON
8.72% DEBENTURES DUE NOVEMBER 1, 2024
---------------------------------
Interest on the Debentures is payable semiannually on May 1 and November 1
of each year, beginning May 1, 1995. The Debentures are not redeemable prior to
November 1, 2004.
---------------------------------
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 SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
===============================================================================
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(1)(3)
- -------------------------------------------------------------------------------
Per Debenture ............ 100% .875% 99.125%
- -------------------------------------------------------------------------------
Total .................... $300,000,000 $2,625,000 $297,375,000
===============================================================================
(1) Plus accrued interest, if any, from November 1, 1994.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $200,000.
---------------------------------
The Debentures are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them, subject to approval of
certain legal matters by Cravath, Swaine & Moore, counsel for the Underwriters,
and certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or part. It is
expected that delivery of the Debentures will be made in New York, New York on
or about November 1, 1994, through the book-entry facilities of The Depository
Trust Company, against payment therefor in Federal funds.
---------------------------------
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
---------------------------------
The date of this Prospectus Supplement is October 25, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------------------------
RECENT DEVELOPMENTS
On October 19, 1994, the Company announced that it had unaudited
consolidated sales of $11.64 billion during the first nine months of 1994,
compared to unaudited consolidated sales of $10.61 billion during the same
period in 1993. Unaudited consolidated sales for the third quarter of 1994 were
$4.04 billion, compared to unaudited consolidated sales of $3.51 billion for the
third quarter of 1993. The Company reported unaudited consolidated net earnings
of $1.45 billion, before one time charges, for the same period in 1993.
Unaudited consolidated net earnings for the third quarter of 1994 were $525
million, compared to unaudited consolidated net earnings of $454 million for the
same quarter of 1993.
The Company has announced the following additional debt issues: Italian
Lira 200,000,000,000 11.25% Notes due 1998; Swiss Franc 150,000,000 5.375% Bonds
due 1997; U.S. Dollars 200,000,000 7.375% Notes due 1997; and U.S. Dollars
200,000,000 8.25% Notes due 2004.
DESCRIPTION OF THE DEBENTURES
The following description of the particular terms of the 8.72% Debentures
due November 1, 2024 (the "Debentures") offered hereby supplements, and to the
extent inconsistent therewith replaces, the description of the general terms and
provisions of the Debt Securities (as such term is used in the accompanying
Prospectus) set forth under the heading "Description of Debt Securities" in the
accompanying Prospectus, to which description reference is hereby made.
General
The Debentures offered hereby will be unsecured obligations of the Company,
will be limited to $300,000,000 aggregate principal amount, will mature on
November 1, 2024, and will be issued under an Indenture dated as of September
15, 1987 between the Company and 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 Debentures will
bear interest at the rate of 8.72 per cent per annum from November 1, 1994 or
from the most recent interest payment date to which interest has been paid or
provided for, payable semiannually on May 1 and November 1 of each year,
beginning May 1, 1995, to the beneficial owners of the Debentures at the close
of business on the applicable record date, which is the April 15 or October 15
next preceding such interest payment date (the "Record Date").
The Debentures will be entitled to the benefits of the covenants of the
Company described under the caption "Description of Debt Securities Certain
Covenants" in the accompanying Prospectus.
S-2
<PAGE>
Optional Redemption
The Debentures will be redeemable upon not less than 30 nor more than 60
days' notice by mail at any time, as a whole or in part, at the election of the
Company, at a price (the "Redemption Price") equal to the percentage of the
principal amount set forth if redeemed in the 12-month period beginning November
1 of the years indicated:
Year Redemption Price
---- ----------------
2004 ......................................... 104.360%
2005 ......................................... 103.924%
2006 ......................................... 103.488%
2007 ......................................... 103.052%
2008 ......................................... 102.616%
2009 ......................................... 102.180%
2010 ......................................... 101.744%
2011 ......................................... 101.308%
2012 ......................................... 100.872%
2013 ......................................... 100.436%
and thereafter at a Redemption Price equal to 100% of the principal amount,
with accrued interest to the date of redemption (subject to the right of
holders of record on the Record Date to receive interest due and accrued
through such date of redemption). The Company may not
redeem any Debentures prior to November 1, 2004.
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. 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 the Company 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 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.
Purchases of Debentures under the DTC system must be made by or through
Direct Participants. Upon the issuance by the Company 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 &
S-3
<PAGE>
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.
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.
The Company expects 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. The Company has been advised that the Depositary's usual procedure
is to mail an omnibus proxy to the Company 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, the
Company 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. The Company has initially appointed the Trustee and Harris Trust Company
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 77 Water Street, New York, New York 10005.
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 the
Company through a Paying Agent to the Depositary or its nominee, as the case may
be, as the registered owner of the Global Security. Neither the Company, 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.
The Company has 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. The Company has 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. The Company expects 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.
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 the Company within 90 days, the Company will issue Certificated
Debentures in exchange for the Debentures represented by such Global Security.
In addition, the Company 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.
S-4
<PAGE>
UNDERWRITING
Under the terms of and subject to the conditions set forth in the
Underwriting Agreement dated the date hereof, the Company has agreed to sell to
each of the Underwriters named below, severally, and each of the Underwriters
has severally agreed to purchase the principal amount of the Debentures set
forth opposite its name below:
Principal
Amount of
Name Debentures
--- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated .......................... $ 55,000,000
J.P. Morgan Securities Inc. ................. 55,000,000
Morgan Stanley & Co. Incorporated ........... 55,000,000
Salomon Brothers Inc ........................ 55,000,000
Chase Securities, Inc. ...................... 25,000,000
Citicorp Securities, Inc. ................... 25,000,000
BT Securities Corporation ................... 15,000,000
Goldman, Sachs & Co. ........................ 15,000,000
------------
Total .................................... $300,000,000
============
The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to take and pay for all of the
Debentures if any are taken.
The Underwriters initially propose to offer the Debentures directly to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession of
.5% of the principal amount of the Debentures. The Underwriters may allow and
such dealers may reallow to certain other dealers a concession not in excess of
.25% of the principal amount of the Debentures. After the initial public
offering, the offering price and other selling terms may be changed by the
Underwriters.
The Underwriters and certain of their affiliates engage in transactions
with and perform services for the Company and its affiliates in the ordinary
course of business.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that they currently
intend to make a market in the Debentures, as permitted by applicable laws and
regulations. The Underwriters are not obligated, however, to make a market in
the Debentures and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Debentures.
S-5
<PAGE>
PROSPECTUS
JOHNSON & JOHNSON
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
<PAGE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
Fiscal Quarter Fiscal Years
Ended July 3, 1994 ------------------------------------------------------
------------------ 1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges ...................... 11.94 9.82 9.19 8.81 6.01 6.78
</TABLE>
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.
3
<PAGE>
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 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).
4
<PAGE>
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).
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).
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<PAGE>
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 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.
6
<PAGE>
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 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.
7
<PAGE>
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.
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.
8
<PAGE>
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No dealer, salesperson or other individual has been authorized to give any
information or make any representations other than those contained or
incorporated by reference in this Prospectus Supplement or the Prospectus in
connection with the offer made by this Prospectus Supplement and the Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or the Underwriters. Neither the
delivery of this Prospectus Supplement and the Prospectus nor any sale made
hereunder and thereunder shall under any circumstance create an implication that
there has been no change in the affairs of the Company since the date hereof.
This Prospectus Supplement and the Prospectus do not constitute an offer or
solicitation by anyone in any state 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.
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TABLE OF CONTENTS
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PAGE
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Recent Developments ............................ S-2
Description of the Debentures .................. S-2
Underwriting ................................... S-5
Prospectus
Available Information .......................... 2
Incorporation by Reference ..................... 2
The Company .................................... 3
Recent Developments ............................ 3
Ratio of Earnings to Fixed Charges ............. 3
Use of Proceeds ................................ 3
Description of Debt Securities ................. 4
Description of Warrants ........................ 7
Plan of Distribution ........................... 8
Experts ........................................ 8
Legal Opinions ................................. 8
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$300,000,000
JOHNSON & JOHNSON
8.72% Debentures due
November 1, 2024
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PROSPECTUS SUPPLEMENT
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Merrill Lynch & Co.
J.P. Morgan Securities Inc.
Morgan Stanley & Co.
Incorporated
Salomon Brothers Inc
October 25, 1994
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