SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): OCTOBER 5, 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
<PAGE>
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.
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 division 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.
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<PAGE>
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 six months
ended July 3, 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 July 3, 1994 10
(6) Notes to Unaudited Pro Forma Condensed
Consolidated Balance Sheet 11
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<PAGE>
DESCRIPTION OF UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
July 3, 1994, and the Unaudited Pro Forma Condensed Consolidated Statements of
Income for the twelve months ended January 2, 1994 and the six months ended July
3, 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 transactions were consummated on
July 3, 1994 and 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 six month period
ended July 3, 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
February 1, 1994 - July 31, 1994 for the six months ended July 3, 1994. The
Neutrogena Balance Sheet used in the Unaudited Pro Forma Condensed Consolidated
Balance Sheet as of July 3, 1994 is the Neutrogena Balance Sheet as of July 31,
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.
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<PAGE>
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 which may be obtained in the
future, due to the hypothetical nature of the pro forma information. The
Unaudited Pro Forma Condensed Consolidated Financial Statements are based on the
historical audited Consolidated Financial Statements for J&J, Neutrogena and the
unaudited divisional historical results and account balances of 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 historical
results of CDD.
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<PAGE>
JOHNSON & JOHNSON
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JULY 3, 1994
(In Millions, Except Per Share Amount)
<TABLE>
<CAPTION>
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 $7,606 $ 403 $8,009
Cost of Products Sold 2,468 140 2,608
Selling, Marketing, & Administrative Exp. 3,038 165 3,203
Research Expense 602 41 643
Other (Income) Expense, Net 5 19 (1)
55 (2) 79
------ ----- ---- ------
6,108 351 74 6,532
Earnings Before Provision for ------ ----- ---- ------
Taxes on Income 1,498 52 (74) 1,476
Provision for Taxes on Income 395 7 (12)(3) 389
------ ----- ---- ------
Net Earnings $1,103 $45 $(61) $1,087
====== ===== ==== ======
Net Earnings Per Share $1.71 (4) $1.69
====== ======
Weighted Average Number of Common
Shares Outstanding 643.2 643.2
====== ======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statements
of Income.
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<PAGE>
JOHNSON & JOHNSON
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED JANUARY 2, 1994
(In Millions, Except Per Share Amount)
<TABLE>
<CAPTION>
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 11 38 (1)
101 (2) 212
------ ----- ---- ------
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
====== ======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statements
of Income.
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<PAGE>
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 six months
ended July 3, 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 acquisition of Neutrogena was just completed and the acquisition of
CDD is pending, 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 6 months ended July 3, 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 six
months ended July 31, 1994 (2/1/94 - 7/31/94).
* Represents the historical results for CDD for the year ended
December 31, 1993 and the 6 months ended June 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 3.6% in 1994 and fixed rate debt at an assumed
interest rate of 5.9% in 1993 and 6.8% in 1994. Also included is
the amortization of debt issuance costs to finance the
transactions. For purposes of the Unaudited Pro Forma
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<PAGE>
Condensed Consolidated Statement of Income for the six months
ending July 3, 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 $200MM of cash in overseas accounts to
fund the acquisitions, assuming an interest income rate of 8.1%
in 1993 and 5.9% 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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<PAGE>
JOHNSON & JOHNSON
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JULY 3, 1994
(In Millions)
<TABLE>
<CAPTION>
SUBTOTAL PRO PRO
JOHNSON & ACQUIRED FORMA FORMA
JOHNSON BUSINESSES ADJUSTMENTS COMBINED
------- ---------- ----------- --------
(Note D) (Note E) (Note F)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash & Cash Equivalents $ 571 $ 4 ($204) (7) $ 371
Marketable Securities 116 22 (22) (7) 116
Accounts Receivable - Trade, Net 2,440 190 2,630
Inventories 1,901 140 2,041
Other Current Assets 1,092 13 1,105
------- ----- ------ -------
Total Current Assets 6,120 369 (226) 6,264
Marketable Securities - Non Current 464 464
Property, Plant, and Equipment, Net 4,479 176 4,655
Intangible Assets, Net 975 38 1,488 (5) 2,502
Other Assets 1,404 39 1,443
------- ----- ------ -------
Total Assets $13,442 $623 $1,263 $15,327
======= ===== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Loans and Notes Payable $ 585 $ 7 $370 (6) $ 962
Accounts Payable 829 32 861
Accrued and Other Liabilities 1,783 71 1,854
------- ----- ------ -------
Total Current Liabilities 3,197 111 370 3,678
Long Term Debt 1,510 1,375 (6) 2,885
Other Liabilities 2,114 29 2,143
------- ----- ------ -------
Total Liabilities 6,821 140 1,745 8,706
------- ----- ------ -------
Stockholders' Equity
Common Stock 767 157 (157) (8) 767
Additional Capital 19 (19) (8) 0
Notes Receivable from Employee Stock
Ownership Plan (73) (73)
Cumulative Translation Adjustment (50) 4 (4) (8) (50)
Retained Earnings 8,455 322 (322) (8) 8,455
Less: Common Stock Held in Treasury 2,478 18 (18) (8) 2,478
------- ----- ------ -------
Total Stockholders' Equity 6,621 483 (483) 6,621
------- ----- ------ -------
Total Liabilities and Stockholders' Equity $13,442 $ 623 $1,263 $15,327
======= ===== ====== =======
</TABLE>
See accompanying Notes to Unauditied Pro Forma Condensed Consolidated Balance
Sheet.
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<PAGE>
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 July 3, 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 July 3, 1994.
Note E: * Represents the historical consolidated unaudited balance sheet
of Neutrogena as of July 31, 1994.
* Represents the historical unaudited account balances for CDD
as of June 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 Neutrogena
($819MM) and CDD ($669MM) acquisitions.
6) Represents the issuance of short-term and long-term debt to
finance the acquisition of 100% of the outstanding shares of
Neutrogena and the assets of CDD.
7) Represents $200MM of cash in overseas accounts and Neutrogena's
cash and marketable securities used to fund the acquisitions.
8) Represents the elimination of Neutrogena and 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.
JOHNSON & JOHNSON
By: /s/ John A. Papa
----------------
John A. Papa
Assistant Treasurer
Date: October 5, 1994
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