Johnson and Johnson 2005 Annual Report Download - page 49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PAGE 47
The Company has access to substantial sources of funds at
numerous banks worldwide. Total unused credit available to the
Company approximates $3.6 billion, including $1.5 billion of
credit commitments, of which $0.75 billion expire September 28,
2006 and $0.75 billion expire September 29, 2010. Also included
are $0.8 billion of uncommitted lines with various banks world-
wide that expire during 2006. Interest charged on borrowings
under the credit line agreements is based on either bids provided
by banks, the prime rate or London Interbank Offered Rates
(LIBOR), plus applicable margins. Commitment fees under the
agreements are not material for all periods presented.
The Company filed a shelf registration with the Securities
and Exchange Commission that became effective January 21,
2004, which enables the Company to issue up to $1.985 billion
in debt securities and warrants for the purchase of debt securi-
ties. No debt was issued off the shelf during 2005 and the full
amount remained available as of January 1, 2006.
On August 19, 2005, Scios Inc. exercised its right to redeem
all of its outstanding $150 million original principal amount of
5.50% Convertible Subordinated Notes due 2009. The redemp-
tion price was 103.143% of the principal amount or $1,031.43
per $1,000 principal amount of Debentures, with accrued
interest to, but excluding, the date of redemption.
On July 28, 2000, ALZA Corporation completed a private
offering of the 3% Zero Coupon Convertible Subordinated
Debentures, which were issued at a price of $551.26 per $1,000
principal amount at maturity. At January 1, 2006, the outstand-
ing 3% Debentures had a total principal amount at maturity of
$311.6 million with a yield to maturity of 3% per annum, com-
puted on a semiannual bond equivalent basis. There are no
periodic interest payments. Under the terms of the 3% Deben-
tures, holders are entitled to convert their Debentures into
approximately 15.0 million shares of Johnson & Johnson stock
at a price of $40.102 per share. Approximately 10.7 million
shares have been issued as of January 1, 2006, due to volun-
tary conversions by note holders. At the option of the holder,
the 3% Debentures may be repurchased by the Company on
July 28, 2008 or 2013, at a purchase price equal to the issue
price plus accreted original issue discount to such purchase
date. The Company, at its option, may elect to deliver either
Johnson & Johnson common stock or cash, or a combination
of stock and cash, in the event of repurchase of the 3% Deben-
tures. The Company, at its option, may also redeem any or all
of the 3% Debentures after July 28, 2003 at the issue price
plus accreted original issue discount. At January 1, 2006, and
January 2, 2005, the fair value based on quoted market value
of the 3% Debentures was $260.6 million and $780.5 million,
respectively.
Short-term borrowings and current portion of long term
debt amounted to $668 million at the end of 2005, of which
$381 million relates to a commercial paper program.
The remainder represents principally local borrowing by
international subsidiaries.
On November 1, 2004 the Company exercised its right to
redeem all of its $300 million aggregate principal amount of
8.72% Debentures due in 2024. The redemption price was
104.360% of the principal amount or $1,043.36 per $1,000
principal amount of Debentures, with accrued interest to the
date of redemption.
Short-term borrowings and current portion of long-term
debt amounted to $280 million at the end of 2004, principally
local borrowing by international subsidiaries.
Aggregate maturities of long-term obligations commencing
in 2006 are:
After
(Dollars in Millions) 2006 2007 2008 2009 2010 2010
$12 17 8 208 9 1,776
7. INTANGIBLE ASSETS AND GOODWILL
At the end of 2005 and 2004, the gross and net amounts of
intangible assets were:
(Dollars in Millions) 2005 2004
Trademarks (non-amortizable) — gross $ 1,400 1,232
Less accumulated amortization 134 142
Trademarks (non-amortizable) — net $ 1,266 1,090
Patents and trademarks — gross $ 4,128 3,974
Less accumulated amortization 1,370 1,125
Patents and trademarks — net $ 2,758 2,849
Other intangibles — gross $ 3,544 3,302
Less accumulated amortization 1,383 1,262
Other intangibles — net $ 2,161 2,040
Subtotal intangible assets — gross $ 9,072 8,508
Less accumulated amortization 2,887 2,529
Subtotal intangible assets — net $ 6,185 5,979
Goodwill — gross $ 6,703 6,597
Less accumulated amortization 713 734
Goodwill — net $ 5,990 5,863
Total intangible assets — gross $15,775 15,105
Less accumulated amortization 3,600 3,263
Total intangible assets — net $12,175 11,842
Goodwill as of January 1, 2006 and January 2, 2005, as allo-
cated by segment of business is as follows:
Med Dev
(Dollars in Millions) Consumer Pharm and Diag Total
Goodwill at
December 28, 2003 $ 882 781 3,727 5,390
Acquisitions 232 32 138 402
Translation/other 46 19 6 71
Goodwill at
January 2, 2005 $1,160 832 3,871 5,863
Acquisitions — 71 194 265
Translation/other (70) (29) (39) (138)
Goodwill at
January 1, 2006 $1,090 874 4,026 5,990