Johnson & Johnson - Index

Johnson & Johnson - report - Index

or amortization are eliminated from the asset and accumulated
depreciation accounts, respectively. The difference, if any, between
the net asset value and the proceeds is recorded in earnings.
4. Rental Expense and Lease Commitments
Rentals of space, vehicles, manufacturing equipment and
office and data processing equipment under operating leases
were approximately $302 million in 2007, $285 million in 2006
and $248 million in 2005.
The approximate minimum rental payments required under
operating leases that have initial or remaining noncancelable
lease terms in excess of one year at December 30, 2007 are:
(Dollars in Millions) After
2008 2009 2010 2011 2012 2012 Total
$183 151 119 94 77 113 737
Commitments under capital leases are not significant.
5. Employee Related Obligations
At the end of 2007 and 2006, employee related obligations were:
(Dollars in Millions) 2007 2006
Pension benefits $2,014 2,380
Postretirement benefits 2,134 2,009
Postemployment benefits 1,119 781
Deferred compensation 740 631
6,007 5,801
Less current benefits payable 605 217
Employee related obligations $5,402 5,584
Prepaid employee related obligations of $481 million and
$259 million for 2007 and 2006, respectively, are included in
other assets on the consolidated balance sheet.
6. Borrowings
The components of long-term debt are as follows:
Effective Effective
(Dollars in Millions) 2007 Rate% 2006 Rate%
3% Zero Coupon
Convertible Subordinated
Debentures due 2020 $ 178 3.00 182 3.00
4.95% Debentures due 2033 500 4.95 500 4.95
3.80% Debentures due 2013 500 3.82 500 3.82
6.95% Notes due 2029 294 7.14 293 7.14
6.73% Debentures due 2023 250 6.73 250 6.73
6.625% Notes due 2009 199 6.80 199 6.80
5.55% Debentures due 2017 1,000 5.55 — —
5.95% Notes due 2037 995 5.99 — —
5.50% Notes due 2024
(500 GBP 1.9944) (2) 989 5.71 — —
4.75% Notes due 2019
(1B Euro 1.4573) (2) 1,447 5.35 — —
5.15% Debentures due 2012 599 5.18 — —
Other (Includes Industrial
Revenue Bonds) 132 — 99 —
7,083 5.47 (1) 2,023 5.23 (1)
Less current portion 9 — 9 —
$7,074 2,014
(1) Weighted average effective rate.
(2) Translation rate at December 30, 2007.
The Company has access to substantial sources of funds at
numerous banks worldwide. Total credit available to the
Company approximates $8.0 billion of which $6.4 billion expire
September 25, 2008, and $1.6 billion expire September 27, 2012.
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.
The Company filed a shelf registration with the Securities
and Exchange Commission that became effective November 13,
2006 and which enables the Company to issue up to $10 billion
in debt securities and warrants to purchase debt securities. The
Company issued bonds in August 2007 for a total of $2.6 billion
and in November 2007 for a total of $2.4 billion for general
corporate purposes and the Common Stock repurchase program
in 2007. At December 30, 2007 the Company had
$5.0 billion remaining on the shelf registration.
On July 28, 2000, ALZA Corporation, a subsidiary of the
Company 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
December 30, 2007 the outstanding 3% Debentures had a total
principal amount at maturity of $ 258.8 million with a yield to
maturity of 3% per annum, computed on a semiannual bond
equivalent basis. There are no periodic interest payments. Under
the terms of the 3% debentures, holders are entitled to convert
their debentures into approximately 15.0 million shares of
Johnson & Johnson common stock at a price of $40.102 per
share. Approximately 11.4 million shares have been issued as of
December 30, 2007, due to voluntary 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% Debentures. 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
December 30, 2007 and December 31, 2006, the fair value
based on quoted market value of the 3% Debentures was $240.0
million and $250.7 million, respectively.
Short-term borrowings and the current portion of long-term
debt amounted to approximately $2.5 billion at the end of 2007,
of which $2.0 billion was raised under the Commercial Paper
Program. The remainder represents principally local borrowing
by international subsidiaries.
Aggregate maturities of long-term obligations commencing
in 2007 are:
(Dollars in Millions) After
2008 2009 2010 2011 2012 2012
$9 247 5 23 628 6,171
CERTAIN BUSINESS RELATIONSHIPS
A member of the Company’s Board of Directors is the former
Chief Executive Officer of a major bank. This bank has provided
services to the Company, for which the payments made were not
significant for either the Company or the bank in 2007, 2006
or 2005. The Company plans to engage the bank to provide
NOTES TO CONSOLIDA TED FINANCIAL ST A TEMENTS 55