AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 2003
REGISTRATION NO. 333-
REGISTRATION NO. 333-99641
===================================================================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT AND POST-EFFECTIVE AMENDMENT NO. 1
UNDER
THE SECURITIES ACT OF 1933
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JOHNSON & JOHNSON SCIOS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY DELAWARE
(STATE OF OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (STATE OF OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
22-1024240 95-3701481
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
ONE JOHNSON & JOHNSON PLAZA 820 WEST MAUDE AVENUE
NEW BRUNSWICK, NEW JERSEY 08933 SUNNYVALE, CALIFORNIA 94085
(732) 524-0400 (408) 616-8200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------------------------------------------------------------------------------------
JOHN T. CRISAN, ESQ.
JOHNSON & JOHNSON
ONE JOHNSON & JOHNSON PLAZA
NEW BRUNSWICK, NEW JERSEY 08933
TELEPHONE: (732) 524-0400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
ROBERT I. TOWNSEND, III, ESQ.
CRAVATH, SWAINE & MOORE LLP
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 474-1000
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Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes
effective.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans,
please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans,
check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act registration statement number of the earlier effective registration
statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
[ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED
AMOUNT PROPOSED MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
-----------------------------------------------------------------------------------------------------------------------------------
5.5% Convertible Subordinated Notes Due 2009
of Scios Inc...................................... N/A N/A N/A N/A(1)
Guarantees by Johnson & Johnson................... N/A N/A N/A N/A(2)
===================================================================================================================================
(1) A registration fee of $13,800.00 was paid in connection with the original filing by Scios Inc. of the Registration Statement on
Form S-3 (Registration No. 333-99641) filed on September 17, 2002.
(2) In connection with the merger of Saturn Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Johnson &
Johnson, with and into Scios Inc., a Delaware corporation, Scios, Johnson & Johnson and Wells Fargo Bank, National Association, as
trustee, under the Indenture dated as of August 5, 2002 pursuant to which Scios's 5.50% Convertible Subordinated Notes Due 2009
(the "notes") were issued, entered into a supplemental indenture pursuant to which, among other things, each $1,000 principal
amount of the notes became convertible only into the right to receive $1,145.04 in cash, without interest, and Johnson & Johnson
unconditionally and irrevocably guaranteed, on a subordinated basis, the notes. No consideration was received by Johnson & Johnson
from holders of the notes or otherwise in connection with Johnson & Johnson's issuance of its subordinated guarantees of the notes
(which guarantees are embodied in the supplemental indenture).
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Pursuant to Rule 429 under the Securities Act, the prospectus included in this registration statement is a combined
prospectus and relates to this registration statement and Registration No. 333-99641, pursuant to which the notes with an
aggregate principal amount of $150,000,000 were registered. This registration statement also constitutes Post-Effective Amendment
No. 1 to the notes registration statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===================================================================================================================================
EXPLANATORY STATEMENT
This registration statement is being filed under the Securities Act
of 1933 jointly by Johnson & Johnson, a New Jersey corporation, referred to in
this registration statement as Johnson & Johnson, and Scios Inc., a Delaware
corporation, referred to in this registration statement as Scios. On September
17, 2002, Scios filed a registration statement, Registration No. 333-99641,
referred to in this registration statement as the notes registration
statement, registering $150,000,000 principal amount of its 5.50% convertible
subordinated notes due 2009, referred to in this registration statement as the
notes, and common stock of Scios then issuable upon conversion of the notes.
The notes registration statement became effective on January 10, 2003.
On April 29, 2003, Scios became a wholly owned subsidiary of Johnson
& Johnson through the merger of Saturn Merger Sub, Inc., a wholly owned
subsidiary of Johnson & Johnson, with and into Scios. In connection with the
merger, each $1,000 principal amount of the notes became convertible into the
right to receive $1,145.04 in cash without interest, and Johnson & Johnson
issued its subordinated guarantee of the notes. This registration statement
registers the resale of the guarantee by Johnson & Johnson of the obligations
of Scios pursuant to the notes. This post-effective amendment No. 1 to the
notes registration statement revises the notes registration statement to
reflect that the notes are guaranteed on a subordinated basis by Johnson &
Johnson, are convertible only into the right to receive $1,145.04 in cash
without interest and to explain other changes to the notes related to the
merger.
PROSPECTUS SUBJECT TO COMPLETION
DATED APRIL 29, 2003
$150,000,000
SCIOS INC.
5.50% CONVERTIBLE SUBORDINATED NOTES DUE 2009
JOHNSON & JOHNSON
GUARANTEES
In August 2002, Scios issued and sold $150,000,000 aggregate
principal amount of its 5.50% convertible subordinated notes due 2009 in a
private offering.
On April 29, 2003, Scios became a wholly owned subsidiary of Johnson
& Johnson through the merger of Saturn Merger Sub, Inc., a wholly owned
subsidiary of Johnson & Johnson, with and into Scios. In connection with the
merger, each $1,000 principal amount of the notes became convertible into the
right to receive $1,145.04 in cash without interest, and Johnson & Johnson
issued its subordinated guarantee of the notes.
This prospectus relates to the resale of the notes and the
associated Johnson & Johnson guarantees. The notes may be sold from time to
time by or on behalf of the selling securityholders named in this prospectus
or in supplements to this prospectus. The Johnson & Johnson guarantees are
embodied in the first supplemental indenture to the indenture governing the
notes and may be sold together with the associated notes from time to time by
or on behalf of the selling securityholders named in this prospectus or in
supplements to this prospectus.
Scios will pay interest on the notes each February 15 and August 15
to the holders of record on each February 1 and August 1. The first interest
payment was made on February 15, 2003. Scios may redeem some or all of the
notes on or after August 19, 2005 at the redemption prices listed in this
prospectus, plus accrued interest.
Scios has pledged a portfolio of U.S. government securities as
security for the first six scheduled interest payments due on the notes.
The notes are not listed on any national securities exchange.
Neither Johnson & Johnson nor Scios will receive any proceeds from
the sale by the selling securityholders of the notes or associated Johnson &
Johnson guarantees offered by this prospectus or in any prospectus supplement.
Other than selling commissions and fees and transfer taxes, Scios and Johnson
& Johnson will pay all expenses of the registration and sale of the notes and
the associated guarantees.
Investing in the notes and associated Johnson & Johnson guarantees
involves risk. See "Risk Factors" beginning on page 5 of this prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 2003.
TABLE OF CONTENTS
Page
Additional Information......................................................i
Special Note Regarding Forward-Looking Statements...........................1
Johnson & Johnson...........................................................2
Risk Factors................................................................5
Ratio of Earnings to Fixed Charges..........................................6
Use of Proceeds.............................................................7
Description of Notes........................................................8
Description of Johnson & Johnson Guarantees.................................20
Selling Securityholders.....................................................20
Plan of Distribution........................................................21
Material United States Federal Income Tax Consequences......................24
Legal Matters...............................................................28
Experts.....................................................................28
Where You Can Find More Information.........................................28
----------------------------------
ADDITIONAL INFORMATION
This prospectus incorporates important business and financial
information about Johnson & Johnson and Scios that is not included in or
delivered with this prospectus. This information is available to you without
charge upon your written or oral request. You can obtain documents
incorporated by reference in this prospectus by requesting them in writing or
by telephone from Johnson & Johnson at the following address and telephone
number:
JOHNSON & JOHNSON
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Attention: Corporate Secretary's Office
Telephone: (732) 524-2455
Scios and Johnson & Johnson have not authorized anyone to provide you with
different information. You should not assume that the information contained or
incorporated by reference in this prospectus is accurate as of any date other
than the date of this prospectus. Scios and Johnson & Johnson are not making
an offer of securities in any state where the offer is not permitted.
See "Where You Can Find More Information" on page 28.
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These
statements relate to future events or future financial performance. When used
in this prospectus, any prospectus supplement and the documents incorporated
in this prospectus by reference, words such as "anticipate," "believe," "can,"
"continue," "could," "estimate," "expect," "intend," "may," "plan,"
"potential," "predict," "should," or "will" or the negative of these terms or
other comparable terminology are intended to identify forward-looking
statements. These statements are only predictions and involve known and
unknown risks, uncertainties and other factors, including the risks and
uncertainties outlined under "Risk Factors," that may cause Johnson &
Johnson's or Scios's or their respective industries' actual results, levels of
activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. Johnson & Johnson and Scios
assume no obligation to update these forward-looking statements.
Although Johnson & Johnson and Scios believe that the expectations
reflected in these statements are reasonable, they cannot guarantee future
results, levels of activity, performance or achievements.
1
JOHNSON & JOHNSON
Johnson & Johnson, with approximately 108,300 employees, is one of
the world's largest manufacturers of health care products, as well as a
provider of related services, for the consumer, pharmaceutical and medical
devices and diagnostics markets. Johnson & Johnson has more than 200 operating
companies in 54 countries around the world, selling products in more than 175
countries.
Johnson & Johnson's worldwide business is divided into three
segments: consumer, pharmaceutical and medical devices and diagnostics. The
consumer segment's principal products are personal care and hygienic products,
including nonprescription drugs, adult skin and hair care products, baby care
products, oral care products, first aid products and sanitary protection
products. These products are marketed principally to the general public and
distributed both to wholesalers and directly to independent and chain retail
outlets.
The pharmaceutical segment's principal worldwide franchises are in
the antifungal, anti-infective, cardiovascular, dermatology, gastrointestinal,
hematology, immunology, neurology, oncology, pain management, psychotropic,
urology and women's health fields. These products are distributed both
directly and through wholesalers for use by health care professionals and the
general public.
The medical devices and diagnostics segment includes a broad range
of products used by or under the direction of health care professionals,
including, suture and mechanical wound closure products, surgical equipment
and devices, wound management and infection prevention products,
interventional and diagnostic cardiology products, diagnostic equipment and
supplies, joint replacements and disposable contact lenses. These products are
used principally in the professional fields by physicians, nurses, therapists,
hospitals, diagnostic laboratories and clinics. Distribution to these markets
is done both directly and through surgical supply and other dealers.
Johnson & Johnson was organized in the State of New Jersey in 1887.
The address of its principal executive offices is One Johnson & Johnson Plaza,
New Brunswick, New Jersey 08933, and the telephone number at that address is
(732) 524-0400.
RECENT DEVELOPMENTS
On April 29, 2003, Scios became a wholly owned subsidiary of Johnson
& Johnson through the merger of Saturn Merger Sub, Inc., a wholly owned
subsidiary of Johnson & Johnson, with and into Scios. In connection with the
merger, each $1,000 principal amount of the notes became convertible into the
right to receive $1,145.04 in cash without interest, and Johnson & Johnson
issued its subordinated guarantee of the notes.
2
THE NOTES
ISSUER Scios Inc.
SECURITIES OFFERED $150,000,000 aggregate principal amount of 5.50%
convertible subordinated notes due 2009.
INTEREST 5.50% per annum on the principal amount, payable
semiannually in arrears in cash on February 15 and
August 15 of each year, commencing February 15, 2003.
MATURITY DATE August 15, 2009.
GUARANTEE Johnson & Johnson has unconditionally and irrevocably
guaranteed the notes on a subordinated basis. See
"Description of Johnson & Johnson Guarantees."
CONVERSION RIGHTS The notes are convertible at the option of the
holder at any time prior to redemption or maturity
only into $1,145.04 in cash without interest per
$1,000 in principal amount of notes. See "Description
of Notes--Conversion of the Notes."
SECURITY Scios has purchased and pledged to the trustee under
the indenture, as security for the benefit of the
trustee under the indenture and the ratable benefit
of the holders of the notes, approximately $24.0
million of U.S. government securities, which will be
sufficient upon receipt of scheduled principal and
interest payments thereon, to provide for the payment
in full of the first six scheduled interest payments
due on the notes. The notes are not otherwise
secured. See "Description of Notes--Security."
RANKING The notes (other than with respect to payments made
toward the first six scheduled interest payments due
on the notes, as described above under "Security")
are subordinated in right of payment to all existing
and future senior indebtedness of Scios Inc. and are
structurally subordinated to any indebtedness and
other liabilities (including trade and other
payables) of Scios's subsidiaries. As of December 31,
2002, Scios had approximately $35.2 million of
indebtedness that constituted senior indebtedness, no
indebtedness that ranked equal in right of payment to
the notes and no indebtedness of subsidiaries that
would have been structurally senior to the notes. The
indenture governing the notes does not limit the
amount of indebtedness, including senior
indebtedness, that Scios or its subsidiaries may
incur. See "Description of Notes--Subordination of
the notes."
OPTIONAL REDEMPTION At any time on or after August 19, 2005, Scios may
redeem some or all of the notes at the declining
redemption prices listed herein, plus accrued
interest. See "Description of Notes--Optional
redemption
3
by Scios."
SINKING FUND None.
USE Neither Johnson & Johnson nor Scios will receive any
OF PROCEEDS proceeds from any sale of securities under this
prospectus.
TRADING The notes and the associated Johnson & Johnson
guarantees are not listed on any national securities
exchange.
4
RISK FACTORS
You should consider the risk factors below as well as the other information
set forth or incorporated by reference in this prospectus. See "Where You Can
Find More Information" on page 28. If any of the following risks actually
occur, Johnson & Johnson's or Scios's business, financial condition or results
of operations could be materially and adversely affected. In such case,
Johnson & Johnson's or Scios's ability to make payments on the notes or the
associated Johnson & Johnson guarantees could be impaired, the trading prices
of the notes could decline, and you could lose all or part of your investment.
Please read "Special Note Regarding Forward-Looking Statements."
RISKS RELATED TO JOHNSON & JOHNSON AND SCIOS
In addition to the risk factors set forth below, you should consider
carefully the various factors, risks, uncertainties and assumptions that could
materially affect the actual results of Johnson & Johnson and Scios contained
in:
o Exhibit 99(b) to Johnson & Johnson's Annual Report on Form 10-K for the
fiscal year ended December 29, 2002, and
o the "Risk Factors" section in Scios's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002.
RISKS RELATED TO THIS OFFERING
The notes and guarantees are subordinated, and holders of any senior
indebtedness will be paid before holders of the notes are paid.
Except as described below in the section entitled "Description of
Notes--Security," the notes are unsecured and subordinated in right of payment
to any existing and future senior indebtedness. As of December 31, 2002, Scios
had approximately $35.2 million of indebtedness that constituted senior
indebtedness. In addition, Scios may incur new indebtedness, which may be
senior to the indebtedness represented by the notes. Scios is not prohibited
from incurring debt, including indebtedness secured by its assets, under the
indenture governing the notes. In the event of Scios's bankruptcy, liquidation
or reorganization or upon acceleration of the notes due to an event of default
under the indenture and in certain other events, Scios's assets, other than
the U.S. government securities pledged to secure the first six interest
payments on the notes, will be available to pay obligations on the notes only
after all of the secured indebtedness of Scios and other senior indebtedness
of Scios has been paid. As a result, there may not be sufficient assets
remaining to pay amounts due on any or all of the outstanding notes. For a
description of the subordination provisions of the notes, see the "Description
of Notes--Subordination of the notes" section of this prospectus. The Johnson
& Johnson guarantees are subordinated in right of payment to all of its
existing and future senior indebtedness. As of April 28, 2003, Johnson &
Johnson's aggregate outstanding senior indebtedness was approxiamtely $5,118
million.
You cannot be sure that a public market will develop for the notes.
On August 5, 2002, Scios issued the notes to the initial purchasers
in a private placement. The notes are eligible to trade in PORTAL, the Private
Offering, Resale and Trading through Automated Linkages Market of the National
Association of Securities Dealers, Inc., a screen-based automated market for
trading securities for qualified institutional buyers. However, the notes
resold pursuant to this prospectus will no longer trade on the PORTAL market.
As a result, there may be a limited market for the notes. Scios does not
intend to list the notes on any national securities exchange or on the Nasdaq
National Market.
5
A public market may not develop for the notes. Although the initial
purchasers of the notes have advised Scios that they intend to make a market
in the notes, they are not obligated to do so and may discontinue such market
making at any time without notice. In addition, such market making activity
will be subject to the limits imposed by the Securities Act and the Exchange
Act. Accordingly, Scios cannot assure you that any market for the notes will
develop or, if one does develop, that it will be maintained. If a public
market for the notes fails to develop or be sustained, the trading price of
the notes could be materially adversely affected.
The notes are not protected by restrictive covenants.
The indenture governing the notes does not contain any financial or
operating covenants or restrictions on the payment of dividends, the
incurrence of indebtedness or the issuance or repurchase of securities by
Scios or any of its subsidiaries. The indenture contains no covenants or other
provisions to afford protection to holders of notes in the event of a change
in control involving Scios.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for Johnson & Johnson
represents its historical ratio and is calculated on a total enterprise basis.
This 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.
------------------------------------- --------------------------------------------------------------------------------
Fiscal Year Ended
------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
December 29, December 30, December 31, January 2, January 3,
2002 2001 2000 2000 1999
------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
Ratio of Earnings to
Fixed Charges........... 26.75 23.95 18.41 14.76 13.46
------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
The ratio of earnings to fixed charges for Scios is computed by
dividing earnings by fixed charges. For purposes of computing this ratio of
earnings to fixed charges, earnings consist of pretax loss from continuing
operations adjusted by adding fixed charges. Fixed charges consist of interest
expense, amortization of financing costs and estimated interest component of
rental expense on operating leases.
------------------------------------- --------------------------------------------------------------------------------
Fiscal Year Ended December 31,
------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
2002 2001 2000 1999 1998
------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
Ratio of Earnings to
Fixed Charges........... n/a n/a n/a n/a 0.7
------------------------------------- ---------------- ----------------- ---------------- --------------- ------------
Earnings of Scios were insufficient to cover fixed charges by $869,000,
$20,050,000, $42,519,000, $62,170,000 and $87,916,000 for the fiscal years
ended December 31, 1998, 1999, 2000, 2001 and 2002, respectively.
6
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds of the
sale of the notes and the associated Johnson & Johnson guarantees offered by
this prospectus. Neither Johnson & Johnson nor Scios will receive any of the
proceeds from the sale of the notes and the associated Johnson & Johnson
guarantees offered by this prospectus.
7
DESCRIPTION OF NOTES
The notes were issued under an indenture dated as of August 5, 2002
between Scios and Wells Fargo Bank, National Association, as trustee. Scios,
Johnson & Johnson and Wells Fargo Bank, National Association subsequently
entered into a first supplemental indenture dated as of April 29, 2003. The
following summarizes some, but not all, of the provisions of the notes and the
indenture, as amended and supplemented by the first supplemental indenture.
You should read the indenture and the notes in their entirety because they,
and not this description, define your rights as a holder of the notes. A copy
of the form of indenture, the first supplemental indenture and the form of
certificate evidencing the notes are exhibits to the registration statement of
which this prospectus forms a part and will be made available to you upon
request.
GENERAL
The notes are unsecured (except to the extent described under
"--Security") general obligations of Scios and are subordinate in right of
payment as described under "--Subordination of the notes." However, payment
from the money or the proceeds from the U.S. government securities pledged by
Scios to Wells Fargo Bank, National Association, as collateral agent, as
security for the notes and for the benefit of the trustee and the ratable
benefit of the holders of the notes, as described under "--Security," is not
subordinated to any senior indebtedness of Scios or subject to the
subordination provisions described under "--Security". The notes are
convertible into cash as described under "--Conversion of the notes." The
notes are $150,000,000 aggregate principal amount. The notes may be issued
only in denominations of $1,000 or in integral multiples of $1,000.
The notes bear interest at the annual rate of 5.50% from August 5,
2002, or from the most recent payment date to which interest has been paid or
duly provided for. Interest is payable semi-annually in arrears on February 15
and August 15, which commenced on February 15, 2003, to holders of record at
the close of business on the preceding February 1 and August 1, respectively,
except:
o that the interest payable upon redemption, unless the date of
redemption is an interest payment date, will be payable to the
person to whom principal is payable; and
o as set forth in the next succeeding paragraph.
o Interest will be paid, at Scios' option, either:
o by check mailed to the address of the person entitled to the
interest as it appears in the note register; provided that a holder
of notes with an aggregate principal amount in excess of $2 million
will, at the written election of the holder, be paid by wire
transfer in immediately available funds; or
o by transfer to an account maintained by that person located in the
United States.
Payments to The Depository Trust Company, New York, New York, or
DTC, will be made by wire transfer of immediately available funds to the
account of DTC or its nominee. Interest will be computed on the basis of a
360-day year composed of twelve 30-day months.
The notes will mature on August 15, 2009 unless earlier converted or
redeemed as described below. The indenture does not contain any financial
covenants or restrictions on the payment of dividends, the incurrence of
indebtedness or the issuance or repurchase of securities by Scios or any of
its
8
subsidiaries. The indenture contains no covenants or other provisions to
protect holders of the notes in the event of a highly leveraged transaction or
a change in control of Scios.
In the first supplemental indenture, the indenture governing the notes
was amended to eliminate the obligation of Scios to repurchase the notes at the
option of the holders after the occurrence of a change in control of Scios. This
provision was eliminated because the price at which the notes would have been
required to be repurchased after a change in control (100% of the principal
amount plus accrued and unpaid interest) was less than the cash amount payable
upon conversion of the notes after the effectiveness of the merger ($1,145.04
per $1,000 in principal amount).
CONVERSION OF THE NOTES
Any registered holder of notes may, at any time prior to close of
business on the business day prior to the date of redemption or final maturity
of the notes, as appropriate, convert the principal amount of any notes or
portions thereof, in denominations of $1,000 or integral multiples of $1,000,
into $1,145.04 in cash without interest per $1,000 in principal amount of
notes.
Except as described below, no payment or adjustment will be made on
conversion of any notes for interest accrued thereon. If any notes are
converted between a record date and the next interest payment date, those
notes must be accompanied by funds from the holder equal to the interest
payable on the next interest payment date on the principal amount so
converted. The foregoing sentence does not apply in the case of such notes or
portions of such notes called for redemption. In the case of notes called for
redemption, conversion rights will expire at the close of business on the
business day preceding the day fixed for redemption unless Scios defaults in
the payment of the redemption price.
SECURITY
On August 5, 2002, Scios used approximately $24.0 million of
existing funds to purchase U.S. government securities which were pledged to
the collateral agent as security for the notes and for the benefit of the
trustee and the ratable benefit of the holders of the notes (and not for the
benefit of Scios's other creditors). These securities, as held and invested by
the collateral agent in accordance with the terms of the pledge agreement that
Scios entered into with the trustee and the collateral agent, are sufficient
upon receipt of scheduled interest and principal payments of such securities
to provide for payment in full of the first six scheduled interest payments on
the notes when due.
The U.S. government securities were pledged by Scios to the
collateral agent for the benefit of the trustee and the ratable benefit of the
holders of the notes and are being held by the collateral agent in a pledge
account. Immediately prior to an interest payment date, the collateral agent
will release from the pledge account proceeds sufficient to pay interest then
due on the notes. Scios may also make additional payments to the collateral
agent to ensure that sufficient funds are available to pay interest then due
on the notes if necessary. A failure to pay interest on the notes when due
through the first six scheduled interest payment dates will constitute an
event of default (as defined below) under the indenture.
The pledged U.S. government securities and the pledge account also
secure the repayment of the principal amount on the notes. If prior to the
date on which the sixth scheduled interest payment on the notes is due:
o an event of default under the notes or the indenture governing the
notes occurs and is continuing; and
o the trustee or the holders of 25% in aggregate principal amount of
the notes accelerate the notes by declaring the principal amount of
the notes to be immediately due and payable (by written
9
consent, at a meeting of note holders or otherwise), except for the
occurrence of an event of default relating to the bankruptcy,
insolvency or reorganization of Scios or that of any of Scios's
significant subsidiaries, upon which the notes will be accelerated
automatically,
then the proceeds from the pledged U.S. government securities will be promptly
released for payment to the note holders, subject to the automatic stay
provisions of bankruptcy law, if applicable.
Distributions from the pledge account will be applied:
o first, to any accrued and unpaid interest on the notes; and
o second, to the extent available, to the repayment of a portion of
the principal amount of the notes.
If any event of default is waived prior to the acceleration of the
notes by the trustee or holders of the notes referred to above, the trustee
and the holders of the notes will not be able to accelerate the notes as a
result of that event of default.
For example, if the first two interest payments were made when due
but the third interest payment was not made when due and the note holders
promptly exercised their right to declare the principal amount of the notes to
be immediately due and payable, then, assuming the automatic stay provisions
of bankruptcy law are inapplicable and the proceeds of the pledged U.S.
government securities are promptly distributed from the pledge account,
o an amount equal to the interest payment due on the third interest
payment plus any additional interest o accrued on the missed third
interest payment would be distributed from the pledge account as
accrued interest; and
o the balance of the proceeds of the pledge account would be
distributed as a portion of the principal amount of the notes.
In addition, note holders would have an unsecured claim against
Scios for the remainder of the principal amount of their notes.
Once Scios makes the first six scheduled interest payments on the
notes, all of the remaining pledged U.S. government securities and cash, if
any, will be released to Scios from the pledge account and thereafter the
notes will be unsecured.
OPTIONAL REDEMPTION BY SCIOS
The notes are not entitled to any sinking fund.
At any time on or after August 19, 2005, Scios may redeem the notes
on at least 30 days' and not more than 60 days' notice as a whole or, from
time to time, in part at the following prices, expressed as a percentage of
the principal amount, together with accrued interest to, but excluding, the
date fixed for redemption:
REDEMPTION
PERIOD PRICE
----------------------------------------------------------- --------------
Beginning August 19, 2005 and ending on August 14, 2006 103.143%
Beginning August 15, 2006 and ending on August 14, 2007 102.357%
10
Beginning August 15, 2007 and ending on August 14, 2008 101.571%
Beginning August 15, 2008 and ending on August 14, 2009 100.786%
------------------------------------------------------------------------------
Any accrued interest becoming due on the date fixed for redemption
will be payable to the holders of record on the relevant record date of the
notes being redeemed.
If less than all of the outstanding notes are to be redeemed, the
trustee will select the notes to be redeemed in principal amounts of $1,000 or
integral multiples of $1,000 by lot, pro rata or by another method the trustee
considers fair and appropriate. If a portion of a holder's notes is selected
for partial redemption and that holder converts a portion of that holder's
notes, the converted portion will be deemed to be of the portion selected for
redemption.
SUBORDINATION OF THE NOTES
The indebtedness evidenced by the notes (other than with respect to
payments on the notes derived from U.S. government securities pledged by Scios
to the collateral agent for the benefit of the trustee and the ratable benefit
of the holders of the notes (hereafter referred to as "permitted payments"))
is subordinated to the extent provided in the indenture to the prior payment
in full, in cash or other payment satisfactory to holders of senior
indebtedness, of all of the existing and future senior indebtedness of Scios.
Upon any distribution of Scios's assets upon any dissolution, winding-up,
liquidation or reorganization, or in bankruptcy, insolvency, receivership or
similar proceedings, payment of the principal of, premium, if any, interest
and all other obligations in respect of the notes, including by way of
redemption, acquisition or other purchase thereof, on the notes, except for
permitted payments and payments Scios may choose to make comprised solely in
permitted junior securities acceptable to the holders, is subordinated in
right of payment to the prior payment in full, in cash or other payment
satisfactory to holders of senior indebtedness, of all of Scios's existing and
future senior indebtedness. In addition, the notes are effectively
subordinated to any indebtedness and other liabilities, including trade
payables and lease obligations and preferred stock, of Scios's subsidiaries.
In the event of any acceleration of the notes because of an event of
default, the holders of any senior indebtedness then outstanding would be
entitled to payment in full, in cash or other payment satisfactory to holders
of senior indebtedness of Scios, of all obligations in respect to such senior
indebtedness before the holders of notes are entitled to receive any payment
or other distribution, except for permitted payments and payments Scios
chooses to make comprised solely in permitted junior securities acceptable to
the holders. Scios will be required to promptly notify holders of senior
indebtedness of Scios if payment of the notes is accelerated because of an
event of default.
Scios also may not make any payment upon or redemption of or
purchase or otherwise acquire the notes, except for permitted payments and
payments it may choose to make comprised solely in permitted junior securities
acceptable to the holders, if:
o a default in the payment of principal, premium, if any, interest or
other obligations in respect of o designated senior indebtedness of
Scios occurs and is continuing beyond any applicable period of grace
(a "payment default"); or
o any other default occurs and is continuing with respect to
designated senior indebtedness of Scios that permits holders of the
designated senior indebtedness of Scios to which such default
relates to accelerate its maturity and the trustee receives a notice
of such default, referred to as a payment blockage notice, from
Scios or any other person permitted to give this notice under the
indenture.
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Unless the holders of any senior indebtedness of Scios have
accelerated its maturity, Scios may and shall resume making such payments on
the notes:
o in the case of a payment default, when the default is cured or
waived or ceases to exist; and
o in the case of a nonpayment default, the earlier of when such
nonpayment default is cured or waived or ceases to exist or 179 days
after receipt of the payment blockage notice.
No new period of payment blockage may be commenced pursuant to a
payment blockage notice unless and until 360 days have elapsed since the
initial effectiveness of the prior payment blockage notice.
No default that existed or was continuing on the date of delivery of
any payment blockage notice to the trustee shall be the basis for a subsequent
payment blockage notice, unless the default has been cured or waived for a
period of not less than 90 consecutive days.
In the event of the bankruptcy, dissolution or reorganization of
Scios, holders of senior indebtedness may receive more, ratably, and holders
of the notes may receive less, ratably, than Scios's other creditors. Such
subordination will not prevent the occurrence of any event of default under
the indenture.
While Scios currently has no subsidiaries with significant
operations, all or a portion of its operations in the future may be conducted
through subsidiaries. Any subsidiaries of Scios would be separate and distinct
legal entities. None of Scios's subsidiaries would have any obligation to pay
any amounts due on the notes or to provide Scios with funds for its payment
obligations, whether by dividends, distributions, loans or other payments. In
addition, any payment of dividends, distributions, loans or advances by
Scios's subsidiaries to Scios could be subject to statutory or contractual
restrictions. Payments to Scios by its subsidiaries will also be contingent
upon Scios's subsidiaries' earnings and business consideration. There can be
no assurance that Scios will receive adequate funds from its subsidiaries to
pay interest due on the notes or to repay the notes when redeemed or upon
maturity. Scios's right to receive any assets of any of its subsidiaries upon
their liquidation or reorganization, and therefore the right of the holders of
the notes to participate in those assets, will be effectively subordinated to
the claims of that subsidiary's creditors, including its trade creditors. In
addition, even if Scios was a creditor of any of its subsidiaries, Scios's
rights as a creditor would be subordinate to any security interest in the
assets of its subsidiaries and any indebtedness of its subsidiaries senior to
that held by Scios.
As of December 31, 2002, Scios had approximately $35.2 million of
indebtedness that constituted senior indebtedness, no indebtedness that ranked
equal in right of payment to the notes and no indebtedness at Scios's
subsidiaries that would have been structurally senior to the notes.
Neither Scios nor its subsidiaries are limited in or prohibited from
incurring senior indebtedness or any other indebtedness or liabilities under
the indenture.
CERTAIN DEFINITIONS
"designated senior indebtedness" means any particular senior
indebtedness of Scios in which the instrument creating or evidencing the
senior indebtedness or the assumption of guarantee thereof (or related
documents or agreements to which Scios is a party) expressly provides that
such indebtedness shall be "designated senior indebtedness" of Scios (provided
that such instrument may place limitations and conditions on the right of such
senior indebtedness to exercise the rights of designated senior indebtedness).
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"indebtedness" means:
(1) all of the indebtedness, obligations and other liabilities of
Scios, contingent or otherwise, for borrowed money, including obligations:
o in respect of overdrafts, foreign exchange contracts, currency
exchange agreements, interest rate protection agreements and any
loans or advances from banks, whether or not evidenced by notes or
similar instruments; or
o evidenced by bonds, debentures, notes or similar instruments,
whether or not the recourse of the lender is to all of Scios's
assets or to only a portion thereof, other than any account payable
or other accrued current liability or obligation incurred in the
ordinary course of business in connection with the obtaining of
materials or services;
(2) all of Scios's reimbursement obligations and other liabilities,
contingent or otherwise, with respect to letters of credit, bank guarantees or
bankers' acceptances;
(3) all of Scios's obligations and liabilities, contingent or
otherwise, in respect of leases required, in conformity with generally
accepted accounting principles, to be accounted for as capitalized lease
obligations on Scios's balance sheet or under other leases for facilities
equipment or related assets, whether or not capitalized, entered into or
leased for financing purposes, as determined by Scios;
(4) all of Scios's obligations and other liabilities, contingent or
otherwise, under any lease or related document, including a purchase
agreement, in connection with the lease of real property or improvements
thereon (or any personal property included as part of any such lease) which
provides that Scios is contractually obligated to purchase or cause a third
party to purchase the leased property and thereby guarantee a residual value
of leased property to the lessor and all of Scios's obligations under such
lease or related documents to purchase the leased property (whether or not
such lease transaction is characterized as an operating lease or a capitalized
lease in accordance with generally accepted accounting principles);
(5) all of Scios's obligations, contingent or otherwise, with
respect to an interest rate, currency or other swap, cap, floor or collar
agreement, hedge agreement, forward contract, or other similar instrument or
agreement or foreign currency hedge, exchange, purchase or similar instrument
or agreement;
(6) all of Scios's direct or indirect guarantees or similar
agreements to purchase or otherwise acquire or otherwise assure a creditor
against loss in respect of indebtedness, obligations or liabilities of another
person of the kind described in clauses (1) through (5) above;
(7) any indebtedness or other obligations of Scios described in
clauses (1) through (6) above secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by Scios, regardless
of whether the indebtedness or other obligation secured thereby has been
assumed by Scios; and
(8) any and all deferrals, renewals, extensions and refundings of,
or amendments, modifications or supplements to, any indebtedness, obligation
or liability of Scios of the kind described in clauses (1) through (7) above.
"permitted junior securities" means (a) shares of stock of any class
of Scios or (b) securities of Scios that are subordinated in right in payment
to all senior indebtedness of Scios that may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as,
or greater extent than, the notes are so subordinated pursuant to the terms of
the indenture.
13
"senior indebtedness" means all obligations with respect to
indebtedness of Scios whether outstanding on the date of the indenture or
thereafter created, incurred, assumed, guaranteed, or in effect guaranteed, by
Scios, including, without limitation, all deferrals, renewals, extensions or
refundings of, or amendments, modifications or supplements to, the foregoing,
unless in the case of any particular indebtedness the instrument creating or
evidencing the same or the assumption or guarantee thereof expressly provides
that such indebtedness shall not be senior in right of payment to the notes or
expressly provides that such indebtedness ranks equally in right of payment or
junior to the notes. Senior indebtedness does not include the indebtedness
evidenced by the notes, any indebtedness of Scios to any subsidiary of Scios,
any obligation for federal, state or local or other taxes or any trade or
accounts payable arising in the ordinary course of business.
Scios is obligated to pay compensation to the trustee and to
indemnify the trustee against certain losses, liabilities or expenses incurred
by it in connection with its duties relating to the notes. The trustee's
claims for such payments will generally be senior to those of the holders of
the notes in respect to all funds collected and held by the trustee.
DEFEASANCE
The notes will not be subject to defeasance.
EXCHANGE AND TRANSFER
Notes may be transferred or exchanged at the office of the security
registrar in accordance with the indenture. Scios will not impose a service
charge for any transfer or exchange, but Scios may require holders to pay any
tax or other governmental charges associated with any transfer or exchange. In
the event of any potential redemption of the notes, Scios will not be required
to:
o issue, authenticate or register the transfer of or exchange any note
during a period beginning at the opening of business 10 business
days before the mailing of a notice of redemption and ending at the
close of business on the day of the mailing; or
o register the transfer of or exchange any note selected for
redemption, in whole or in part, except the unredeemed portion of
notes being redeemed in part.
Scios has initially appointed the trustee as the security registrar,
paying agent and conversion agent. Scios may designate additional registrars,
paying or conversion agents or change registrars, paying or conversion agents.
However, Scios will be required to maintain a paying agent in the place of
payment for the notes.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Scios may not consolidate with or merge into any other person, in a
transaction in which Scios is not the surviving corporation, or convey,
transfer or lease its properties and assets substantially as an entirety to,
any person, unless:
o the successor, if any, is a corporation organized under the laws of
the United States or any state thereof or the District of Columbia;
o the successor assumes Scios's obligations under the notes and the
indenture;
o immediately after giving effect to the transaction, no default or
event of default shall have occurred and be continuing; and
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o certain other conditions are met as set forth in the indenture.
The foregoing shall not prohibit any of Scios's subsidiaries from
merging with or into Scios or a merger effected solely for the purposes of
reincorporating Scios in another jurisdiction.
Under any consolidation, merger or any conveyance, transfer or lease
of Scios's properties and assets described in the preceding paragraph, the
successor company will be Scios's successor and shall succeed to, and be
substituted for, and may exercise every right and power of, Scios under the
indenture. Except in the case of a lease, if the predecessor is still in
existence after the transaction, it will be released from its obligations and
covenants under the indenture and the notes.
EVENTS OF DEFAULT
The indenture defines an event of default with respect to the notes
as one or more of the following events:
(1) Scios's failure to pay principal of or any premium on the notes
when due (whether or not prohibited by the subordination provisions of the
indenture);
(2) Scios's failure to pay any interest on the notes when due, if
such failure continues for 30 days (whether or not prohibited by the
subordination provisions of the indenture); provided that a failure to make
any of the first six scheduled interest payments on the notes within three
business days after the applicable interest payment dates will constitute an
event of default with no additional grace or cure period;
(3) Scios's failure to perform any other covenant in the indenture,
if such failure continues for 60 days after the notice required in the
indenture;
(4) any indebtedness for money borrowed by Scios or one of Scios's
significant subsidiaries in an outstanding principal amount in excess of $20
million is not paid at final maturity or upon acceleration and such
indebtedness is not discharged, or such default on payment or acceleration is
not cured, waived or rescinded within 30 days after written notice as provided
in the indenture;
(5) certain events of bankruptcy, insolvency or reorganization of
Scios or that of any of Scios's significant subsidiaries; and
(6) the pledge agreement, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time, shall cease to
be in full force and effect or enforceable in accordance with its terms.
If an event of default, other than an event of default described in
clause (5) above, occurs and continues, either the trustee or the holders of
at least 25% in aggregate principal amount of the outstanding notes may
declare the principal amount including any accrued and unpaid interest on the
notes to be due and payable. If an event of default described in clause (5)
above occurs, the principal amount of all the notes will automatically become
immediately due and payable. Any payment by Scios on the notes following any
acceleration will be subject to the subordination provisions described above
under "--Subordination of the notes."
After acceleration but before a judgment or decree of the money due
in respect of the notes has been obtained, the holders of a majority in
aggregate principal amount of the outstanding notes may
15
rescind such acceleration and its consequences if all events of default, other
than the nonpayment of accelerated principal, or other specified amount, have
been cured or waived.
Other than the duty to act with the required care during an event of
default, the trustee will not be obligated to exercise any of its rights or
powers at the request of the holders unless the holders offer the trustee
reasonable indemnity. Generally, the holders of a majority in aggregate
principal amount of the notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee.
A holder will have the right to begin a proceeding under the
indenture, or for the appointment of a receiver or a trustee, or for any other
remedy under the indenture only if:
(1) the holder gives to the trustee written notice of a continuing
event of default;
(2) holders of at least 25% in aggregate principal amount of notes
then outstanding made a written request to the trustee to pursue the remedy;
(3) such holder or holders offer to the trustee indemnity reasonably
satisfactory to the trustee against any loss, liability or expense;
(4) the trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the holders of a majority in aggregate
principal amount of the notes then outstanding do not give the trustee a
direction inconsistent with the request.
Holders may, however, sue to enforce the payment of principal,
premium or interest on or after the due date or their right to convert without
following the procedures listed in (1) through (5) above.
Scios will furnish the trustee an annual statement by its officers
as to whether or not, to the officer's knowledge, Scios is in default in the
performance of the indenture and, if so, specifying all known defaults.
MODIFICATION AND WAIVER
Scios may make modifications and amendments to the indenture with
the consent of the holders of a majority in aggregate principal amount of the
outstanding notes affected by the modification or amendment. However, Scios
may not make any modification or amendment without the consent of the holder
of each outstanding note affected by the modification or amendment if such
modification or amendment would:
o change the stated maturity or the maturity date of the notes;
o reduce the principal, premium, if any, or interest on the notes;
o change the place of payment from New York, New York or the currency
in which the notes are payable;
o impair the right to sue for any payment after the stated maturity,
the maturity date or redemption date;
o modify the subordination provisions in an adverse manner to the
holders;
16
o adversely affect the right to convert the notes other than as
provided in or under the indenture;
o change the provisions in the indenture that relate to modifying or
amending the indenture; or
o reduce the percentage in principal amount of the outstanding notes
necessary for waiver of compliance with certain provisions of the
indenture or for waiver of certain defaults.
Without the consent of the holders of the notes, Scios and the
trustee may enter into one or more supplemental indentures for any of the
following purposes:
o to cure any ambiguity, omission, defect or inconsistency;
o to provide for uncertificated notes in addition to or in place of
certificated notes;
o to provide for the assumption of Scios's obligations to holders of
the notes in the case of a merger or consolidation or sale of all or
substantially all of Scios's assets;
o to reduce the conversion price;
o to make any change that would provide any additional rights or
benefits to the holder of the notes or that does not adversely
affect the legal rights under the indenture of any such holder; or
o to comply with the requirements of the SEC in order to maintain the
qualification of the indenture under the Trust Indenture Act or
1939, as amended.
Holders of a majority in aggregate principal amount of the
outstanding notes may waive, on behalf of the holders of all of the notes,
compliance by Scios with respect to certain restrictive provisions of the
indenture.
Generally, the holders of not less than a majority of the aggregate
principal amount of the outstanding notes may, on behalf of all holders of the
notes, waive any past default or event of default unless:
o Scios fails to pay principal, premium or interest on any note when
due;
o Scios fails to convert any note; or
o Scios fails to comply with any of the provisions of the indenture
that would require the consent of the holder of each outstanding
note affected.
An amendment may not effect any change that adversely affects the
rights of any holder of senior indebtedness of Scios then outstanding under
the subordination provisions unless such holder of such senior indebtedness,
or a representative for such holder, consents to such change.
Any notes held by Scios or by any persons directly or indirectly
controlling or controlled by or under direct or indirect common control with
Scios shall be disregarded (from both the numerator and denominator) for
purposes of determining whether the holders of a majority in principal amount
of the outstanding notes have consented to a modification, amendment or waiver
of the terms of the indenture.
17
NOTICES
Notices to holders will be given by mail to the addresses of the
holders in the security register.
GOVERNING LAW
The indenture and the notes are governed by, and construed under,
the law of the State of New York, without regard to conflicts of laws
principles.
REGARDING THE TRUSTEE
Wells Fargo Bank, National Association is the trustee under the
indenture. The trustee is permitted to deal with Scios and any of its
affiliate with the same rights as if it were not trustee. However, under the
Trust Indenture Act of 1939, as amended, if the trustee acquires any
conflicting interest and there exists a default with respect to the notes, the
trustee must eliminate such conflicts or resign.
The holders of a majority in principal amount of all outstanding
notes have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy or power available to the trustee.
However, any such direction may not conflict with any law or the indenture,
may not be unduly prejudicial to the rights of another holder or the trustee
and may not involve the trustee in personal liability.
BOOK-ENTRY SYSTEM
Scios initially issued the notes in the form of a global security.
Upon the issuance of a global security, DTC (referred to as the depository) or
its nominee credited the accounts of persons holding through it with the
respective principal amounts of the notes represented by such global security.
Such accounts are designated by the initial purchasers with respect to notes
placed by the initial purchasers for Scios. Ownership of beneficial interests
in a global security is limited to persons that have accounts with the
depository ("participants") or persons that hold interests through
participants. Ownership of beneficial interests by participants in a global
security is shown on, and the transfer of that ownership interest will be
effected only through, records maintained by the depository for such global
security. Ownership of beneficial interests in such global security held
through participants is shown on, and the transfer of that ownership interests
through such participant will be effected only through, records maintained by
such participant. The foregoing may impair the ability to transfer beneficial
interests in a global security.
Scios will make payment of principal, premium, if any, and interest
on notes represented by any such global security to the paying agent for the
benefit of the depository or its nominee, as the case may be, as the sole
holder of the notes represented thereby for all purposes under the indenture.
None of Scios, the trustee, any agent of Scios, or the trustee or the initial
purchasers have any responsibility or liability for any aspect of the
depository's records relating to or payments made on account of beneficial
ownership interests in the global security representing any notes or for
maintaining, supervising or reviewing any of the depository's records relating
to such beneficial ownership interests. Scios has been advised by the
depository that, upon receipt of any payment of principal, premium, if any, or
interest on any global security, the depository will immediately credit, on
its book-entry registration and transfer system, the accounts of participants
with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such global security as shown on the
records of the depository. Payments by participants to owners of beneficial
interests in a global security held through such participants will be governed
by standing instructions and customary practices as is now the case with
securities held for customer accounts registered in "street name," and will be
the sole responsibility of such participants.
18
A global security may not be transferred except as a whole by the
depository for such global security to a nominee of such depository or by a
nominee of such depository to such depository or another nominee of such
depository or by such depository or any such nominee to a successor of such
depository or a nominee of such successor. If (i) the depository notifies us
that it is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by us or the depository within 90 days,
or (ii) an event of default has occurred and is continuing and the registrar
has received a written request from the depository to issue physical
securities, Scios will issue notes in definitive form in exchange for the
global security. In either instance, an owner of a beneficial interest in the
global security will be entitled to have notes equal in principal amount to
such beneficial interest registered in its name and will be entitled to
physical delivery of such notes in definitive form. Notes so issued in
definitive form will be issued in denominations of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
Scios will pay principal, premium, if any, and interest on the notes and the
notes may be presented for registration of transfer or exchange, at the
offices of the trustee.
So long as the depository for a global security, or its nominee, is
the registered owner of such global security, such depository or such nominee,
as the case may be, will be considered the sole holder of the notes
represented by such global security for the purposes of receiving payment on
the notes, receiving notices and for all other purposes under the indenture
and the notes. Beneficial interests in notes will be evidenced only by, and
transfers thereof will be effected only through, records maintained by the
depository and its participants. The depository has nominated Cede & Co. as
its nominee. Except as provided above, owners of beneficial interests in a
global security will not be entitled to have the notes represented by the
global security registered in their name, will not be entitled to receive
physical delivery of certificated notes and will not be considered the holders
thereof for any purposes under the indenture. Accordingly any such person
owning a beneficial interest in such a global security must rely on the
procedures of the depository, and, if any such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the indenture. The indenture provides
that the depository may grant proxies and otherwise authorize participants to
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a holder is entitled to give or take under the
indenture. Scios understands that under existing industry practices, in the
event that a holder of the notes requests any action or that an owner of a
beneficial interest in such a global security desires to give or take any
action which a holder is entitled to give or take under the indenture, the
depository would authorize the participants holding the relevant beneficial
interest to give or take such action and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning
through them.
The depository has advised Scios that the depository is a
limited-purpose trust company organized under the laws of the State of New
York, 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 under the Exchange Act. The depository was created to hold the
securities of its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
depository's participants include securities brokers and dealers (including
the initial purchasers), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own
the depository. Access to the depository's book-entry system is also available
to others, such as banks, brokers, dealers and trust companies, that clear
through or maintain a custodial relationship with a participant, either
directly or indirectly.
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DESCRIPTION OF JOHNSON & JOHNSON GUARANTEES
The following summary of the Johnson & Johnson guarantees is subject
in all respects to the first supplemental indenture dated as of April 29,
2003, among Scios, Johnson & Johnson and Wells Fargo Bank, National
Association, as trustee, to the indenture governing the notes. See "Where You
Can Find More Information".
Johnson & Johnson has unconditionally and irrevocably guaranteed:
o the full and punctual payment of principal of, premium, if any, and
interest on the notes when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary
obligations of Scios under the indenture and the notes; and
o the full and punctual performance within applicable grace periods of
all other obligations of Scios under the indenture and the notes.
The Johnson & Johnson guarantees constitute a guarantee of payment,
performance and compliance when due and not a guarantee of collection.
Johnson & Johnson's obligations under the Johnson & Johnson guarantees
are subordinated in right of payment to all of its senior indebtedness that is
currently outstanding or that it may incur in the future. As of April 28, 2003,
Johnson & Johnson's aggregate outstanding senior indebtedness was approximately
$5,118 million. The terms of the indenture, the first supplemental indenture and
the notes do not limit Johnson & Johnson's or any of its subsidiaries' ability,
including Scios's, to incur additional senior indebtedness.
The Johnson & Johnson guarantees are in uncertificated form and are
embodied in the first supplemental indenture.
SELLING SECURITYHOLDERS
The notes originally were issued by Scios and sold by the initial
purchasers of the notes on August 5, 2002 in a transaction exempt from the
registration requirements of the Securities Act of 1933 to persons reasonably
believed by the initial purchasers to be qualified institutional buyers in
reliance on Rule 144A under the Securities Act of 1933. Selling
securityholders, including their transferees, pledges or donees or their
successors, may from time to time offer and sell pursuant to this prospectus
any or all of the notes and the associated Johnson & Johnson guarantees.
On January 10, 2003, a registration statement on Form S-3 filed by
Scios to register resales of the notes and Scios common stock then issuable
upon conversion of the notes was declared effective by the Securities and
Exchange Commission. On April 29, 2003, Scios became a wholly owned subsidiary
of Johnson & Johnson through the merger of a wholly owned subsidiary of
Johnson & Johnson with and into Scios, and each outstanding share of Scios
common stock was converted into the right to receive $45.00 in cash. In
connection with the merger, each $1,000 principal amount of the notes became
convertible only into the right to receive $1,145.04 in cash without interest,
and Johnson & Johnson issued its subordinated guarantee of the notes.
The following table sets forth as of April 29, 2003 (1) the
principal amount of notes held by the selling securityholders, (2) the
percentage of the aggregate principal amount of notes outstanding, (3) the
principal amount of notes that may be offered and sold pursuant to this
prospectus, (4) the principal amount of the Johnson & Johnson guarantees
associated with the notes held by the selling securityholders, (5) the
percentage of the aggregate principal amount of Johnson & Johnson guarantees
20
outstanding, represented by that principal amount of Johnson & Johnson
guarantees and (6) the principal amount of the Johnson & Johnson guarantees
that may be offered and sold pursuant to this prospectus.
Notes Guarantees
--------------------------- ---------------------------
Principal Percentage Principal Percentage Principal Amount
amount of of amount of of of notes and
notes bene- outstanding guarantees outstanding associated
ficially notes bene- beneficially guarantees guarantees
owned and ficially owned and beneficially beneficially owned
offered owned prior offered owned prior after completion
Name of Selling Securityholder hereby ($) to offering hereby ($) to offering of the offering(1)
------------------------------ ------------- ------------ ------------ -------------- ------------------
-----------------
* Represents beneficial ownership of less than 1% of the aggregate principal
amount of notes and Johnson & Johnson guarantees outstanding as of ,
2003.
(1) Assumes that all of the notes and the associated Johnson & Johnson
guarantees have been sold by the selling securityholders. Based upon this
assumption, no selling securityholder will beneficially own greater than one
percent of the notes and the associated Johnson & Johnson guarantees after
completion of the offering.
None of the selling securityholders has, or within the past three
years has had, any position, office or other material relationship with
Johnson & Johnson or Scios or any of their predecessors or affiliates.
The initial purchasers purchased all of the notes from Scios in a
private transaction on August 5, 2002. All of the notes were "restricted
securities" under the Securities Act prior to this registration. The selling
securityholders have represented to Scios that they purchased the notes for
their own account for investment only and not with a view toward selling or
distributing them, except pursuant to sales registered under the Securities
Act or exempt from such registration.
Information concerning other selling securityholders will be set
forth in prospectus supplements from time to time, if required. Information
concerning the securityholders may change from time to time and any changed
information will be set forth in supplements to this prospectus if and when
necessary. In addition, the selling securityholders identified above may have
sold, transferred or otherwise disposed of all or some portion of the notes
and the associated Johnson & Johnson guarantees held by the selling
securityholders since the date on which they provided the information
regarding such notes and guarantees, in transactions exempt from the
registration requirements of the Securities Act of 1933.
PLAN OF DISTRIBUTION
The selling securityholders and their successors, which term
includes their transferees, pledges or donees or their successors may sell the
notes and the associated Johnson & Johnson guarantees directly to purchasers
or through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from the
selling securityholders of the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.
The notes and the associated Johnson & Johnson guarantees may be
sold in one or more transactions at:
21
o fixed prices,
o prevailing market prices at the time of sale,
o prices related to the prevailing market prices,
o varying prices determined at the time of sale, or
o negotiated prices.
These sales may be effected in transactions:
o on any national securities exchange or quotation service on which
the notes and the associated Johnson & Johnson guarantees may be
listed or quoted at the time of sale,
o in the over-the-counter market,
o otherwise than on such exchanges or services or in the
over-the-counter market,
o through the writing of options, whether the options are listed on an
options exchange or otherwise, or
o through the settlement of short sales.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as agent on both sides of the
trade.
In connection with the sale of the notes and the associated Johnson
& Johnson guarantees or otherwise, the selling securityholders may enter into
hedging transactions with broker-dealers or other financial institutions. The
selling securityholders may also sell the notes and the associated Johnson &
Johnson guarantees short and deliver these securities to close out such short
positions, or loan or pledge the notes and the associated Johnson & Johnson
guarantees to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling securityholders from the sale
of the notes and the associated Johnson & Johnson guarantees offered by them
hereby will be the purchase price thereof less discounts and commissions, if
any. Neither Scios nor Johnson & Johnson will receive any of the proceeds from
this offering.
Scios and Johnson & Johnson do not intend to list the notes and the
associated Johnson & Johnson guarantees for trading on any national securities
exchange or on the Nasdaq National Market and cannot assure you that any
trading market for the notes the associated Johnson & Johnson guarantees will
develop.
In order to comply with the securities laws of some states, if
applicable, the notes and the associated Johnson & Johnson guarantees may be
sold in these jurisdictions only through registered or licensed brokers or
dealers. In addition, in some states the notes and the associated Johnson &
Johnson guarantees may not be sold unless they have been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.
22
The selling securityholders and any broker-dealers or agents that
participate in the sale of the notes and the associated Johnson & Johnson
guarantees may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act. Profits on the sale of the notes and the
associated Johnson & Johnson guarantees by selling securityholders and any
discounts, commissions or concessions received by any broker-dealers or agents
might be deemed to be underwriting discounts and commissions under the
Securities Act. Selling securityholders who are deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act will be subject to
the prospectus delivery requirements of the Securities Act. To the extent the
selling securityholders may be deemed to be "underwriters," they may be
subject to statutory liabilities, including, but not limited to, Sections 11,
12 and 17 of the Securities Act.
The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder. Regulation M of the Exchange Act may
limit the timing of purchases and sales of any of the securities by the
selling securityholders and any other person. In addition, Regulation M may
restrict the ability of any person engaged in the distribution of the
securities to engage in market-making activities with respect to the
particular securities being distributed for a period of up to five business
days before the distribution. The selling securityholders have acknowledged
that they understand their obligations to comply with the provisions of the
Exchange Act and the rules thereunder relating to stock manipulation,
particularly Regulation M, and have agreed that they will not engage in any
transaction in violation of such provisions.
A selling securityholder may decide not to sell any notes and the
associated Johnson & Johnson guarantees described in this prospectus. Scios
and Johnson & Johnson cannot assure you that any selling securityholder will
use this prospectus to sell any or all of the notes and the associated Johnson
& Johnson guarantees. Any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this prospectus. In
addition, a selling securityholder may transfer, devise or gift the notes and
the associated Johnson & Johnson guarantees by other means not described in
this prospectus.
With respect to a particular offering of the notes and the
associated Johnson & Johnson guarantees, to the extent required, an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part
will be prepared and will set forth the following information:
o the specific notes and the associated Johnson & Johnson guarantees
to be offered and sold,
o the names of the selling securityholders,
o the respective purchase prices and public offering prices and other
material terms of the offering,
o the names of any participating agents, broker-dealers or
underwriters, and
o any applicable commissions, discounts, concessions and other items
constituting, compensation from the selling securityholders.
Scios entered into the registration rights agreement for the benefit
of holders of the notes to register their notes and the underlying common
stock the notes were then convertible into under applicable federal and state
securities laws under certain circumstances and at certain times. The
registration rights agreement provides that the selling securityholders and
Scios will indemnify each other and their respective directors, officers and
controlling persons against specific liabilities in connection
23
with the offer and sale of the notes and the underlying common stock the notes
were then convertible into, including liabilities under the Securities Act, or
will be entitled to contribution in connection with those liabilities. Scios
and Johnson & Johnson will pay all of their expenses and specified expenses
incurred by the selling securityholders incidental to the registration,
offering and sale of the notes and the associated Johnson & Johnson guarantees
to the public, but each selling securityholder will be responsible for payment
of commissions, concessions, fees and discounts of underwriters,
broker-dealers and agents.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material U.S. Federal income
tax consequences relevant to the purchase, ownership, and disposition of the
notes. This discussion applies only to persons who hold the notes as capital
assets (generally, property held for investment within the meaning of Section
1221 of the Internal Revenue Code of 1986 (the "Code"), as amended). This
discussion is based upon the Code, U.S. Treasury Regulations promulgated
thereunder ("Treasury Regulations"), Internal Revenue Service (the "IRS")
rulings and pronouncements, and judicial decisions now in effect, all of which
are subject to change at any time by legislative, administrative, or judicial
action, possibly with retroactive effect. This discussion does not discuss
every aspect of U.S. Federal income taxation that may be relevant to a
particular taxpayer in light of their personal circumstances or to persons who
are otherwise subject to special tax treatment (including, without limitation,
banks, broker-dealers, insurance companies, pension and other employee benefit
plans, tax exempt organizations and entities, investors in pass-through
entities, persons who acquire notes in connection with the performance of
services, certain U.S. expatriates, persons holding notes as a part of a
hedging or conversion transaction or a straddle, certain hybrid entities and
owners of interest therein, U.S. persons whose functional currency is not the
U.S. dollar and, except to the limited extent described below, persons who are
not U.S. Holders (as defined below)) and it does not discuss the effect of any
applicable U.S. state and local or non-U.S. tax laws or estate or gift tax
laws (other than estate tax consequences to the extent described below under
"Non-U.S. Holders") or tax laws other than U.S. Federal income tax law. Scios
has not sought and will not seek any rulings from the IRS concerning the tax
consequences of the purchase, ownership or disposition of the notes and,
accordingly, there can be no assurance that the IRS will not successfully
challenge the tax consequences described below.
If a partnership holds notes acquired upon conversion of the notes,
the tax treatment of a partner in the partnership will generally depend upon
the status of the partner and the activities of the partnership. If you are a
partner of a partnership holding the notes, you should consult your tax
advisor regarding the tax consequences of the ownership and disposition of the
notes.
EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT SUCH PURCHASER'S OWN
TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF
HOLDING AND DISPOSING OF NOTES, AS WELL AS ANY TAX CONSEQUENCES APPLICABLE
UNDER THE LAWS OF ANY U.S. STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION.
U.S. HOLDERS
As used herein, the term "U.S. Holder" refers to a person that is
classified for U.S. Federal income tax purposes as a U.S. person. For this
purpose, a U.S. person includes (i) a citizen or resident of the United
States, (ii) a corporation created or organized in the United States or under
the laws of the United States or of any state or political subdivision
thereof, (iii) an estate the income of which is subject to U.S. Federal income
taxation regardless of its source, or (iv) a trust whose administration is
subject to the primary supervision of a U.S. court and which has one or more
U.S. persons who have the authority to control all substantial decisions of
the trust. Notwithstanding the preceding sentence, to the extent
24
provided in Treasury Regulations, certain trusts in existence on August 20,
1996, and treated as U.S. persons prior to such date that elect to continue to
be treated as U.S. persons, shall also be considered U.S. Holders.
Interest. Interest paid or accrued on the notes will be taxable to a
U.S. Holder as ordinary income at the time it is accrued or received in
accordance with the holder's method of accounting for U.S. Federal income tax
purposes.
Conversion, sale, retirement, redemption or other taxable
disposition of notes. Except as set forth under "Market discount," upon the
conversion, sale, retirement, redemption or other taxable disposition of a
note (including a repurchase of a note by a third party), a U.S. Holder will
recognize gain or loss to the extent of the difference between the sum of the
cash and the fair market value of any property received in exchange therefor
(except to the extent attributable to the payment of accrued and unpaid
interest on the notes, which generally will be taxed as ordinary income to the
extent that the holder has not previously recognized this income), and the
U.S. Holder's adjusted tax basis in the notes. A U.S. Holder's tax basis in a
note will initially equal the cost of the note and will subsequently be
increased by market discount previously included in income in respect thereof
and will be reduced by any premium that the U.S. Holder has taken into
account. Generally, any such gain or loss recognized by a U.S. Holder upon the
sale, retirement, redemption or other taxable disposition of a note will be
capital gain or loss. In the case of a non-corporate U.S. Holder, such capital
gain will be subject to tax at a reduced rate if the note is held for more
than one year. The deductibility of capital losses is subject to limitation.
Market discount. If a U.S. Holder acquires a note at a cost that is
less than the stated redemption price at maturity of the note, the amount of
such difference is treated as market discount for federal income tax purposes,
unless such difference is less than .0025 multiplied by the stated redemption
price at maturity multiplied by the number of complete years to maturity (from
the date of acquisition). The market discount provisions of the Code require a
U.S. Holder who acquires a note at a market discount to treat as ordinary
income any gain recognized on the disposition of that note to the extent of
the accrued market discount on that note at the time of maturity or
disposition that such holder has not previously included in income. In
addition, a U.S. Holder that disposes of a note with market discount in
certain otherwise nontaxable transactions must include accrued market discount
as ordinary income as if such holder had sold the note at its then fair market
value.
A U.S. Holder may elect to include market discount in income over
the life of the note. Once made, this election applies to all market discount
obligations acquired on or after the first taxable year to which the election
applies and may not be revoked without the consent of the IRS. In general,
market discount will be treated as accruing on a straight-line basis over the
remaining term of the note at the time of acquisition, or, at the election of
the U.S. Holder, under a constant yield method. If an election is made, it
will apply only to the note with respect to which it is made, and may not be
revoked. A U.S. Holder who acquires a note at a market discount and who does
not elect to include accrued market discount in income over the life of the
note may be required to defer the deduction of a portion of the interest on
any indebtedness incurred or maintained to purchase or carry the note until
maturity or until the note is disposed of in a taxable transaction.
Amortizable premium. A U.S. Holder who purchases a note at a premium
over the sum of all amounts payable on the note after the acquisition date
(other than stated interest payments) generally may elect to amortize that
premium (referred to as Section 171 premium) from the purchase date to the
note's maturity date under a constant-yield method that reflects semiannual
compounding based on the note's payment period. The notes are subject to call
provisions at Scios's option at various times, as described under the heading
"Description of Notes--Optional redemption by Scios." A U.S. Holder will
calculate the amount of Section 171 premium based on the amount payable at the
applicable call date, but only if
25
the use of the call date (in lieu of the stated maturity date) results in a
smaller amortizable bond premium for the period ending on the call date.
Amortizable premium will not include any amount attributable to a note's
conversion feature. The amount attributable to the conversion feature may be
determined under any reasonable method, including by comparing the note's
purchase price to the market price of a similar note that does not have a
conversion feature. Amortized Section 171 premium is treated as an offset to
interest income on a note and not as a separate deduction. The election to
amortize premium on a constant yield method, once made, applies to all debt
obligations held or subsequently acquired by the electing U.S. Holder on or
after the first day of the first taxable year to which the election applies
and may not be revoked without the consent of the IRS.
Information reporting; backup withholding. Scios is required to
furnish to the record holders of the notes, other than corporations and other
exempt holders, and to the IRS, information with respect to interest paid on
the notes.
A U.S. Holder may be subject to backup withholding with respect to
interest paid on the notes or with respect to proceeds received from a
disposition of the notes. Certain holders (including, among others,
corporations and certain tax-exempt organizations) are generally not subject
to backup withholding. A U.S. Holder will be subject to backup withholding if
such holder is not otherwise exempt and such holder (i) fails to furnish its
taxpayer identification number ("TIN"), which, for an individual is ordinarily
his or her social security number; (ii) furnishes an incorrect TIN; (iii) is
notified by the IRS that it has failed to properly report payments of
interest; or (iv) fails to certify, under penalties of perjury, that it has
furnished a correct TIN and that the IRS has not notified the U.S. Holder that
it is subject to backup withholding. Backup withholding is not an additional
tax but, rather, is a method of tax collection. U.S. Holders will be entitled
to credit any amounts withheld under the backup withholding rules against
their actual tax liabilities provided the required information is furnished to
the IRS.
NON-U.S. HOLDERS
As used herein, the term "Non-U.S. Holder" refers to a person that
is classified for U.S. Federal income tax purposes as (i) a non-resident alien
individual, (ii) a foreign corporation, or (iii) a nonresident alien fiduciary
of a foreign estate or trust.
Interest. In general, a Non-U.S. Holder will not be subject to U.S.
Federal withholding tax with respect to interest received on the notes so long
as (a) the Non-U.S. Holder does not actually or constructively own 10% or more
of the total combined voting power of all Johnson & Johnson's classes of stock
entitled to vote, (b) the Non-U.S. Holder is not a controlled foreign
corporation that is related to us actually or constructively through stock
ownership, and (c) the Non-U.S. Holder provides its name and address, and
certifies, under penalties of perjury, that it is not a U.S. person (which
certification may be made on an IRS Form W-8BEN (or successor form)) or the
Non-U.S. Holder holds its notes through certain foreign intermediaries, and
the Non-U.S. Holder and the foreign intermediary satisfy the certification
requirements of applicable Treasury Regulations.
If a Non-U.S. Holder cannot satisfy the requirements described
above, payments of interest to such holder will be subject to the 30% U.S.
Federal withholding tax, unless the holder provides us with a properly
executed (1) IRS Form W-8BEN (or successor form) claiming an exemption from or
reduction in withholding under the benefit of an applicable tax treaty or (2)
IRS Form W-8ECI (or successor form) stating that interest paid on the note is
not subject to withholding tax because it is effectively connected with the
conduct of a U.S. trade or business. If a Non-U.S. Holder is engaged in a
trade or business in the United States and interest on a note is effectively
connected with the conduct of that trade or business, the holder will be
subject to U.S. Federal income tax on that interest on a net income basis
(although the holder will be exempt from the 30% withholding tax, provided the
certification requirements described
26
above are satisfied) in the same manner as if the Non-U.S. Holder was a U.S.
person as defined under the Code. In addition, if the Non-U.S. Holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30%
(or lower applicable treaty rate) of its earnings and profits for the taxable
year, subject to adjustments, that are effectively connected with its conduct
of a trade or business in the United States.
Gain on disposition of notes. Non-U.S. Holders generally will not be
subject to U.S. Federal income taxation, including by way of withholding, on
gain recognized on a disposition of notes so long as (i) the gain is not
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business within the United States (or if a tax treaty applies, the gain is not
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business within the United States and attributable to a U.S. permanent
establishment maintained by such Non-U.S. Holder) and (ii) in the case of a
Non-U.S. Holder who is an individual, such Non-U.S. Holder is not present in
the United States for 183 days or more in the taxable year of disposition and
certain other requirements are met.
A Non-U.S. Holder whose gain is effectively connected with the
conduct of a trade or business within the United States generally will be
subject to U.S. Federal income tax on the net gain derived from the sale. Any
such effectively connected gain received by a Non-U.S. Holder that is a
corporation may also, under certain circumstances, be subject to an additional
branch profits tax at a 30% rate or such lower rate as may be applicable under
an income tax treaty. An individual Non-U.S. Holder who is present in the
United States for 183 days or more in the taxable year of disposition and
meets certain other conditions will be subject to a 30% U.S. Federal income
tax on the gain derived from the sale.
United States Federal estate tax. A note held by an individual who
at the time of death is not a citizen or resident of the United States, as
specifically defined for United States Federal estate tax purposes, will not
be subject to United States Federal estate tax if the individual did not
actually or constructively own 10% or more of the total combined voting power
of all classes of Johnson & Johnson's stock and, at the time of the
individual's death, payments with respect to that note would not have been
effectively connected with the conduct by that individual of a trade or
business in the United States.
Information reporting; backup withholding. Generally, payments of
interest or principal on the notes to Non-U.S. Holders will not be subject to
information reporting or backup withholding if the Non-U.S. Holder certifies,
under penalties of perjury, as to its foreign status or otherwise establishes
an exemption.
Information reporting requirements and backup withholding generally
will not apply to any payments of the proceeds of the disposition of notes
effected outside the U.S. by a foreign office or a foreign broker (as defined
in applicable Treasury regulations). However, unless such broker has
documentary evidence in its records that the beneficial owner is a Non-U.S.
Holder and certain other conditions are met, or the beneficial owner otherwise
establishes an exemption, information reporting (but not backup withholding)
will apply to any such payments effected outside the U.S. by such a broker if
it:
1. derives 50% or more of its gross income for certain periods
from the conduct of a trade or business in the U.S.;
2. is a controlled foreign corporation for U.S. Federal income tax
purposes; or
3. is a foreign partnership that, at any time during its taxable
year, has 50% or more of its income or capital interests owned
by U.S. persons or is engaged in the conduct of a U.S. trade or
business.
27
Payments of the proceeds of a disposition of notes effected by the
U.S. office of a broker will be subject to information reporting requirements
and backup withholding tax unless the Non-U.S. Holder properly certifies under
penalties of perjury as to its foreign status and certain other conditions are
met or it otherwise establishes an exemption.
Any amount withheld under the backup withholding rules may be
credited against the Non-U.S. Holder's U.S. Federal income tax liability and
any excess may be refundable if the proper information is provided to the IRS.
LEGAL MATTERS
Certain legal matters in connection with the notes offered hereby
have been passed upon for Scios by Latham & Watkins LLP, San Francisco,
California.
The enforceability of the Johnson & Johnson guarantees offered hereby
have been passed upon by John T. Crisan, Esq., Assistant General Counsel and
Assistant Secretary of Johnson & Johnson. Mr. Crisan is paid a salary by Johnson
& Johnson, is a participant in various employee benefit plans offered to
employees of Johnson & Johnson generally and owns and has options to purchase
shares of Johnson & Johnson common stock.
EXPERTS
The consolidated financial statements and financial statement
schedule of Johnson & Johnson and its subsidiaries as of December 29, 2002 and
December 30, 2001 and for each of the three fiscal years in the period ended
December 29, 2002 incorporated in this prospectus by reference to the Johnson
& Johnson Annual Report on Form 10-K for the year ended December 29, 2002,
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts
in auditing and accounting.
The consolidated financial statements of Scios incorporated in this
prospectus by reference to the Annual Report on Form 10-K for the year ended
December 31, 2002 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Johnson & Johnson and Scios have filed registration statements on
Form S-3 with the Securities and Exchange Commission to register resales of
the notes and the associated Johnson & Johnson guarantees held by certain
selling securityholders. This prospectus forms a part of those registration
statements. As allowed by Securities and Exchange Commission rules, this
prospectus does not contain all the information contained in the registration
statements or in the exhibits to the registration statements.
Johnson & Johnson is subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance therewith files annual,
quarterly and special reports, proxy statements and other information with the
Securities and Exchange Commission. Prior to its acquisition by Johnson &
Johnson, Scios filed annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may
read and copy those reports, statements or other information at the Securities
and Exchange Commission's public reference room:
28
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference room. These Securities and
Exchange Commission filings are also available to the public from commercial
document retrieval services and at the Internet world wide web site maintained
by the Securities and Exchange Commission at "http://www.sec.gov." Reports,
proxy statements and other information concerning Johnson & Johnson may also
be inspected at the offices of the New York Stock Exchange at 20 Broad Street,
New York, New York 10005.
The Securities and Exchange Commission allows certain important
information to be "incorporated by reference" into this prospectus, which
means that such information can be disclosed to you by referring you to other
documents filed separately with the Securities and Exchange Commission. The
information incorporated by reference is considered to be part of this
prospectus, except for any information superseded by information contained
directly in this prospectus or in later filed documents incorporated by
reference in this prospectus.
This prospectus incorporates by reference the documents set forth
below that Johnson & Johnson and Scios have previously filed with the
Securities and Exchange Commission. These documents contain important business
and financial information about Johnson & Johnson and Scios that is not
included in or delivered with this prospectus.
JOHNSON & JOHNSON FILINGS
(FILE NO. 001-03215) PERIOD OR DATE FILED
---------------------------------------- ------------------------------------
Annual Report on Form 10-K.............. Fiscal Year ended December 29, 2002
filed on Form 10-K on March 18, 2003
Current Report on Form 8-K.............. Filed on April 29, 2003
SCIOS INC. FILINGS
(FILE NO. 000-11749) PERIOD OR DATE FILED
---------------------------------------- ------------------------------------
Annual Report on Form 10-K.............. Fiscal Year ended December 31, 2002
filed on Form 10-K on March 17, 2003
--------------------------------------------------------------------------------
Johnson & Johnson is also incorporating by reference additional
documents that it will file before the termination of this offering. These
include periodic reports, such as Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
You can request a free copy of any or all of these documents, other
than the exhibits to those documents, unless those exhibits are specifically
incorporated by reference into these documents, by writing to or calling the
following address or telephone number:
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Attention: Office of Corporate Secretary
Telephone: (732) 524-2455
29
You should rely only on the information contained or incorporated by
reference in this prospectus before deciding to purchase the notes and the
associated Johnson & Johnson guarantees being offered by this prospectus.
Johnson & Johnson and Scios have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. This
prospectus is dated , 2003. You should not assume that the information
contained in this prospectus is accurate as of any date other than that date
unless the information specifically indicates that another date applies. If
you are in a jurisdiction where it is unlawful to offer to convert or sell or
to ask for offers to convert or buy the securities offered by this prospectus,
or if you are a person to whom it is unlawful to direct those activities, then
the offer presented in this prospectus does not extend to you.
30
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be paid by
Johnson & Johnson and Scios in connection with the sale and distribution of
the securities being offered by the prospectus forming a part of this
Registration Statement. All amounts shown are estimates except for amounts of
filing and listing fees.
Prior costs and expenses of
Scios pursuant to the note
registration statement Anticipated costs and
(Registration Statement No. expenses of Johnson &
333-99641) Johnson and Scios
Securities and Exchange Commission registration
fee..................................................... $13,800 $0
Legal fees and expenses................................. 100,000 10,000
Accounting fees and expenses............................ 20,000 5,000
Printing, EDGAR formatting and mailing expenses......... 20,000 1,000
Miscellaneous........................................... 15,000 5,500
---------------------------- -----------------------
Total.............................................. $168,800 $21,500
============================ =======================
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
JOHNSON & JOHNSON
The New Jersey Business Corporation Act (the "NJBCA") provides that
a New Jersey corporation has the power to indemnify a director or officer
against his or her expenses and liabilities in connection with any proceeding
involving the director or officer by reason of his or her being or having been
such a director or officer, other than a proceeding by or in the right of the
corporation, if such director or officer acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the corporation; and with respect to any criminal proceeding, such director or
officer had no reasonable cause to believe his or her conduct was unlawful.
The indemnification and advancement of expenses shall not exclude
any other rights, including the right to be indemnified against liabilities
and expenses incurred in proceedings by or in the right of the corporation, to
which a director or officer may be entitled under a certificate of
incorporation, by-law, agreement, vote of shareholders, or otherwise;
provided, that no indemnification shall be made to or on behalf of a director
or officer if a judgment or other final adjudication adverse to the director
or officer establishes that his or her acts or omissions (a) were in breach of
his or her duty of loyalty to the corporation or its shareholders, (b) were
not in good faith or involved a knowing violation of law or (c) resulted in
receipt by the director or officer of an improper personal benefit.
Johnson & Johnson's Restated Certificate of Incorporation provides
that, to the full extent that the laws of the State of New Jersey permit the
limitation or elimination of the liability of directors and
II-1
officers, no director or officer of Johnson & Johnson shall be personally
liable to the Johnson & Johnson or its stockholders for damages for breach of
any duty owed to Johnson & Johnson or its stockholders.
The By-laws of Johnson & Johnson provide that to the full extent
permitted by the laws of the State of New Jersey, Johnson & Johnson shall
indemnify any person (an "Indemnitee") who was or is involved in any manner
(including, without limitation, as a party or witness) in any threatened,
pending or completed investigation, claim, action, suit or proceeding, whether
civil, criminal, administrative, arbitrative, legislative or investigative
(including, without limitation, any action, suit or proceeding by or in the
right of Johnson & Johnson to procure a judgment in its favor) (a
"Proceeding"), or who is threatened with being so involved, by reason of the
fact that he or she is or was a director or officer of Johnson & Johnson or,
while serving as a director or officer of Johnson & Johnson, is or was at the
request of Johnson & Johnson also serving as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (including, without limitation, any employee benefit plan), against
all expenses (including attorneys' fees), judgments, fines, penalties, excise
taxes and amounts paid in settlement actually and reasonably incurred by the
Indemnitee in connection with such Proceeding; provided, that there shall be
no indemnification under the By-laws with respect to any settlement or other
nonadjudicated disposition of any threatened or pending Proceeding unless
Johnson & Johnson has given its prior consent to such settlement or
disposition. The right of indemnification created by the By-laws shall be a
contract right enforceable by an Indemnitee against Johnson & Johnson, and it
shall not be exclusive of any other rights to which an Indemnitee may
otherwise be entitled. The indemnification provisions of the By-laws shall
inure to the benefit of the heirs and legal representatives of an Indemnitee
and shall be applicable to Proceedings commenced or continuing after the
adoption of the By-laws, whether arising from acts or omissions occurring
before or after such adoption. No amendment, alteration, change, addition or
repeal of or to the By-laws shall deprive any Indemnitee of any rights under
the By-laws with respect to any act or omission of such Indemnitee occurring
prior to such amendment, alteration, change, addition or repeal.
Johnson & Johnson enters into indemnification agreements with its
directors and officers and enters into insurance agreements on its own behalf.
The indemnification agreements provide that Johnson & Johnson agrees to hold
harmless and indemnify its directors and officers to the fullest extent
authorized or permitted by the NJBCA, or any other applicable law, or by any
amendment thereof or other statutory provisions authorizing or permitting such
indemnification that is adopted after the date hereof. Without limiting the
generality of the foregoing, Johnson & Johnson agrees to hold harmless and
indemnify its directors and officers to the fullest extent permitted by
applicable law against any and all expenses, judgments, fines, and amounts
paid in settlement actually and reasonably incurred by its directors and
officers in connection with the defense of any present or future threatened,
pending, or completed claim, action, suit, or proceeding by reason of the fact
that they were, are, shall be, or shall have been a director or officer of
Johnson & Johnson, or are or were serving, shall serve, or shall have served,
at the request of Johnson & Johnson, as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan, or
other enterprise.
SCIOS INC.
Scios' Restated Certificate of Incorporation provides that to the
fullest extent permitted by the Delaware General Corporation Law ("DGCL"), a
director or officer of Scios shall not be liable to Scios or its stockholders
for monetary damages for breach of fiduciary duty as a director or officer.
The effect of the provision of the Scios Restated Certificate of Incorporation
is to eliminate the rights of Scios and its stockholders (through
stockholders' derivative suits on behalf of Scios) to recover monetary damages
against a director or officer for breach of the fiduciary duty of care as a
director or officer (including breaches resulting from negligent or grossly
negligent behavior) except in certain situations set forth in Section
102(b)(7) of the DGCL. This provision does not limit or eliminate the rights
of Scios or any
II-2
stockholder to seek nonmonetary relief such as an injunction
or rescission in the event of a breach of a director's or officer's duty of
care.
Under Section 145 of the DGCL, a corporation may indemnify its
directors, officers, employees and agents and its former directors, officers,
employees and agents and those who serve, at the corporation's request, in
such capacities with another enterprise, against expenses (including
attorney's fees), as well as judgments, fines and settlements in nonderivative
lawsuits, actually and reasonably incurred in connection with the defense of
any action, suit or proceeding in which they or any of them were or are made
parties or are threatened to be made parties by reason of their serving or
having served in such capacity. The DGCL provides, however, that such person
must have acted in good faith and in a manner he or she reasonably believed to
be in (or not opposed to) the best interests of the corporation and, in the
case of a criminal action, such person must have had no reasonable cause to
believe his or her conduct was unlawful. In addition, the DGCL does not permit
indemnification in an action or suit by or in the right of the corporation,
where such person has been adjudged liable to the corporation, unless, and
only to the extent that, a court determines that such person fairly and
reasonably is entitled to indemnity for costs the court deems proper in light
of liability adjudication. Indemnity is mandatory to the extent a claim, issue
or matter has been successfully defended.
Scios' Restated Certificate of Incorporation contains a provision
permitted by the DGCL that provides that directors, officers and other agents
will be indemnified by Scios to the fullest extent not prohibited by the DGCL.
In addition, Scios has entered into indemnification agreements with certain
officers of Scios pursuant to which Scios has agreed to indemnify such officer
from claims, liabilities, damages, expenses, losses, costs, penalties or
amounts paid in settlement incurred by such officer and arising out of his or
her capacity as an officer, employee and/or agent of the corporation of which
he or she is an officer to the maximum extent provided by applicable law. In
addition, the directors and officers of Scios will be entitled to an advance
of expenses to the maximum extent authorized or permitted by law to meet the
obligations indemnified against. Scios also maintains insurance for the
benefit and on behalf of its directors and officers insuring against all
liabilities that may be incurred by such director or officer in or arising out
of his or her capacity as a director, officer, employee and/or agent of Scios.
ITEM 16. EXHIBITS.
See the index to exhibits, which is incorporated herein by reference.
The Registrants agree to furnish supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange Commission upon request.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in the volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b)
II-3
if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering set
forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Securities registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by such Registrant of expenses incurred or paid by a director, officer
or controlling person of such Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
such Registrant will, unless in the opinion of such Registrant's counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Johnson
& Johnson certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New Brunswick, State of New Jersey
on this 29th day of April, 2003.
JOHNSON & JOHNSON
By /s/ Christine A. Poon
----------------------------------
Name: Christine A. Poon
Title: Worldwide Chairman,
Pharmaceuticals Group and
Member, Executive Committee
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints M. H. Ullmann and J. T. Crisan, and each of them, as his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including pre-effective
and post-effective amendments) to this Registration Statement and all
documents relating thereto, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
necessary or advisable to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ W.C. Weldon
--------------------- Chairman, Board of Directors and April 29, 2003
W. C. Weldon Chief Executive Officer and Director
(Principal Executive Officer)
/s/ R.J. Darretta
--------------------- Executive Vice President; Chief April 29, 2003
R. J. Darretta Financial Officer and Director
(Principal Financial Officer)
/s/ S. J. Cosgrove
--------------------- Controller April 29, 2003
S. J. Cosgrove (Principal Accounting Officer)
II-5
SIGNATURE TITLE DATE
--------- ----- ----
/s/ G. N. Burrow
--------------------- Director April 29, 2003
G. N. Burrow
/s/ J. G. Cullen
--------------------- Director April 29, 2003
J. G. Cullen
/s/ M. J. Folkman
--------------------- Director April 29, 2003
M. J. Folkman
/s/ A. D. Jordan
--------------------- Director April 29, 2003
A. D. Jordan
/s/ A. G. Langbo
--------------------- Director April 29, 2003
A. G. Langbo
/s/ J. T. Lenehan
--------------------- Vice Chairman, Board of Directors April 29, 2003
J. T. Lenehan and Director
/s/ L. F. Mullin
--------------------- Director April 29, 2003
L. F. Mullin
/s/ D. Satcher
--------------------- Director April 29, 2003
D. Satcher
/s/ H. B. Schacht
--------------------- Director April 29, 2003
H. B. Schacht
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing this Post-Effective Amendment
No. 1 to Form S-3 and has duly caused this Post-Effective Amendment No. 1 to
Form S-3 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Sunnyvale, State of California, on the 29th day of
April, 2003.
SCIOS INC.
By
/s/ Christine A. Poon
-------------------------------
Name: Christine A. Poon
Title: Director
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Richard B. Brewer President and Chief April 29, 2003
---------------------- Executive Officer
Richard B. Brewer (Principal Executive Officer)
/s/ David W. Gryska Senior Vice President, Finance April 29, 2003
---------------------- and Chief Financial Officer
David W. Gryska (Principal Financial and
Accounting Officer)
/s/ Christine A. Poon Director April 29, 2003
----------------------
Christine A. Poon
/s/ Joseph Scodari Director April 29, 2003
----------------------
Joseph Scodari
II-7
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
2.1 Agreement and Plan of Merger dated as of February 10, 2003,
among Johnson & Johnson, Saturn Merger Sub, Inc. and Scios Inc.
4.1* Indenture, dated as of August 5, 2002, between Scios Inc. and
Wells Fargo Bank, National Association, as trustee, filed as an
exhibit to Scios Inc.'s Report on Form 8-K dated August 5,
2002.
4.2* Form of $150,000,000 aggregate principal amount 5.50%
Convertible Subordinated Note due 2009, filed as an exhibit to
Scios Inc.'s Report on Form 8-K dated August 5, 2002.
4.3* Registration Rights Agreement dated as of August 5, 2002, by
and among Scios Inc., J.P. Morgan Securities, Inc., Lehman
Brothers Inc., SG Cowen Securities Corporation, Needham &
Company, Inc., Adams, Harkness & Hill, Inc. and Prudential
Securities Incorporated, filed as an exhibit to Scios Inc.'s
Report on Form 8-K dated August 5, 2002.
4.4* Pledge Agreement dated as of August 5, 2002, among the Scios
Inc., Wells Fargo Bank, National Association, as trustee, and
Wells Fargo Bank, National Association, as collateral agent,
filed as an exhibit to Scios Inc.'s Report on Form 8-K dated
August 5, 2002.
4.5* Control Agreement, dated as of August 5, 2002, by and among
Scios Inc, Wells Fargo Bank, National Association, as trustee,
Wells Fargo Bank, National Association, as collateral agent,
and Wells Fargo Bank, National Association, in its capacity as
securities intermediary and depository bank, filed as an
exhibit to Scios Inc.'s Report on Form 8-K dated August 5,
2002.
4.7 First Supplemental Indenture dated as of April 29, 2003, among
Scios Inc., Johnson & Johnson and Wells Fargo Bank, National
Association, as trustee.
5.1* Opinion of Latham & Watkins LLP.
5.2 Opinion of John T. Crisan, Esq., Assistant General Counsel and
Assistant Secretary of Johnson & Johnson, regarding the
enforceability of the guarantees.
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges
of Johnson & Johnson (incorporated by reference to Exhibit 12
to Johnson & Johnson's Annual Report on Form 10-K for the
fiscal year ended December 29, 2002).
12.2 Statement of Computation of Ratio of Earnings to Fixed Charges
of Scios Inc.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants
to Johnson & Johnson.
23.2 Consent of PricewaterhouseCoopers LLP, independent accountants
to Scios Inc.
23.3* Consent of Latham & Watkins LLP (included in Exhibit 5.1).
23.4 Consent of John T. Crisan, Esq., Assistant General Counsel and
Assistant Secretary of Johnson & Johnson (included in Exhibit
5.2).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
25.1* Statement of Eligibility under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee of Wells Fargo
Bank, National Association (Form T-1).
-----------------
*Previously Filed
Exhibit 5.1
[Johnson & Johnson Letterhead]
April 29, 2003
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Ladies and Gentlemen:
I am Assistant General Counsel and Assistant Secretary of Johnson &
Johnson, a New Jersey corporation (the "Company"), and I am familiar with the
Registration Statement on Form S-3 (the "Registration Statement") being filed
by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, relating to the proposed registration of
resales by certain selling securityholders of the Company's guarantees (the
"Guarantees") of up to $150,000,000 aggregate principal amount of the 5.50%
Convertible Subordinated Notes Due 2009 (the "Notes") of Scios Inc., a
Delaware corporation and a wholly owned subsidiary of the Company ("Scios").
The Notes were originally issued pursuant to the Indenture dated as of August
5, 2002, between Scios and Wells Fargo Bank, National Association, as trustee
(the "Trustee"), as supplemented and amended by the First Supplemental
Indenture thereto dated as of April 29, 2003 (the "First Supplemental
Indenture"), among Scios, the Company and the Trustee. The Guarantees were
issued by the Company under the First Supplemental Indenture.
I have reviewed the Company's Restated Certificate of Incorporation
and By-laws and such other corporate records and documents of the Company,
including, without limitation, the Indenture and the First Supplemental
Indenture, and documents and certificates of public officials and others as I
have deemed necessary as a basis for the opinion hereinafter expressed.
Based on the foregoing and having regard for such legal
considerations as I deem relevant, I am of the opinion that, assuming that the
First Supplemental Indenture has been duly authorized, executed and delivered
by Scios and the Trustee, the Guarantees constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity, including, without limitation, good faith and fair dealing regardless
of whether in a proceeding in equity or at law).
I hereby consent to the use of my name under the caption "Legal
Matters" in the Registration Statement and to the use of this opinion as an
Exhibit to the Registration Statement.
Very truly yours,
/s/ John T. Crisan
---------------------------
Name: John T. Crisan
Title: Assistant General Counsel and
Assistant Secretary
Exhibit 12.1
JOHNSON & JOHNSON AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(1)
(DOLLARS IN MILLIONS)
FISCAL YEAR ENDED
-------------------------------------------------------------------------
DECEMBER 29, DECEMBER 30, DECEMBER 31, JANUARY 2, JANUARY 3,
2002 2001 2000 2000 1999
------------- ------------- ------------- ------------- -------------
Determination of Earnings:
Earnings Before Provision for $ 9,291 $ 7,898 $ 6,868 $ 5,877 $ 4,333
Taxes on Income..........
Fixed Charges................. 259 245 292 337 269
------------- ------------- ------------- ------------- -------------
Total Earnings as Defined.. $ 9,550 $ 8,143 $ 7,160 $ 6,214 $ 4,602
============= ============= ============= ============= =============
Fixed Charges and Other:
Rents...................... 99 92 88 82 83
Interests.................. 160 153 204 255 186
------------- ------------- ------------- ------------- -------------
Fixed Charges............ 259 245 292 337 269
Capitalized Interest....... 98 95 97 84 73
------------- ------------- ------------- ------------- -------------
Total Fixed Charges...... $ 357 $ 340 $ 389 $ 421 $ 342
============= ============= ============= ============= =============
Ratio of Earnings to Fixed 26.75 23.95 18.41 14.76 13.46
Charges.................. ============= ============= ============= ============= =============
----------------------------------
(1) The ratio of earnings to fixed charges represents the historical
ratio of Johnson & Johnson 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.
Exhibit 12.2
SCIOS INC AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(1)
(DOLLARS IN MILLIONS)
FISCAL YEAR ENDED
--------------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2002 2001 2000 1999 1998
--------------------------------------------------------------------------------
Pre-tax loss before adjustment
for minority interests and
equity in net loss of affiliate $(87,916) $(62,170) $ (42,519) $ (20,050) $ (869)
Interest expense 13,897 2,818 3,796 2,793 2,685
Amortization of interest expense
related to warrants issued 2,468 ---- ---- ---- ---
Lease rental expense
representative of interest(1) 1,146 637 534 723 321
Pre-tax loss before adjustment
for minority interests and
equity in net loss of affiliate
plus fixed charges (70,405) (58,715) (38,189) (16,534) 2,137
Less: fixed charges
Interest expense 13,897 2,818 3,796 2,793 2,685
Amortization of interest
expense related to warrants
issued 2,468 ---- ---- ---- ---
Lease rental expense
representative of interest(1) 1,146 637 534 723 321
TOTAL FIXED CHARGES 17,511 3,455 4,330 3,516 3,006
========= ========= ========= ========= ========
PRE-TAX LOSS BEFORE ADJUSTMENT
FOR MINORITY INTERESTS AND
EQUITY IN NET LOSS OF AFFILIATE $(87,916) $(62,170) $(42,519) $(20,050) $(869)
========= ========= ========= ========= ======
RATIO OF EARNINGS FIXED CHARGES N/A N/A N/A N/A 0.7
DEFICIENCY IN EARNINGS $(87,916) $(62,170) $(42,519) $(20,050) $(869)
------------------
(1) Calculated as one-third of rentals, which is a reasonable approximation of
the interest factor.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of Johnson & Johnson of our report dated January 20,
2003, except for Note 22 for which the date is February 10, 2003 relating to
the financial statements of Johnson & Johnson, which appears in the Johnson &
Johnson 2002 Annual Report to Shareholders, which is incorporated by reference
in its Annual Report on Form 10-K for the fiscal year ended December 29, 2002.
We also consent to the incorporation by reference of our report dated January
20, 2003 relating to the financial statement schedule, which appears in such
Annual Report on Form 10-K. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
New York, New York
April 25, 2003
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 1 to the Registration Statement on Form S-3 (Registration No.
333-99641) of Scios Inc. of our report dated February 7, 2003, except as to
Note 20, which is as of February 10, 2003, relating to the consolidated
financial statements, which appears in the Scios Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 2002. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
San Jose, California
April 28, 2003