01—Abstract
Summary
Summary of the 10-K/A filed June 29, 1999. Cited figures are marked; the original filing is the authoritative source.
This Form 10-K/A for fiscal year ended January 3, 1999 is mainly a vehicle for three employee savings plan annual reports (Form 11-K) filed as exhibits.
The core 10-K items are incorporated by reference to the 1998 Annual Report to Shareowners, so this document contains no consolidated revenue, earnings, or balance sheet for Johnson & Johnson. Investors seeking operating results should consult the annual report itself. The exhibits show a strong 1998 for the company's retirement plans.
The main Johnson & Johnson Savings Plan grew net assets available for benefits about 26%, from $2.53 billion to $3.19 billiona, driven by a $659 million net increase that included $352 million of unrealized appreciation and $131 million of realized gains. The J&J Stock Fund alone reached $1.13 billion, up from $863 million, and the plan's total J&J common stock holdings were valued at roughly $1.6 billion at year-end. The plan remains heavily concentrated in company stock, which ties participant retirement wealth closely to the share price.
The filing also discloses a $100 millionb ESOP loan from the company, originally made in 1991 at 9% interest, with $53.5 million outstanding at year-end and final payment due in 2005. The company's cash contributions service this debt.
The filing reports a non-exempt transaction in which the plan administrator, Johnson & Johnson, sold no shares but the plan bought $58.8 millionc of company stock in the savings plan. The Form 10-K/A cover page reports about $117.2 billion in non-affiliate market value and 1,345,589,883 common shares outstanding as of February 23, 1999.
02—Key points
Key Highlights
- Johnson & Johnson Savings Plan net assets available for benefits rose from $2.53 billion (1997) to $3.19 billion (1998), a 26% increase
- The plan's J&J Stock Fund reached $1.13 billion at year-end 1998, up from $863 million, and the ESOP Trust Fund held J&J stock valued at $484.6 million
- Plan net increase of $659 million in 1998, including $352 million of unrealized appreciation and $131 million of realized gains on investments
- Plan benefit payments to participants totaled $125.5 million in 1998, compared with $100.8 million in 1997
- ESOP loan from the company: $100 million originally borrowed at 9% interest, with $53.5 million outstanding and final maturity in February 2005
- Non-exempt transaction: the plan purchased $58.8 million of J&J common stock from the company in 1998, disclosed under ERISA reporting rules
- Cover data: approximately $117.2 billion market value of non-affiliate common stock and 1,345,589,883 shares outstanding as of February 23, 1999
03—Questions
Frequently Asked Questions
Does this filing show Johnson & Johnson's revenue, net earnings, or balance sheet?
No. Parts I and II of the 10-K are incorporated by reference from the 1998 Annual Report to Shareowners, and the financial statements for the company itself are not included in this amendment. The document consists mainly of Form 11-K reports for three employee savings plans, which provide plan-level financial statements rather than corporate results.
Why does the savings plan hold so much Johnson & Johnson stock?
The ESOP feature, established in 1991, uses company-funded borrowing to buy J&J shares for employee accounts, and the company also directs its matching contributions into the J&J Stock Fund. Plan holdings of J&J common stock were valued at roughly $1.6 billion at year-end 1998, so plan participants' retirement assets are closely tied to the share price.
What does the ESOP loan mean for the company's future cash flows?
The company is obligated to make cash contributions that, together with ESOP dividends and earnings, cover the plan's scheduled principal and interest payments. Scheduled principal payments are about $7.0 million in 1999, rising to about $8.5 million by 2003, with $15.0 million due thereafter. The loan carries a 9% interest rate and ends in February 2005.
What was the 1998 investment performance of the savings plans?
The main savings plan recorded $131 million in realized gains and $352 million in unrealized appreciation during 1998, mostly from the J&J Stock Fund and Diversified Equity Fund. Total plan assets grew 26%, though part of the increase reflects new contributions and transfers from acquired company plans, including Clinical Diagnostics and UltraCision.
04—Continue