~ ' . = - . .o .. o
M. 2 41992
License Nos.. 29-00206-07, 29-02608-03, 29-02786-03, 29-02786-06, 29-16223-01, 29-17001-02, 29-27950-01, 29-28265-02, 37-09743 01
Dochet Nos.: 030 11969, 030-10814, 030-06990, 030-05284, 030-10611, 030-17839, 030-29745, 030-30751, 030-06212
Control Nos.: 113168, 113167, i13160, 113161, 113162, 113165, 113164, 113779, 113166
Johnson & Johnson ATrN: John N. Beidler Office of General "nunsel One Johnson & Johnson Plaza New Umnswick, New Jersey
Dear Mr. Beidler:
Subject: Financial Assurance for Decommissioning
This refers to your submittal regarding financial assurance for decommissioning dated August 13, 1990, and subsequent submittals dated March 28,1991, March 27,1992 and June 18,1992.
We have reviewed these submittals and have no funher questions at this time.
10 CFR 30.35(c)(2) requires that Ortho Phannaceutical Corpomtion (License No. 29-02608-03) include e decommissioning funding plan (DFP) in any application for license renewal. Since Onho has ided a request to renew this license a DFP is due at this time. As a result of a telephone conference between Tivn,:.as LaVake and Eric II. Reber of our staff on June 22,1992, we understand that Ortho is investigating the possibility of amending the license so that this requirement will not apply. You should assure that pmmp; action is taken on this matter.
9211120186 920724- REG 1 LIC30 MATLSLICENSING PDR
OFFICIAL RECORD COPY - S:\JOIINSON. APP - July 23,1992
ML 10 < : ' | o . . O
2 Johnsoa & Johnson ,
If you have funher questions, pleasc centact Eric II. Rcber of my staff at (215) 337-5276.
Your cooperation with us is appreciated.
Sincerely,
Originc! Rned Br John D. Kinneman John D. Kinneman, Chief SDMP Task Force Division of Radiation Safty anti Safeguards
': I : I ~n lb h neman
07/$92 07/f92
OFFICIAL RECORD COPY - S:\ JOHNSON. APP - July 23,1992
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CWC JOHNSON & JOHNSON PLAZA GCNCHAL COUNSEL NEW BRUNSWICK. N J. 08933-7002
March 27, 1991
United States Nuclear Regulatory' Commission Washington, D.C. 20555 Re: FRC Lic. No. 29-02786-03 )@C Lic. No. 29-02786-06 lifilICON , INC. U.S. Route 22 Somerville, New Jersey 08876
Dear Siro:
On behalf of the above-captioned subsidiary of Johnson & Johnson, I onclose herewith the financial assurance documentation required by 10 CFR Parts 30, 40, 70 & 72. This licensee has elected to provido-financial assurance through a parent corporation guaranteo and the mooting of the financial test. Specifically, I havo enclosed:
A. A lotter, dated March 27, 1991, by r srk !! . Johnson, Vice Presiden* and Chief tancial Officer, demonstrating o. compliance with the financial test.
B. A Special Auditor's Report by Coopers &_Lybrand. If there are any questions about these documents, I can be. reached at the above address or, by telephone,-at~201-524-2475.
Very truly yours g I ohn N. eidler ec: Mike Cascio .
//3Hoo OFFICIAL RECORD COPY ML 10 ' APR _0 t 191R
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ONE JOliNSON & JOllNSON PLAZA NEW BRUNSWICK. N.J. 08933
'
March 27, 1992 ,
United States Nuclear Regulatory Commission Washington, D.C. 20555 Re: NRC Financial Assurance Reouirements Dear Sirs: I am the Chief Financial Officer of JOllNSON & JOHNSON, a corporation of the State of New Jersey. This lotter is in support of this firm's use of the financial test to demonstrato '- financial assurance as specified in 10 CFR Parts 30, 40, 70 and 72. This firm guarantecs, through the parent campany guar- antoo submitted to demonstrato compliance under 10 CFR Parts 30e 40, 70 and 72, the decommissioning of the following facilitics owned or operated by subsidiaries of this firm. The current cost ostimates or cortified amounts for decommissioning,so guarantood, are shown for each facility:
NRC LICENSE NO. & LICENSEE DECOMMISSIONING AMOUNT
29-02786-03...... $ 75,000.00 29-02786-06...... $150,000.00
ETilICON, INC. U.S. Route 22 Somerville, New Jorrey 08876
29-28265-02...... $750,000.00
IMMUNOBIOLOGY RESEAkCH INSTITUTE P.O. Box 999 Route 22 East Annandalo, Now Jersey 08801
29-27950-01...... $150,000.00
JANSSEN PHARMACEUTICA INC. 40 Kingsbridge Road Piscataway, New Jersey 08854
__- _ - - - - . .--- .- - -. . . . - . - . - . - - - - - . - - . - - - . _ .
- ''- , _ o . . o ; _2_
29-17001-02...... $750,000.00
JOffNSON & JO!!NSON BABY
PRODUCTS COMPANY > Grandview Road ' Skillman, New Jersey 08876
7
29-00206-07...... $ 75,000.00 JO!!NSON & JOliNSON Research Center U.S. Route #1 ' North Brunswick, New Jersey 08902
12-09743-01...... $750,000.00
McNEIL Pl!ARMACEUTICAL Welsh and McKean Roads Spring llouse, Pa.19477-0776
29-16223-01...... $750,000.00
ORTilO DIAGNOSTIC SYSTEMS INC. U.S. Route 202 Raritan, New Jersey 08869-0602
29-02608-03...... ,.....$750,000.00
ORTHO P11ARMACEUTICAL CORPORATION P.O. Box 300 U.S. Route 202 Raritan, New Jersey 08869-0602
TOTAL...... $4,200,000.00
This firm is required to file a Form 10K with the Securities and Exchange Commission (SEC) for the latest fiscal ~ year. The fiscal yeariof this firm ends on the. Sunday closest ; to December 31, The figures for_the following items marked with ' an-asterisk are derived from tnis firm's independently audited year-end financial statements-and footnotes for the-latest com- pleted. fiscal year, onded December-29, 1991.
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ALTERNATIVE I $ In Milli 2DH 1. Sum of decommissioning cost estimates for all facilities listed above. $4,200.000 $ 4.200 ,
*2. Total liabilities (if any portion of the decommissioning cost estimates is included in total liabilities on the financial statement, deduct the amount of that portion from this line and add that amount to lines 3 and 4) S 4887 *3 Tangible not worth __. 4888
*4. Het worth 5626
' *5. Current assets 4933
*6. Current liabilities 2689 ,
7. Not working capital (line 5 minus 6) 2244
*8. The sum of not incomo plus depreciation, depletion, and amortization 1954
*9. Total assets in U.S. (required only if less than 90% of firm's assets are located in the U.S.) 5644
YLE HQ
10. Is line 3 at least $10 million? X
11. Is line 3 at least 6 times lino 1? X
12. Is line 7 at least 6 times line 1? X
*13. Are at least 90% of firm's assets located in the U.S.? If not,
complete line 14. , X
14. Is line 9 at least 6 times line 1? X
15. Is line 2 divided by line 6 less than 2.0? X l ) l l I
- _ _ . _ _, . _ . . - _._. . . _ _ . . - - . . .- . _ _ _ .
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X.T& Ll2
16. Is line 8 divided by line 2 greater
than 0.17 X ,
17. Is lino 5 divided by lino 6 greater than 1.5? X
I hereby certify that the content of this letter 4.s true and correct to the best of my knowledge.
~8 Clark!!.(Johnson Vice PresYdent, Finance
Dato: March 27, 1992
, T-
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INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of Johnson & Johnson:
We have audited, in accordance with generally accepted auditing standards, the consolidated balance sheets of Johnson & Johnson and subsidiaries as of December 29, 1991, anti December 30, 1990, and the related consolidated statements of earnings and consolidated statement of common stock, retained earnings and treasury stock, and cash flows for each of the three years in the period ended December 29, 1991, and have issued our report thereon dated January 29, 1992. At your request, we have compared the information presented on lines 2 through 9 and 13 of the Schedule of NRC Financial Assurance Requirements designated as Alternative I in the lette.r from Clark H. Johnson, dated March 27, 1992, with the amounts derived from the aforementioned financial statements. Because the above procedure does not constitute an audit in accordance with generally accepted auditing standards, we do not express an opinion on any of the items referred to above. In connection with the procedures referred to above, no matters-came to our attention that caused us to believe that such information should be adjusted. This report relates only to the information specified above and does not extend to the consolidated financial statements of Johnson & Johnson and subsidiaries taken as a whole. Our report is made solely for the purpose of complying with the United States Nuclear Regulatory Commission and is not to be used for any other purpose.
X4f d
New York, New York March 27, 1992
- . . _- --- - . - - , . - - . . . . - ., _ . ._ _ . . -_ _. . . _ - - - +t o . b . . b v I Consolidated Biltnce Sheet Hnwn &Mnwn and Subidiaries .-
.
At twemic 29.199t onnwende .w, 29mm::ars in wnnsume n 1991 1990
Assets
Current assets Cash and cash equivalents (Note 1) 5 589 826 Marketable securities, at cost, which approximates market value 203 105 Accounts receivable, trade, less allowances $136 (1990, 5124) 1,763 1,519 Inventories (Notes 1 and 3) 1,702 1,543 Deferred taxes onincome 238 232 Prepaid expenses and other receivables 438 439 Total current assets 4,933 4,(64
Mr.tketable securities, non-current, at cost, which approximates market value 276 255 Property, plant and equipment, net (Notes 1 and 4) 3,667 3,247 ' Intangible assets, net (Notes 1 and 5) 738 706 Deferred tases onincome 100 30 Other assets 799 6f4 Totalasseis $10,513 9,506
Liabilities and Stockholders' Equity Current liabilities Loans and notes payable (Note 6) 5 67v F76 Accounts payable 934 829 . Accrued habilities 918 851 Tases on incotry 158 67 Total current liabilities 2,689 2,623
Long-term debt (Note 6) 1,301 1,316 Certificates of estra compensation (Note 13) 79 75 Otherliabihties 818 592
Stockholders' equity " . referred stock-without par value (authorized and unissued 2,000,000 shares) - - Common stock-par value 51.00 per share (authorized 540,000,000 shares; issued 383,678,000 rad 383,677,000 shares) 384 384 Note receivable from employee stock ownership plan (Note 15) 000) (100) Cumulative currency translation adjustments (Note F) *J4 241 Retained earnings 6,6% .5,863 7,114 6,388 less common stock held in treasury, at cost (50,512,000 and 50,601,000 shares) 1,488 1,488 Total stockholders' equity 5,626 4,900
Totalliabilities and stockholders' equity $10,513 | . 9,506 |
See Notes to ComoMated Tinaal Statements
t
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g . . O q,I Ccnsolidat:d St:t: ment of Earn'Ifigs Mnw & Mwn an45ubshrics ,;
' ,
truiers m Ata:wns lurpt Ter S%re TogurnHNote 1) 1991 1990 1989 Sales to customers $12,447 | 11,232 | 9,757 | Cost of products sold 4,204 3,937 3,480 Selhng, marketing and administrative expenses 5,099 4,469 3,897 Research experse 980 834 719 Pennanent impairment of certain assets and operations
Utin America (Note 2) - 104 - Interestincome (89) (98) (87) Interest expense, net of portion capitalized: IJguidation of Argcntine debt (Note 2) - 36 - Otherinterest expense (Note 4) 129 165 141 Other expense (Note 8) 85 162 93 10,409 _ 9,609 8,243 Eamings before prosision for taxes on income 2,038 1,623 1,514 Provision for taxes on income (Note 7) 577 480_ 432 Net earnings 5 1,461 1,143 1,082 Net earnings per share (Note l) 5 4.39 | 3.43 | 3.25 |
Consolidated Statement cl Common Stock, Retained Earnings and Treasury S:ock
Retained Common Stock issued Earnings Treasury Stock (tW!ars in AtAms, 5 bra in hsandd (Notes i and 12) Shares Amount Amount Shares Amount Balance, January l,1989 383,670 | 53M | 54,625 | 50,601 | 51,484 |
- - Net earnings 1,082 - -
Cash disidends paid (per share: 51.12) - - (373) - - Employee compensation and stock option plans - - (74) (2,988) (150) Repurchase of common stock - - - 3,003 15. Balance, Decernber 31,1989 3S3,670 | 3S4| 5,260 | 50,616 1,,87
- - Net earnings 1,143 - - Cash dividends paid (per share: $1.31) - - (436) - - Employee compensation and stock option plans - - (1N) (3,235) (208) Repurchase of common stock - - - 3,220 209 Other - 7 - - -
Balance, December 30,1990 383,677 | 3M | 5,863| 50,601 | 1,488 |
- - Net eamings 1,461 - -
- Cash dividends paid (per share: $1.54) - - (513) - Employee compensation and stock option plans - - (115) (2,523) (222) Repurchase of common stock - - 2,434 222 - Other 1 - - -
Balance, December 29,1991 383,678 | $384| 56,6% | 50,512 | 51,488 | 5ee Notes to Consalutated Isna naa! Statements
41 _ _ _ . - _ - _ _ _ - _ _ _ _.______. ___ _ _ - . _ _ _ __
- . . n . . O 9- Consolidat:d Statement of Ccsh fliiws fewn 6 JAwn and $uNden
4
(LMia*s in Atilhons)(Note il 1991 19X) 198') Ccsh flows from operating acthities r Net earnings 51,461 1,143 1.082 Adjustments to reconcile net camings to cash flows from operating activities:
Depreciation and amortization of property and intangibles 493 4 74 Tax deferrals 414 (22) (46) (8) Changes in assets and liabihties, net of effects from acquisition of businesses: Increase in accounts receivable, trade, les.s allowances (244) Increaseininventories (127) (179) 0 65) (106) (82) Increase (decrease)in accounts payable and accrued liabilities 156 360 (42) Increase in other current and non-cunent assets 't3) (7) (103) Increase (decrease) in other cunent and non _, --. Supplemental casF :a data Cash paid during L.* year for: Interest, net of portk>rc apitalized 5 127 186 122 Income taxes - 629 509 418 Supplemental schedule of noncash investing and financing activities 1.iabilities assumed from the acquisition of businesses . 5 - - 12 Trearury stock issued for employee compensation and stock option plans, net of cash proceeds 182 148 103 See Notes to Comadatid ivunc al Statements 42 . _ _ . __ _ _ , ._ _ ,. _ _ _ _ ,. ,- -- . - .- , ' ' . . 7 n o $ Notes to Consolidated Financ'al Statements pnm &pnwn and Suisidiaries . 1 Summaryof Principles of Consolidation Significant The consolidated financial statements indude the accounts of Johnson & Johnson and subsid- Accounting Policies iaries. Intercompany accounts and transactions are eliminated. Cash Equ' Jents The Compan considers securities with maturitie of three months or less, when purchased, to be cash equivalents. Inventories While cost is determined principally by the first-in, first-out (FIFO) method, certain domestic inventories are valued using the last-in, first-out (LIFO) method. Inventories are valued at the lower of cost or market. Depreciation of Property Ir 1989, the Company adopted the straight-line method of depreciation for financial statement purpoxs for all additions to property, plant and equipment placed in service aftm January 1, . 1989. Depreciation of property, plant and equipment for assets placed in service prior to Janu- ' ary 1,1989 is generally determined using an accelerated method. Intugible Assets The excess of the cost over the fair value of net assets of purchased businesses is recorded as - goodwill and is amortized on a straigl t line basis over periods of 40 years or less. The cost of other acquired intangibles is amortized on a straight-line basis over their esti- mated usefullives. + "e Taxes A npany intends to continue to reinvest its undistributed intemational camings to expand its intemational operations; therefore, no t* . "t been provided to cover the repatria- tion of such undistributed eamings. At Decemtt . ^ ' 11, the cumulative amount of undistri- buted intemational eamings for which the Company nas not provided United States income taxes was approximately $2.0 billion. Net Earnings Per Share Net earnings per share are calculated using the average number of shares outstanding during : each year. Shares issuable under stock option and compensation plans would not materially reduce net eamings per share. Annual Closing Date The Company follows the concept of a fiscal year which ends on the Sunday nearest to the end of *he month of December. Normally each fiscal year consists of 52 weeks. but every five or six - years, the fiscal year consists of 53 weeks. For 1992, the Sunday closest 5 the end of Decem%. is January 3,1993. Johnson & Johru,on's 1992 fiscal year will end on that date and will consi t of F3 weeks, 1 O . . .- . -- - . - - . , s . s. 't * . .. 2 Latin America First quarter 1990 earnings were reduced by charges relating to Latin American operations Non Recurring amounting to 5140 million before applicable tax ben *s of $15 million. These charges include - Charges $104 million (589 million after taxes) for the perm w mpairment of certain assets and opera. tions in Latin America, pring.Ily Argentina, as . P ' lion for interest expense to liquidate - Argentine debt. - 3 Inventories At the end of 1991 and 1990, inventories compnsed: (Dona in Malice) 1991 1990 Raw materials and supplies 5 438 433 Goodsin pravss 349 312 Finished goods 915 -798 $1,702 1,543 i ' inventories valued on the LIFO basis were approximately 17% of total inventories at the end of both 1N and 1990. If allinventories were valued on the FIFO basis, totalinventories would have been 51,832 million and 51,694 million at December 29,1991 and December 30,1990, respectively. 4 Property, Plant and At the end of 1991 and 1990, property, plant and equipment at cost and accumulated Equipment depreciation comprised: (Dollarsin Afillrec) 1991 1990 land and land improvements 5 245 245 Buildings and building equipment 2,419 1,890 hiachiriety and equipment 2,762 2,474 Construction in progress 635 489 5.691 5,098 1.ess Secumulated depreciation 2,024 1,851 $3,667 3,247 The Company capitalizes interest expense as part of the cost of construction of facilities and - equipment. Interest expense capitalized in 1991,1990 and 1989 was 546, 541, and 541 million, respectively. 5 Intangible Assets At the end of 1901 and 1990, intangible assets, consisting primarily of patents and goodwill, comprised: (Donm in Minioc) 1991 1990' - Intangible assets $1,002 921 Less accumulated amortization 264 215 -5 738 706 44 . . - . .- - - . . - . _ - -. - - - - - _ . . - .. ., . ~ ~ - . . 0- s (r3 . j 6 Bormwings lhe Company has access to substantial sources of funds at numerous banks worldwide. Total r unused credit available u the Company approximates 52.1 billion, including a 5600 million credit commitment established with a group of worldwide banks and $300 million in other committed lines of credit, which expire on December 31,1992 and Septembbr 29,1992, respec- tively. Borrowings under the credit line agreements will bear interest based on either bids - provided by the banks or the prime rate, London Interbank Offered Rates (LIBOR) or Certifi- cate of Deposit rates, plus applicable margins. Commitment fees under the agreements are not i material. There were no borrowings under the agreements during 1991 and 1990. In 1990, the Company filed a shelf registration with the Securities and Exchange Commis- sion, and in combination with 52504nillion remainmg from a prior shelf registration, initiated 7 a Medium Term Note Program (hf!N) for the issuance of up to 5750 million of unsecured debt securities and warrants to purchase debt securities. During 1991 and 1990,5250 and $200 _ * million of hfTN's were issued, respectively. The proceeds of the $250 million of MTN's issued - in 1991 were used to refinance the $250 million of 9%% Notes due 1992, which were called at par during 1991. In addition, the Company issued $200 million of 8% Notes due1998 from the z' existing shelf registration for general corporate purposes.l.t December 29,1991, the Company ' had $100 million remaining on its shelf registration. _ , Short-term oorrowings amounted to 5679 million at the end of 1991. These borrowings arel . composed of 565 million of U.S. commercial paper, SL 11 ion of 7%% European Currency : Unit Notes due 1992 and 5480 million oflocal borrowings principally by international subsidi- aries. Included in the 5679 million is $221 million which represents the current portion of long- term debt. Long-term debt comprised: tDolkes in Mdiens) 1991 1990 * 8%% Notes due 1995 $ 250 250 8% Notes due 1998 200 - 3 .10% European Currency Unit Notes due 1993 " 135 137 7% Swiss Franc Notes due 1994'" 112 1118 7.18 to 8.38% Medium Term Notes due 1993-8 -350 100 12%% IWian Lire Notes due 1993'" - 87 88 - 249 9%% Notes due 1992 (net of unamoel ed discount) ' 7%% European Currency Unit Notes due 1992'" . '136 Industrial Revenue Bonds 87. -95 . '' ' Other, principallyinternational 80 { 143 | $1,301 1,316 3 '" These debt issues include Ihe effect offoreisn currenty mowments in Ihe principal amounts shown. Houw. these ' debt issues urre amverted topoating rate U.S. dollar liabilities at interest rates Mow commercial paper rates via interest rate and currency suups. Unrewgnized gains Gosses) on the currency swaps are classifed in the balance sheet as atherassets Giabilitlesh Interest rates on the Industrial Revenue Bonds and other long-term obligations vary from 5% to 16% according to local conditions. Aggregate maturities oflong-term debt obligations for each of the next five years commencingin1992 are: 4 tootkn in Millensf 1992~ 1993 19M 1995 :1996 ' $221 | 379| 217| 261 | ' 1N [ _ 45 ' - - - . - . - . . . . - ...... ; o i o. 'O , 0 v v 1. - . ~. 7 IncomeTases The provision for taxes on income consists of; (DofLees m Milhons) 1991 1990 1989 Cunently payable; U.S. taxes on domestic income $121 75 30 U.S. taxes on intemationalincome 15 30 51 Internationaltawes 440 403 -353 U.S. state and local taxes 23 18 10 599 526 444 Deferred: U.S. taxes (21) (28) 00) Intemational taxes - 0) 08) (2) t22) (46) (12) $577 480 432 Deferred taxes result from the effect of transactions which are recognized in different periods for financial and tax reporting purposes and relate pnmarily to employee costs, depreciation and other valuation allowances, A comparision ofincome tax expense at the federal statutory rate of 34% in 1991,1990 and 1989 to the Company's provision for taxes on income is as follows: (Dofhrs m Ati!hons) 1991 1990 1989 Eamings before taxes on income: U.S. $ 797 635 512 Intemational 1,241 988 1,002 Worldwide $2,038 1,623 1,514 i Statutory taxes 5 693- 552 515 Puerto Rico operations 058) 0 48) (147) Research tax credits 08) 04) (10) Domestic state andlocal 15 12 7 _ Intemational subsidiaries 32 79 61 All other 13 (1) .6 Prosision for taxes on _ncome $ 577 480 432 Effective tax rate 28.3% | 29.6% | 28.5% | Excluding the latin America non-recumng charge, the effective tax rate in 1990 would have been 28.1%. De Company has domestic subsidiaries operating in Puerto Rico under grants prosiding for tax relief expiring December 31,2002 and December 31,2003. The Company plans to adopt Statement of Financial Accounting Standard No.109, " Accounting for Income Taxes," in 1993. The standard will require the computation of deferred income taxes based on a liability approach rather than the deferred method previ- ously required. he adoption of this standard is not expected to have a material effect on the Company's financial position or its operating results. 46 ______- ______- _ _ - - _ _ _ _ _ - _ _ _ _ - ______-- _-_ _ _ _ _ - _ _ - - _ _ _ - _ _ _ _ _ - ______- _ _ _ - _ _ . . '. A A * ' . , ' V J l -r . 8 Foreign Currency For translation of its intemational currencies, the Company has determined that the local Translation currencies ofits intemational subsidiaries are the functional currencies except those in highly inflationary economiet which are defined as those which have had compound cumulative rates of inflation of 100-7c or more during the past three years. In consolidating international subsidiaries, balance sheet currency effects are recorded as a separate component of stockholders' equity. This equity account includes the results of trans- lating au balance sheet assets and liabilities at current exchange rates, except for those located in highly inflationary economies, principally Brazil, which are reflected in operating results. These translation adjustments do not exist in terms of functional cash flows; such adjustments are not reported as part of operating results since realization is remote unless the intemational businesses were sold or liquidated. An analysis of the changes during 1991 and 1990 in the separate component of stockholders' ^~~- equity for cumulative currency translation adjustments follows: (Dalkrs m Awns) 1991 1990 Beguuung of year $241 (9) Translation adjustments (107) 250 End of year $134 241 Net currency transaction and translation gains and losses included in other expense were after-tax losses of 562, 5124 and $141 million in 1991,1990 and 1989, respectively, incurred principally in Latin America. 9 International The following amounts are included in the consolidated financial statements for intemational Subsidiaries subsidiaries: (Dolkes in Afd!wns) 1991 1990 Current assets $2,849 2,754 Current habilities 1,593 1,407 Net property, plant and equipment 1,510 1,416 Parent company equity in net assets 2,%7 2,613 Excess of parent company equity over investments 2,537 2,209 intemational sales to customers were $6,199,55,805 and $4,676 million for 1991,1990 and 1989, respectively. . 10 Segments of Business See pages 56 and 57 for information on segments of business and geographic areas. and Geographic Areas I 47 - _. - -_ _ __ - ______-______-______- - - ___ _ - .. . . ' o . (9v . N - 4 . , . Il Rental Expense and Rentals of space, vehicles, manufacturing equipment and office and data processing equip- Lease Commitments ment under operating leases amounted to approximately $239 million in 1991, $222 million in 1990and $218 millionin 1989. The approximate minimum rental payments required under operating leases that have ini- tial or remaining noncancellable lease terms in excess of one year at December 29,1991 are: (Denars in Millums) IW2 IW3 IW4 1995 1996 After1W6 Total 597 | 82 | 61 | 43 | 38 | 58 | 379 | Commitments under capital leases are not significant. 12 Stock Option Plans The Company has stock option plans which provide for the granting of options to certain end Stock Compen- officers and employees to purchase shares ofits common stock within prescribed periods at sation Agreements prices equal to the fair market value on the date of gran' Share activity during 1991 and 1990 under the Company's stock option plans is summarized below: Wes in 1%wnds. Pnce ivr SMres 1991 1990 Held at begmnmg of year by 2,851 employees (1993-2,725) 15,083 16,229 Granted to 1,274 emplayees (1990-1,272) 1,906 2,277 16,989 18,506 Exercised (1989-2,552) (2,159) (2,934) Canmlled or expired (374) (489) Held at end of year by 2,810 employees (1990-2,851) 14,456 15,083 Shares exercisable, end of year (19846,808) 5,884 | 5,943 | Shares available for future grants, end of year (1989-6,393) 11,162 | 4,553 | Price range of options exercised (1989-52.01 to 547.35) 5 3.51to 2.51 to 5 57.88 45.19 Price range of options held, end of year 514.78 to 3.51 to 5 100.56 71.31 At year end, the Company was obligated to deliver, over a period of not more than two years, 379 thousand shares of common stock (1990-427)in performance of outstanding stock compensation agreements with 6,833 employees (1990-6,280). . 13 Certificates of Extra The Company has a deferred compensation program for senior management and other key Compensation personnel. The value of units awarded under the program is related to the asset value and historical earning power of the Company's common stock. Amounts eamed under the program are payable only after employment with the Company has ended. 14 Retirementand The Company has various retirement and pension plans, including defined benefit, dermed Pension Plans contribution and ternunation indemnity plans, which cover most employees worldwide. Total pension expense related to these phns amounted to 569 million in 1991, $65 million in 1990, and $56 million fn 1989. | ! . f . s ., . - () (~) u . 14 Retirement and Plan benefits are primarily based on the employee's compensation during the last three to Pension Plans five years before retirement and the number of years of senice. (continued) Domestic Pension Plans The Company's objective in funding its domestic plans is to accumulate funds sufficient to provide for all accrued benefits. Net pension expense for the domestic defined benefit plans for 1991,1990 r.n61989 included the following components: (a&n en Mdhens) 1991 1990 1999 Service cost-benefits earned during period 5 54 55 42 Interest cost on projected benefit obbgations 95 87 75 Investment (gain) loss on plan assets (358) 6 (221) Net amortization and deferral 242 (108) 138 Net periodic pension cost 5 33 40 34 The following table sets forth the actuarial present value of benefit obligations and funded status at December 31,1991 and 1990 for the Company's domestic plans: (ac, en MJhens) . 1991 1990 Plan assets at f air value, pimarily s! Accumulated benefit obligatic n 973 870 Effeet of projected future salary increases 274 259 Projected benefit obbgation 1,247 1,129 Overfunded 227| 37| Unrecognized prior service cost 76 79 Unrecognized net (gain) (330) (157) Unamortized net transition (assets) (41) (47) Voluntary supplemental benefits liability (6) (9) Net pension (liability)induded in the balance sheet 5 (124) (97) The domestic pension data includes unrecognized prior senice cost of 57 million in 1991 and $8 million in 1990 and a net pension liability of 57 million in 1991 and 58 million in 1990, related to unfunded supplemental pension benefits. Assumptions used to develop domestic net periodic pension expense and the actuarial present value of projected benefit obligations: 1991 1990 1989 Expected long. term rate of return on plan assets 9.50 % 9.50 % 9.50 % Weighted average discount rate 8.50 8.50 8.00 Ra te of increase in compensation levels 7.00 7.50 7.50 | 49 _ _ _ _ _ - - ______- _ _ - _ - _ _ - ______- n * . ( ) . (n) 6. ? e 14 Retirement and International Pension Plans Pension Plans International subsidiaries have plans under which funds are deposited with trustees, annui- (continued) ties are purchased under group contracts, or reserves are provided. Net pension expense for international defined benefit plans for 1991,1990 and 1989 included the following components: Wilan m Malumi 1991 1990 1989 Senice cost-benefits camed during period 5 46 41 33 Interest cost on projected benefit obhgations 52 45 33 Investment (gain) loss on plan assets 0 14) 28 (87) Net amortization and deferral 52 (89) 35 Net periodic pension cost 5 36 25 14 In certain countries, the funding of pension plans is not a common practice as funding provides no economic benefit. Consequently, the Company has pension plans which are underfunded. The following table sets forth the actuarial present value of benefit obligations and funded status at year-end 1991 and 1990 for the Company's international plans: December 31,1991 December 31,1990 Over- Under- Over. Under- Ouars in MJhonsi funded funded funded funded Plan assets at fair value, primarily stocks and bonds 5 671 27 580 25 _ Actuanal present value of benefit obligations Vested ber efits 325 128 283 110 Nonvested benefits 8 34 9 25 Accumulated benefit obligation 333 162 292 135 Effect of projected future salary increases 170 61 129 57 Projected benefit obligation 503 223 421 192 Funded status 168| (196)| 159| (167)| Unrecognized prior senice cost 22 4 14 2 Unrecognized net loss (gain) 32 (1) _ 56 (9) Additional minimum liabdity - (6) - (9) Unamortized net transition (assets) liabilities (131) 27 (146) 31 Net pension asset (liability)induded in the balance sheet 5 91 (172) 83 (152) The following table provides the range of assumptions, which are based on the economic emironment of each applicable country, used to develop international net periodic pension expense and the actuarial present value of projected benefit obligations for international plans: 1991 1990 1989 Expected long-term rate of return on plan assets 5-11.0 % 5-11.5 % 5-11.0 % Weighted average discoun. rate 5-11.0 5-12.0 5-12.0 Rate of increase in compensation levels 3.5-8.0 3.5-9.0 3.5-9.0 - 50 . . * a O , (D . , V v ? < 15 Savings Plan The Company has a voluntary 401(K) savings plan designed to enhance the existing retirement program of eligible domestic employees. In August 1990, the Company formed an employee stock ownership plan (ESOP) as part of the 401(k) savings plan. The Company match, which is based on employee contributions of up to 6% of base salary, was increased from 50 cents on the dollar to 75 cents on the dollar effective January 1,1991. The incremental match is paid in Corrpany stock, except that employees age 55 or older may choose alternative investments. The ESOP was established to satisfy this incremental portion of the Company's obligation. To establish the ESOP, the Company loaned $100 million to the ESOP Trust in exchange for a note. The note was recorded in 1990 as a reduction of stockholders' equity. The ESOP Trust used the proceeds from the note to purchase 1,5M,800 shares of the Company's stock on the open market. The Company funded its loan to the ESOP with U.S. commercial paper borrow- ings, which were subsequently paid down. Company contributions to the sasings plan were 534 million in 1991,520 million in 1990 and 518 milbon in 1989. 16 Other The Company also provides postretirement health care and life insurance benefits covering Postretirement substantially all domestic employees. Intemational employees receive similar benefits in many Benefits cases from the Company or from govemment sponsored arrangements, where customary. Postretirement health care costs, recognized as the claims are paid, and life insurance benefits, funded by Company contributions to a reserve insurance fund, totaled $15 million, $14 million and 512 million in 1991,1990 and 19S9, respectively, in December 1990, the Financial Accounting Standards Board issued Statement No.106, " Employers' Accounting for Postretirement Benefits Other Than Pensions," which requires companies to accrue postretirement benefits throughout employees' active senice periods until they attain full eligibility for those benefits. The new standard will change the Company's practice of accounting for non-pension postretiremer.: benefits from a pay-as-you-go (cash) basis to an accrual basis and requires implementation by 1993. In the year of adoption, the pest - - service liability may be reco'gnized either immediately as the cumulative effect of an accot.w ing change or on a delayed basis over 20 years. The Company plans to recognize the past service liability immediately upon adoptiep 1993. Based on the Company's preliminary assessment of the new standa.tl, there will br . one-time after tax charge in 1993 of approximately $500 million. The impaet on subsequent years' income will not be material. . 17 FinancialInstruments Off-Balance Sheet Risk The Company enters into contracts to hedge interest rate and currency risk. These contracts are used to minimize exposure and to reduce risk from exchange rate and interest rate fluctua- tions in the regular course of the Company's global business. Gains, unrealized non-perma- nent losses, premiums and discounts are deferred and included in the cost of related transactions. As of December 29,1991, the Company had approximately $1.9 billion of interest rate and currency contracts outstanding in various currencies, principally U.S. Dollars, Japanese Yen - and European currencies. These contracts generally mature within twelve months. ! , 51 _ . _ _ _ _ _ - _ _ _ - ______- - . . . .- - -. --- ~ - . . . . - ,. . " y , - O , . . - h- sa m ;9 - _3 . 17 FinandalInstruments in addition, interest rate and currency swap agreements which hedge third party' debt (continued) issues are described in Note 6. Interest exper ce under these agreements, and the respective debt instruments that they hedge, are recorded at the net effective interest rate of the hedged transactions. Unrecognized currency gains (losses) on currency swaps are not induded in the basis of the related debt transactions which such swaps hedge and are classified in the balance ~ sheet as otherassets(liabGities). The Company has e policy of only entering into interest rate and currency contracts with parties that have at least an "A" (or equivalent) credit rating. Cash flows from hedging instru- ! ments are dassified consistent with theitem being hedged. Concentration of Credit Risk The Company invests its excess cash in both deposits with major banks throughout the world and other high quality short-term liquid money market instruments (commercial paper, gov- ' ernment and government agency notes and bills, etc.). The Company has a policy of making investments only with institutions with at least an "A" (or equivalent) credit rating. The investments generally mature within six months and therefore are subject to little risk. The - Company has not incurred losses related to these investments. .. The Company sells a broad range of products in the health care field in most countries of - the world. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company's customer base. Ongoing credit evalua- tions of customers' financial condition are performed and, generally, no collateral is required. ,- The Company maintains reserves for potential credit losses and such losses, in the aggrega te,-- have not exceeded management's expectations. IS Acquisitions During 1991 and 1990, certain businesses were acquired for $125 million and $300 millien, . and Divestitures - respectively. Acquisitions accounted for under the purchase method of accounting totaled 585 million in 1991 and $55 million in 1990. The 1991 acquisitions indude the purchase of the i ' CLEAN & CLEAR skin care lines from Revlon and the buyout of Sara Lee, our former~ joint venture partner, in the 'o.b,' sanitary protection business in the Netherlands. In'additione Johnson & Johnson and Merck jointly purchased Woclm Pharma's OTC business in Germany. The 1990_ acquisitions induded the purchase of the U.S. OTC business ofICI Americas, Inc. - by the Johnson & Johnson Merck Consumer Pharmaceuticals Co. Joint venture. The OTC - business indudes the MYLANTA line of antacid prod ucts and the MYLICON iine of anti-gas products. The results of operations of the acquired businesses have been induded in the accompany . . - ing consolidated financial stateraents from their respective dates of acquisition. Had the results of these businesses been induded commencing with operations in 1989, the reported results would not have been materially affected. _ .~ In April 1991, the Company announced the completion of the sale of the Devro edible- sausage casing business. The after tax gain of the divestiture in the amount of $58 million is ' 4 - . offset by reinvestment in restructunng certain base businesses and increased reserves for : other corporate purposes. I 52.- . y n ,N-g e a,- -c -y , . - -9 y + - e--u- w- %- ' , * * _o O , O .a , v v e 19 Pending Legal The Company is involved in numerous product liability cases in the United States, many of Proceedings which concern adverse reactions to drugs and medical devices. The damages claimed are substantial, and while the Company is confident of the adequacy of the warnings which accompany such products, it is not feasible to predict the ultimate outcome oflitigation. How- ever, the Company believes that if any liability results from such cases for injuries occurnng on or before December 31,1985, it will be substantially covered by insurance. Due to the general unavailability of traditionalliability insurance, including product liability insurance, the Company is substantially uninsured for injuries occurnng on or afterJanuary 1, 1956. The Company has a self. insurance program which provides reserves for such injuries based on claims experience. The Company is also involved in a number of patent, trademark and other lawsuits indden- tal to its business. The Company believes that the above proceedings m the aggregate will not have a material adverse effect on its operations or financial position. 20 SelectedQuarterly Selected unaudited quarterly financial data for the years 1991 and 1990 is summarized below: Financial Data (Unaudited) *H''"" "U""8 Excert Per Sharc Frgsres) First Second Third Fourth Total Year 1991 Quarter Quarter Quaner Quarter Year Sales to customers Consumer segment $1,185 1,113 1,193 1,093 4,584- Pharmaceutical segment 9M 915 943 973 3,795 - Professional segment 1,000 1,003 983 1,082 4,068 Total sales 3,149 3,031 3,119 3,148 12,447 Cost of products sold 1,039 9S4 1,079 1,102 4,2N Selling, marketmg and administrative expenses 1,269 1,216 1,272 1,M2 5,099 Research expense 219 225 242 294 980 Interest income (19) (23) (21) (25) -(88) Interest expense, net of portion capitalized 37 36 31 25 129 Other (income) expense, net (5) 14 (5) 81 85 2.540 2,452 2,598 2,819 10,409 Eammgs before provision for taxes onincome 609 579 521 329 2,038 Provision for taxes on income 191 173 158 55 577 Net eamings 5 418 | 406| 363| 274 | 1,461 | - Net camings per shue 5125 | 1.22 | 1.09 | .83| 4.39 | 53 . . .. o ;. O ( q) . ~ _ v') .t w , 20 Selected Quarterly trutiers ,n Atdi,cn, Financial Data Exert Pr we ngurco First Second Third Fourth Total (Unaudited) Year 1990 Quarter Quarter (continued) Quarter Quarter Year Sales to customers Consurner r.egrnent $1,138 1,005 1,1 01 968 4,212 Pharrnaceutical segment 798 829 809 667 3,333 Professionals.egmer.t 873 960 925 959 3,717 Total sales 2,809 2,794 2,835 2.794 11,23.I Cost of products sold 905 989 992 1,051 3,937 Selling, marketing and administrative expenses 1,076 1,062 1,169 1,161 4,469 Research expense 188 189 201 156 Permanent impairment of 834 certain assen and operations in Latin America - 104 - - Interest income . 104 .'22) (19) (30) Interest expense, net of (l'i) (98) portion capitalized: Liquidationof Argentine debt 36 - - - 36 Otherinterest expense 52 40 40 33 165 Other expense 67 33 28 34 162 2,406 2,295 2,400 2,508 9,609 ' Eamings before provision for - taxes on income 403 499 435 256 1.623 Provision for taxes onincome 159 146 121 54 480 Net earnings 5 244 | 353| 314 | 232 | 1,143 | Net camings per share $ .73 | 1.06 | .94 | .70| 3.43 [ *Reclass4ed to conform with leurth quarter and tota! year 1990 presentation. Devro sales ha~s been deconschdatedfrcm the year's sain a nd consohdated sales for the first three quarters of1990 haw been restated an the amount of $94 milhon. bales and related Ivfort tax costs for 1990 were reclassified and included in other exgwnse. 51 - - ._ . - , - . n . O ,, .- -- H e Report of Management The management of Johnson & Johnson is responsible for the integrity and objectivity of the accompanying financial statements and related information. The statements have been prepared in conformity with generally accepted accounting principles, and include amounts that are based on our best judgements with due consideration given to materiality. The financial statements are consistent in all material respects with guidelines issued to date by the International Accounting Standards Committee. Management maintains a system of internal accounting controls monitored by a corporate staff of professionally trained intemal auditors who travel worldwide. 'Ihis system is designed to provide reasonable assurance, at reasonable cost, that assets are safeguarded and that transactions and events are recorded properly. While the Company is organized on the principles of decentralized management, appropnate control measures are also evidenced by well-defined organizational responsibilities, management selection, development and evaluation processes, communicative techniques, financial planning and reporting systems and formalized procedures. It has always been the policy and practice of the Company to conduct its affairs ethically and in a socially responsible manner. This responsibihty is characterized and reflected in the Company's Credo and Policy on Business Conduct which are distributed throughout the Company. Management maintains a systematic program to ensure compliance with these pdicies. Coopers & Lybrand, independent auditors, is engaged to audit our financial statements. Coopers & Lybrand obtains and maintains an understanding of our internal control structure and conducts such tests and other auditing procedures considered necessary in the circumstances to express the opinion in the report that follows. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with the independent auditors, management and interr.al auditors to review their work and confirm that they are properly dis- charging their responsibihties. In addition, the independent auditors, the General Counsel and the Vice President, Inter- nal Audit are free to meet with the Audit Committee without the presence of management to discuss results of their work and observations on the adequacy of intemal fmancial controls, the quality of financial reporting and other relevant matters. A L_ - CN Ralph S. Larsen Clark H. Johnsan Chairman, Board of Directors Vice President, Finance and Chief Executive Officer and Chief Fmancial Officer Independent Auditor's Report To the Stockholders and Board of Directors of Johnson & Johnson: We have audited the consolidated balance sheets of Johnson & Johnson and subsidiaries as of December 29,1991 and December 30,1990, and the related consolidated statements of earnings and consolidated statement of common stock, retained eamings and treasury stock, and cash flows for each of the three years in the period ended December 29,1991. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generauy accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes exanurung, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement prewntation. We believe that our audits proside a reasonable basis for our opinien. In our opinion, the financial staterwnts referred to above present fairly, in all meterial respects, the consolidated financial pasition of Johnson & Johnson and subsidiaries as of December 29,1991 and December 30,1990, and tne results ofits operations and its cash flows for each of the three years in the period ended December 29,1991, in conformity with generally accepted accounting principles. - - New York, New York - OFFICIAL RECORD COPY ML 10 55 * ' * , r. ~.' , , O lil)0114 0 1414 011 oN' C"NSo""so"NLON"W ^ o ricc or C ENE R AL COUNSL L NEW BRUN SWICK. N.J 00933 7002 March 28, 1991 United States Nuclear Regulatory Commission Washington, D.C. 20555 Re: HRC_.Lic2__NL _21.92786-02 NRC_Lica_NA 29_02786-05 ETilICON , INC. U.S. Route 22 Somerville, New Jersey 08876 Dear Sirs: On behalf of the above-captioned subsidiary of Johnson & Johnson, I enclose herewith the financial assur- ance documentation required by 10 CFR Parts 30, 40, 70 & 72. This licensee has elected to provide financial assur- ance through a parent corporation guarantee and the meet- ing of the financial test. Specifically, I have enclosed: A. A letter, dated March 28, 1991, by Clark II. Johnson, Vice President and Chief Financial Officer, demonstrating J&J compliance with the financial test. B. A Special Auditor's Report by Coopers & Lybrand. If there are any questions about these docu- ments, I can be reached at the above address or, by telephone, at 201-524-2475. Very truly yours ! 1 ;. ' p -~%_. ( % \ I John . Beidler cc: Mike Cascio \ / 0895s \\ % D OFFICIAL IGCORD COPY ML 10 p,pg 17 3gg3 p ,* :. . Of |, , g . foftmenfdtmen g . . ONE JOHNSON a uGHNSON PLAZA - GLNE.RAL COUNSEL Nt W BRUNSWrC A, N.J. 08933 7002 March 28, 1991 United States Nuclear Regulatory Commission Washington, D.C. 20555 Re: NRC_fina nciaLA s suIanca._Re q u.11ement s | Dear Sirs: I am the Chief Financial Officer of JOHNSON & JOHNSON, a corporation of the State of New Jersey. This letter is in support of this firm's use of the financial test to demonstrate financial assurance as specified in 10 CFR Parts 30, 40, 70 and 72. This firm guarantees, through the parent company guar- anteo submitted to demonstrate compliance under 10 CFR Parts , 30, 40, 70 and 72, the decommissioning of the following facili- i ties owned or operated by subsidiaries of this firm. The cur- rent cost estimates or certified amounts for decommissioning, so guaranteed, are shown for each facility: NRC_hlCENSX_NLLIdCENSEF. RF40MMISS10NIRG_AMOU31T 29-02786-01 $ 75,000.00 29-02786-04 $150,000.00 ETHICON, INC. U.S. Route 22 Somerville, New Jersey 08876 29-Ja2ML-R2 $750,000.00- IMMUNOBIOLOGY RESEARCH INSTITUTE P.O. Box 999 Route 22 East Annandale, New Jersey 08801 21-27950-Q1 $150,000.00 JANSSEN PHARMACEUTICA INC. 40 Kingsbridge Road Piscataway, New Jersey 08854 i I | ! , . .. . . ~ - . O . - O -2- 29-17001-02 $750,000.00 JOHNSON & JOHNSON BABY PRODUCTS COMPANY Grandview Road Skillman, New Jersey 08876 29-00206-Q2 $ 75,000.00 JOHNSON-& JOHNSON Research Center U.S. Route #1 North Brunswick, New Jersey 08902 37-09743-01 $750,000.00 McNEIL PHARMACEUTICAL Welsh and McKean Roads Spring House, Pa.19477-0776 29-16223-01 $750,000.00 ORTHO DIAGNOSTIC SYSTEMS INC. U.S. Route 202 Raritan, New Jersey 08869-0602 29-02508-01 $750,000.00- ORTHO PHARMACEUTICAL CORPORATION P.O. Box 300 U.S. Route 202 Raritan, New Jersey 08869-0602 TOTAL...... $4,200,000.00 This firm is required to file a Form 10K with the Securities and Exchange Commission (SEC) for the latest fiscal. year. The fiscal year of this firm ends on the Sunday closest to December 31. The figures for the following items marked with an asterisk are derived from this firm's independently-audited year-end financial statements and footnotes for the latest.com- pleted fiscal' year, ended December 30, 1990. ~ . _ . . _ '. . O , o; . -- 3-- ALTERNATIVE I $ In Millions 1. Sum of decommissioning cost estimates for all facilities listed above.- $4.200.000 $ 4.200 *2. Total liabilities (if any portion of the decommissioning cost estimates is included in total liabilities on the financial statement, deduct the amount of that portion from this line and add that amount to lines 3 and 4)_. $ 4606 - *3 Tangible net worth 4194 *4. Net worth 4900- *5. Current assets 4664 *6. Current liabilities 2623- 7. Net working capital (line 5 minus 6) 2041 *8. The sum of net income plus depreciation, depletion, and amortization 1617 *9. Total assets in U.S. (required only if less ~' than 90% of firm's assets are located in the U.S.) 5147 YES HQ: - 10. Is line 3 at least.$10 million? X 11. Is line 3 at least 6 times line 17 X 12. Is line 7 at least 6 times line l? X *13. Are at least 90*5 of firm's assets located in the U.S.? If not, complete line 14. X 14. Is line 9 at least 6 times - line l? X 15. Is line 2 divided by line 6 less than 2.07 X- _ .- - = ,_ ' - 'Oa :- . .... o . -4- YES RQ 16. Is line 8 divided by line 2 greater than 0.17 X 17. Is line 5 divided by line 6 greater than 1.07. X I hereby certify that the content of this letter is true and correct to the best of my knowledge. . A w =r- Clark H. idohnson Vice President, Finance Date: March 28, 1991 0849s __ _ . _ . ______. _ _ _ . _ _ c ...:... cJ- 9 , , (* * i putAIC BCU>untants Coo]ers- &Lyarand INDEPENDENT AUDITOR'S REPORT To the Board of Directors of Johnson & Johnson: We have audited, in accordance with generally accepted auditing standards, the consolidated balance sheets of Johnson & 1990, and DecemberJohnson31, and1989 subsicsiariesand the as related of December consol 30,idated statements of earnings an,d consolidated statement of common stock, retained earnings and treasury stock, and cash flows for each of the three years in the period ended December 30, 1990, and have issued our report thereon dated January 30, 1991. At your request, we have compared the information presented on lines 2'through 9 and 13 of the schedule of NRC Financial Assurance Requirements designated as Alternative I in the letter from Clark H. Johnson, dated March 28, 1991, with the amounts derived from the aforementioned financial statements. Because the above procedure does not constitute an audit in accordance with generally accepted auditing standards, we do not express an opinion on any of.the items -referred to above. In connection with the procedures referred to above, no matters came to our attention that caused us to believe that such information should be adjusted. This repoct relates only to the information specified above and does not extend to the consolidated financial statements of Johnson & Johnson'and subsidiaries taken as a whole. Our report is made solely for the purpose of complying with the United States ' Nuclear Regulatory Commission and is not to be used for any other purpose, W Y . New York, New York March 28, 1991 . - _ _ . . . UKB'LM . O o LIST OF INSTRUCTIONS J0llNSON & JOHNS 0tl RESEARCil CEllTER In reviewing the comments the reviewer will note that there will be some overlap between ICF and OGC comments. The following comments should be included in the basis for the deficiency letter: 1. ICF comments 1 through 7 plus. M paragraph. M 2. All 0GC comments. All other comments and discussions are for reviewer information. OFFICIAL RECORD COPY ML 10 .______-______-- _ ___-_ _ _ - . . . .. O . - O February 6, 1991 Note to: Louis Bykoski, NMSS/LLWM From: Mike Finkelstein, OGC/R&FC he: Review of ICF Comments in 5th Package dated 1/7/91 For each of the submittals listed below, the regional-reviewers must verify that the document is a signed copy of the original and duly notarized. 4 Unless otherwise stated, the ICF comments and recommendations are correct and should be implemented. - ! . Johnson & Johnson Research Center (parent quarantee) All ICF recommendations should be implemented because the analysis is correct Comments similar'to those of Olin Research Center, supru. 4 k additional comments submitted on this licensee's submittal. . Y 1 Olin Research Center (parent guarantee) i ' Evidence that Olin Ordinance Division is a subsidiary : of Olin Corp. must be submitted or the licensee's' submittal is not valid. According to Form 10-K the Red Lion, PA facility is a division of Olin, not a subsidiary. . Proof of the corporate - structure is necessary. 3' All ICF recommendations should be implemented analysis is correct, especially the substantiation ofbecause the bondthe Agreement.rating, submittal of certification or DFP and Standby Trust Fund- } ; 1 i ______. ______. _ _ _ . _ _ _ _ _ . _ .___ _ iJ r- - 1 < - . (~3 f,) ' 'N ' , 9300 lee lilgimay i fairfat. Virginia 220311207 70l'934 :1000 ICF INCORI'OR ATim * December 21, 1990 To: Dr. Lou Bykoski, NMe",':-' From: Rick Nevin, John Collier, and Craig Daan, ICF Incorporated Subject: Review of Parent Guarantee / Financial Test Submitted by Johnson & Johnson Research Center Johnson & Johasen in New Brunswick, New Jersey submitted a parent guarantee (with accompanying financial test) to provide financial assurance in the amount of $4,200,000. The submission assures decommissioning costs for licenses 29-02786-03 ($75,000), 29-02786 06 ($150,000), 29-28265-01 ($750,000), 29-27950-01 ($150,000), 29-17001-01 ($750,000), 29 00206-07 ($75,000), 37 09743-01 ($750,000), 29-16223 01 ($750,000), 29 02608 03 ($750,000).1 The submission did not specify under which parts of 10 CFR the licenses were issued. . Upon review of the entire submission, ICF recommends that NRC Region I require the licensee to modify the submission in the following ways: (1) Submit either a statement of certification or a decommissioning cost estimate; and (2) Demanstrate that a parent subsidiary relationship exists between the guarantor and the licensee, or submit a different method of financial assurance. If the licensee can demonstrate that it is eligible to use the parent guarantee, then it should also modify its submission in the following ways: (3) Submit a letter from the licensee's chief executive officer; (4) Revise Recital 7 of the parent guarantee to include evidence of authority; , (5) Submit a revised independent auditor's special report and an attached schedule; - (6) Submit evidence that the party signing the guarantee is authorized to represent the company; and (7) Submit a standby trust fund. 1 We assume that NRC Region I has verified these certification amounts, and that they are acceptable under the applicable regulations. . . - . v. . O . . 2 Each of these recommendations is discussed below. (1) Submit Either a Statement of Certification or a Decommissioning Cost Estimate lhe licensee's submission does not include either a decommissioning cost estimate cr a certification statement. Based upon amounts of assurance specified, it appears that a certification statement should have been included. ICF recommends that NRC require the licensee to submit a certification statement certifying compliance with the decommissioning rules, as required by NRC regulations (e.g., 10 CFR 30.35) and recommended in the draf t Regulatory Culde " Standard Formac and Content of Financial Assurance Mechanisms Required for Decommissioning Under 10 CFR Parts 30, 40, 70, and 72," January 1990, page 1-7. The statement of certification, in addition to providing information that would allow NRC to verify the certification amount (e.g., the names and locations of the facilities for which financial assurance is provided and the amount and types of materials handled), officially corrifies that the 1.icensee is in compliance with the appropriate requirements. (2) Demonstrate that a Parent-Subsidiary Relationship Exists Between the Cuarantor and the Licensew, or Submit a Different Method of Financial Assurance A parent-subsidiary relarionship must exist between a guarantor and a licensee in order for the parent guarantee to be a valid method of financial assurance under NRC regulations. NRC regulations (e.g. ,10 CFR 40.36(e)(2)) state that a parent company guarantee, like the surety and insurance methods of financial assurance, must " guarantee that decommissioning costs will be paid should the licensee default." This mechanism is allowed only when the parent company provides "an independent commitment beyond that of the licensee to expend funds" (53 Federal Register 24036, June 27, 1988). The cover letter written by the counsel of the parent company states that the licensee is a subsidiary. However, there is no direct evidence in the submission that a parent-subsidiary relationship exists. ICF recommends that NRC require the licensee to demonstrate that there is a parent-subsidiary relationship between the guarantor and the licensee. Appropriate evidence includes incorporation agreements (e.g. , copies of submissions to the appropriate State Corporation Commission) or a certified corporate resolution certifying that the licensee and guarantor are separate and distinct cdrporate entitles and that the parent controls a majority of the voting stock of the subsidiary. If a parent-subsidiary relationship cannot be demonstrated, a parent guarantee is not a valid financial assurance mechanism and the licensee must submit another type of financial assurance mechanism. If, however, the licensee is able to demonstrate a parent-subsidiary relationship, then ICF also recommends that NRC require the licensee to modify its submission as described below. . . . ' - - ; , O 0 " 3 (3) Submit a Letter from the Licensee's Chief Executive Officer * The submission does not contain a letter from the licensee's Chief Executive Officer (CEO) as required by Section 4.7.1 of NRC's draft Regulatory Guide, page 4-35. In this letter, the licensee must certify that it is a going concern, identify the amount of its tangible net worth, specify whether the firm is required to file a Form 10K with the U.S. Securities and Exchange Commission, and list the date on which the firm's fiscal year ends. ICF recommtnds that NRC require the licensee to submit a letter from its CEO attesti.ig co these facts. (4) Revise Recital 7 of the Parent Guarantee to Include Evidence of Authority Under the recommended wording of Recital 7 of the guarantee, a corporation must specify and document the source of its authority to make a guarantee, such as a unanimous resolution of its board of directors or a majority vote of its shareholders. The purpose of this requirement is to ensure that the guarantee has been authorized and therefore is valid and enforceable. Recital 7 of the guarantee submitted by the licenseu did not specify the source of its authority to issue the guarantee. Thus, ICF . recommends that NRC require the licensee to revise the guarantee and submit the corresponding documentation. (5) Submit a Revised Independent Auditor's Special Report and an Attached Schedule The submission includes an independent auditor's special report from the licensee, but the special report does not have an attached schedule reconciling the financial test numbers cor.tained in the chief financial officer's 1.tter with the amounts in the. financial statements of the parent compruy. The purpose of the schedule is to ensure that the financial data used to demonstrate the guarantor's abil'c) to pass the financial test accurately reflect the-financial results of tho guarantor ICF recommends that NRC require the submission of this schedule in the format specified-on e age 4-40 of the draft Regulatory Guide. In addition, the auditor's special report contains language-that does- not exactly correspond to that specified in the draft' Regulatory Guide. Some of these differences reflect the fact that the recommended language of the ' special report refers to the schedule attachment. Because an attachmedt was not used, no reference to it is made in the auditor's special report. ICF- recommends.that NRC require the licensee to resubmit the auditor's special report to reflect the use of the schedule. (6). Submit Evidence that the Party Signing the Guarantee is Authorized to Represent the Company- The licensee did not submit any evidence to demonstrate the authorization of the chief financial officer (CFO) to represent the licensee in the parent company guarantee. Evidence of authority to represent the guarantor is necessary, as recommended by the draft Regulatory Guide, to 1 _ _ _ _ _, ______ ' . <, . . . . o . o 4' 4 ensu*e the validity and enforceability of the mechanism. ICF recommends that NRC require the licensee to provide a copy of the corporate by-laws or another form of evidence authorizing the chief financial officer to sign the guarantee. (7) Submit a Standby Trust Fund If the licensee defaults on its decommissioning obligations, the guarantor, under Recital 7, must either (1) carry out required decommissioning activities or (2) make funds available in a trust fund to allow NRC to pay for these activities. If the guarantor chooses the second option, it must establish a trust fund b*cause funds paid directly to NRC must be deposited in the U.S. Treasury and ar. 3.ot available for decommissioning costs. .To avoid the possibility that a trust fund will not be readily available if and when needed, the draft Regulatory Guide states that a standby trust fund should be used with a parent company guarantee. Thus, ICF recommends that NRC request the licensee to submit a standby trust fund, acknowledgement, and other related documents as recommended in the draft Regulatory Guide on pages 4-18 through 4-27. . Other Issues The licensee made a few other modifications to the_ standard wording provided in the draft Regulatory Cufde, which do not decrease the protection provided by the mechanism. Apart from editorial and non-substantive changes, the following modifications are noteworthy: (1) The CFO's letter includes two typographical errors in the test criteria: (1) line 3 states " Tangible net w2Ih" instead of " Tangible net Enrrh," and (2) line-15 states "Is line 2 divided by- line i less than 2.0?" instead of "Is line: 2 divided by line 4 less than 2.0?" These-errors do not affect the outcome of the test at the present_ time, although ICF recommends that the financial test be revised to read correctly the next time _ the test is submitted. (2) The parent guarantee agreement submitted by the licensee generally follows the wording recommended by the draft Regulatory Culde, page 4-41 to 4 43, but differs _in the following ways: ~ i - Recital 4 does not state which financial test is being used. The CFO's letter, however,- includes Alternative 1 of the test. - Recital 8 of the guarantee does not indicate that the licensee must annually provide a reconciling sd edule along with the auditor's special report. - Recital 13 does not name "the beneficiary," NRC is clearly identified, however, by many other references'in the guarantee agreement. _- - - , _ _ , _ _ _ - _ __._ , _ > .. . _ _ . _ _ . _ _ . . _ . , ___ ' ~ - . o .. o , .. 5 , Finally, NRC should ensure that documents. submitted by the licensee are originally-signed duplicates, as recommended in'the' draft Regulatory Gulde. Upless the documents have been signed properly, NRC cannot be _certain thet_ the- financial assurance mechanism is enforceable. Because ICF does not possess the original submissions, we cannot verify compliance with these requirements.- attachments - i- 9 + k r * l. , , - . z .; o . t21?OA . ~ 6" _ zq .131G r - o i - APPEN0!X A 39 ' ZW I CHECKLIST FOR DECOWilSSIONING FINANCIAL ASSURANCE E9 - 17 oo $ -oi zct - co7_ c6 - u m ~ ~ ' NAME OF LICENSEE OR APPLICANT ba s.;n + bmm Rc4 m cw CcnwA N ^_ $2Og_,*03' MAILING ADDRESS U . 5, 2.oor n # 1 N dranss.oc N.3 os 9ot s.%:u r m ces e e 9 u umu a . A. Licensee Part (check one of the following): Nos p Rec. % w 4 x* P e6 CF2. Part 30 Licensee or Applicant Part 70 Licensee or Applicant Part 40 Licensee or Applicant Part 72 Licensee or-Applicant B. Check appropriate item in each category (if applicable) 1. 3/3/9 Date of Financial Assurance Submission /s, sue ca/cl 'i/zo /50 2. Public Entity X Private Entity 3. X Certification of Financial Assurance 0M / b N C d '* Decommissioning Funding Plan 4. (a) Prepayment Option (See Appendix B) Trust Fund Escrow Account Certificate of Deposit Government Fund Deposit of Government Securities. (b) I Surety / Insurance /Other Guarantee (See Appendix C) //, Zoo, obo Surety bond Letter c.'. Credit Line of Credit a y Parent Company Guarantee / Financial Test (c) External Sinking Fund, Sinking Account and Surety / - Insurance (See. Appendix D) , Trust Fund ' Escrow Account Certificate of Deposit Government Fund Deposit of Government Securities Surety Bond Letter of Credit Line of Credit (d) Statement of Intent (public entities only) *May not be used in combination with any other instrument. A-1 - _ _ _ _ _ . ______' -. t 1J 1 - dal 4Jm + hl e x O - - L 2 , ,.e , au ,j ' ' " APPENDIX C ~ 0# ~ U CHECKLISY FOR SUBMISSION OF SVRETY/ INSURANCE / PARENT COMPANY GUARANTEE A. Chec'- \ppropriate Form of Surety / Insurance / Guarantee . Surety Bond i Letter of Credit Line of Credit Parent C;mpany Guarantee / Financial Test * Insurance 1 CFO's/c//cr B. Check Documents Submitted for Su*ety/ Insurance / Guarantee - no op,z Rer 1. Surety Bond pec,pc 4 Surety Bond cg,,g f) Standby Trust Agreement Acknowledgement , F,itu c.,at *Tcsr ' ~ ' , Letter of Credit * -. E MN ggi_/1nancial- Test:X(tter from Chief Financial Officer of Parent Company Alternative @ or II) Auditor's Special Report and Attached Schedule duuMbf gorporateGuarantee - - py. I doe ~4 Standby Trust Agreement A Acknowledgement Ldituse cifftwolby ' , S. Insur e , 8Mrd 4f dirttJM r ificate.of Insurance Standby Trust Agreement - Pu. 4/ dog rio f Acknowledgement Yb A tc A f h e l a.( 4ea. ?s Len wJ May not be used in'combin4 tion with any other instrument. - hcuaf70ph 7' (ewo cNOfW Meded ih h % h O YA""/ 3pwd63 s k ep ,t k cn k< d a{ A m n 4 * ' . # ' N Akut : O - - % u.m %ca,- sm * /,MM * 2.1 00 204 0 7 EXHIBli 3-8 - CHECKLIST OF CRITERIA FOR REVII.W 0F PARENT CCMPANY GUARANTEES , /D e Copy of letter f rom the ch_te_f ex.tcuthe.41fican of the licensee, verifying that it if a going concern * with positive tangible net worth (submitted annually at same time as parent company financial test in Sections 4.7.3 and 4.7.4 of this guide). d * Copy of corporate by-l ws or other evidence indicating that parties- signing the financial instrument (for the applicant) are authorized to represent the organization in the transaction. /td> * Evidence that the financial instrument is an originally signed duplicate (e.g., an executed copy of the instrument). yo * Evidencethatthecorporateparenthasmajoritycontrolofthe applicant's voting stock, hitif [+thcclec/ S1 Nc4N f f *bj /taved, au tvMudA AfMN * Name and address of guarantor. i g* 'e eandaddressofthelicensee/5,) * Name and address of the regulatory agency. ; p3 * Recitation of the guarantor's authority'to provide the guarantee, such as ownership of the licensee. h ecl W b h . ' e g3 * ldentification of the facilities for which the guarantee provides- financial assurance and amounts guaranteed for decommissioning activities. "A " going concern" is a firm that is expected to continue operating at least long enough for current expectations and plans to be carr.ied out and for the reasonably foreseeable futyre period after that. . 3-30 . . _ - _. . . - - . - - - - - . . - - _ _ _ . _ - _ _ . _ . - . . . - -_ * - ' - - - , O }%sr% <24c;a., av 4%W 29 c02cp,g7 EXHIBli 3 8 (Continued) G ,4 Description of the primary obligation (decommissioning requirements). 2.c ci4c d b , kuu >w4 c. Cp2 Dw4s cJt[ A 4 d oel + Unequivocal statement of guarantee. [ech/ 7 /adg /4.p, y e g n /g u k 4 SwJ4 baeck y,nw~l a. Recitation of the consideration for the guarantee. b. Liability of the guaaantor, a. Limitation of liability b. Condition (s) of liability c. Effect on liability of a change in the status of the licensee . Statement that guarantor remains bound despite amendment or U ,*~ modificati n of license or decommissioning funding plan, reduction ' or extension of time of performance of required activities, or any other modification or alteration of an obligation of licensee. g ,*' Notice requirements. / Discharge of the guarantor. * Termination and revocation. /2e//cd 9 gg4/g u/yr-4 /4'cu< x4 1. Termination on occurrence of contingency 2. Voluntary revocation by guarantor , , 3. Effective date of termination or revocation * 'r 7 j f4 4' Date. Signatures. * 3fs / , . 3-31 . . . _ _ _ .. - ...... O - - O Notes on ICF, Inc.'s letter dated December 21,1990 regarding parent company garantee from Johnson and Johnson. ICF Comment #1) There i., not need foi a cert. of fin ass. In J&J's letter dated hiarth 27, 1992 they list facilities and amounts, therefore a cert. is not required. ICF Comment #2) htarch 27,1992 letter from J&J states that all firm's are subsidiaries of J&J. No evidence exists to the contrary. Also, there is little to be gained by investigating this. ICF Comment #') The letter mentioned in this point is not important enough to bother the licensee about. The garantee is from J&J not the licensee. ICF Comment #4) The parent company garantee is signed by the Chief Financial Officer of J&J - and notarized. It is common practice for the CFO to be able to commit a corporation. ICF Comment #5) The schedule which ICF requests is not necessary for the auditor's statement to be valid since they con!!nn in their statement the figures provided in the CFO's letter. ICF Comment #6) The parent company garantee is signed by the Chief Financial Officer of J&J and notarized, it is common practice for the CFO to be able to commit a corporation. ICP Comment #7) J&J agrees to set up a trust fund to decommission the listed faciliths or decommission the facilities. It is not necessary at this time for them to provide a Standby Tntst Fund. , -- - - _ _ _ _ - _ _ _ _ - _ - _ _ _ . _ _ - - _ _ _ _ - _ - ______n ' . O . - O [t UNITED STATES /k<>...... % |, I j NUCLEAR REGULATORY COMMISSION o ! REGION I 478 ALLENDALE ROAD k *****/ KING OF PRUSBlA, PENNSYLVANIA 19406 , NOV 3 0190 MEMORAND|lli FOR: Louis M. Bykoski, NRC Project Officer Low Level Waste Management, Low Level Regulatory Branch FROMi John D. Kinneman, Chief Nuclear Materials Safety Section B Division of Radiation Safety and Safeguards SUBJECT: NONSTANDARD FINANCIAL ASSURANCE SU%'ITTALS RELATED TO THE DECOMMISS*0NING RULE Jchn Austin's August 6, 1990 memorandum set forth a procedure for submitting nonstandard financial assurance submittals to you for review by the NRC contractor. We have also included parent company guarantee's and .deconuissioning funding plans. Licensee License No. Control No. Johnson and Johnson Baby 29-17001-02 113165 Products Company Ortho Pharmaceutical 29-02609-03 113167 Corporation Ethicon, Incorporated 29-02786 ' 113160 Ethicon, Incorporated 29-02786-v6 113161 Janssen Pharmaceutical, 29-27950-01 113164 Incorporated ' Princeton University 29-05185-24 113478 Afftrex, Limited 37-28329-01 113390 Alaron Corporation 37-20826-01 112969 Displays, Incorporated 37-19629-04 113417 California University 37-10470-03 113466 of Pennsylvania | Xenobiotic Labs, 29-28053-01- 112968 ! Incorporated i E. 1. duPont de Nemours 20-00320-21 113360 , and Company, Incorporated | Georgetown University 08-01709-04 113213 | Medical Center y Richardson-Vicks, 06-20511-01 113603 | Incorporated i , 0FFICIAL RECORD COPY ML 10 _ _ _ - _ _ _ - _ _ . ' - .. . o O Louis M. Bykoski 2 If any of you or the contractors believe any of these cases should more properly be reviewed by the Region, please return them. Some of these cases have obvious, mir.or deficiencies which we have not attempted to resolve so that we could provide the cases to you promptly. . iSuwu,A(64 / John D. Kinneman, Chief fluclear Materials Safety Section B Division of Radiation Saf ety and Safeguards cc: J. Glenn, f4 MSS R. Bellamy, R1 S. Villar, RI . _ _ - _ _ . - . - - - . . . . . O o , ET H I C O N.~ e | d Q 1%%l011 I O tiltOH Company f P o. 00X 151 SoMERVILLE e NEW JER5rY e (W2700151 August 13, 1990 Mr. John D. Kinneman USNRC - Region I 475 Allendale Road King of Prussia, PA 19406 Reference License #st 29-02786-03 and 29-02786-06 Dear Mr. Kinneman, As per our 8/7/90 phone conversation, enclosed are the required fees and amendments regarding " financial assurance for decommissioning" of our cobalt irradiator and radioisotope research licenses. Also, enclosed is a copy of the financial assurance documents prepared by the JLJ Office of General Counsel that was sent to the USNRC, Washington, D.C. office. Please contact me at 201-218-2674 ff you have any questions regarding these documents. Sincerely, ,d ,/ ghi,ygg7=" Mike Cascio RSO , Enclosures . 3/233 1];cate [en Infonnatiott '' ~ nn of: plash vs n3%D ometa REcm coPfR18. Aue ij 1990 s,,,,.. ,, ,, . J e - . . . O . O V B NUCL E AR pt GUL ATDa y (OMMiss#Oes N rfp*M 313 ANRD t&G giga n,Vf3g D Dv OMB n-a50 CPM 30. 34. 33 3a APPUCATION FOR MATERIAL LICENSE I.e e. s auf IN51HUCTIONI. $(i TH[ APPROPRL AT E UCI N$L AfMIC A* ION GVIDE F OR plt Att ED INSTML'CTIONS iDR COMPL(TING APPLICA180N SEND TWO CDPtES OF THE ENTIM COMPLETED APPUCATION TO THk N'iC OF FICE SPECIFitD BE LOW FEDt h AL AGE NCitS Pf tt APPLICAisONS WITH ff v00 AR$ LOCATED IN tLLtNots IN0iANA. BOW A MICMiCAN MiNNESOT A Mi&SOURI, OHIO OR U $ NuCLI An PE QULATOm v COMM$uoN D'vlSION 08 8vt L C TC(t AND M AYksil AL 1AiiTY NMES WISCDN684 $(ND APPLICAT#ONE TO W ASN8NGTON. DC 2%f,9 U S NUCLlam a t OULATORY COMMIS$@N. PE GION 611 Ati OTME m PtmSONS FILE APPLICAT40NS A5 f OLLOWS.17 YOU Amt M ATI N' ALS L8 CENSING $3CTiON 799 MOO &E vt LT ROAD L OCA T E D IN: GL EN LLLYN, IL GCl31 CONNf CTICUI. Df LAW Ant . Da5TelCT OF COtUM#iA MAINf M AN vtA ldD. M&li&&CHULI TT5 NI W HAMP&Himi. Nf W Jt R$f Y. Nf W VQRE. Pt NNE TLV ANIA. ARK Ak1AS COLOR ADO. lDAMO K AN6AS LOUll'ANA. MONT ANA. Nismasita flHUD( ISLAND OR Vt RMQqt, g,END APPLICATIONS TO NEW ME n dCO. NOR TM DAROTA Oa LA NOMA,40VTH DAR f)T A T R EA$. UT AN, DA WYDM4NG. SEND APPLICATIONS 70 U $ NUCL t am RtGUL ATORY COMMIS$1DN Rf Of0N I 8dUu f AFI M AflDi AL &E CTION g Li t NUCLt em pt 3ULATO#f COMMiltlON RE GtON IV 63t P AftK AVf 4ug M A f f hi&L A ACiA YlON PaOf f CTION 84CT10h et t A V AN PLAZ A cimeyt 8VlYt itKio EINO Os tav55d A. P A 19406 A R L IN GT ON. T R 76091 ALABAMA F LORIDA, Groncia s tNTuca y, MIESM$1Pel. NOMIN CAROLIN A. AL ASK A AN12DNA. CAllPOANI A MAwall. 8ef V ADA. Daf GON WAsHfNGTON PUP NID AICO. SOUTH C A AOLIN A i t ilfNe ssf 8. Vf RGJNIA. VimistN ISL ANDS, O A AND U t Tt ANITORifl AND POSSESSIONS IN THE pacific 88 ND APPLICATION $ WESI Yl#GINia, $LND APPLtCATIONE TO 10 U S NUCLI AR RE GUL ATOR Y COMMilllON R$ GION il U S NUCLE AR #f GutATOmv COMur$$10N ago DN y MA Timl AL M ADi A T8DN PROF f UtDN stCTION 101 MARetTT A STPI ET, $UIT E 7960 MAf tRf AL A&DI Af tDN PHOTECTION stCTION f 460 M A Ata L ANf Sutif 210 ATLANT A. GA 30323 W ALNUT CattK. CA 94biPG Pf R50NS LOCATTD sN Aomt tMtNT ST Af ts $f NO APPLIC ATIONS TO T at U S NUCLE AR me0UL ATOR Y COMMISSION ONLY 17 TMtv WISH TO POS$EE8 AND U$$ LICENE4D MAf t RI AL IN ST ATES SunJECT TO U S NUCLt Am RE GULATOn v COMMisOON JUfu1 DICTION 1 THIS 68 AN APP (ICATION POP ([hs g6 P'e#Preff ifev/ CO'NN ADD 0f 51 q8 APPLIC ANT fience 4 Cepet - 2. NAMEETi AOdafd, INC. A NPW LICLNSE 29-02786-03 P.O. Box 151 ] . AMtNDMtNitOLittut w ,,,,, Route 22 C MINT *AL08 LICE NSE NJMBE R - Somerville, NJ 08876 3 ADDMitSitsi WNt at LICEN5E D MAT E RI AL WIL L 49 V5f D OR PC5 t hat D . V 4 NAME QP *t8k50N TO 8t CQNT ALTLD aSOUT TMS A p 6 yid *e T E L EPHONE NUMS Lfi Mike Cascio, RSO M/M[W #fd 201-218-2674 $UBMIT ITEMS S THROUGH 11 DN 84 s ti" P APIR efh[WPNbOPt OP tNFORM AYtON 70 et PmOVICE D 18 Ct$08tOIO IN TMt LICEN58 APMICATION 0V104 6 R ADiOACity t MAT (Rf AL e f emene and roats %mlie<.t eemnat snetsw p%e.cai * rm sed t eie g imum smount $ PVAPO$t(5) POR WHICM LICEN5tQ MATE mi AL WILL ei USED. =%#i will toe omened av saw one time f IND;VfDU ALill pf 5Pov54BLE FOR R AQi ATION Sas FTv P8kOG A AM AND Tutte TR AINING ANC + 1 Pg ailt NC E 3 TR A NING FOR INDIVIDUALS WORKING iN OR FREQUENDNG Pt$TRICTED arf AS. $ P ACILITIEI ANQ tOUIPME NT. 10. M ADi ATION $APITY PROGR AM s2 LtCtNLa t e tti g5ee IJ C9M 00 eon bervee lN Jfl tt WA$TEMANAGEMtNT p gg CAf t 3Onv 3C |AMOUNTLO5wtN s 37 0 . 0 0 13 Cimiar iC A TION sAeget pe compeen #v *ophreart TN4 APPLICANT UNDE #51 ANOS f naT ALL 31 ATEMtNT3 AND mt PRestN T ATiONS Mact IN THIS APPLICATION Amt SINDING UPON T**E APettC TNT THE APPLIC ANT AND ANY Of flCIAL EXECUTING TMil CERTiveCATiON ON REH ALP OF Tat APPLICPT. N AMt0 IN ITtM 2. CinTip Y TM AY THIS APPLICATION IS &+e aNtrviraT eNPORM ATION CONTAsNEO NERteN, Ppf P AP E D IN CONFORMITv WITH f tTLt to. CODC OF PtLE R AL Af GUL ATiONS.P AR Ts asp 3 $$ 39- 43 TRV$ AND CORRICT TO TMS BEST Op 1 Main KNOWLEDGE AND stLetr - ;g. - d) W A RNING IS U S C $ECTION 1001 ACT 07 JUNE 71.1948 67ST AT TA9 MAKE S IT , eas t; Acoff N33 TO Magg A w LL ULLy s AL53 STATEMENT QR REPRESENTATION TO AN Y DEPA A TMENT OR AG61CY OF THE UNITE C ST Afil AS TO ANY M ATT E R WPfTHiN IT5 JURt10iCTION $4N ATURt -CE MT ip viNG OP Pic t R T YPEDsPMINTED NA TITLS DATt R.E. P ions REB AUG O 'T E Baksa ,%et h a gh! gaqw (feV V / a nyh *'ifM e NUM8f R 06 EMPLOV til steres se a e WOULO g o_gst WiLLiNG TO PUANa&M CDST INFORMATION (J' ewer ender smorf Asutw enere ecdesv ene eraf outse e apairect rb/ ON Tat I'CONOMIC IMPACT OF CUNRtNT NHC Mf GULATIONS OR ANY PUTunt < 5M $1M*3 EM PROPOSED NmC REQULATION$ THA T MAY AP PECT YOUP INAC repuderens eemwf g3p ggg gagu.7y et to prefec t sedve***'(**** wit er Pmsac*es-entspres+ywaformeeren 4mesAed me ePe spenty w reddearel , g! pun .150li' $1M-10M s. NUMG t 8:CPStD1 STS01(-1M > 510M M5 @ FOR NRC U$E ONLY ' TYPE OP # EE pet LOG P ER CAltGOA V COMMENTS i .. ,I APP A vtDev N LwL k Iv- k 1. L T . g ( Q d _ | [^ | ''s ^ > Omk 0% W & - : : | t / a ) IC9N _ T.t _ to - _ .1, , u 301 ArOURED - o < poo gay g & n ma m4y - l AC .n ST.T.MENTONTMt EoRS. . U3166 . < ..g r - . . . O, . , O 6C 1111011 C 1414C11 l l . , cor sonNeon a x*,NSON PL AZ A OLNtHAL C?uN*iLL N LW T4fwNE WiC K, tL J, 06 933 7o02 July 27, 1990 United States Nuclear Regulatory Commission Washington, D C. 20555 Re: URC.1dL_U0,_?3:QL736-01 NBCJdL._Rou21-0220f203 ETHICON, INC. U.S. Route 22 Somerville, New Jersey 08876 Dear Sirn: On behalf of the nuove-captioned subsidiary of Johnson L Johnson, I enclose herewith the financial assur- ance documentation required by 10:CFR Parts 30, 40, 70 & 72. This licensee has elected to provide financial assur- ance through a parent corporation guarantee and the meet- ing of the financial test. Specifically, I have enclosed: A. A Guarantee of Johnson & Johnson, dated July 20, 1990, executed by Clark H. Johnson, its Vice President and Chief Financial Officer; B. A letter, dated July 20, 1990, by Clark H. Johnson, ..Vice President _and_ Chief Financial Officer, demonstrating JhJ compliance with the financial test. C. A Special Auditor's Report by Coopers & I,ybr a nd . If there are any questions about these docu - ments, I_can be reached at the above address or, by telephone, at 201-524-2475. * Very truly-yours John N. Beidler i ec: Mike-Cascio 0895s _ ._ _ - - - . - - . - . - ...... - _ - . _ - . _ - ______, . _.2. _ - . e - . . . . . O , . O fCft11)0114hoft111011I . g, out so-seen a so ,ot on et Ar A othCPAL COUNELL f* CW bh LH.E WIC K,4 J 06933 7 C'0 2 July 20, 1990 United States Nuclear Regulatory Commission Washington, D.C. 20555 Re: HRC_EinaD_c1B1 Assyranc_e ReauireJacata Dear Sirs: I am the Chief Financial Officer of JOHNSON & JOH!iSON, a corporation of the State of New Jersey. This letter is in support of this firm's use of the financial test to demonstrate ' financial assurance as specified in 10 CFR Parts 30, 40, 70 and 72. ; This firm guarantees, through the parent company guar- antee submitted to demonstrate compliance under 10 CFR Parts 30, 40, 70 and 72, the decommissioning of the following facilities owned or operated by subsidiaries of this firm. The current cost estimates or certified amounts for decommissioning, so guaranteed, are shown for each facility: , ' HRC_IdCEHSE NO. &_hlCERSf2 DECOMMISSIO!QNG AMOUNI 21.02786-03 $ 75,000.00 29 -0273ft-QJi $150,000.90 ETHICON, INC. U.S. Route 22 Somerville, New Jersey 08876 29-28255-01 $750,000.00 IMMUNOBIOLOGY RESEARCH INSTITUTE ; P.O. Box 999 | Route 22 East Annandale, New Jersey 08801 T f- | 29-27950-01 $150,000.00 JANSSEN PHARMACEUTICA INC. | 40 Kingsbridge Road Piscataway, New Jersey 08854 .-- i . . . O , , _ , . _ o . 23-12001-02 $750,000.00 JOliNSO!1 & JOliNSON BABY PRODUCTS COMPANY Grandview Road Skillman, New Jersey 08876 21:0A206-07 $ 75,000.00 JOllNSON & JOllNSON Research Center U.S. Route #1 North Brunswick, New Jersey 08902 17-022A32.01 $750,000.00 McNEIL Pl!ARMACEUTICAL Welsh and McKean Roads Spring flouse, Pa.19477-0776 ! i 23-llt2211.0.1 $750,000.00 ORTilO DIAGNOSTIC SYSTEMS INC. U.S. Route 202 Raritan, New Jersey 08869-0602 29-026082.01 $750,000.00 ORTliO Pl!ARMACEUTICAL CORPORATION P.O. Box 300 U.S. Route 202 Raritan, New Jersey 08869-0602 TOTAL...... $4,200,000.00 This firm is required to file a Form 10K with the 3 Securities and Exchange Commission (SEC) for.the latest fiscal : year. The fiscal year of this firm ends on the Sunday closest to December 31. -The figures for the following items marked-with- , , 'an asterisk-are derived from this firm's independently audited:- year-end financial statementsuand footnotes for the' latest com- pleted fiscal-year, ended December 31, 1989. t 't , - , - . . _. ._ ._ ._ _ , , _ _ , - _ . . _ , _ . . _ . _ . . _ _ . . _ _ _ _ , c ^ . . . O . . - 3,- o ALTERNATIVE I $_In_llLLli.QDE 1. Sum of decommissioning cost estimates for all facilities listed above. $4.200.000- $ 4.200 *2. Total liabilities (if any portion of the decommissioning cost estimates is included in total liabilities on the financial statement, deduct the amount of that portion from this line and add that amount to lines 3 and 4) $ 3771 *3 Tangible not work __3.4.44 ; *4. Net worth 41J 8 ~ *5. Current assets 3776 *6. Current liabilities 1927 : 7. Net working capital (line 5 minus 6) 1849 *8. The sum of net incomo plus depreciation, depletion, and amortization 1496 ' *9. Tctal assets in U.S. (required only~if less i than 90% of firm's assets are located in the U.S.) 4213 , XE2 -11Q 10. Is line 3 at least $10 million? X : 11. Is line 3 at least 6 times line 17 X 12. Is line 7 at least 6 times line 17 X *13. Are at least 90% of firm's assets i located in the U.S.? If not, complete line 14. X ] 14 . - Is line- 9 at least-6 times line l? X 15 . - Is line 2 divided by line 6 less than 2.0? X i 4 -i - . ~- L :, a .. . _ . - _ _ . , __ . - - . * ' :'- , . 4 .- YES NO 16. Is line 8 divided by line 2 greater than 0.17 % ._ _ 17. Is line 5 divided by line 6 greater than 1.57___, X I hereby certify that the content of this letter is true and correct to the best of my knowledge, v .. - __{ __ C l a r k 11. Johnson Vice President, Finance Date: July 20, 1990 0849s r ...... , O . . . . O PARENT _COMPANLGUARANTLE GUARANTEE made this July 20, 1990 by JOHNSON & JOHNSON, a corporation organized under the laws of the State of New Jersey, herein referred to as " guarantor", to the U. S. Nuclear Regula- tory Commission (NRC), obligee, on behalf of its below-listed subsidiaries: HRC_LEEllSE_110a__&_l4KERSIE DECDMMISS10lllRG_AMOUllI 29=022Bh=01 % 15,000.00 29-022Eir.Q6 $150,000.00 ETHICON, INC. U.S. Route 22 Somerville, New Jersey 08876 21:28265-0). $750,000.00 IMMUNODIOLOGY RESEARCH INSTITUTE P.O. Box 999 Route 22 East Annandale, New Jersey 08801 23=2.22ML-01 $150,000.00 JANSSEN PHARMACEUTICA INC. 40 Kingsbridge Road Piscataway, New Jersey 08854 29-17001-02 $750,000.00 JOHNSON & JOHNSON BABY PRODUCTS COMPANY Grandview Road Skillman, New Jersey 08876 29-00206-01 $ 75,000.00 JOHNSON & JOHNSON Research Center U.S. Route #1 North Brunswick, New Jersey 08902 12-09743-01 $750,000.00 McNEIL PHARMACEUTICAL Welsh and McKean Roads Spring House, Pa,19477-0776 2.92LE223:01 $750,000.00 ORTHO DIAGNOSTIC SYSTEMS INC. U.S. Route 202 Raritan, New Jersey 08869-0602 , . ,r--+a w - - -c y -e -+ ~, . _ . _ - - . . ._-- - . . . . - . - - . - -- , - . . . , ; O . . o -2- 29-R2f18-Q3 4750,000.00 ORTHO PHARMACEUTICAL CORPORATION P.O. Box 300 U.S. Route 202 Raritan, New Jersey 08869-0602 TOTAL...... $4,200,000.00 RECLTALS 1. The guarantor has full authority and capacity to enter into , this guarantee under its bylaws, articles of incorporation and the laws of the State of New Jersey, its state of incorporation, t 2. This guarantee is being issued to comply with regulations issued by the NRC, an agency of the U. S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorgan- ization Act of 1974. NRC has promulgated regulations in Title 10, Chapter I of the Code of Federal Regulations, Parts 30, 40, 70 and 72 which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part 30, 40, 70 or 72 provide assurance that funds will be available when needed for required decommissioning activities. 3. The guarantee is issued to provido financial assurance for ' decommissioning activities for the licensed facilities listed above as required by 10 CFR Part 30, 40, 70 or 72. The decommis- sioning costs for these_ facilities are as listed above. | 4. The guarantor meets or exceeds the financial test criteria set forth in the. applicable regulations and agrees to comply with all notification requirements as specified in 10 CFR Part 30, 40, 70 and 72. , 5. The guarantor has majority control of the voting stock for the above-identified subsidiaries. 6. Decommissioning activities as used below refer to the activi- ties required by 10 CFR Parts 30, 40, 70 or 72 for decommission- ' t ing of the facilities identified above. 7. For value. received-from the above-identified licensees, guar- antor guarantees to NRC that if the licensees fail to perform the required decommir ioning activities, as required by the above- identified licenb . , the. guarantor shall: , a.w,.r--... - - ,- ,--.-,.,.n w,,- , - en-,..,-,v- . - - - . , - - , -. ,.me ~ , ,w , u . . .w.., , ' - . O . _ 3. _ o (a) carry out the required activities, or (b) cet up a trust fund in favor of the above-identified beneficiary in the amount of the current cost estimates for these activities. 8. The guarantor agrees to submit revised financial statements, financial test data, and a special auditor's report annually within 90 days of the close of the parent guarantor's fiscal year. 9. Guarantor agrees that if, at the end of any fiscal year before termination of this guarantee, the guarantor fails to meet the financial test criteria, guarantor shall send within 90 days, by certified mail, notice to the NRC and to the licensee that he intends to provide alternate final.cial assurance as specified in 10 CFR parts 30, 40, 70 and 72, as applicable, in the name of the licensee.. Within 120 days after the end of such fiscal year, the guarantor shall establish such financial assurance unless the licensee has done so. 10. The guarantor agrees .. notify the beneficiary promp'ly if the ownership of the licensee or the parent firm is transferred and to maintain this guarantee until the new parent firm or the licensee provides alternative financial assurance acceptable to the beneficiary. 11. Guarantor agrees that within 30 days after it determines that 4t no longer meets the financial test criteria or that he is. disallowed from continuing as a guarantor for any of-the facili- ties identified above under 10 CFR parts 30, 40, 70 or 72, it shall establish alternate financial assurance as specified in 10 CFR parts 30, 40, 70 or 72, as applicable, in the name of the licensee unless the licensee has done so. 12. Gua:.antor and its successors and assigns agree to remain bound jointly and severally under this guarantee notwithstanding any or all of the following: amendment or modification of the license or NRC-approved ~ decommissioning funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licensee pursuant to 10 CFR Part 30,-40, 70 or 72. 13. The guarantor agrees that all bound parties shall be jo'intly_' and severally liable for all litigation costs incurred by the- beneficiary in any successful effort to enforce the' agreement. against the guarantor. 14. The guarantor agrees to remain bound under this guarar. tee for so long as the licensee must comply with the applicable financial- assurance requirements of 10 CFR Parts 30, 40, 70.or 72 for the |- | : , | ,, . . _ _ . _ _ _ _ . _ _ .. _ . _-______. u_ . _ _. - , , - . . O . . - 4. _ o above-listed facilities, except that guarantor may cancel this guarantee by sending notice by certified mail to the NRC and to the licensee, such cancellation to become effective no earlier than 120 days after receipt of such notice by both the NRC and the licensee, as evidenced by the return receipts. 15. The guarantor agrees that if the licensee fails to provide alternate financial assurance as specified in 10 CFR Parts 30, 1 40, 70 or 72, as applicable, and obtain written approval of such assurance from the NRC within 90 days after a notice of cancella- tion by the guarantor is received by the NRC and the licensee from Guarantor, Guarantor shall provide such alternate financial assurance in the name of the licensee or make full payment under the guarantee. 16. The guarantor expressly waives notice of acceptance of this guarantee by the NRC or by the licensee. The guarantor also expressly waives notice of amendments or modifications of the decommissioning requirements and of amendments or modifications of the license. 17. If the guarantor files financial reports with the U. S. Securities and Exchange Commission, then it shall promptly submit them to the NRC during each year in which this guarantee is in offect. I hereby certify that this guarantee is true and correct to the best of my knowledge. JOHNSON & JOHNSON Pra _ ? Sworn to and subscri ed by: before me this # Clark H. bohnson day of July, 1990. Vice President and Chief Financial Officer S. f 5 Atfat$UIDAR ^5CHiEW( h MARY PUBUC of NEW KRsty * 084Sc " I'f"' Ard 6.19 9.9 . - . . . - , -- - - - ['T . . v * * (mMed putac Exx>urdam-g. Coo 3ers &Ly3 rand INDEPENDENT AUDITOR'S REPORT To the Boarcl of Directors of Johnson & Johnson: We have audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Johnson & Johnson and subsidiaries as of December 31, 1989, and Jcauary 1, 1989, and the related consolidated statements of earnings and consolidated statement of common stock, retained earnings and treasury stock, and cash flows for each of the three years in the period ended December 31, 1989, and 1. ave issued our report thereon dated February 5, 1990. > At your request, we have compared the information presented on lines 2 through 9 and 13 of the schedule designated as Alternative I in the letter from Clark H. Johnson, dated July 20, 1990, with the amounts derived from the aforementioned financial statements. Becaune the above procedure does not constitute an audit in accordance with generally accepted auditing standards, we do not express an opinion on any of the Jtems referred to above. In connection with the procedure referred to above, no matters came to our attention that caused us to believe that such information should be adjusted. This report relates only to the information specified above and does not extend to the consolidated financial statements of Johnson & Johnson and subsidiaries taken as a whole. Our report is made solely for the purpose of complying with the United States Nuclear Regulatory Commission and is not to be used for any other purpose 24W Y W New York, New York July 20, 1990 113166 0FFICIAL RECORD COPY jl.10 - , . , ' . . . O . . O D3D"DJMD C 111)011( O l11) Oil 0 y sia o . < m n e, h%N N M A G T r.I L h ., f l f. L A (l D U N C W ' C P . N J ~, e 9 3 3 7 C Oi' July 27, 1990 UnitedStatesNuclearRegulatoryCommissionf, * Washington, D.C. 20555 rm ; Re: H RC._L in._1102_29 - 02.ZE n- 01 a HRC_ Lim _No. _29 - 0 21M- 0 6 ETilICON , INC. U.S. Route 22 i Somerville, New Jur$ey 08876 Dear Sirs: On behalf of the above-captioned subsidiary of Johnson & Johnson, I enclose herewith the financial assur- ance documentation required by 10 CFR Parts 30, 40, 70 & 72. This licensee has elected to provide financial assur- ance through a parent corporation guarantee and the n'eet- ing of the financial test. Specifically, I have enclosed: A. A Guarantee of Johnson & Johnson, dated July 20, 1990, executed by Clark 11. Johnson, its Vice President and Chief Financial Officer. B. A letter, dated July 20, 1990, by Cla rk 11. Johnson, Vice President and Chief Financial Officer, demonstrating J&J compliance with the financial test. C. A Special Auditor's Report by Coopers & Lybrand. If there are any questions about these docu- ments, I can be reached at the above address or, by telephone, at 201-524-2475. .,,-----r- - i) I.cg _ . - it ts--g-~;['}...u:- Very truly yours R; mitter ------~ ~ " ' ggg,,k No._ ___ _ - -- -' - ' tr w Jnt. - -. :-~ ' '[ ,| - u no caer.m " ' ''' at b. ; Type of f 08 -- (-s -* ' i Date CMck Rec'd. - . . - Beidler Date Comp;sted . -. - = ~ ~ ~ ' ) 'd.ohnN. gy _ ,. _ ...... - - - w. : fKQ a s c i o u 11a100 FEENOToWA. g g AUG 021990 g&OW omclAl. RECORD 00PY1{0 - y -3 . * '...... O , . o - , , LO' 1111011 ONE JOHNSON R ,.iOHNSDN PL AF A Can'am GENrHAL COUNSEL N tw BRU N S WiC M, N. J. 00933 7002 July 20, 1990 United States Nuclear Regulatory Commission Washir.gton, D.C. 20555 Re: liBC Financial Assuranc0_RCmtirements Dear Sirs: I am the Chiuf Financial Officer of JOllNSON & J011NSON, a corporation of the State of New Jersey. This letter is in support of this firm's use of the financial test to demonstrate financial assurance as specified in 10 CFR Parts 30, 40, 70 and 72. This firm guarantees, through the parent company guar- antee submitted to demonstrate compliance under 10 CFR Parts 30, 40, 70 and 72, the decommissioning of the following- facilities owned or operated by subsidiaries of-this firm The current cost estimates or certified amounts for decommissioning, so guaranteed, are shown fur each facility: HRC LICENSE NO. & LICENSEE DECOMMISSIONING AMQURI 23-0.2786-03 $ 75,000.00 23-Q2786-06 $150,000.00 ETHICON, IhC. U.S. Route 22 Somerville, New Jersey 08876- 29-28265-01 $750,000.00 IMMUNOBIOLOGY RESEARCH INSTITUTE P.O. Box 999 Route 22 East Annandale, New Jersey 08801 $150,000.00 29-27950-01 _ | JANSSEN PHARMACEUTICA INC. -1 40 Kingsbridge Road i Piscataway, New Jersey 08854 m ______. _ _._ - r N . . . , .O . . O 1%RENLCOMPANLGUARANTEE GUARANTEE made this July 20, 1990 by JOllNSON & JOl(NSON, a corporation organized under the laws of the State of New Jersey, herein referred to as " guarantor", to the U. S. Nuclear Regula- tory Commission (NRC), obligee, on behalf of its below-listed subsidiaries: NRC_LICENSLH02_klLCniSEE DECOMISS10tlIRG_AMQUllI 29-ELIBi_Q3 $ 75,000.00 292Q21Bf-D.6 $150,000.00 ETill CON , INC. U.S. Route 22 Somerville, New Jersey 08876 2922H215-01 $750,000.00 IMMUNOBIOLOGY RESEARCil INSTITUTE P.O. Dox 999 Route 22 East Annandalo, New Jersey 08801 29=2195Q-91 $150,000.00 JANSSEN PilARMACEUTICA INC. 40 Kingsbridge Road Piscataway, New Jersey 08854 29-17001-02 $750,000.00 JOllNSON & JOi!NSON BABY PRODUCTS COMPANY Grandview Road Skillman, New Jersey 08876 1920_Q216_01 . $ 75,000.00 JOliNSON & JOHNSON Research Center U.S. Route #1 North Brunswick, New Jersey 08902 37-09 733-Q1 -$750,000.00 McNEIL PilARMACEUTICAL Welsh and McKean Roads Spring llouse, Pa.19477-0776 292 16_223-01 $750,000.00 ORTilO DIAGNOSTIC SYSTEMS ?NC. U.S.-Route 202 4 Raritan, New Jersey 08869-0602 ;-.,,_,,-.-.__.--,,._-..-__. , _ _ - . . - , - . - - . . - - - - . - . - . . = . .. - - . . d'- ' ' . .. , . . .O . , -2- O , 19-170al:22 $750,000.00 UOllNSON & JOilNSON DABY , PRODUCTS COMPANY | Grandview Road 1 Skillman, New Jersey 08876 ! 29 _0120_62.01 $ 75,000.00 JOllNSON & JOllNSON Research Center U.S. Route #1 North Drunswick, New Jersey 08902 31 0R143-01 $750,000.00 McNEIL Pl!ARMACEUTICAL Welsh and McKean Roads 1 Spring llouse, Pa.19477-0776 1 2R:15222 R1 $750,000.00 t ORTilO DIAGNOSTIC SYSTEMS INC. ' U.S. Route 202 Raritan, New Jersey 08869-0602 19-02120-02 $750,000.00 ORTIIO PHARMACEUTICAL' CORPORATION P.O. Box 300 U.S. Route 202 Raritan, New Jersey 08869-0602 -- TOTAL...... $4,200,000.00 This firm is required to file a norm 10K with-the Securities and Exchange Commission-(SEC) for the latest-fiscal year. The fiscal year of this firm ends on the Sunday closest .to December 131. The figures for.the'following. items marked with~ an asterisk are derfvod from this firm's independently audited . year-end financial. statements and footnotes for the latest com- pleted fiscal year, ended December 31, 1989. V ' . g n , + us , , -3- ALTERNATIVE I $_ J n_MLLlions 1. Sum of deconmissioning cost estimates for all facilities listed above. $422.01,10f_ $ _ 42200 *2. Total liabilities (if any portion of the decommissioning cost estimates is included in total liabilities on the financial statement, deduct the amount of that portion from this line and add that amount to lines 3 and 4)_ _$_3]]L _ *3 Tangible not work 34_4A *4. Not worth 43 4B *5. Current assets 3276 *6. Current liabilities ___ 1127 7. Net working capital (line 5 minus 6)_ 1B_49 *8. The sum of net income plus depreciation, depletion, and amortization 1496 *9. Total assets in U.S. (required only if less than 90% of firm's assets are located in the U.S.) 41E3 YES NQ 10. Is line 3 at least $10 million? X 11. Is line 3 at least 6 times line 17 X 12. Is line 7 at least 6 times lire 17 X | | *13. Are at least 90*5 of firm's assets | located in the U.S.? If not, complete line 14. X 14. Is line 9 at least 6 times line 17 K. | 15. Is line 2 divided by line 6 less | than 2.0? X | E N ' - ...... O o _4_ above-listed facilities, except that guarantor may cancel this guarantee by sending notice by certified mail to tne NRC and to the licensee, such cancellation to become effective no earlier than 120 days after receipt of such notice by both the NRC and the licensee, as evidenced by the return receipts. 15. The guarantor agrees that if the licensee fails to provide alternate financial assurance as specified in 10 CFR parts 30, 40, 70 or 72, as applicable, and obtain written approval of such assurance from the NRC within 90 days after a notice of cancella- tion by the guarantor is received by the NRC and the licensee from Guarantor, Guarantor shall provide such alternate financial assurance in the name of the licensee or make full payment under the guarantee. 16. The guarantor expressly waives notice of acceptance of this guarantee by the NRC or by the licensee. The guarantor also expressly waives notice of amendments or modifications of the decommissioning requirements and of amendments or modifications of the license. 17. If the guarantor files financial reports with the U. S. Securities and Exchange Commission, then it shall promptly submit them to the NRC during each year in which this guarantee is in effect. I hereby certify that this gu3rantee is true and correct to the best of my knowledge. JOHNSON & JOHNSON # D m~ " Sworn to and subscribed by: before me this /FNL Clark H.(Johnson day of July, 1990.' Vice President and Chief Financial Officer Ps o' ' N&[a .DN A ~ H12tuA Pv0TARY PUBUC oF NEW JERSEY 0848s D "**" l'W 8 '"t 8 ' # . - , .- . . - - - . O . . __ _O_ Coo 3ers &Ly] rand INDEPENDENT AUDITOR'S REPORT To the Board of Directors of Johnson & Johnson: We have audited, in accordance with generally accepted auditing standards, the consolidated balance sheet et Johnson & Johnson and subsidiaries as of December 31, 1989, and January 1, 1989, and the related consolidated statements of earnings and consolidated statement of common stock, retained earnings ar1 treasury stock, and cash flows for each of the three years in the period ended December 31, 1989, and have issued our report thereon dated February 5, 1990. At your request, we have compared the information presented on lines 2 through 9 and 13 of the schedule designated as Alternative I- in the letter from Clark H. Johnson, dated July 20, 1990, with the amounts derived from the aforementioned financial statements. Because the above procedure does not constitute an audit in accordance with generally accepted auditing standards, we do not express an opinion on any of the items referred to above. In connection with the procedure referred to above, no matters came to our attention that caused us to believe that such information should be adjusted. This report i relates only to the information specified above and does not ! extend to the consolidated financial statements of Johnson & | Johnson and subsidiaries taken as a whole. Our report is L made solely for the purpose of complying with the United | States Nuclear Regulatory Commission and is not to be used ' for any other purpose. , 24 W | New York, New York July 20, 1990 . - _ _ - - _ _ _ _ -______ ' ...... , . o . -2- o , 29-02608-03 $750,000.00 ORTHO PHARMACEUTICAL CORPORATION P.O. Dox 300 U.S. Route 201 Raritan, New Jersey 08869-0602 TOTAL ...... $ 4 , 2 0 0 , 0 0 0 . 0 0 REITALE 1. The guarantor has full authority and capacity to enter into- this guarantee under its bylaws, articles of incorporation and the laws of the State of New Jersey, its state of incorporation. 2. This guarantee is being issued to comply with regulations issued by the NRC, an agency of the U. S. Government, pursuant to the Atomic Energy Act of 1954, as amended, and the Energy Reorgan- ization Act of 1974. NRC has promulgated regulations in-Title 10c Chapter I of the Code of Federal Regulations, Parts 30, 40, 70 and 72 which require that a holder of, or-an applicant for, a materials license issued pursuant to 10 CPR Part 30, 40, 70 or 72 provide assurance that funds will be available when needed for required decommissioning activities. 3. The guarantee is issued to provide financial assurance for decommissioning activities for the licensed f acilities : listed above as required by 10 CFR Part 30, 40,-70 or 72. The decommis- -sioning costs for these facilities are Ls listed above. 4. The guarantor meets or exceeds the financial-test criteria set forth in the applicable re.ulations and agrees to comply with all notification requirements as specified in 10 CFR Part 30, 40, 70 and 72. 5. The guarantor has majority control of the' voting stock-for the above-identified subsidiaries. 6. Decommissioning activities as used below refer to'the activi- . ties required by 10 CPR Parts 30, 40, 70 or 72 for decommission- ing of the facilities identified above. 7. For value received from the above-identified licensees,' guar . 'antor gaarantees to NRC that if-the licensees fail'to perform the required decommissioning' activities, as required by the above-- identified licenses, the guarantor shall: : - ' . - . . . . o . , o - 3 -- . (a) carry out the required activities, or (b) set up a trust fund in favor of the above-identified beneficiary in the amount of the current cost estimates for these activities. 8. The guarantor agrees to submit revised financial statements, financial test data, and a special auditor's report annually within 90 days of the close of the parent guarantor's fiscal year. 9. Guarantor agrees that if, at the end of any fiscal year befora . termination of this guarantee, the guarantor fails to meet the I financial test criteria, guarantor shall send within 90 days, by 1 certified mail, notice to the NRC and to the licensee that he i intends to provide alternate financial assurance as specified in ' 10 CFR parts 30, 40, 70 and 72, as applicable, in the name of the , licensee.. Within 120 days after the end of such fiscal year, ! the guarantor shall establish such financial assurance unless the i licensee has done so. I 10. The guarantor agrees to notify the beneficiary promptly if the ownership of the licensee or the parent firm is transferred and to maintain this guarantee until the new parent firm or the licensee provides alternative financial assurance acceptable to the beneficiary. 11. Guarantor agrees that within 30 days after it determines tn(t it no longer meets the financial test criteria or that he lu disallowed from continuing as a guarantor for any of-the facili- ties identified above under 10 CFR Parts 30, 40, 70 or 72, i t shall establish alternate financial assurance as specified in 10 , ' CFR Parts 30, 40, 70 or 72, as applicable, in the name of the licensee unless the licensee has done so. ; 12. Guarantor and its successors and' assigns agree to remain bound jointly and severally under this guarantee notwithstanding ; any or all of the following: ' amendment or. modification of the license or NRC-approved decommissioning funding plan'for that facility, the extension or reduct4.on of the time of performance l of required activities, or any other modification or. alteration | of an obligation of the licensee pursuant to 10 CFR Part 30c 40, L 70-or 72. . 1 |- 13. The-guarantor agrees that all bound _partien shall be jointly _ | and. severally liable for all litigation-costs -incurred by the beneficiary in any successful effort to enforce the agreement against the guarantor. 14. The guarantor agrees to remain bound under this guarantee for so long as the licensee must comply with the applicable. financial i assurance requirements of 10 CFR Parts 30, 40, 70 or 72 for the | . - ,,9p, "W. ' - ...... -o , _,_ o ES 60 16. Is line 8 divided by line 2 greater than 0.17 X 17. Is line 5 divided by line 6 greater than 1.57 X I hereby certify that the content of this letter is true and correct to the best of my knowledge. 1 :- Clark Ib Johnson Vice President, Finance | Date: July 20, 1990 0849s I i : OfflCIAL RECORD COPY %10 3 11alco . _-- . ._ .__ . _ . . _ . - _ _ _ _ . - _ _. . _ _ - . _ . - - O . . O . DEC 191990 l > Ethicon, Inc. ATTN: Mike Cascio P.O. Box 151 Route 22 Somerville, NJ 08876 Gentlemen: ' We are returning Check Hos. 80464($370)and80465($500)which accompanied your August 13, 1990, application for an amendment to Materials Licenses 29-02786-03 and 29-02786-06. The cuecks are being returned in accordance with Information Notice 90-38, Supplement #1. Sincerely, Signed b-/ Maurice f.iessier Maurice Messier License fee and Debt Collection Branch Division of Accounting and Finance Office of the Controller Enclosure: Check Nos. 80466 $370 and 80465 $L00 DISTRIBUT- 0N: b/F Copy OC/DAF R/F LFDCB R/F (2) DW/lilSCFM/Ethicon J OFFICE : OC/LFDCB.N OC/LFDCB OC/LFDCB'/ SURNAME: SKimberley:ab. MMessier GJac(sond DATE : 12/' /90 12/ v /90 12/!j/90 1 5 ______- _ - . ______- _ __ _ _ - _ . . . . n . - . O , , i . : (FOR LFMS U$E) ' : ItlFO RM A TI0tl F :'O M L T S BETWEEN: : ------: LICEN5' Pd" MANA M ENT #AANCH, JH : PROGRAM CODE: 03521 AND : STATUS CODE: 0 R E C, I O N A L LICENi!HS SECTIONS : FEE CATEGORY: 3G : EXP. DATE: 19910930 : FEE COMMENTS: SEE 1/16/36 NOT E T O FILE ::::::::::::::::::::::::::::::::::::::::: LICENSE r !. E Ty4N541TTAL 1. R F ^, I O N - 1. APPLICATION iTTACHED APPLICANT / LICENSEE: ETHICON, INC. ' R E C E ! V E ') DATE: 70]LO2 00 C rl i N3: 3306970 CCNTROL NO.: 113160 LICENSE tJ 0. : 29-027S6-03 -{ ACTIDN'iYP!: AMENOMENT 2. FEE ATTACMLD AMou"T: '. .... CHECX NS.: ... . . , 3. C F M?'1TS ' * * 5IGNEO . . 'fM.N...... DAT: . . . . J L'." ...... 3 LICLN5! CEE M A '14 G E '4 E N T BRANCH (CHECA WHEN PLIWS T -0 T rI E MD / /) I[ b[ P S|lk~ ^ 1. FtE CATiGO:Y AND AMOUNT: . "f"...... A f,,y gg , 2. COR2ECT FEE P AICp AP PLIC ATION MAY SE PROCFSSED FOR: AM"OfM1T ..p...... * RENEWAL ...... 8 LICEN5E ...... 3. OTHER ...... . . WD ...... e. ..e...... ad . , N sIaNEo ...... nr E g ...... x .B.y , ;d...... , i | . _ _ . __