, )


PUBLIC RECORD VERSION 

UNITED STATES OF AMERICA


BEFORE FEDERAL TRADE COMMISSION


COMMISSIONERS:	 Deborah Platt Majoras, Chairman 

Thomas B. Leary 

Pamela Jones Harbour 

Jon Leibowitz


NOV 0 . Z003


SEGREAWI 

In the Matter of 

THE PROCTER & GAMBLE COMPANY a corporation; Docket No. C-4151 

and	 File No. 051-0115 

THE GILLETTE COMPANY 

a corporation. 

PETITION OF THE PROCTER & GAMBLE COMPANY 

FOR APPROVAL OF PROPOSED DIVESTITURE 

Pursuant to Section 2.41(f) of the Federal Trade Commission ("Commission" or "FTC" 

Rules of Practice and Procedure, 16 C.F. R. 9 2.41 (f) (2005), and Paragraph ILA. of the Decision 

and Order ("the Order ) contained in the Agreement Containing Consent Orders approved by the 

Commission in the above-captioned matter, The Procter & Gamble Company ("P&G") hereby 

fies this Petition for Approval of Proposed Divestiture ("Petition ) requesting the Commission 

approval of the divestiture of The Gillette Company s Rembrandt business ("the Rembrandt 

Assets ) to Johnson & Johnson ("J&J" 
PUBLIC RECORD VERSION


INTRODUCTION 

On September 23 , 200S, P&G and the Commission entered into an Agreement 

Containing Consent Orders, including the Order and an Order to Maintain Assets (collectively, 

the "Consent Agreement"). On September 29, 200S, the Commission accepted the Consent 

Agreement for public comment. On October 1 , 200S, pursuant to an Agreement and Plan of 

Merger between P&G and Gillette dated January 27, 200S , P&G completed its acquisition of 

Gilette. 

Paragraph V. 16. of the Commission s Complaint alleges that the acquisition by P&G of 

the Rembrandt Assets would substantially lessen the competition in the United States market for 

at-home teeth whitening products because the acquisition would significantly increase the 

concentration level in the market, leaving P&G as the leading supplier. Paragraph Il.A. of the 

Order requires P&G and Gillette to divest the Rembrandt assets within ninety days ITom the date 

the Order becomes final. Paragraph 1l.A. of the Order also requires prior Commission approval 

of such divestiture. 

On October 20, 200S , Gillette and J&J executed an Asset Sale and Purchase Agreement 

(including attachments, exhibits, annexes, and schedules) (collectively, the "Agreement") for the 

sale of the Rembrandt Assets. As part of the Agreement, P&G and 1&1 executed a Transitional 

Supply and Services Agreement ("TSSA") for provision of transitional services by P&G to 1&1. 

A copy of the Agreement, which was provided to Commission Staff on October 2S, 200S, is 

attched as Confidential Exhibit 1. 

P&G desires to complete the proposed divestiture of the Rembrandt Assets as soon as 

possible following Commission approval. Prompt consummation will further the purposes of the 

Decision and Order and is in the interests of the Commission, the public, P&G, and J&1 because 
PUBLIC RECORD VERSION 

it will allow J&J to move forward with its plans for the competitive operation ofthe divested 

business, and it will allow P&G and Gillette to fulfill their obligations under the Consent 

Agreement. P&G accordingly requests that the Commission promptly commence the period of 

public comment pursuant to Section 2.41 (f)(2) of the Commission s Rules of Practice and 

Procedure, 16 C.F. R. 9 2.41 (f)(2), limit the public comment period to the customar thirt-day 

period, and grant this Petition by approving the divestiture of the Rembrandt Assets to J&1 

pursuant to the proposed agreement as soon as practicable after the close of the public comment 

period. 

This Petition describes the principal terms of the Agreement by which P&G and Gillette 

propose to divest the Rembrandt Assets to J&J and explains why the Agreement satisfies the 

objectives and requirements of the Consent Agreement by establishing a strong and effective 

competitor in the market for at-home teeth whitening products in the United States. 

II. REQUEST FOR CONFIDENTIAL TREATMENT 

Because this Petition and its attachments contain confidential and competitively sensitive 

business information relating to the divestiture of the Rembrandt Assets, P&G has redacted such 

confidential information from the public version of this Petition and its attachments. ! The public 

disclosure of this information would prejudice P&G, Gillette, and J&J, could cause harm to the 

ongoing competitiveness of the Rembrandt Assets, and could impair P&G and Gilette s ability 

to comply with its obligations under the Consent Agreement. 

Pursuant to Sections 2.4 I (f)(4) and 4. 9(c) of the Commission s Rules of Practice and 

Procedure , 16 C.F. R. 99 2.41 (f)(4), 4. 9(c), P&G requests, on its own behalf and on behalf of 

I For the convenience of maintaining the public record, P&G is submitting two versions of this Petition: a


confidential version that contains confidential and proprietary information and documents necessary for the 

Commission to assess this Petition, and a redacted version that excludes confidential and proprietar information for 

placement on the public record. 
PUBLIC RECORD VERSION


Gilette and J&J , that the confidential version of this Petition and its attachments and the 

information contained therein be accorded confidential treatment under 5 U. C. 9 552 (2000) 

and Section 4. 1 0(a)(2) ofthe Commission s Rules of Practice and Procedure, 16 C. 

94.10(a)(2). The confidential version of this Petition is also exempt from disclosure under 

Exemptions 4 7(A), 7(B), and 7(C) of the Freedom ofInformation Act, 5 U. C. 99 552(b)(4), 

(b)(7)(A)-(C), and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 

c. 9 18a(h) (2000).


II. THE PROPOSED ACQUIRER 

Paragraph II of the Order requires that P&G and Gillette divest the Rembrandt Assets 

within ninety days from the date the Order becomes final. Pursuant to this requirement, P&G 

and Gillette have diligently sought an acquirer that would be acceptable to the Commission. 

According to the 2003 "Statement of the Federal Trade Commission s Bureau of 

Competition on Negotiating Merger Remedies" (the "Merger Remedies Statement"), to be an 

acceptable buyer, a divestiture acquirer must be financially and competitively viable. The 

acquirer must be able-with the package of assets to be divested-to maintain or restore 

competition in the relevant market. Key factors to consider in this analysis are whether the 

proposed acquirer has (I) the financial capacity and incentives to acquire and operate the 

package of assets, and (2) the competitive ability to maintain or restore competition in the 

marketplace. 

As discussed in more detail below, J&J has the financial capacity and the incentives to 

acquire and operate the Rembrandt Assets and also the competitive ability to maintain or restore 

competition in the marketplace. J&J's satisfaction of these key factors demonstrates that it is an 

acceptable acquirer suitable for approval by the Commission. 
PUBLIC RECORD VERSION 

J&J Has The Financial Abilty To Successfully Complete The Transaction 

The Rembrandt Assets On A Going-Forward Basis 

2 ranked #30 in the 2005 Fortne 500 list oflargest U. S. corporations, has the 

In And Invest 


J&J 

financial capacity, resources, and incentives to acquire the Rembrandt Assets and ensure its 

continued operation as a viable, ongoing business. The Johnson & Johnson family of companies 

includes more than 200 operating companies that have operations in 57 countries and employ 

bilion. 

more than 115 000 people. J&J's worldwide sales for 2004 were in excess of$47 

According to its 2004 Annual Report, the company has access to substantial sources of funds 

s most recent 

ITom numerous banks, including more close to $4 billion of unused credit. J&J' 

Form 10-K and Form IO-Q are provided as Exhibits 2 and 3, respectively. J&J's current 

financial condition provides great flexibility in making additional investments in the business, as 

such investments may become necessary or propitious in the future.


PPC,


The acquiring subsidiary, the Personal Products Company, a Division of McNeil-


Inc. (" PPC" 3 is an established company with significant experience in the dental care industry 

Assetswith its REACH(g brand products. Finally, the profitability of the Rembrandt 

(CONFIDENTIAL INFORMATION REDACTED)-will provide even greater flexibility for 

PPC to invest in and expand the whitening-products business. 

J&J Has And Wil Acquire The Necessary Industry Experience, Customer 

Relationships, And Knowledge Of The Divestiture Assets To Operate The 

Business Successfully As J&J Is An Established And Integrated Producer 

And Marketer Of Dental Care Products 

The Bureau of Competition s 1999 "Study of the Commission s Divestiture Process" (the 

Divestiture Study ) discusses several factors that help to identify an acceptable divestiture 

2 J&J' s corporate headquarters are located at One Johnson & Johnson Plaza, New Brunswick

, NJ 08933. 

3 PPC's corporate headquarters , which are part ofthe Johnson & Johnson Consumer Companies 

headquarters, are located at 199 Grandview Road, Skillman, NJ 08558. 
PUBLIC RECORD VERSION 

buyer. Specifically, the Divestiture Study cites the buyer s experience in the relevant industry 

and knowledge of the assets to be purchased as key to a successful divestiture. 

J&J has been committed to the dental-care business since 1898 when it patented dental 

floss. In 1977, J&J's McNeil Laboratories , Inc. was separated into two companies, one 

producing pharmaceutical products and the other, McNeil Consumer Products, manufacturing 

of the Johnson and marketing consumer products. Today, J&J's acquiring subsidiary PPC is par 

& Johnson Consumer Companies and a leader in the fast growing consumer oral health market. 

PPC' s continued mission has been to develop, produce, and market innovative oral health 

products as well as women s health and sanitary protection products. PPC' s dental products 

include a full line of floss, rinse, toothbrush, and interdental-stimulator products. Among PPC' 

brands are REACHlI Toothbrushes, Johnson & Johnson REACHlI Dental Floss, REACHlI 

ACCESSTM Daily Flosser, ACTlI Rinse, and ARESTINlI Microspheres (for treatment of 

periodontal disease). J&J introduced in Canada REACH lI Whitening Floss, the first floss 

clinically proven to whiten between teeth with regular use, and REACHlI Whitening Tape 

which also helps whiten between teeth. The Rembrandt Assets are a good complement to J&J's 

existing oral care portfolio, enabling J&J to expand into dentifrice and atchome whitening 

products. 

J&J Has The Competitive Abilty To Maintain Or Restore Competition 


The Marketplace


economic The Merger Remedies Statement suggests that the proposed acquirer have an "

incentive to maintain or restore competition in the relevant market. " The Divestiture Study 

emphasizes the importance of the buyer s commitment (ie. substantial investment in the relevant 

business). Given J&J' s relevant experience in the dental-care products industry, J&J is fully 

qualified to operate the Rembrandt Assets in a manner that will maintain or restore competition 
PUBLIC RECORD VERSION 

in the marketplace. The PPC management and employees are experienced in the production and 

marketing of oral care products. Furthermore, all of the assets needed to operate the Rembrandt 

, it is not anticipated that Assets competitively wil be included as part of the sale to J&J. As such

this acquisition will generate a need for substantial capital to develop the Rembrandt Assets in 

the near term. More than adequate capital is available to J&J, if and when any such investments 

are deemed necessary. 

Part of J&J's vision for its subsidiary PPC is to be a developer , manufacturer, and 

marketer of innovative dental care products. The acquisition of the Rembrandt Assets provides 

fuher 

the perfect opportunity and an excellent fit with J&J's strategic plan for growth into 

segments of the dental care products business. J&J's years of experience in the consumer dental 

care industry have provided it an intimate understanding, both of the innovative requirements of 

the dental care business and the commercial and competitive landscape. J&J is well positioned 

to maintain and expand the Rembrandt Assets' customer relationships as a strong competitor in 

the marketplace immediately. Throughout the years of constant growth and expansion, J&J has 

proven that, with the necessary intellectual property and innovation, it is capable of successfully 

entering into new businesses. J&J's business plan for Rembrandt wil discuss their plans for the 

business in more detail. 

IV.	 THE REMBRANDT ASSETS 

J&J will be acquiring an established business with a proven record of innovative 

development and application as a supplier of at-home tooth whitening products. 

Rembrandt is a leading (REDACTED) brand of high-quality and easy-to-use whitening 

products, focused mainly on the North American market but also expanding to Europe and 

Australia. Rembrandt consists of tooth whitening products marketed by Gilette under the 
PUBLIC RECORD VERSION


Rembrandt(I trademark and of its secondary trademarks and tradenames. The whitening 

products include toothpaste products that whiten or brighten teeth and of any other product that 

is applied to teeth by tray, strip, patch, brush or otherwise for the purpose of whitening or 

brightening. Toothpastes whiten the teeth either by use of chemical whitening agents (so-called 

chemical whitening" or "bleaching ) or by rubbing off the enamel with abrasives thus 

eliminating any stains that may have resided in the outer layer. 

In 1989, Rembrandt introduced its first highly efficient whitening paste. Rembrandt's 

founder, Dr. Robert Ibsen, had developed a formula, with a patented ingredient Citroxain, which 

resulted in a paste with remarkable cleaning properties in removing surface stains but with only 

, Rembrandt became a leader in minimum abrasion levels compared to competing pastes. Thus

, Den-Mat Corporation, sold the 

the whitening toothpaste business. Rembrandt's previous owner 

business to Gillette in April of 2004. Subsequently, Gillette invested substantial resources in the 

business, resulting in the introduction of innovative products, trade effciencies, and improved 

portfolio. 

The whitening product category has grown in North America at an annual growth rate of 

(REDACTED) over the past (REDACTED) years and has reached the level of (REDACTED) in 

sales, (REDACTED) of which in retail-consumer sales and about (REDACTED) in sales to 

dental-care professionals. Based on the introduction of product innovations supported by 

s (REDACTED) significant spending on product marketing, Gillette expects to grow Rembrandt 

this year. During the last (REDACTED) years, Rembrandt has replaced (REDACTED) as a 

market leader and is currently number (REDACTED) in premium whitening paste providing 

superior products to (REDACTED) of the market and number (REDACTED) in whitening 

systems with (REDACTED) of the retail consumer market. This consumer loyalty strengthens 
PUBLIC RECORD VERSION


even further Rembrandt's commitment to producing high quality products and provides the 

financial means for continued innovation and constantly improving customer satisfaction as well 

as the brand' s position within the industry. In the past few years, Rembrandt operations have 

resulted in contribution margins between (REDACTED) and (REDACTED) of sales. This year 

the business is expected to generate (REDACTED) contribution margins even with Gilette 

significant investments in brand advertising and marketing. 

Finally, the capital intensity of the business is very low because Rembrandt outsources its 

productio to well qualified third parties. (CONFIDENTIAL INFORMATION REDACTED) 

Curently, all of Rembrandt's products are produced (CONFIDENTIAL INFORMATION 

REDACTED). 

Pursuant to paragraph II of the Order to Maintain Assets, P&G has retained an Interim 

Monitor to supervise P&G and Gi1ette s compliance with the divestiture and asset maintenance 

, Mr. Edward A. Gold of obligations and related requirements. The Interim Monitor

PricewaterhouseCoopers LLP was vested with all powers and authorities required to oversee and 

administer the Rembrandt Assets. 

THE AGREEMENT 

Pursuant to the Merger Remedies Statement, the divestiture agreement must convey all 

assets required to be divested and must not contain any provisions inconsistent with the terms of 

the Commission s order or with the remedial objectives ofthe order. The Merger Remedies 

Statement also provides that, in evaluating the terms of the divestiture agreement, the 

Commission staffwi1 rely, in large par, on the acquirer. 

The Agreement conveys all assets required to be divested and does not contain any 

provisions inconsistent with the terms of the Consent Order or its remedial objectives. Pursuant 
PUBLIC RECORD VERSION 

to the Agreement, Gillette has agreed to sell and J&J has agreed to purchase all rights, title, and 

interest to the Rembrandt Assets for the purchase price of (CONFIDENTIAL INFORMATION 

REDACTED). 

As set forth in more detail in the Agreement, the acquired assets and rights include: (i) all 

raw materials and inventories of the Current Rembrandt Product; (ii) the Books and Records and 

, (v) the the Additional Records; (iii) any Contract and Supply Contract; (iv) the Equipment

Intellectual Property, except the Product Licensed Intellectual Property (see next), (vi) a nonexclusive, perpetual , irrevocable, fully paid-up and royalty free licensees) with rights to 

sublicense to all Product Licensed Intellectual Property for the Rembrandt Products worldwide 

(vii) any goodwill exclusively related to the Business. These assets, including permits and the 

services P&G will provide to J&J pursuant to the TSSA constitute all the assets and services that 

are necessary for J &J to conduct the Rembrandt business immediately following the closing in 

all material respects in the same manner as it is currently conducted by Gillette. The TSSA 

between P&G and J&J provides, as required by paragraph II of the Order, that: 

o P&G will provide J&J with the opportunity to enter into employment contracts with 

the Rembrandt Core Employees and Rembrandt Key Employees durng the Access 

Period; will not interfere with the hiring or employing by J&J of any .such employees 

and will remove any impediments within the control of P&G that may deter these 

employees; 

o P&G will provide written notification of the restrictions on the use by P&G' 

personnel of the Confidential Business Information related to the Rembrandt 

Products; 

o Upon reasonable notice and request by J&J, P&G will make available to J&J, at no 

greater than Direct Cost, such additional personnel , assistance and training as J&J 

might reasonably need for the complete transfer of the Rembrandt Assets; 

o Upon reasonable notice and request from J&J to P&G, shall provide, in a timely 

manner, at no greater than Direct Cost, assistance of knowledgeable employees of 

P&G to assist the J&J to defend against, respond to , or otherwise paricipate in any 

litigation related to the Intellectual Property. 
PUBLIC RECORD VERSION 

Thus, the Agreement complies with and satisfies the purposes of the Consent Agreement. 

VI. CONCLUSION 

The proposed divestiture of the Rembrandt Assets to J&J wil accomplish the puroses of 

the Consent Agreement and remedy any alleged increase of concentration in the supply of athome whitening products in the United States as a result ofP&G' s acquisition of the Gilette. 

J&J will be a strong and effective competitor in the relevant market. The company has 

the financial ability to successfully complete the transaction and invest in the teeth whitening 

business on a going-forward basis. As an established and integrated producer and marketer of 

dental-care products, J&J has the necessary industry experience, customer relationships, and 

wil 

knowledge ofthe divestiture assets to operate the business successfully. Furhermore, J&J 

be acquiring an established business requiring no additional management expertise. Finally, J&J 

has the competitive ability to maintain or restore competition in the marketplace as J&J is a 

leading company in the fast growing oral-health market. Accordingly, P&G respectfully 

requests that the Commission approve the proposed divestiture and acquirer. 

Dated: November 4 , 2005	 Respectfully submitted 

THE PROCTER & GAMBLE COMPANY 

By: 

Joe Sims, Esq. 

JONES DAY 

51 Louisiana Avenue, NW 

Washington, DC 20001-2113 

Counsel for The Procter & Gamble Company 

Enclosures 
PUBLIC RECORD VERSION


Docket No. C-4151 

File No. 051-0115 

LIST OF EXHIBITS 

Exhibit I Asset Sale and Purchase Agreement Between The Gillette Company And 

Personal Products Company Division, McNeil-PPC, Inc. , Johnson & Johnson 

(Confidential) subsidiary for the sale of the Rembrandt Assets 


Johnson & Johnson SEC Form 10-K For The Fiscal Year Ended January 2 2005 

Exhibit 2


Exhibit 3 Johnson & Johnson SEC Form 10-Q For Period Ending July 3 , 2005 

PUBLIC RECORD VERSION


FTC Docket No. C-4151 

File No. 051-0115 

CONFIDENTIAL EXHIBIT 1 

Asset Sale and Purchase Agreement Between The Gilette Company And


Pcrsonal Products Company Division, McNeil-PPC, Inc., a Johnson & Johnson subsidiary


(Accorded confidential treatment under Us. 552 (2000) and Section 0(a)(2) of the 

Federal Trade Commission s Rules of Practice and Procedure 16 CFR. ' 4. 0(a)(2) (2005))

PUBLIC RECORD VERSION


FTC Docket No. C-4151


File No. 051-0115


EXHIBIT 2


Johnson & Johnson SEC Form 10-K For The Fiscal Year Ended January 2, 2005 
                                      

SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D. C. 20549 

FORM lOANNUAL REPORT PURUAN TO SECTION 13 OF
 TI SECURITIES EXCHANGE ACfOF 1934


FOR THE FISCAL YEAR ENDED JANUARY 2, 2005 COMMSSION FIE NUER 1-3215 

JOHNSON & JOHNSON


(EXACT NAM OF REGISTRNT AS SPECn'IED IN ITS CHARTER) 

NEW JERSEY 22- 1024240 

(State of Incorporation) (1. R. S. Employer

Identification 

No. 

ONE JOHNSON & JOHNSON PLAZA 

NEW BRUNSWICK, NEW JERSEY 08933 

(Address of principal executive offices) (Zip Code) 

Registrant' s telephonc numbcr, including area code (732) 524-0400 

SECURITIES REGISTERED PURUANT TO SECTION 12(b) OF THE ACT 

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH


REGI STERED 

Common Stock, Par Value $1. New York Stock Exchange


Indicate by check mark whcthcr thc registrant (I) has filed all reports rcquired to be filed by Scction 13 or 15(d) of the Securities 

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), 

and (2) has been subjcct to such filing requirements for thc past 90 days. Yes (XJ No ( J 

Indicate by check mark if disclosure of delinquent fiers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be 

contained, to the best of registrant' s knowledge, in definitive proxy or infonnation statements incorporated by reference in Part III of 

this Fonn IO-K or any amcndmcnt to this Fonn IO-K. (J 

Indicate hy chcck mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchangc Act of 1934). 

Yes (XJ No (J 

The aggregate market value of the common stock held by non-affiiates (computed by reference to the price at which the common stock 

was last sold) as of the last business day of the registrant s most recently completed second fiscal quarter was approximately $161 

billion. 

On March 1 2005 there were 2 973 666 464 shares of Common Stock outstanding. 

DOUMNT INCORPORATED BY REFERENCE 

(e 2005. EDGAR Online, Inc. 
) .


Parts I, II and Portions of registrant. s annual report to shareholders for


III, fiscal year 2004 (the 11Annual Report II


Parts I and III: Portions of registrant I s proxy statement for its 2005


annual


meeting (the "Proxy Statement" 

co 2005. EDGAR OnI ine 
 Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . .. . . . . . . . . . . . . . . . .

ITEM 

PAGE 

7A. 

9A. 

10. 

11. 

12. 

13 . 

14 . 

15. 

PARTI


Business. . . . . 


General. . . . . . . 


Segments of Business................... 


Consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 


Pharmaceutical. . . . 


Medical Devices and Diagnostics. . . 

Geographic Areas. . . . . 

Raw Materials. 


Patents and Trademarks. 


Seasonal ity. . . . . 

Competi tion. . 


Research. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Envi ronmen t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Regulation. . . . 

Available Information................................


Properties. . . 

Legal Proceedings...........................................


Submission of Matters to a Vote of Security Holders. 


Executive Officers of the Registrant......................


PART II 

Market for the Registrant I s Common Equity, Related 

Stockholder Matters and Issuer Purchases of Equity 

Securities. . . 

Selected Financial Data................................ 

Management I s Discussion and Analysis of Results of 

Operations and Financial Condition.................... 

Quantitative and Qualitative Disclosures About Market


Risk. . . . . . . . . . . . . . . . . . . . . . . 

Financial Statements and Supplementary Data. 


Changes in and Disagreements on Accounting and Financial


Disclosure. . . . 

Controls and Procedures........ . 


PART II I 

Directors and Executive Officers of the Registrant.. 


Exe cu t i ve Compens at i on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Security Ownership of Certain Beneficial Owners and


Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Certain Relationships and Related Transactions. 


Principal Accountant Fees and Services. 


PART IV 

Exhibits, Financial Statement Schedules.....................


Signatures. . . . 

Report of Independent Registered Public Accounting Firm on


Financial Statement Schedule................................


Exhibit Index...............................................


(E 2005. EDGAR Online Inc. 
PART!


ITEM 1. BUSINSS 

GEN 

Johnson & Johnson, employing approximately 109 900 people worldwide, is engaged in the manufacture and sale of a broad range of 

products in the health care field. Johnson & Johnson has over 200 subsidiaries that conduct business in virtally all countries of the 

world. Johnson & lohnson s primary interest, both historically and currently, has been in products related to human health and 

well-being. Johnson & Johnson was organized in the State of New Jersey in 1887. 

Johnson & Johnson is organized on the principle of decentralized management. The Executive Committee of Johnson & Johnson is the 

principal management group responsible for the operations and allocation of the resources of the Company. This Committee oversees 

and coordinates the activities of the Consumer, Phannaceutical and Medical Devices and Diagnostics business segments. Each 

subsidiary within the business segments is, with some exceptions, managed by citizens of the country in which it is located. 

SEGMENTS OF BUSINSS


Johnson & Johnson s worldwide business is divided into three segments: 

Consumer, Phannaceutical and Medical Devices and Diagnostics. Additional infonnation required by this item is incorporated herein 

by reference to the narrative and tabular (but not the graphic) descriptions of segments and operating results under "Management' 

Discussion and Analysis of Results of Operations and Financial Condition" on pages 28 through 38 and 64 of Johnson & Johnson 

Annual Report to Shareholders for fiscal year 2004 which is filed as Exhibit 13 to this Report on Fonn lQ. 

CONSUMER 

The Consumer segment manufactures and markets a broad range of products used in the baby and child care , skin care , oral and 

wound care and women s health care fields, as well as over-the-counter phannaceutical and nutritional products. Major brands include 

A VEENO skin care products; BAND-AID Brand Adhesive Bandages; CAREFREE Pantiliners; CLEAN & CLEAR teen skin care 

products; JOHNSON'S Baby line of products; MOTRIN 1B ibuprofen products; PEPCID AC Acid Controller from Johnson & JohnsonMerck Consumer Phanaceutieals Co. ; NEUTROGENA skin and hair care products; RoC skin care products; SPLENDA, a no caloric 

sweetener; STA YFREE sanitary protection products; and the broad family of TYLENOL acetaminophen products. These products are 

marketed principally to the general public and sold both to wholesalers and directly to independent and chain retail outlets throughout 

the world. 

PHACEUTCAL 

The Pharmaceutical segment's principal worldwide franchises are in the antifungal, anti-infective , cardiovascular, contraceptive 

dennatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management, psychotropic (central nervous system) and urology fields. These products are distributed both directly and through wholesalers and health care professionals for use 

by prescription by the gcneral public. Key products in the Phannaceutieal segment include: PROCRIT (Epoetin alfa, sold outside the 

S. as EPREX), a biotechnology derived product that stimulates red blood cell production; DURAGESIC (fentanyl transdennal 

system, sold abroad as DUROGESIC), a treatment for chronic pain that offers a novel delivery system; RISPERDAL (risperidone) and 

RlSPERDAL CONSTA (risperidone long-acting injection), for treatment of the symptoms of schizophrenia; REMICADE (infliximab), a 

novel monoclonal antibody therapy indicated to treat the symptoms of Crohn s disease, rheumatoid arthritis and ankyJosing 

spondylitis; LEV AQUIN (lcvofloxaein) and FLOXIN (ofloxaein), both in the anti-infective field; TOPAMAX (topiramate), an 

anti-epileptic and migraine prevention treatment; ORTHO EVRA (norelgestromin/ethinyl estradiol transdennal system), the first 

contraceptive patch approved by thc Food and Drug Administration (FDA) and ORTHO TRI-CYCLEN LO (norgestimate/ethinyl 

estradiol), a low dose oral contraceptive; DOXIL (doxorubiein), a cancer treatment; DITROPAN XL (oxybutynin chloride), for 

(9 2005. EDGAR OnI ine, Ine. 
the treatment of overactive bladdcr; REMINL (galantamine HBr), for paticnts with mild to modcrate Alzheimer s disease; NA TRECOR 

(nesirtide), a novel agent approvcd for congestive hear failure; VELCADE (bortezomib), an oncology treatment; and CONCERT 

(mcthylphenidate HCI) a product for the treatment of attention deficit hyperactivity disorder. 

MEDICAL DEVICES AN DIAGNOSllCS 

The Medical Devices and Diagnostics segment includes a broad range of products used by or under the direction of physicians 

nurses, therapists , hospitals , diagnostic laboratories and clinics. These products include Ethicon s wound care and women s health 

products; Ethicon Encto- Surgery s minimally invasive surgical products; Cordis' circulatory disease management products; LifcScan 

blood glucose monitoring products; Grtho-Clinical Diagnostics ' professional diagnostic products; DePuy s orthopaedic joint 

reconstruction, spinal and sports medicine products and Vistakon s disposable contact lenses. Distribution to these health care 

professional markets is done both directly and through surgical supply and other dealers. 

GEOGRAIDC ARAS 

The international business of Johnson & Johnson is conducted by subsidiaries located in 56 countries outside the United States 

which are selling products in virtally all countries throughout the world. The products made and sold in the international business 

include many of those described above under "Business -- Consumer, Phannaceutical and Medical Devices and Diagnostics. 

However, the principal markets, products and methods of distribution in the international business vary with the country and the 

culture. Thc products sold in international business incJude not only those which were developed in the United States but also those 

which were developed by subsidiaries abroad. 

Investments and activities in some countries outside the United States arc subject to higher risks than comparable U. S. activities 

because the investment and commercial climate is influenced by restrictive economic policies and political uncertainties. 

RAW MATERI 

Raw materials essential to Johnson & Johnson s operating companies' businesses are generally readily available from multiple sources. 

PATENTS AND TRAEMA 

Johnson & Johnson has made a practice of obtaining patent protection on its products and processes wherc possible. Johnson & 

Johnson owns or is licensed under a number of patents relating to its products and manufacturing processes, which in the aggregate 

are believed to be ofmateriaJ importance in the operation of its business. Sales of the Company s two largest products, PROCRIT and 

RlSPERDAL, each accounted for over 5% of Johnson & Johnson s total revenues for 2004. Accordingly, the patents related to these 

products are believed to be materiaJ in relation to Johnson & Johnson as a whole. 

During 2004 and 2005 , DURAGESIC (fentanyl transdermal system) in thc United States and EPREX in international markets havc lost or 

will lose their basic patent protection and wil be subject to generic competition. The pediatrc exclusivity for the DURAGESIC patent 

expired in the U. S. in January 2005. The first generic version of DURAGESIC has been launched. Foreign patent protcction related to 

DURAGESIC will expire durg 2005. The Company expects that DURAGESIC sales will decline in 2005 as compared to 2004. 

Durng 2004, patents related to EPREX in certain international markets expired. Generic competition will be limited in the near tenn due 

to the lack of biologically equivalcnt compounds. Sales of DURAGESIC and EPREX accounted for over 7% of Johnson & Johnson 

worldwide sales in 2004. There are no other major product patents that are scheduIcd to expire during the next 2 years. 

Johnson & Johnson has made a practice of sellng its products under trademarks and of obtaining protection for these trademarks by 

all available means. Johnson & Johnson s trademarks are protected by registration in the United States and other countries where its 

products are marketed. Johnson & Johnson considers these trademarks in the aggregate to be of material importance in the operation 

of its business. 

2005. EDGAR Onl ine. Inc. 
SEASONALITY 

Worldwide sales do not reflect any significant degree of seasonality; however, spending has been heavier in the fourth quarter of each 

year than in other quarters. This reflects increased spending decisions, principally for advertising and research grants. 

COMPETION 

In all of their product lines, Johnson & Johnson companies compete with companies both large and small, located in the United States 

and abroad. Competition is strong in all lines without regard to the number and size of the competing companies invoJvcd. Competition 

in research, invoJving the development of new products and processes and the improvement of existing products and processes, is 

particularly significant and results from time to time in product and process obsolescence. The development of new and improved 

products is important to Johnson & Johnson s success in all areas of its business. This competitive environment requires substantial 

investments in continuing research and in multiple sales forces. In addition, the winning and retention of customer acceptance of the 

products of Johnson & Johnson s consumer businesses involve heavy expenditures for advertising, promotion and selling. 

RESFARCH 

Research activities are important to all segments of Johnson & Johnson s business. Major research facilities are located not only in the 

United States but also in Australia, Belgium, Brazil, Canada and the United Kingdom. The costs of Johnson & Johnson s worldwide 

research activities relating to the development of new products, the improvement of existing products, technical support of products 

and compliance with governmental regulations for the protection , of the consumer amounted to $5 203 , $4 684 and $3 957 million for 

fiscal years 2004 , 2003 and 2002 , respectively. These costs are charged directly to income in the year in which incurred. All research 

was sponsored by Johnson & Johnson.


ENVIRONMNT 

During the past year Johnson & Johnson companies were subject to a variety of federal, state and local environmental protection 

measures. Johnson & Johnson believes that its operations comply in all material respects with applicable environmental laws and 

regulations. Johnson & Johnson s compliance with these requirements did not and is not expected to have a material effect upon its 

capital expenditures, cash flows, earings or competitive position. 

REGUlTION 

Most of Johnson & Johnson s business is subject to varying degrees of governmental regulation in the countries in which operations 

are conducted, and the general trend is toward regulation of increasing stringency. In the United States, the drug, device, diagnostics 

and cosmetic industries have long been subject to regulation by various federal, state and local agencies, primarily as to product 

safety, effcacy, advertising and labeling. The exercise of broad regulatory powers by the Food and Drug Administration (the " FDA" 

continues to result in increases in the amounts of testing and documentation required for FDA clearance of new drgs and devices 

and a corresponding increase in the expense of product introduction. Similar trends toward product and process regulation are also 

evident in a number of major countries outside of the United States, especially in the European Economic Community where efforts arc 

continuing to harmonize the internal regulatory systems. 

The costs of human health care have been and continue to be a subject of study, investigation and regulation by governmental 

agencies and legislative bodies in the United States and other countries. In the United States, attention has been focused on drug 

prices and profits and programs that encourage doctors to write prescriptions for particular drugs or recommend particular medical 

devices. Managed care has become a more potent force in the market place and it is likely that increased attention will be paid to drug 

and medical device pricing, appropriate drug and medical device utilization and the quality of health care. There is also 

2005. EDGAR Online, Inc. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     

uncertainty as to the impact of the Medicare Prescription Drug, Improvement and Modernization Act which was enacted in the latter 

parof2003. 

The regulatory agencies under whose purview Johnson & Johnson operates have administrative powers that may subject Johnson & 

Johnson to such actions as product recalls, seizure of products and other civil and criminal sanctions. In some cases Johnson & 

Johnson may deem it advisable to initiate product recalls voluntarily. 

In addition, sales, marketing and other business practices in the health care industry have come under increased scrutiny by 

government agencies and state attorney generals and resulting investigations and prosecutions carr the risk of significant civil and 

criminal penalties. 

While the Company's affiliates do not sell any COX- 2 inhibitor medicines, the recent developments involving those medicines (such as 

Vioxx and Celebrex) are likely to have implications throughout the health care industr. 

AVAILE INORMATION 

Copies of Johnson & Johnson s quarterly reports on Fonn 10-Q, annual report on Fonn 1 O-K and current reports on Fonn 8- , and any amendments to the foregoing, wil be provided without charge to any shareholder submitting a written request to the Secretary at the 

principal executive offices of the Company or by calling 800-328-9033. All of the Company s Securties and Exchange Commission 

SEC" ) fiings are also available on the Company s Web site at www.investor.jnj. com/govemance . as soon as reasonably practicable 

after having been electronically fied or furnished to the SEe. All SEC filings are also available at the SEC Web site at ww.sec.gov. addition, the Charters of the Audit Committee , the Compensation & Benefits Committee and the Nominating & Corporate Governance 

Committee of the Board of Directors and the Company s Principles of Corporate Governance, Policy on Business Conduct and Code of 

Business Conduct & Ethics for Directors and Executive Officers, are available at the www. investor.jnj. com/governance Web site 

address and will be provided without charge to any shareholder submitting a written request, as provided above. 

ITEM 2. PROPERTIS 

Johnson & Johnson and its worldwide subsidiaries operate 141 manufacturing facilities occupying approximately 19 million square feet 

of floor space.


The manufacturing facilities are used by the industry segments of Johnson & Johnson s business approximately as folJows: 

SQUARE FEET 

SEGMENT (IN

THOUSANS) 

Consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970 

Pharmaceutical. . . . 499 Medical Devices and Diagnostics. . . 514 

Worldwide total................................... 983


Within the United States, 7 facilities are used by the Consumer segment, 14 by the Pharmaceutical segment and 42 by the Medical 

Devices and Diagnostics segment. Johnson & Johnson s manufacturing operations outside the United States are often conducted in 

facilities which serve more than one segment of the business. 

(9 2005. EDGAR Onl ine 
 Ine.
.... .. .. . .. .... . .... .. 

....... .. ... . . . . . . . . . . . . . . . . . . . . ... ... ..         

The locations of the manufacturing facilities by major geographic areas of the world are as follows: 

NOER 

SQUARE FEET 

GEOGRAPHIC AREA FACILITIES (IN THOUSANS 

United States. .. .. 602 

Europe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Western Hemisphere excluding U. A.......................... 445 

784 

Africa , Asia and Pacific.................................... 152 

Worldwide Total... 141 983 

In addition to the manufacturing facilities discussed above, Johnson & Johnson maintains numerous office and warehouse facilities 

throughout the world. Research facilities are also discussed in Item I under " Business - Research. 

Johnson & Johnson generally seeks to own its manufacturing facilities, although some, principally in locations abroad, are leased. 

Office and warchouse facilities are often leased. 

Johnson & Johnson s properties are maintained in good operating condition and repair and are well utilized. 

For infonnation regarding lease obligations see Note 4 "Rental Expense and Lease Commitments " under "Notes to Consolidated 

Financial Statements" on page 46 of the Annual Report, fied as Exhibit 13 to this Report on Fonn lO-K. Segment infonnation on 

Additions to Propert, Plant & Equipment is contained on page 64 oflhe Annual Report, fied as Exhibit 13 to this Report on Fonn 

IOITEM 3, LEGAL PROCEEDINGS 

The infonnation set forth in Note 18 " Legal Proceedings " under "Notes to Consolidated Financial Statements " on pages 56 through 61 

of the Anual Report is incorporated herein by reference and fied as Exhibit 13 to this Report on Fonn lOThe Company or its subsidiaries are parties to a number of proceedings brought under the Comprehensive Enviromnental Response 

Compensation and Liability Act, commonly known as Superfund, and comparable state laws, in which the primary relief sought is the 

cost of past and future remediation. While it is not feasible to predict or detennine the outcome of these proceedings, in the opinion of 

the Company, such proceedings would not have a material adverse effect on the results of operations, cash flows or financial position 

of the Company. 

ITEM 4, SUBMISSION OF MA TIERS TO A VOTE OF SECURITY HOLDERS 

Not applicable. 

EXCUT OFFCERS OF THE REGISTRr 

Listed below are the executive officers of Johnson & Johnson as of March 14 2005 , each of whom, unless otherwise indicated below 

has been an employee of the Company or its affiliates and held the position indicated during the past five years. There are no family 

relationships between any of the executive officers, and there is no arrangement or understanding between any executive officer and 

any other person pursuant to which the executive officer was selected. At the annual meeting of the Board of Directors, the executive 

officers are elected by the Board to hold office for one year and until their respective successors arc elected and qualified, or until 

earlier resignation or removal. 

(f 2005. EDGAR Onl ine Inc. 
.................. ....... (g) 

Information with regard to the directors of the Company, including those of the following executive officers who are directors, is 

incorporated herein by reference to pages 3 through 9 of Johnson & Johnson s Proxy Statement dated March 16 2005 (the " Proxy 

Statement" 

NAME AGE POSITION 

Robert J. Darretta.... . vice Chairman, Board of Directors; Member , Executive 

Committee; Chief Financial Officer 

Russell c. Deyo. .. . . Member , Executive Committee; vice President, General 

Counsel and Chief Compliance Officer (a) 

Michael J. Dormer. . . Member , Executive Committee; worldwide Chairman 

Kaye I. Foster- Cheek. 

Medical Devices (b) 

Member, Executive Committee; vice President , Human 

Resources (c) 

colleen A. Goggins. . . . . Member, Executive Committee; Worldwide Chairman, 

Consumer & Personal Care Group (d) 

JoAnn Heffernan Heisen. Member , Executive Committee; Vice President, Chief 

Information Officer(e) Per A. Peterson , M. D., Ph. Member , Executive Committee; Chairman 

pharmaceuticals Research & Development (f) 

Christine A. Poon. . . . Vice Chairman; Member , Executive Committee; 

worldwide Chairman , Medicines & Nutritionals 

Joseph C. Scodari. . . . Member , Executive Committee; Worldwide Chairman 

Pharmaceuticals Group 

Nicholas J. Valeri ani ... Member , Executive Committee; Worldwide Chairman, 

Cardiovascular Devices and Diagnostics (h) 

william C. Weldon.... Chairman , Board of Directors; Chief Executive 

Officer; Chairman, Executive Committee 

(a) Mr. R. C. Dcyojoined the Company in 1985 and became Associate General Counsel in 1991. lIe became a Member of the Executive 

Committee and Vice President, Administration in 1996 and Vice President, General Counsel and Chief Compliance Offcer in April 2004. 

(b) Mr. M. J. Donner joined the Company in 1998 as Company Group Chainnan, Worldwide Franchise Chainnan for DePuy and 

Cadman, when the Company acquired DePuy, Inc. At the time of that acquisition, he had been Chief Operating Offcer of DePuy, Inc. 

sinee 1996. Mr. Dormer bccame a Member of the Executive Committee and Franchise Group Chainan for Medical Devices in 2001. In 

Apri12002, Mr. Donner was named Worldwide Chainan, Medical Devices Group. 

(c) Ms. K. I. Foster-Cheekjoined the Company in 2003 as Vice President, Human Resources for the Johnson & Johnson Consumer 

Products Companies. In March 2004, she was named Vice President, Human Resources for the Consumer & Personal Care Group and 

was named a member of the Human Resources Leadership Team and the Consumer & Personal Care Group Operating Committee. Ms. 

Foster-Cheek became a Member of the Executive Committee and Vice President, Human Resources for the Company in January 2005. 

Prior to joining the Company, Ms. Foster-Cheek served in various human resources management positions with Pfizer for 13 years 

most recently supporting its phannaceutical business in Japan, Asia, Africa, Middle East and Latin America. 

(d) Ms. C. A. Goggins joined the Company in 1981 and held various positions before becoming President of Personal Products 

Company in 1994. She was named President of Johnson & Johnson Consumer Products Company in 1995 and Company Group 

Chairman, North America, Johnson & Johnson Consumer Products in 1998. Ms. Goggins became a Member of the Executive Committee 

and Worldwide Chainnan, Consumer & Personal Care Group in 2001. 

(e) Ms. J. H. Hciscnjoined the Company in 1989 and became Treasurer in 1991 and ContToller in 1995. She became a Member of the 

Executive Committee and Vice President, Chief Information Offcer in 1997. 

(I) Dr. P. A. Peterson joined the Company in 1994 as Vice President, Drug Discovery of The R. Johnson Pharmaceutical Research 

Institutc. He was named Group Vice President of The Phannaceutical 

(9 2005. EDGAR onl ine, Inc. 
Research Institute in April 1998 and its Prcsident in Novemhcr 1998. In 2000, Dr. Petcrson was named Chairman, Pharmaceuticals 

Research & Development. Dr. Peterson became a Member of the Executive Committee in 2001. 

(g) Mr. J. C. Scodarijoincd the Company in 1999 as President ofCcntocor when the Company acquired Centocor. At the time ofthat 

acquisition, he had been the President and Chief Operating Officer of Centacar and a member of Centocor s Board of Directors since 

December 1997. In March 2001 , he was named Company Group Chairman for the North American pharaceutical business , and became 

a member of the Pharmaceuticals Group Operating Committee. In March 2003 , Mr. Scodari was named Company Group Chairman 

Biophannaceutical Businesses, Mr. Scodari was named Worldwide Chainnan, Pharmaceuticals Group and became a Member of the 

Executive Committee on March 1 , 2005. 

(h) Mr. N. J. Valerianijoincd the Company in 1978 and held various positions before becoming President of Ethicon Endo-Surgery, Inc. 

in 1997. In Januar 2001 he was named Company Group Chairman for Ethicon Endo-Surgery with additional responsibility for the 

Johnson & Johnson Medical Products Medical Devices and Diagnostics business in Canada. He became Worldwide Franchise 

Chainnan for the DePuy Franchise in 2002. Mr. Valeriani became a Member of the Executive Conuittee and Vice President, Human 

Resources in September 2003. In Februar 2004 he assumed additional responsibilities as Worldwide Chainnan, Diagnostics. In 

January 2005 , Mr. Valeriani was appointed as the Worldwide Chainnan, Cardiovascular Devices and Diagnostics and relinquished his 

Human Resources responsibilities. 

PART" 

ITM 5. MARKET FOR THE REGISlR'S COMMON EQUITY, RELATED STOCKHOLDER MA TIRS AND ISSUER 

PURCHES OF EQUITY SECURH1ES 

As of March 1 2005, there were approximately 187 840 rccord holders of Common Stock ofthe Company. The other information called 

for by this item is incorporated herein by reference to: the material captioned "Management s Discussion and Analysis of Results of 

Operations and Financial Condition -- Share Repurchase & Dividends" on page 35 and " Common Stock Market Prices " on page 38; 

Note 10 under the "Notes to Consolidated Financial Statements " on pages 49 and 50 of the Annual Report, fied as Exhibit 13 to this 

Report on Fonn lO-K; and the "Equity Compensation Plan Infonnation" on pages 32 and 33 of the Proxy Statement. 

The following table provides infonnation with respect to Common Stock share purchases by the Company during fiscal 2004. Stock 

purchases are made as par of a systematic plan to meet the Company s compensation programs. 

TOTAL NUMBER OF SHAES AVERAGE PRICE PAID 

FISCAL MONTH PURCHSED PER SHAE 

December 29, 2003 through January 25 , 2004....... 256 500 $52.


January 26 , 2004 through February 22 , 2004....... 950 600 $53.


February 23 , 2004 through March 28, 2004......... 458 500 $52.


March 29 2004 through April 25, 2004............ 925, 000 $52.


April 26, 2004 through May 23 , 2004....... 836, 200 $54.


May 24, 2004 through June 27 , 2004............... 678 000 $55.


June 28, 2004 through July 25, 2004.............. 334 300 $55. 

July 26 , 2004 through August 22, 2004....,....... 130, 000 $55. 

August 23, 2004 through September 26 , 2004...... 553 300 $57. 

September 27 , 2004 through October 24 , 2004...... 510 600 $56. 

October 25 , 2004 through November 21 , 2004....... 001 100 $59. 

November 22 , 2004 through January 2 , 2005........ 087 700 $62. 

(9 2005. EDGAR OnI ine Ine. 
ITEM 6, SELECTD FINANCIA DATA 

The infonnation called for by this item is incorporated herein by reference to the material captioned " Summary of Operations and 

Statistical Data 1994- 2004" on page 6S of the Annual Report, fied as Exhibit 13 to this Report on Fonn IOITEM 7. MAAGEMENT' S DISCUSSION Al'\'D ANALYSIS OF RESULTSOFOPERATIONSAN FINANCIA CONDITION 

The infonnation called for by this item is incorporated herein by reference to the narrative and tabular (but not the graphic) material 

included in the material captioned "Management' s Discussion and Analysis of Results of Operations and Financial Condition" on 

pages 28 through 38 of the Annual Report, filed as Exhibit 13 to this Report on Fonn IOITM 7A. QUANATIVE AND QUALITATI DISCLOSUR ABOUT MAT RISK 

The infonnation called for by this item is incorporated herein by reference to the material captioned "Management' s Discussion and 

Analysis of Results of Operations and Financial Condition -- Liquidity and Capital Resources " on pages 34 through 3S of the Annual 

Report, fied as Exhibit 13 to this Report on Fonn IOITEM 8. FINANCIAL STATEMENTS AN SUPPLEMENTARYDATA 

The information called for by this item is incorporated herein by reference to the Audited Consolidated Financial Statements and Notes 

thereto and the material captioned "Report ofIndependent Registered Public Accounting Finn" on pages 39 through 63 of the Annual 

Report, which are filed as Exhibit 13 to this Report on Fonn 10­

ITM 9, CHAGES IN AND DISAGREEMENTS WI ACCOUNANS ON ACCOUNG AND FlANOAL DISCLOSUR 

Not applicable. 

ITEM 9A, CONTROLS AND PROCEDURS 

DISCLOSURE CONTROLS. At the end of the fiscal fourth quarter, the Company evaluated the effectiveness of the design and 

operation of its disclosure controls and procedures. The Company s disclosure controls and procedures are designed to ensure that 

the Company records, processes , summarizes and reports in a timely manner the information the Company must disclose in its reports 

fied under the Securties Exchange Act. William C. Weldon, Chairman and Chief Executive Offcer, and Robert J. Darretta, Vice 

Chainnan and Chief Financial Officer, reviewed and participated in this evaluation. Based on this evaluation, Messrs. Weldon and 

Darretta concluded that, as of the date of their evaluation, the Company s disclosure controls and procedures were effective. 

INTERNAL CONTROL. Management's Report on Internal Control over Financial Reporting is included in this Report on Fonn IO- K in 

this Item 9A. During the fiscal quarter ended January 2, 2005 , there were no significant changes in the Company s internal control over 

financial reporting that have materially affected, or are reasonably likely to materially affect, the Company s internal control over 

financial reporting.


MAAGEMENT' S REPORT ON INER."IAL CONTOL OVER FINANCIA REPORTING. Under 

Section 404 of The Sarbanes-Oxley Act of 2002, management is required to assess the effectiveness of the Company s internal control 

over financial reporting as of the end of each fiscal year and report, based on that assessment, whether the Company s internal control 

over financial reporting is effective. 

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The 

Company s internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company's 

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting 

principles. 

Internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, internal control over financial 

reporting detennined to be effective can provide only reasonable assurance with 

if 2005. EDGAR Onl ine , Inc. 
respect to financial statement preparation and may not prevent or detect all misstatements. Moreover, projections of any evaluation of 

effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that 

the degree of compliance with the policies or procedures may deteriorate. 

The Company s management has assessed the effectiveness of the Company s internal control over financial reporting as of January 2, 

2005. In making this assessment, the Company used the criteria established by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO) in "Internal Control-Integrated Framework." These criteria are in the areas of control environment, risk 

assessment, control activities, infonnation and communication, and monitoring. The Company s assessment included extensive 

documenting, evaluating and testing the design and operating effectiveness of its internal control over financial reporting. 

Based on the Company s processes and assessment, as described above, management has concluded that, as of January 2, 2005 , the 

Company s internal control over financial reporting was effective. 

Management s assessment of the effectiveness of the Company s internal control over financial reporting as of January 2 , 2005 has 

been audited by PricewaterhouseCoopers LLP, an independent registered public accounting finn, as stated in their report which 

appears in the "Report of Independent Registered Public Accounting Firm" on page 63 of the Annual Report, which is incorporated 

herein by reference. 

PART II


ITM 10 DIRCTORS AN EXECUT OFHCERS OF THE REGISmA 

The information called for by tbis item is incorporated herein by reference to (a) the material under the caption " Election of Directors -­

Nominees " on pages 3 through 9 of the Proxy Statement, (b) the material in Part I hereof under the caption " Executive Offcers of the 

Registrant " (c) the discussion of the Audit Committee under the heading "Directors' Fees, Committees and Meetings " on pages 1 0 

through 12 of the Proxy Statemeot and (d) the material under the caption " Section 16(a) Beneficial Ownership Reporting Compliance 

on page 13 of the Proxy Statement. 

The Company's Policy on Business Conduct , which covers all empJoyees (including the Chief Executive Offcer, Chief Financial Officer 

and Controller), meets the requirements of the SEC Rules promulgated under Section 406 of the Sarbanes-Oxley Act of2002. The Policy 

on Business Conduct is available on the Company s Web site at www.jnj. com. Copies of the Policy on Business Conduct are available 

to shareholders without charge upon written request to the Secretary at the Company s principal address. Any substantive amendment 

to the Policy on Business Conduct or any waiver of the Policy granted to the Chief Executive Officer, the Chief Financial Officer or the 

Controller will also be posted on the Company s Web site at ww.jnj.com within five business days (and retained on the Web site for 

at least one year). 

In addition, the Company has adopted a Code of Business Conduct & Ethics for Members of the Board of Directors and Executive 

Officers. The Code of Business Conduct & Ethics for Directors and Executive Officers is available on the Company s Web site at 

www.jnj. com. Copies of the Code of Business Conduct & Ethics are available to shareholders without charge upon written request to 

the Secretary at the Company s principal address. Any substantive amendment to the Code or any waiver of the Code granted to any 

member of the Board of Directors or any Executive Officer will also be posted on the Company's Web site at www.jnj. com within five 

business days (and retained on the Web site for at least one year). 

ITM 11, EXECUTIVE COMPENSATION 

The information called for by this item is incorporated herein by reference to the following sections of the Proxy Statement: "Election of 

Directors -- Directors' Fees, Committees and Meetings " on pages 10 through 12; " Compensation & Benefits Committee Report on 

Executive Compensation " on pages 15 through 19; " Shareholder Return Performance Graphs " on pages 20 and 21; and " Executive 

Compensation!! on pages 22 through 26. 

(9 2005. EDGAR Online Inc. 
ITEM 12, SECU OWNRSHI OF CERTAI BENEFICIAL OWNRS AN MAAGEMENT 

The information called for by this item is incorporated herein by reference to the material captioned "Election of Directors -- Stock 

Ownership/Control" on page 9 of the Proxy Statement, and Note 10 under the "Notes to Consolidated Financial Statements" on pages 

49 and 50 ofthe Annual Report, filed as Exhibit 13 to this Report on Form IOITEM 13 CERTAI RELA TIONSll AN RELATED 'IRANSACTIONS 

Not applicable. 

ITEM 14, PRINCIP AL ACCOUNAN FEES AN SERVICES 

The information called for by this item is incorporated herein by reference to the material under the headings "Appointment of 

Independent Auditors " and "Pre-Approval of Audit and Non-Audit Services " on pages 34 through 36 of the Proxy Statement. 

PARTIV 

ITEM 15. EXITS, FIANCIAL STATEMENT SCHEDULES 

(aJ The fol1owing documents are filed as part of this report 

1. Financial Statements 

The following Audited Consolidated Financial Statements and Notes thereto and the Report of Independent Registered Public 

Accounting Finn on pages 39 through 63 of the Annual Report are incorporated herein by reference and fied as Exhibit 13 to this 

Report on Form lOConsolidated Balance Sheets at end of Fiscal Years 2004 aod 2003


Consolidated Statements of Earnings for Fiscal Years 2004, 2003 aod 2002


Coosolidatcd Statemeots of Eqoity for Fiscal Years 2004, 2003 and 2002


Consolidated Statements of Cash Flows for Fiscal Years 2004, 2003 and 2002 

Notes to Consolidated Financial Statements 

Report oflndependent Registered Public Accounting Firm 

2. Financial Statement Schedules 

Schedule II - Valuation and Qualifying Accounts 

Schedules other than those listed above arc omitted because they are not required or are not applicable. 

3. Exhibits Required to be Filed by Item 601 of Regulation S-


The infonnation called for by this item is incorporated herein by reference to the Exhibit Index in this report.


(9 2005. EDGAR Onl ine, Inc. 
.....

....... 

JOHNSON & JOHNSON AN SUBSIDIARIES


SOIDULE ll- VALUATION AND QUALG ACCOUNS


FISCAL YEARS ENDED JANUARY 2, 2005, DECEMBER 28, 2003 AND DECEMBER 29, 2002


(DOLLAR IN MILLIONS) 

BALANCE AT BALANCE AT 

BEGINNING PAYMENTS! END OF 

OF PERIOD ACCRUALS OTHER PERIOD 

2004 

Accrued rebates, returns and promotions(l). 622 514 (2) 351) 785 

Reserve for doubt ful accounts.. 192 (15) 206 

Re serve for cash discounts. 736 (729) 

$2, 869 279 (8, 095) 053 

2003 

Accrued rebates returns and promotions (1) .. 035 850 263) 622 

Reserve for doubt ful accounts.. 191 (27) 192 

Reserve for cash discounts. . . . 597 (604) 

$2, 288 475 (5, 894) 869 

2002 

Accrued rebates ret urns and promot ions (1) 403 931 (3, 299) 035 

Reserve for doubtful accounts... 197 (59) 191 

Reserve for cash discounts... 627 (639) 

674 611 (3, 997) 288 

(1) Includes reserve for customcr rebates of$488 , S314 and $274 at January 2, 2005 , Dccember 28 , 2003 and December 29 2002 

respectively. 

(2) Includes $170 rclated to the reversal of previously estimated performance-based rebate allowances in managed carc contracts. 

Ccrtain prior year amounts have been reclassified to conform with current year presentation. 

(t) 2005. EDGAR OnI ine Inc. 
                                           

SIGNATURES 

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be 

signed on its behalf by the undersigned, thereunto duly authorized. 

JOHNSON Date: March 9, 2005	 JOHNSON 

(Registrant) 

By Isl	 WELDON 

W. C. Weldon, Chainnan, Board of Directors and Chief Executive Offcer 

Pursuant to the requirements of the Securities Exchange Act of 1934 , this report has been signed bclow by the following persons on 

behalf of the registrant and in the capacities and on the dates indicated. 

SIGNA TURE	 TITLE DATE 

/s/ w. C. WELDON	 Chairman , Board of Directors and March 9, 2005 

Chief Executive Officer, and 

W. C. Weldon	 Director (Principal Executive


Officer) 

/s/ R. J. DARRETTA	 vice Chairman , Board of Directors i March 9, 2005 

Chief Financial Officer and Director 

R. J. Darretta (principal Financial Officer) 

/s/ S. J. COSGROVE Controller March B, 2005 

S. J. Cosgrove 

/s/ G. N. BURROW Director March 11 , 2005 

G. N. Burrow 

/s/ M. S. COLEMAN Director March 12 , 2005 

M. S. Co 1 eman 

/ s / J. G. CULLEN Director March 11, 2005 

J. G. Cullen 

/s/ M. J. FOLKMAN Director March 11 , 2005 

J. Folkman 

/s/ A. D. JORDAN Director March 14, 2005 

A. D. Jordan 

/s/ A. G. LANCEO Director March 9, 2005 

co 2005. EDGAR Online, Inc. 
A. G. Langbo


(E 2005. EDGAR Onl ir. e , Inc. 
                                                                    

SIGNATURE 

/s/ S. L. LINDQUIST


S. L. Lindquist


/s/ L. F. MULLIN


F. Mullin


/s/ S. S REINEMUND


S Reinemund


/s/ D. SATCHER


D. Satcher


/s/ H. B. SCHACHT


H. B. Schacht


TITLE DATE 

Director March 9, 2005 

Director March 9 , 2005 

Director March 11 , 2005 

Director March 14, 2005 

Director March 14 , 2005 

cg 2005. EDGAR Onl ine. Ine. 
                               

REPORT OF INEPENDENT REGISTERED PUBLIC ACCOUNTING Fl ON 

F1ANOA STATEMENTSCHEDULE 

To the Shareholders and Board of Directors of Johnson & Johnson: 

OUf audits of the consolidated financial statements, of management s assessment of the effectiveness of internal control over financial 

reporting and of the effectiveness ofintcmal control over financial reporting refcITcd to in our report dated Februar 28, 2005 

appearing in the 2004 Annual Report to Shareholders of Johnsou & Johnson (which report, consolidated tinaneial statements and 

assessment are incorporated by reference in this Annual Report on Fonn lO-K) also included an audit of the financial statement 

schedule listed in Item 15(a)(2) of this Form lO-K. In our opinion, this tinaneial statement schedule presents fairly, in all material 

respects, the infonnation set forth therein when read in conjunction with the related consolidated financial statements. 

Isl PRICEWATERHOUSECOOPERS LLP


PricewaterhouseCoopers LLP


New York 
 New York 

March 11, 2005 

(Q 2005. EDGAR Onl ine , Ine. 
REG. SEXHIBIT TABLE


ITEM NO.


3 la) Ii)


30, 

3 la) Iii)


3 (a) liii)


3 la) (iv)


31b) 

41a) 

101a) 

101b) 

10 Ie) 

101d) 

10 (e)


10 If)


101g) 

ended 

10lhl 

10 Ii)


10 I j I 

EXITINEX 

DESCRIPTION 

OF EXHIBIT


Restated Certificate of Incorporation dated April 26, 

1990 - - Incorporated herein by reference to Exhibit 3 (a) of the 

Registrant r s Form lO- K Annual Report for the year ended December 

1990. 

Certificate of Amendment to the Restated Certificate of 

Incorporation of the Company dated May 20, 1992 - - Incorporated 

herein by reference to Exhibit 3 (a) of the Registrant r s Form lOAnnual Report for the year ended January 3, 1993. 

Certificate of Amendment to the Restated Certificate of 

Incorporation of the Company dated May 21, 1996 -- Incorporated

herein by reference to Exhibit 3 (a) (iii) of the Registrant r s Form 

ID- K Annual Report for the year ended December 29, 1996. 

Certificate of Amendment to the Restated Certificate of 

Incorporation of the Company effective May 22 , 2001 -- Incorporated I s Form 10-Q herein by reference to Exhibit 3 of the Registrant 


Quarterly Report for the quarter ended July 1, 2001.


By- Laws of the Company, as amended effective June 11, 

2001 - - Incorporated herein by reference to Exhibit 99. 2 of the 

Registrant I s Form 10-Q Quarterly Report for the quarter ended July 

1, 2001. 

Upon the request of the Securities and Exchange Commission , the 

Registrant will furnish a copy of all instruments defining the 

rights of holders of long term debt of the Registrant. 

Stock Option Plan for Non- Employee Directors - - Incorporated herein 

by reference to Exhibit 10 (a) of the Registrant' s Form 10- K Annual 

Report for the year ended December 29, 1996. 

2000 Stock Option Plan (as amended) - - Incorporated herein by


reference to Exhibit 10 (b) of the Registrant 
I s Form 10- K Annual

Report for the year ended December 29, 2002. 


1995 Stock Option Plan (as amended) - - Incorporated herein by


reference to Exhibit 10 (b) of the Registrant' s Form 10- K Annual


Report for the year ended January 3 I 1999. *


1991 Stock Option Plan (as amended) - - Incorporated herein by


reference to Exhibit 10(c) of the Registrant' s Form 10- K Annual


Report for the year ended December 28, 1997. 


2000 Stock Compensation Plan - - Incorporated herein by reference to 

Exhibit 10 (e) of the Registrant I s Form 10- K Annual Report for the 

year ended December 31, 2000. 

Executive Incentive Plan (as amended) -- Incorporated herein by 

reference to Exhibit 10 (f) of the Registrant I s Form 10- K Annual 

Report f or the year ended December 31, 2000. * 

Domestic Deferred Compensation (Certificate of Extra Compensation) 

Plan (as amended) -- Incorporated herein by reference to Exhibit 

10 (g) of the Registrant I s Form 10- K Annual Report for the year 

December 28, 2003. 

Deferred Fee Plan for Non- Employee Directors (as amended) - - Filed 

wi th thi s document. * 

Executive Income Deferral Plan (as amended) - - Incorporated herein 

by reference to Exhibit 10 (i) of the Registrant' s Form 10- K Annual 

Report for the year ended December 28 , 2003. * 

Excess Savings Plan - - Incorporated herein by reference to Exhibit 

e 2005. EDGAR OnI ine , Ine. 
10 (j) of the Registrant' s Form lO- K Annual Report for the year


ended 

101k) 

10 11) 

December 29 , 1996. 

Supplemental Retirement Plan - - Incorporated herein by reference to 

Exhibit lO(h) of the Registrant' s Form lO- K Annual Report for the 

year ended January 3, 1993. 

Executive Life Insurance Plan -- Incorporated herein by reference 

Exhibit 10 (i) of the Registrant I s 

year ended January 3, 1993. 

Form lQ- K Annual Report for the 

C9 2005. EDGAR OnI ine Ine. 
(j 

REG. SEXHIBIT TABLE


ITEM NO.


101m) 

the 

10 In) 

10 (0) 

December 

101p) 

ended 

10 (q) 

Annual 

31 (a) 

31 (b) 

32 (a) 

321b) 

99 (b) 

DESCRIPTION 

OF EXHIBIT


Stock Option Gain Deferral Plan -- Incorporated herein by reference


to Exhibit 10 (m) of the Registrant' s Form lO- K Annual Report for


year ended January 2 / 2000. *


Estate Preservation Plan - - Incorporated herein by reference to 

Exhibit lO(n) of the Registrant' s Form lO- K Annual Report f or the 

year ended January 2, 2000. 

Letter Agreement dated June 24 , 2002 between the Company and Mr. R.


S. Larsen with respect to post- employment


arrangements - - Incorporated herein by reference to Exhibit 10 (0)


the Registrant I s Form lO- K Annual Report for the year ended 

29, 2002.


Consul ting Agreement between the Company and Dr. Judah Folkman


member of the Board -- Incorporated herein by reference to Exhibit


10 (p) of the Registrant' s Form 10- K Annual Report for the year


December 29 , 2002.


Summary of compensation arrangements for Named Executive Officers


and Directors - - Filed with this document. 

Statement of Computation of Ratio of Earnings to Fixed


Charges - - Filed with this document.


- Pages 28 through 66 of the Company' s Annual Report to 

Shareholders for fiscal year 2004 (only those portions of the 

Report incorporated by reference in this report are deemed


"filed" - Filed with this document. 

Subsidiaries - - Filed with this document. 

Consent of Independent Registered Public Accounting Firm - - Filed 

wi th this document. 

Certification of Chief Executive Officer pursuant to Section 302 of 

The Sarbanes- Oxley Act of 2002 -- Filed with this document. 

Certification of Chief Financial Officer pursuant to Section 302 of 

The Sarbanes-Oxley Act of 2002 - - Filed with this document. 

Certification of Chief Executive Officer pursuant to Section 906 of 

The Sarbanes - Oxley Act of 2002 - - Furnished with this document. 

Certification of Chief Financial Officer pursuant to Section 906 of 

The Sarbanes- Oxley Act of 2002 -- Furnished with this document. 

Cautionary Statement pursuant to Private Securities Litigation 

Reform Act of 1995: " Safe Harbor " for Forward-Looking 

Statements -- Filed with this document. 

* Management contracts and compensatory plans and arrangements required to be fied as Exhibits to this form pursuant to Item 1 Sea) 

of this Report on F onn 10- K. 

A copy of any of the Exhibits listed above will be provided without charge to any shareholder submitting a written request specifying 

the desired exhibit(s) to the Secretary at the principal executive offices of the Company. 

2005. EDGAR Online Inc. 
EXHIT 10 (h) 

JOHNSON & JOHNSON


DEFERRED FEE PLA FOR DIRECTORS


(Amended as of Februar 14 2005) 

Plan ) is to provide outside Directors of 1. Purpose. The purpose of the Johnson & Johnson Deferred Fee Plan for Directors (the "

Johnson & Johnson (the "Company ) the opportnity to defer receipt of compensation earned as a Director to a date following 

tennination of such service. The provision of such an opportnity is designed to aid the Company in attracting and retaining 

members of its Board of Directors persons whose abilities , experience and judgment can contribute to the well being of the Company. 

2. Effective Date. Tbe original effective date of the Plan was Januar 1 , 1983. The Plan was amended in its entirety, effective as of 

Januar 1 , 1995 and again as of December 5 1996. 

3. Eligibility. Any Director of the Company who is not also an Employee of the Company or any related company shall bc eligible to 

paricipate in the Plan. 

4. Deferred Compensation Account. A deferred compensation account shall be established for each Director. 

5. Amount of Deferal. Each participant (effective retroactive to January 1 2005) may elect to defer receipt of all or a specified part of 

any cash compensation payable to the participant for serving on the Board of Directors or for serving on committees of the Board of s deferred compensation Directors of the Company. An amount equal to all deferred compensation will be credited to the participant' 

account on a quarterly basis as of the dividend payment datc in each quarter (the npayment Date ). In the event that there shall not be 

a dividend payment date in any quarter, then the Payment Date shall be deemed to be the last business day of such quarter. 

6. Deferred Compensation Account - Hypothetical Investment Options. 

, all amounts elected to be (a) Unless otherwise specified by the participant pursuant to tbe tenns of paragraph (b) of this Section 6 

deferred under this Plan for any calendar year (" Deferrals ) shall be credited to the paricipant s deferrcd compensation account 

converted into equivalent units of Johnson & Johnson Common Stock (" Company Stock") and adjusted as if the compensation 

deferred had been invested in Company Stock as of the Payment Datc, until the datc of final paymcnt pursuant to Section 9 hereof 

Company Stock Equivalent Units ). The number of Company Stock Equivalent Units shall be determined by dividing the amount of 

compensation payable by the average of the high and low price of the Company Stock as traded on the New York Stock Exchange on 

the trading day immediately prior to the Payment Date , as reported by Bloomberg (or another financial reporting service selected by the 

Company in its sole discretion). The number of Company Stock Equivalent Units included in a participant s deferred compensation 

account shall be adjusted to reflect dividends and the value of such account shall be adjusted to reflect increases or decreascs in


market value which would have resulted had funds equal to the balance of the participant' s deferred compensation account been


invested in Company Stock. Nothing herein obligates the


(9 2005. EDGAR OnI ine , Ine. 
, it shall remain the sale propert of the Company to purchase any such Company Stock; and if such Company Stock is purchased

Company. 

(b) At the election of each participant, to be made as provided for in Section each deferred compensation account wil be credited 

with interest from the Payment Date, until the date of final payment pursuant to Section 9 hereof, at a rate equal to the annual rate of 

CEC Plan ), for the prior year provided growth of investment in the Johnson & Johnson Certificate of Extra Compensation Plan (the " 

however, that the computation of said growth rate shall not include dividend equivalents paid under the CEC Plan. The election 

pennitted under this Section 6(b) shall not be available to any participant who becomes a participant in the Plan after December 31 

1995. 

(c) With respect to Company Stock Equivalent Units in a deferred compensation account, the Company shall credit such account on 

each dividend payment date declared with respect to the Company s Stock , a number of Company Stock Equivalent Units equal to: (i) 

the product of(y) the dividend per share of the Company s Stock which is payable as of the dividend payment date, multiplied by (z) 

, divided by (ii) the the number of Company Stock Equivalent Units credited to such account as of the applicable dividend record date

average of the high and low price of the Company Stock as traded on the New York Stock Exchange on the trading day immediately 

prior to the dividend payment date, as reported by Bloomberg (or another financial reporting service selected by the Company in its 

sole discretion). Fractional Company Stock Equivalent Units shall be carried forward and fractional dividend equivalent units shall be 

payable thereon. 

(d) All account balances in Company Stock Equivalent Units from the Company s Retirement Plan for Nonemployee Directors which 

have becn transferrcd to his/her deferred compensation account under this Plan, as of January 1995, by reason of the termination of 

of this Plan as Deferrals. such Retirement Plan , shall be treated for purposes 


of compensation deferred and/or (ii) the option elected under 7. Time of Election of Deferral. A participant may change (i) the amount 


Section 6 with respect to hislher account and deferrals for subsequent years, once annually in December by completing forms 

yeaLlfa participant provided by the Company for that purpose. Any such change shall become effective on January I of the followingof December 31 with 

elects to change hislher investment option available under Section 6, the participant' s account shall be valued as 

if such change is of the following January 1 (except 

that value being entered into his/her account under the new investment option as 

to Company Stock Equivalent Units, the first trading day following such January 1 shall be used). 

of each participant's deferred compensation account shall , as the case may be 8. Value of Deferred Compensation Account. The value 


include compensation deferred, interest credited thereon, if any, and any adjustments for dividends, and increases or decreases in the 

If the 

market value of Company Stock, pursuant to the option selected under Section 6 or as otherwise required under the Plan. 

, the next Company Stock does not trade on any date a calculation of Common Stock Equivalent Units is to be made under the Plan


preceding date on which such stock was traded shall be utilized.


9. Payment 	 of Deferred Compensation. Upon a participant s completion of service as a member of the Board of Directors (the


Completion Date ), each participant (or in the event of the participant s death, the named beneficiary or his/her estate) shall be


entitled to receive in cash in a lump sum the value of hislher deferred compensation 

(0 2005. EDGAR OnI ine Inc. 
account as of the Completion Date, unless such participant has elected, pursuant to the provisions of Section 10 below, to further 

defer payment of his/her deferred compensation account beyond such Completion Date. Company Stock Equivalent Units shall be 

valued at the average of the high and low price of the Company s Stock as traded on the New York Stock Exchange on the trading day 

immediately prior to such date, as reported by Bloomberg (or another financial reporting service selected by the Company in its sole 

discretion). No withdrawal may be made from the participant s deferred compensation account prior to the Completion Date. The value 

of a participant s deferred compensation account shall, subject to any further election made pursuant to Section 10 below, be paid as 

soon as practicable following the Completion Date or death. 

10. Further Deferral Election. In addition to the defcrral elections referrcd to above, a participant may also elect (in the manner provided 

for below) to continue to defer the receipt of his /her deferred compensation account beyond his/her Completion Date. The value ofa 

participant s account on his/her Completion Date may be deferred for up to 10 taxable years following such Completion Date. If 

installments are elected , the first installment payment may be made immediately at the Completion Date or be defeITed for up to 10 

taxable years. Installment payments wil be made annually (in the manner described below) in approximately equal amounts (i. e. the 

balance of the account). The minimum number of installments is two and the maximum number is 10 provided, however, that all 

payments shall be made within ten (! 0) years ofthe Completion Date. A participant may elect to defer up to 100% of the value of 

his/her account at the Completion Date; or any percentage increment less than that. All deferred or installment payments shall be made 

in cash. The following additional rules shall apply: 

a) Immediate Lump Sum Payment. The participant will receive the full value of his/her account in the calendar month of his/her 

Completion Date. 

b) Deferred Lump Sum Payment. The participant wil receive the full value of his /her account on or about January 15 of the year he/she 

elects to receive payment in. 

c) Immediate Commencement of Installments. The paricipant wil receive the first installment in the calendar month of his /her 

Completion Date. All subsequent installments on or about Januar 15 of each year. 

d) Deferred Commencement ofInstallments. The participant will receive the first and all subsequent installments on or about January 

15 of each year. 

c) In the event of death of a participant, the Company will make payment in full of the balance of an account, as soon as 

administratively practical in a single lump sum payment to the designated beneficiary or hislher estate. 

f) In making any payment due on or about January 15 , the value of a participant s account on the first trading day of such month shall 

be utilized. 

Any and all deferals following a Completion Date shall be invested iu Company Stock Equivalent Units described in Section 6(a) 

above. To the extent a participant s account was credited with the annual growth rate of an investment in the CEC Plan (as described in 

Section 6(b) above), such account shall be converted to Common Stock Equivalent units as of the Completion Date. 

An election by a participant to defer payment or elect installments of all or a part of his/her dcfeITed compensation account beyond the 

Completion Date must be made a 

(Q 2005. EDGAR OnI ine , Inc. 
minimum of twelve (12) months prior to such Completion Date. Any such election may be revised or revoked up to twelve (12) months 

prior to such Completion Date; after such time any election may not be revoked or otherwise revised. 

Notwithstanding the above and upon implementation of the Plan, an exception has been made for participants having a Completion 

Date during 1997. For such participants, the deferral and or installment election must be made a minimum of thee (3) months and in the 

calendar year prior to the Completion Date. For example, a paricipant baving a Completion Date of Aprill , 1997, must make the deferral 

and/or installment election no later than December 31 , 1996. Any such election to defer and/or receive installment payments may only 

be revised or revoked prior to the last pennissible date for making such election. After such time the election may not be revoked or 

otherwise revised. 

An election to defcr payment and/or be paid in installments beyond a Completion Date is effective only when fied with Extra 

Compensation Services on the fonn utilized for such purposes. Any election made after the required deadline shall be disregarded. 

II. Designation of Beneficiary. Each participant may, from time to time, by writing fied with the Secretar of the Company, designate 

any legal or natural person or persons (who may be designated contingently or successively) to whom payments of a participant' 

deferred compensation account arc to be made if a participant dies prior to the receipt of payment of such account. A beneficiary 

designation wiD be effective only if the signed fonn is filed with the Secretary of the Company while the participant is alive and will 

cancel all beneficiary designation fonns fied earlier. If a participant fails to designate a beneficiary as provided above, or if all 

designated beneficiaries die before the participant or before complete payment of the deferred compensation account, such account 

shall be paid to the estate of the last to die of the participant and designated beneficiaries as soon as practicable after such death. 

12. Participant' s Rights Unsecured. The right of any participant to receive payment under the provisions of the Plan shall be an 

unsecured claim against the general assets of the Company, and no provisions contained in the Plan shall be construed to give any 

participant or beneficiary at any time a security interest in any deferred compensation account or any other asset in trust with the 

Company for the benefit of any participant or beneficiary. 

13. Statement of Account. A statement will be sent to participants as soon as practical following the end of each year as to the value of 

his/hcr deferred compensation account as of December 31 of such year. 

14. Assignability. No right to receive payments hereunder shall be transferable or assignable by a participant or a beneficiary, except 

by will or by the laws of descent and distribution. 

15. Administration of the Plan. The Plan shall be administered by a Committee appointed by and responsibJc to the Board of Directors. 

The Committee shall consist of no less than three Directors of the Company. The Committee shall aet by vote or written consent of a 

majority of its members. 

16. Amendment or Tennination of Plan. This Plan may at any time or from time to time be amended, modified or tenninated by the 

Compensation Committee of the Board of Directors or the Board of Directors of the Company. No amendment, modification or 

(9 2005. EDGAR Onl ine , Inc. 
termination shall, without the consent of a participant, adversely affect such participant s accruals in his deferred compensation 

accounts. 

17. Governing Law. This Agreement shall be governed by and constred in accordance with the Laws of the Statc of New Jersey. 

(g 2005. EDGAR On 1 ine, Inc. 
EXHrr 10 (q) 

Summary of Compensation Arrangements for Named Executive Offcers and Directors 

Compensation Arrangements for Named Executive Offcers 

Following is a description of the compensation arrangements that have been approved by the Compensation & Benefits Committee 

(the "Compensation Committee ) on February 14 2005 for the Company s Chief Executive Officer and the other four most highly 

compensated executive officers in 2004 (the IINamcd Executive Offcers 

The Compensation Committee approved the following base salaries, effective March 1 2005 , for the Named Executive Offcers: 

William c. Weldon , Chairman/CEO


$1, 600 000 

Robert J. Darretta, Vice Chairman/CFO


990, 000 

Chris Poon, Vice Chairman/Worldwide Chairman,


925, 000 

Medicines & Nutri tionals Group


Per A. Peterson , Chairman, R&D , Pharmaceuticals Group


807, 000


Russell C. Deyo, Vice President, General Counsel


710, 000 

The Compensation Committee has approved the following bonus payments for perfonnance in 2004 (comprised of cash and the fair 

market value of Common Stock awards on February 14 , 2005): 

Mr. Weldon


500, 000 

Mr. Darretta 

874 500 

Ms. Poon


856 000 

Dr. Peterson


798, 750 

Mr. Deyo


689 000 

The Compensation Committee has approved the folJowing stock option grants under the Company s 2000 Stock Option Plan at an 

exercise price of$66. l H , which was the fair market value of the Company s Common Stock on the date of grant. The options will become 

exercisable on February 15 2008 and expire on Februar 13 2015. 

Mr. Weldon


410, 000 

Mr. Darretta 

160 000 

Ms. Poon


185, 000 

Dr. Peterson


150, 000 

Mr. Deyo


ce 20C5. EDGAR On 1 i ne Inc. 
125, 000 

The Compensation Committee has approved the following long term incentive plan awards in recognition ofpcrfonnancc during 2004


under the Company's Certificate of Extra Compensation (!l CEC" ) Program. A wards are not paid out until retirement or other


(Q 2005. EDGAR Onl ine Tne. 
termination of employment. As of the end of fiscal year 2004, the CEC value per unit was $19.71. The value of the CEC units is subject 

to increase or decrease based on the performance of the Company. 

Mr. Weldon 100, 000 CEC 

Units 

Mr. Darretta 50, 000 CEC 

Units 

Po on 100, 000 CEC 

Units 

Dr. Peterson 120, 000 CEC 

Units 

Mr. Deyo 95, 000 CEC 

Ms. 

Uni t s 

Compensation Arrangements fur Non-Employee Directors 

, directors receive $5 000 

Each Non-Employee Director receives an annual fee of$85 OOO for his or her services as director. In addition

for service on a committee of the Board of Directors or $15 000 if chairperson of the committee. The Presiding Director is paid an annual 

fee of$10 000. 

Under the 2005 Long-Term Incentive Plan being submitted to the shareholders for approval at the 2005 Annual Meeting, each of restricted or deferred stock having a Non- Employee Director would receive non-retainer equity compensation each year in the form 

value of $1 00 000. Subject to shareholder approval of the 2005 Long-Term Incentive Plan, each Non-Employee Director will receive a 

511 shares of restricted stock, based upon the fair market value of the Common Stock of the Company on February 14, 2005. 

grant of 1 , eaeh future director These shares of restricted stock will not be issued unless sueh Plan is approved by the shareholders. In addition


will receive a one-time grant of 1 000 shares of Company Common Stock upon first becoming a member of the Board of Directors.


If 2005. EDGAR onl ine Ioc. 
. . . . . . . . . . _._           

EXHBIT 12 

JOHNSON & JOHNSON AND SUBSIDIARIES 

STATEMENT OF COMPUT A 110N OF RA 110 OF EARNGS TO FID CHARGES(I) 

(DOLLARS IN MILIONS) 

FISCAL YEAR ENDED


JANUARY DECEMBER DECEMBER 29, DECEMBER 30, DECEMBER 

2005 2003 2002 2001 2000 

Determination of Earnings:


Earnings Before Provision for 

Taxes on Income............. $12 838 $10, 308 9 I 291 898 868 

Fixed charges. 272 300 259 245 292 

Total Earnings as


Defined. . . $13, 110 $10 608 9 I 550 143 160 

Fixed Charges and Other: 

Rents. . 

Interest Expense Before


Capitalization of

Interest. . 323 315 25B 248 301 

Total Fixed Charges.. 4 DB 40B 357 340 389 

Ratio of Earnings to Fixed


Charges. . . 32. 26. 26. 23. 18. 

(1) The ratio of earnings to fixed charges is computed by dividing the sum of earnings before provision for taxes on income and fixed 

charges by fixed charges. Fixed charges represent interest expense (before interest is capitalized), amortization of debt discount and an 

appropriate interest factor on operating leases. 

if 2005. EDGAR Onl ine Inc. 
Exhibit 13


Management s Discussion and Analysis of Results of Operations and Financial Condition 

Organization and Business Segments 

Description of the Company and Business Segments 

The Company and its subsidiaries have approximately 109 900 employees worldwide engaged in the manufacture and sale ofa broad 

range of products in the health care field. The Company conducts business in virtally all countries of the world and its primary focus 

has been in products related to human health and well-being. 

The Company is organized into three business segments: Consumer, Phannaceutical and Medical Devices and Diagnostics. The 

Consumer segment manufactures and markets a broad range of products used in the baby and child care, skin care , oral and wound 

care and women s health care fields , as well as nutritional and over-the-counter phannaceutical products. These products are marketed 

principally to the general public and sold both to wholesalers and directly to independent and chain retail outlets throughout the 

world. The PhannaceuticaJ segment incJudes products in the following therapeutic areas: anti-fungal, anti-infective, cardiovascular 

contraceptive, dcnnatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management, psychotropic (central 

nervous system) and urology areas. These products are distributed directly to retailers, wholesalers and health care professionals for 

prescription use by the general public. The Medical Devices and Diagnostics segment includes a broad rangc of products used 

principally in the professional fieJds by physicians, nurses , therapists , hospitals, diagnostic laboratories and clinics. These products 

include circulatory disease management products; DePuy s orthopaedic joint reconstruction and spinal care products; Ethicon 

wound care and women s health products; Ethicon Endo-Surgery s minimally invasive surgical products; LifeScan s blood glucose monitoring products; Ortho-Clinical Diagnostics' professional diagnostic products and Vision Care s disposable contact lenses. 

The Company s structure is based upon the principle of decentralized management. The Executive Committee of Johnson & Johnson is 

the principal management group responsible for the operations and alJocation of the resources of the Company. This Committee 

oversees and coordinates the activities of the Consumer, Phannaceutical and Medical Devices and Diagnostics business segments. 

Each subsidiary within the business segments is, with some exceptions, managed by citizens of the country where it is located. 

In all of its product lines, the Company competes with companies both large and small, located throughout the world. Competition is 

strong in all product lines without regard to the number and size of the competing companies involved. Competition in research 

involving the development and the improvement of new and existing products and processes , is particularly significant. The 

development of new and improved products is important to the Company s success in all areas of its business. This competitive 

environment requires substantial investments in continuing research and multipJe sales forces. In addition, the development and 

maintenance of customer acceptance of the Company s consumer products involves significant expenditures for advertising and 

promotion. 

(f 2005. EDGAR Onl ine Ine. 
Management' s Objectives 

The Company s objective is to achieve superior levels of capital efficient profitable growth. To accomplish this, the Company 

management operates the business consistent with certain strategic principles that have proven successful over time. To this end , the 

Company participates in growth areas in human health care and is committed to attaining leadership positions in these growth 

segments through the development of innovative products and services. New products introduced within the past five years 

accounted for over 35% of2004 sales. In 2004, $5.2 billion or 11.0% of sales were invested in research and development, recognizing 

the importance of on-going development of new and differentiated products and services, and to sustain long term growth. 

With more than 200 operating companies located in 57 countres , the Company views its principle of decentralized management as an 

asset and fundamental to the success of a broadly based business. It also fosters an entrepreneurial spirit, combining the extensive 

resources of a large organization with the ability to react quickly to local market changes and challenges. 

The Company is committed to developing global business leaders who can drive our growth objectives. Businesses are managed for 

the long term in order to sustain leadership positions and achieve growth that provides an enduring source of value to our 

shareholders. 

Unifying the management team and the Company s dedicated employees in achieving these objectives is the Johnson & Johnson 

Credo. The Credo provides a common set of values and serves as a constant reminder of the Company s responsibilities to its 

customers , employees , communities and shareholders. The Company believes that these basic principles, along with its overall mission 

of improving the quality of life for people everyhere , wil enable Johnson & Johnson to continue to be among the leaders in the 

health care industry. 

Results of Operations 

Analysis of Consolidated Sales 

In 2004, worldwide sales increased 13. 1% to $47. 3 billion, compared to increases of 15.3% in 2003 and 12.3% in 2002. These sales 

increases consist of the following: 

Sales increase due 

2002 

to: 2004 2003 

Volume 

10.4 

Price 1. 0 1. 3 

1. 7 

Currency 

Total 13. 15. 

12. 

Sales by U. S. companies were $27. 7 billion in 2004, $25.3 billion in 2003 and $22. 5 billion in 2002. This represents an increase of9.9% in 

2004 , 12. 6% in 2003 and 13.3% in 2002. Sales hy international companies were S 19.6 bilion in 2004 , $16. 6 billion in 2003 and $13. 8 billion 

in 2002. This represents an increase of 18. 0% in 2004, 19. 8% in 2003 and 10. 8% in 2002. 

CO 2005. EDGAR anI ine Inc. 
(graph J 

For the last five years, the annual compound growth rates for worldwide , U.S. and international sales were 11. , 12.3% and 10. 

respectively. The ten-year annual compound growth rates for worldwide, U. S. and international sales were 11.8% , 13. 6% and 9. 

respectively. 

(graph J 

All international geographic areas experienced double-digit sales growlh durng 2004, consisting of 17.6% in Europe, 15. 8% in the 

Western Hemisphere (excluding the U. ) and 19. 9% in the Asia-Pacific , Africa regions. These sales gains include a positive impact of 

cUITcoey fluctuations between the U. S. dollar and foreign currencies in Europe of 10. , in the Western Hemisphere (excluding the 

) of 4.2% and in the Asia-Pacific, Africa region of 6.6%. 

In 2004, sales to our three largest distributors, Cardinal Distribution, McKesson I-BOC and AmerisourceBergen Corp. accounted for 

10.	 10.0% and 7.5%, respectively, of total revenues. In 2003 and 2002, sales to those distributors accounted for 9. 10.5% and 

0% and 9.2%, 9. 8% and 10. 3%, respectively, of total revenues. 

2004 results benefited from the inclusion of a 53rd week. (See Note 1 for Annual Closing Date details.) The Company estimated that the 

fourth quarter growth rate was enhanced by approximately 2% and the year hy approximately 0.5%. While the additional week added to 

sales , it also brought a full week's worth of operating costs; therefore the net earnings impact was negligible. 

(graph J 

Analysis of Salcs by Business Scgments 

Consumer Segmcnt


Consumer segment sales in 2004 were $8. 3 billion , an increase of 12. 1 % over 2003 , with operational growth accounting for 8. 8% of the 

total growth and 3. 3% due to positive currency fluctuations. U. S. Consumer segment sales were $4. 2 billion, an increase of6.5%. 

International sales were S4. 1 bilion, an increase of 18. , with 11.5% as a result of operations and 7. 2% due to currency fluctuations 

over 2003. 

Consumer segment sales growth in 2004 was attributable to strong sales performance in the major franchises including 

over-the-counter (OTC) pharmaceutical and nutritional products, Skin Care and Baby & Kids Care. Over-the-counter pharmaceutical 

and nutritional products sales were $2.4 billion , an increase of 17. 2% over 2003. Overall growth in this franchise primarily resulted from 

the rapid increase of SPLENDA No Calorie Sweetener in the tabletop category. The acquisition of Merck' s cquity stake in the European 

nonprescription pharmaceutical business was also a contributing factor to this increase, as it added 7. 7% growth to the 

over-the-counter phannaceuticals and nutritionals franchise. 

Major Consumer :Franchise Sales: 

Change 

'04 

vs. 

(Millions Dollars) 2004 2003 2002 ' 03 ' 02 

GTC Pharmaceuticals 

& Nutritionals $2, 395 044 800 17. 13. 

Skin Care	 140 797 571 19. 14. 

Women Heal th	 470 369 249 

Baby & Kids Care 447 309 161 10. 12. 

Other	 881 912 783 (3. 16. 

Total	 $8, 333 431 564 12. 13. 

(g 2005. EDGAR OnI ine Inc. 
In February 2004, the Company announced an agreement with Tate & Lyle related to the production of sucralose and the SPLENDA 

brand. This transaction was completed on April 2, 2004 and resulted in the Company being responsible for the worldwide sales and


marketing of the tabletop category of SPLENDA Brand Sweetener and Tate & Lyle being responsible for the manufacturing of


sucralose and the marketing of ingredient sales. This transaction reduced sales growth by 3. 1 % for the franchise.


The Skin Care ITanchise sales in 2004 were $2. 1 billion, representing a 19. 1 % increase over 2003. This was attributable to double-digit sales growth in RoC, A VEENO, CLEAN & CLEAR and NEUTROGENA brand products. The ADVANCED SOLUTIONS product line 

launched in 2004 was a key contributor in the growth ofNEUTROGENA. The Baby & Kids Care ITanchise grew by 10. 5% to $1.4 billion 

in 2004. Growt in this ITanchise was led by the success of the JOHNSON' S SOFTW ASH and SOFTLOTION product lines and the


BALM EX brand products acquired in 2003.


Consumer segment sales in 2003 were $7.4 billion, an increase of 13. 2% over 2002, with operational growth accounting for 9.4% of the 

total growth, and 3. 8% due to a positive currency impact. U. S. sales increased by 10.1 % while international sales increased by 17. 

with 8. 6% due to operational gains and a positive currency impact of 8.4% over 2002. Consumer segment sales in 2002 were $6.6 billion 

an increase of 3. 9% over 2001 , with 4. 6% of the increase due to operational growth offset by 0.7% of a negative currency impact. U. 

sales increased by 4. 5% while international sales gains were 3. 1 %, with 4.6% operational gains offset by a negative currency impact of 

1.5%. 

Pharmaceutical Segment 

Phannaceutical segment sales in 2004 were $22. 1 billion, an increase of 13.4% over 2003 , with 10.7% of this change due to operational 

growth and the remaining 2.7% increase related to the positive impact of currency. U. S. Phannaceutical segment sales increased 12. 

while international Phannaceutical segment sales increased 14. , which included 6.4% of operational growth and 8.4% related to the 

positive impact of currency. 

Phannaceutical segment sales in 2004 include the benefit from adjustments related to previously estimated perfonnance-based rebate


allowances in managed care contracts. These adjustments were made based on a review of actual performance levels as achieved by


customers , compared to expected performance levels. These favorable adjustments amounted to less than 1. 0% of the Pharmaceutical


segment' s operational growth in 2004. The vast majority of the impact of this adjustment was in the honnonal contraceptive franchise.


Pharmaceutical segment sales growth reflects the strong performance in many of the key pharmaceutical products , partially offset by the sales decline ofPROCRIT (Epoetin alfa) and EPREX (Epoctin alfa), which were adversely affected by competition. Combined


PROCRlT and EPREX sales declined 9.9% in 2004 as compared to 2003. PROCRlT sales declined by 12. 2% over 2003. The PROCRlT


sales decrease was due to lower pricing and market share, partially offset by market growth. The Company continues in its efforts to


stabilize market share and expand the market. 

A strong growth driver in the Pharmaceutical segment was RlSPERDAL (risperidone), a medication that treats the symptoms of 

schizophrenia. RlSPERDAL accounted for $3. 1 billion in sales in 2004, with continued success of RlSPERDAL CONSTA (risperidone) 

long-acting injection. REMICADE (infliximab), a novel monoclonal antibody therapy indicated to treat the symptoms ofCrohn 

disease and rheumatoid arthritis, also had strong growth. REMICADE sales were $2. 1 billion in 2004, an increase of24. 1 % over 2003. 

DURGESIC (fentanyl transdennal system), with its novcl delivery system for the treatment of chronic pain, continued to achieve 

outstanding results, growing 27.7% over 2003. The pediatric exclusivity for the DURAGESIC patent expired in the U.S. in January 2005. 

The first generic version ofDURGESIC has been launched. Additionally, an authorized generic version of DURAGESIC is curently 

being marketed for the Company. The Company expects that DURAGESIC sales will decline in 2005. See Note 18 for further discussion 

regarding this matter. 

TOPAMAX (topiramate), an anti epileptic that was recently approved for use in the prevention of migraines, had strong growth of 

35.2% over 2003. LEV AQUIN (levofloxacin) and FLOXI (ofloxacin) grew by 12. 8% over 2003. Durng the fiscal four quarer

LEV AQUIN oral solution was approved as a new once a day formulation for the treatment of adults for currently approved indications 

and for anthax prophylaxis. 

Major Pharmaceutical Product Revenues:


% Change


04 vs. '03 

VS. 

(Millions of Dollars) 2004 2003 2002 , 03 , 02 

PROCRIT /EPREX 

(Epoetin alfa) $ 3 589 984 269 (9. 9) % (6. 

rQ 2005. EDGAR OnI ine, Ine. 
RISPERDAL (risperidone) 050 512 146 21. 4 17. 

REMICADE (infliximab) 145 729 297 24. 33. 

DURGESIC (fentanyl transdermal system) 083 631 203 27. 35. 

TOPAMA (topiramate) 410 043 687 35. 51. 7 

LEVAQUINjFLOXIN 

(levofloxacin/ ofloxacin) 296 149 032 12. 11. 

Hormonal Contraceptives 278 175 003 17. 

ACIPHEXjPARIET 

(rabeprazole sodium) 116 966 697 15. 38. Other 161 328 817 15. 10. 

Total $22, 128 517 151 13. 13. 

The honnonal contraceptive franchise accounted for $1. 

C9 2005. EDGAR Onl ine Ine. 
billion in sales, with strong growth by ORTHO EVRA (norelgestromin/ethinyl estradiol), the first contraceptive patch approved by Ihe 

FDA, and ORTHO TRI-CYCLEN LO, (norgestimate/ethinyl estradiol) a low dosc oral contraccptive. These sales increascs were 

partially offset by reduced sales of OR THO TRI-CYCLEN (norgestimate/ethinyl estradiol), as a result of generic competition in 2004. 

There was also strong growth in various other products, including VELCADE (bortezomib), an oncology treatment; DITROPAN XL 

(oxybutyin), for the trcatment of overactivc bladder; REMINL (galantamine HBr), a trcatment for patients with mild to moderate 

Alzheimer s disease; and NA TRECOR (nesiritide), a novel agent approved for congestive heart failure. 

CONCERTA (methylphenidate HCI), a product for the treatment of attention deficit hyperactivity disorder, sales continued to grow 

despite the lack afpatent cxcJusivity in the U. S. At present, the FDA has not approved any generic version that is substitutable for 

CONCERT A. Abbreviated New Drug Applications, (ANDAs), for gencric versions of CONCERT A are pending and may be approved 

at any time. 

Pharmaceutical segment sales in 2003 were $19. 5 billion, an increase of 13. 8% over 2002, with 9.7% of this change due to operational 

growth and the remaining 4. 1 % increase related to the positive impact of cUITcoey. U. S. Phanaceutical segment sales increased 11. 

while international Pharmaceutical segment sales increased 19.4%, which included 6.0% growth operationally and 13.4% related to the 

positive impact of currcncy. Phannaceutical segment sales in 2002 were $17. 2 billion, an increase of 15. 5% over 2001 , with 14.8% due to 

operational growth and 0. 7% due to currency fluctuations. U. S. sales increased by 16.4% while international sales grew 13.5% over 

2001. This included a 2.4% positive impact of curency and operational growth of 11.1 %.


Medical Devices and Diagnostics Segment 

Worldwide, the Medical Devices and Diagnostics segment achieved sales of$16.9 billion in 2004, representing an increase over the 

prior year of 13.2%, with operational growth of 9.0% and a positive impact from currency of 4. 2%. U.S. sales increased 6.9% while international sales increased 20. , with 11.4% from operations and 9.3% from cunency. 

Strong sales growth in the Medical Devices and Diagnostics segment was led by multiple franchises. 

The DePuy franchise reported $3.4 billion in sales, which represents 13. 7% growth over the prior year. Double-digit growth in DePuy orthopaedic joint reconstruction unit led the increase for this franchise. Strong perfonnance was also reported in DePuy s spine unit and Mitek sports medicine products. 

The Cordis fTanchise was a key contributor to the segment results with reported sales of$3. 2 billion , an increase of 18. 7% over the 

prior year. The primar driver of the sales growth for 2004 was the CYPHER Sirolimus-eJuting Stent in international markets incIuding 

its launch in Japan. U. S. CYPHER Sirolimus-eluting Stent sales remained relatively flat as compared to 2003 , due to the entr ofa 

competing product. Biosense Webster and the EndovascuJar business unit also contributed to the success of the Cordis franchise 

with continucd solid doublc-digil growth. 

In April and July of2004, the Cordis Cardiology Division of Cordis Corporation receivcd warning lettcrs from the FDA regarding Good 

Manufacturing Practice regulations and Good Clinical Practice regulations. Thcse observations followed post-approval site inspections completed in 2003 and early 2004, including sites involved in the production of the CYPHER Sirolimus-eluting Stent. In 

response to the warning letters, Cordis has met periodically with the FDA representatives at the Center and the Districts advising them 

of the progress being made in addressing observations raised in thc warning letters. 

The Ethicon Endo-Surgery franchise reported $2. 8 billion of sales in 2004 , representing 10. 1 % growth over prior year. This growth was mainly driven by endocutter sales that include products used in performing bariatric procedures for the treatment of obesity, an 

important focus area for thc franchise. In 2004, Ethicon Endo-Surgery introduccd the new EN DOPA TH XCEL trocar platfonn and the 

CONTOUR Curved Cutter Stapler, the only curvilinear cutter stapler for colorectal surgery that confonns to a patient's natural anatomy. 

Strong double-digit sales in the Advanced Sterilization Products line was also a key contributor to the overall sales growth of the 

Ethicon Endo-Surgery franchise. 

The Ethicon worldwide franchise achieved $2.8 billion of sales in 2004 , representing 7. 5% growth over prior year. The Ethicon franchise continues to grow by introducing new products into the marketplace, such as coated VICRYL (polyglactin 910) Plus, the first product in a new anti-bacterial suture platfonn, and MUL TIP ASS needles, introduced in the second fiscal quarter of 2004. 

Major Medical Devices and Diagnostics Franchise Sales: 

% Change


04 VS. ' 

VB. 

cg 2005. EDGAR Onl ine. Ine. 
(Millions Dollars) 2004 2003 2002 

DEPUY 420 008 536 13. 18. 

CORDIS 213 707 641 18. 65. 

ETHICON ENDO - SURGERY 849 587 291 10. 12. 

ETHICON 838 639 386 10. 

LIFESCAN 701 426 342 19. 

Vision Care 530 297 170 18. 10. 

ORTHO- CLINICAL 

DIAGNOSTICS 273 176 094 

Other 

Total $16 887 14, 914 

123 

12, 583 

(14. 

13. 

(39. 

18. 

(9 2005. EDGAR Onl ine Inc. 
The LifeScan fTnchise reported $1.7 billion of sales in 2004, a growth rate of 19.3% over the prior year. The ONETOUCH ULTRA test 

strip provided strong growth to the franchise for 2004. 

The Vision Care franchise achieved $1.5 billion of sales in 2004, which was a growth rate of 18.0% over the prior year, led by the 

continued success of ACUVUE ADVANCE Brand Contacl Lenses with HYDRACLEAR and I-DAY ACUVUE. 

The Ortho-Clinical Diagnostics franchise reported $1.3 billion of sales in 2004, representing 8.2% growth over the prior year. This 

growth was mainly driven by its market penetration of the automated blood tying products , coupled with continued growth of the ECI 

product line. 

On December 15 , 2004, Johnson & Johnson announced the signing of a definitive agreement to acquire Guidant Corporation (Guidant), 

a world leader in the treatment of cardiac and vascular disease, for $25.4 billion in fully diluted equity value. 

The Medical Devices and Diagnostics segment achieved sales of$14.9 bilion in 2003, representing an increase over the prior year of 

18. 5% with operational growth of 12. 8% and a positive impact from currency of 5. 7%. U. S. sales increased 15. 9% while international 

sales increased 21 . , with 9.0% from operations and 12.7% from currcncy. In 2002, the Medical Devices and Diagnostics segment 

sales were $12.6 billion, representing a total increase of 12. 9% over 2001. The 12. 9% total increase also represents the operational sales 

increase over the prior year, as there was no cUITency impact. U. S. sales were up 13. 0% and international sales increased 12. 8% over 

the prior year.


Analysis of Consolidated Earnings Before Provision for Taxes on Income 

Consolidated earnings before provision for taxes on income increased to $12. 8 bilion, or 24.5%, over the $10.3 billion in 2003. The 

increase in 2003 was 10. 9% over the $9. 3 bilion in 2002. As a percent to sales, consolidated earnings before provision for taxes on 

income in 2004 was 27. 1 %, representing an increase of2.5% over the 24.6% in 2003. For 2003 , the decline was 1. 0% over the 25. 6% in 

2002, and the improvement in 2002 was 1.2% over 2001. The sections that follow highlight the significant components of the changes 

in consolidated earnings before provision for taxes on income. 

Cost of Products Sold and Selling, Marketing and Administrative Expenses: Cost of products sold and selling, marketing and 

administrative expenses as a percent to sales were as follows: 

Sales 

2004 2003 2002 

Cost of products sold 28. 29. 28. 

Percent increase/ (decrease) 

over prior year (0. 

(0. 

Selling, marketing

and administrative 

expenses 33. 33. 33. 

Percent increase/ (decrease) 

over prior year 

(1.1) 

(0. 

In 2004, there was a decrease in the percent to sales of cost of products sold. This was due to favorable mix, as well as cost 

improvement initiatives. There was also a decrease in the percent to sales of selling, marketing and administrative expenses. This was 

due to the Company s focus on managing expenses, partially offset by an increase in investment spending across a number of 

businesses focused on driving future growth. In 2003 , there was no improvement in the percent to sales of selling, marketing and 

administrative expenses and an increase in the percent to sales of cost of products sold. This was due to the changes in the mix of 

products with varying cost structures, as well as the cost of the retirement enhancement program of $95 million expensed in the fourth 

quarter of 2003. In 2002 , the decreases were attributable to expense leveraging on sales increases and productivity improvements. 

Research and Development: Research activities represent a significant part of the Company s business. These expenditures relate to 

the development of new products, improvement of existing products, technical support of products and compliance with governmental 

regulations for the protection of the consumer. Worldwide costs of research activities, excluding the in-process research and 

development charges, were as folJows: 

(g 2005. EDGAR Onl ine . Ine. 
(Millions of Dollars) 

Research expense 

957 

2004 

203 

2003 

684 

2002 

Percent increase 

over prior year 

10. 

11. 18. 

Percent sales 11. 11. 

10. 

Research and development expense as a percent of sales for the Pharmaceutical segment was 16.4% for 2004, 16.4% for 2003 and 15. 

for 2002. Combined, the Consumer and Medical Devices and Diagnostics segments averaged 6. , 6.7% and 6.6% in 2004, 2003 and 

2002, respectively. 

Significant research activities continued in the Pharmaceutical segment, increasing to $3. 6 billion, or 13. , over 2003. The compound annual growth rate was approximately 15. 5% for the five-year period since 1999. Johnson & Johnson Pharmaceutical Research & 

Development, L.L.c., Centocor, Inc. , ALZA Corporation, Tibotec-Virco N.V. and Seios Inc. are primary research centers for the 

Company. 

In-Process Research and Development: In 2004, the Company recorded in-process research and development (IPR&D) charges of $18 

million before tax as a result of the acquisition of U. S. commercial rights to certain patents and know-how in the field of sedation and 

analgesia from Scott Lab, Inc. This charge was included in the operating profit of the Medical Devices and Diagnostics segment. 

In 2003 , the Company recorded IPR&D charges of $918 million before tax related to the acquisitions of Scios Inc., Link Spine Group, Inc. , certain assets of Or quest, Inc. and 3-Dimensional Pharmaceuticals, Inc. Scios Inc. is a biopharmaceuticaJ company with a marketed 

product for cardiovascular disease and research projects focused on autoimmune diseases. The acquisition of Scios Inc. accounted for 

$730 million before tax of the IPR&D charges and was induded in the operating profit of the Pharmaceutical segment. Link Spine 

Group, Inc. was acquired 

(g 2005. EDGAR OnI ine Inc. 
to provide the Company with exclusive worldwide rights to the CHARTE Arificial Disc for the treatment of spine disorders. The 

acquisition of Link Spine Group, Inc. accounted for $170 million before tax of the IPR&D charges and was included in the operating 

profit of the Medical Devices and Diagnostics segment. Drquest, Inc. is a biotechnology company focused on developing 

biologically-based implants for orthopaedic spine surgery. The acquisition of certain assets of Orquest, Inc. accounted for $11 million 

before tax of the IPR&D charges and was included in the operating profit of the Medical Devices and Diagnostics segment. 

3- Dimensional Pharmaceuticals , Inc, is a company with a technology platfonn focused on the discovery and development of potential 

new drgs in early stage development for inflammation. The acquisition of 3-Dimensional Phannaceuticals, Inc. accounted for $7 

millon before tax of the IPR&D charges and was included in the operating profit of the Phannaceutical segment. 

In 2002, the Company recorded IPR&D charges of$189 milJion before tax related to the acquisitions of Tibotec- Vireo N.Y. , a 

privately-held biophannaceutical company focused on developing anti-viral treatments, and Obtcch Medical AG, a privately held 

company that markets an adjustable gastrc band for the treatment of morbid obesity. IPR&D of $150 milJion and $39 milJion was 

included in the Pharmaceutical and Medical Devices and Diagnostics segments, respectively. 

Other (Income) Expense, Net: Other (income) expense includes gains and losses related to the sale and write-down ofccrtain 

investments in equity securities held by Johnson & Johnson Development Corporation, gains and losses on the disposal of fixed 

assets, currency gains and losses, minority interests, litigation settlement (income) expense and royalty income. The change in net 

other (income) expense from 2003 to 2004 wa.'i an increase in expense of$400 million. 

For 2004, the other expense balance of$15 milion included several expense items, none of which were individually significant, offset 

by royalty income. 

In 2003 , other income of $385 milion included a favorable ruling ITom a stent patent settlement of$230 milJion. This amount was 

received during the fourth quarter of2003 and was included in the Medical Devices and Diagnostics segment operating profit. Also 

included in thc Medical Devices and Diagnostics segment operating profit was the gain on the sale of various product lines that were 

no longer compatible with this segment's strategic goals. Other (income) expense for 2003 also included the recovery of a $40 million 

loan, included in the Phannaceutical segment operating profit. 

In 2002, other expense ofS294 million included the impact of the Amgen arbitration settlement expense and the gain on the sale of the 

ORTHO PREFEST product line. On October 18, 2002, an arbitrator in Chicago denied an effort by Amgen, Inc. to tenninate the 1985 

license agreement under which Grtho Biotech Inc. obtained exclusive U.S. rights to Amgen-developed eryhropoetin (EPO) for all 

indications outside of kidney dialysis. In his decision, the arbitrator found that sales had been made into markets where Amgen had 

retained exclusive rights, but that they did not walTant the extraordinary remedy of terminating the contract. Instead, he found that 

Amgen couJd be adequately compensated with monetar damages. The arbitrator awarded $150 million in damages. On January 24 

2003 , the arbitrator ruled that Amgen was the " prevailing part" in this arbitration, entitling it to an award of reasonable attorney s fees 

and costs. The Company expensed $85 million in the fourh quarter of 2002 in connection with this claim. These charges were included 

in the Pharmaceutical segment operating profit. 

Operating Profit by Segment 

Operating profits by segment of business were as follows: 

Percent 

Segment Sales 

(Millions of Dollars) 2004 2003 2004 

2003 

Consumer 514 393 18. 2 % 

18.


Pharmaceutical 608 896 34.


30. 

Med Devices 

and Diag 091 370 24. 

22. 

Segments total 13, 213 10, 659 27. 

25.


Expenses not


allocated to 

segments (1) (375 ) (351 ) 

(f 2005. EDGAR anl ine. Inc.

Earnings before


provision for 

taxes on income $12, 838 308 27. 

24. 

(1) Amounts not allocated to segments include interest (income )/expense, minority interest, and general corporate income and expense. 

(graph J 

Consumer Segment: Consumer segment operating profit in 2004 increased 8.7% over the previous year. As a percent to sales , 2004 

experienced a decrease of 0.5% from 2003 , primarily due to additional investment in consumer promotions and advertising in the 

over-the-counter phannaeeutieals and nutritionals franchises. Operating profit for the Consumer segment as a percent to sales in 2003 

remained unchanged from 2002 at 18. 7%. Expense leveraging due to increased sales volumes was offset by costs incurred for 

manufacturing programs to gain future efficiencies and advertising. 

Phannaceutical Segment: In 2004 , Phannaceutical segment operating profit increased 29.0% and reflects operating profit as a percent to 

sales improvement of4.2% over 2003 to 34.4%. This change is primarily due to the impact of$737 million ofIPR&D expenses in 2003. 

Additionally, Phanaccutical segment 

(f 2005. EDGAR Onl ine, Ine.

In 2003 , operating profit for the Phannaceutical segment as leveraging is the result of selling and marketing related cost improvements. 


a percent to sales was 30. reflecting a decline of3.5% from 2002 due to the IPR&D charges related to acquisitions as previously 

noted. Additionally, operating profit was impacted by the sales decline of PROCRIT and EPREX, and increased consumer promotional 

spending for new products and line extensions. 

Medical Devices and Diagnostics Segment: In 2004 , the Medical Devices and Diagnostics segment operating profit increased 21.4%. 

The increase over the prior year was achieved through improved gross margins, resulting from cost reduction programs and product 

mix, and the impact of $181 million of IPR&D expenses related to acquisitions in 2003. In 2003 , operating profit for the Medical Devices 

and Diagnostics segment as a percent to sales was 22. , reflecting an improvement of2. 8% over 2002. 

Interest (Income) Expense: Interest income in 2004 increased by $18 million due primarily to a higher cash balance. The cash and 

marketable securities combined balance at the end of 2004 was $12.9 billion and averaged $11. 3 billion, which is significantly higher 

than the $8. 6 billion average cash balance in 2003. 

Interest expense in 2004 decreased by $20 million as compared to 2003 primarily due to a decrease in the average debt balance, from 

$5.0 billion in 2003 to $3.5 billion in 2004. 

Provision For Taxes On Income: The worldwide effective income tax rate was 33. 7% in 2004 , 30. 2% in 2003 and 29.0% in 2002. The 

increase in the effective tax rate in 2004 was primarily due to the $789 million tax cost on the intended repatriation of undistributed 

international earnings associated with the American Jobs Creation Act of2004, which added 6. 1% to the effective income tax rate. The 

increase in 2003 and 2002 was primarily due to the Company s non-deductible IPR&D charges and the increase in income subject to tax 

in the U. S. Refer to Note 8 for additional information. 

Liquidity and Capital Resources 

Cash Flows 

Cash generated from operations and selected borrowings provide the major sources of funds for the growth of the business, including 

working capital, capital expenditures and acquisitions. Other uses of cash include share repurchases, dividends and debt repayments. 

In 2004, cash flow from operations was $11. 1 billion, an increase of SO. 5 billion over 2003. The increase in cash generated from

billion, net of the non-cash impact ofIPR&D charges. operations was a result ofa net income increase of SO 


Net cash used by investing activities decreased by $2.2 billion in 2004 due to a decrease in acquisition activity. For a more detailed 

discussion on mergers and acquisitions, see Note 17. 

Net cash used by financing activities increased by $1.3 billion in 2004 primarily due to an increase in the net repayment of debt and 

increased dividends.


Cash and current marketable securities were S12.9 billion at the end of2004 as compared with $9. 5 billion at the end of2003. 

(graph J 

Cash generated from operations amounted to $10.6 bilion in 2003 , which was $2.4 billion morc than the cash generated from operations 

in 2002 of $8.2 billion. Major factors contributing to the increase were an increase in net income of $1.3 billion, net of the non-cash 

impact of IPR&D charges, an increase in the change in accounts payable and accrued liabilities of SO. 8 billion, a decrease in the 

pension funding from 2002 ofSO.5 billion and changes to deferred taxes ofSO. 6 billion. 

Financing and Market Risk 

The Company uses financial instrments to manage the impact of foreign exchange rate changes on cash flows. Accordingly, the 

Company enters into forward foreign exchange contracts to protect the value of existing foreign currency assets and liabilities and to 

hedge future foreign currency product costs. Gains or losses on these contracts are offset by the gains or losses on the underlying 

transactions. A 10% appreciation of the U. S. dollar from January 2, 2005 market rates would increase the unrealized value of the 

Company s forward contracts by $258 million. Conversely, a 10% depreciation of the U. S. dollar from the January 2, 2005 market rates 

would decrease the unrealized value of the Company s forward contmcts by $315 million. In either scenario, the gain or loss on the 

forward contract would be offset by the gain or loss on the underlying transaction and, therefore, would have no impact on future 

earnings and cash flows. 

The Company hedges the exposure to fluctuations in currency exchange rates, and the effect on certain assets and liabilities in foreign 

currency, by entering into currency swap contracts. A 1 % change in the spread bctween U. S. and foreign interest rates on the 

(f 2005. EDGAR OnI ine. Inc. 
Company s interest rate sensitive financial instruments would either increase or decrease the unrealized value of the Company s swap 

contracts by approximately $64 million. In either scenario, at maturity, the gain or loss on the swap contract would be offset by the gain 

or loss on the underlying assets and liabilities and therefore would have no impact on future cash flows. 

The Company does not entcr into financial instruments for trading or speculative purposes. Further, the Company has a policy of only 

entering into contracts with parties that have at least an "All (or equivaJent) credit rating. The counterparties to these contracts are 

major financial institutions and the Company does not have significant exposure to anyone counterpart. Management believes the 

risk of loss related to non-perfonnancc by a counterpart is remote. 

If 2005. EDGAR OnI ine , Ine. 
Tolal unused credit available to the Company approximates $3.9 bilion, including $1.5 billion of credit commitments, of which $0. 

billion expire September 29 2005 and $0.75 billion that expire September 30, 2009. Also, included are $0.9 billion of uncommitted lines 

with various banks worldwide that expire during 2005. 

Total borrowings at the end of2004 and 2003 were $2. 8 billion and $4. 1 billion, respectively. Total debt represented 8.2% oftolal capital 

(shareholders' equity and total debt) in 2004 and 13.2% of total capital in 2003. Shareholders ' equity per share at the end of 2004 was 

$10.71 compared with $9.05 at year-end 2003 , an increase of 18.3%. On November I , 2004 the Company exercised its right to redeem all 

of its $300 million aggregate principal amount of 8.72% Debentues due in 2024. The redemption price was 104.360% of the principal 

amount or $1 043.36 per $1 ,000 principal amount of Debentures, with accrued interest to the date of redemption. At Januar 2, 2005, 

there were no material cash commitments. Johnson & Johnson continues to be onc of a few industrial companies with a Triple A credit 

rating. A summary of borrowings can be found in Note 6. 

Contractual Obligations and Commitments 

The Company has long-term contractual obligations, primarily lease , debt obligations and unfunded retirement plans, with no other 

significant obligations. To satisfy these obligations, the Company will use cash from operations. The following table summarizes the 

Company s contractual obligations and their aggregate maturities as of January 2, 2005 (see Notes 4 , 6 and 13 for further details): 

Unfunded 

Operating Debt (1) 

Retirement 

(Millions of Dollars) Leases Obligations Plans 

2005 $144 

2006 132 

2007 110 

2008 

2009 384 

After 2009 $173 139 272 

(1) Amounts do not include interest expense. 

Share Repurchase and Dividends


On February 13 2002 , the Company announced a stock repurchase program of up to $5.0 billion with no time limit on this program. This 

program was completed on August 1 2002, with 83.6 million shares repurchased. In addition, the Company has an annual program to 

repurchase shares for use in employee stock and incentive plans. 

The Company increased its dividend in 2004 for the 42nd consecutive year. Cash dividends paid were $1. 095 per share in 2004 

compared with dividends of$0. 925 per share in 2003 and $0. 795 per share in 2002. The dividends were distributed as follows: 

2004 2003 2002 

First quarter 0 . 205 

Second quarter 0 . 285 0 . 24 

205 

Third quarter 285 

205 

Fourth quarter 285 

205 

Total 095 925 

795 

On January 4, 2005 , the Board of Directors declared a regular cash dividend of $0.285 per share , paid on March 8 , 2005 , to shareholders 

(9 2005. EDGAR OnI ine Ine. 
of record as of Februar 15 2005. The Company expects to continue the practice of paying regular cash dividends. 

Other Information 

Critical Accounting Policies and Estimates 

Management' s discussion and analysis on results of operations and financial condition are based on the Company s consolidated 

financial statements that have been prepared in accordance with accounting principles generally accepted in the U. S. The preparation 

of these financial statements requires that management make estimates and assumptions that affect the amounts reported for revenues 

expenses, assets, liabilities and other related disclosures. Actual results mayor may not differ from these estimates. The Company 

believes that the understanding of certain key accounting policies is essential in achieving more insight into the Company s operating 

results and financial condition. These key accounting policies include revenue recognition, income taxes, legal and self insurance 

contingencies, valuation of long-lived assets and assumptions used to determine the amounts recorded for pensions and other 

employee benefit plans and accounting for stock options. 

Revenue Recognition: The Company recognizes revenue from product sales when goods are shipped or delivered and title and risk of 

loss pass to the customer. Provisions for certain rebates, sales incentives, trade promotions, coupons , product returns and discounts 

to customers are accounted for as reductions in sales in the same period the related sales are recorded. 

Product discounts granted are based on the tenns of arrangements with direct, indirect and other market participants, as well as market 

conditions, including prices charged by competitors. Rebates, the largest being the Medicaid rebate provision, are estimated based on 

sales tenns, historical experience, trend analysis and projected market conditions in the various markets served. The Company 

evaluates market conditions for products or groups of products primarily through the analysis ofwholcsaler and other third part 

sell-through and market research data, as well as internally generated infonnation. 

Sales retus are generally estimated and recorded based on historical sales and returns infonnation, analysis of recent wh01esale 

purchase infonnation, consideration of stocking levels at wholesalers and forecasted demand amounts. Products that exhibit unusual 

sales or return patterns due to dating, competition or other marketing matters are specifically investigated and analyzed as part of the 

accounting for accruals. 

The Company also recognizes service revenue that is received for co-promotion of certain products. For al1 years presented, service 

revenues were less than 2% of total revenues and are included in sales to customers. 

Income Taxes: Income taxes are recorded based on amounts refundable or payable in the current year and include the results of any 

difference between U. S. GAAP accounting and U. S. tax reporting that arc recorded as deferred tax assets or liabilities. The Company 

estimates deferred tax assets and liabilities based on current tax regulations and rates. Changes in tax laws and 

(f 2005. EDGAR Online. Inc. 
rates may affect recorded deferred tax assets and liabilities in the futue. Management believes that changes in these estimates would 

not result in a material effect on the Company s results of operations, cash flows or financial position. 

The Company has detenTined that it will repatrate $10. 8 billion of undistributed international earings in 2005 in accordance with thc 

American Jobs Crcation Act of 2004, and has recordcd a tax charge of $789 million during thc fourth quarter of 2004. (This tax charge 

may be reduced by approximately $225 million, due to technical corrections legislation , expected to be considered by Congress in 

2005. ) Thc legislation was passcd during the fourh quarter of 2004 and pCnTits U. S. corporations to repatriatc earnings offoreign 

subsidiaries at a special onc-time favorable effective tax rate. At Januar 2, 2005 and December 28 2003 , the cumulative amount of 

undistributed international earings were approximately $18. 6 bilion and $14. 8 bilion, respectively. The Company intends to continue 

to reinvest its undistributed international earnings to expand its international operations; therefore, no U. S. tax expense has been 

recorded to cover the undistributed portion not intended for repatriation. 

Legal and Self Insurance Contingencies: The Company records accruals for various contingencies including legal proceedings and 

product liability cases as these arise in the nonnal course of business. The accruals are based on management' s judgment as to the 

probability oflosses, opinions of legal counsel and, where applicable , actuarially determined estimates. AdditionaUy, the Company 

records insurance receivable amounts from third part insurers based on the probability of recovery. As appropriate, reserves against 

these receivables are recorded for estimated amounts that may not be collected horn third part insurers. 

Long-Lived And Intangible Assets: The Company assesses changes in economic conditions and makes assumptions regarding 

estimated future cash flows in evaluating the value of the Company s property, plant and equipment, goodwil and intangible assets. 

As these assumptions and estimates may change over time, it mayor may not be necessary for the Company to record impairment 

charges. In 2004 , certain tangible and intangible assets were written down to fair value with the resulting charge recorded in cost of 

products sold. 

Employee Benefit Plans: The Company sponsors various retirement and pension plans, including defined benefit, defined contribution 

and termination indemnity plans, that cover most employees worldwide. These plans are based on assumptions for the discount rate 

expected return on plan assets , expected salary increases and health care cost trend rates. See Note 13 for further detail on these rates 

and the effect a rate change would have on the Company s results of operations. 

Stock Options: The Company has elected to use Accounting Principles Board Opinion No. 25 , Accounting for Stock Issued to 

Employees (APB 25), that does not require compensation costs related to stock options to be charged against net income, as all 

options granted under the various stock options plans had an exercise price equal to the market value of the underlying common stock 

at grant date. Statement of Financial Accounting Standard (SF AS) No. 148 Accounting for Stock-Based Compensation - Transition and 

Disclosure - an amendment ofFASB Statement No. 123 , requires pro forma disclosure of net income and earnings per share detennined 

as if the fair value method of accounting for stock options had been applied in measuring compensation cost. See Notes 1 and 10 for 

further information regarding stock options. 

New Accounting Standards 

In June 2002 , the FASB issued SF AS No. 146 , Accounting for Costs Associatcd with Exit or Disposal Activities, which is effective for 

exit or disposal activities that are initiated after December 31 , 2002. The Company s adoption of SF AS No. 146 did not have a material 

effect on the Company s results of operations, cash flows or financial position. 

In Novcmber 2002, the F ASB issued FASB Interprctation No. 45 (FIN 45), Guarantor s Accounting and Disclosure Requircments for 

Guarantees, Including Indirect Guarantees ofIndebtedness of Others, an interpretation ofFASB Statements No. , 57 and 107 and 

Rescission ofF ASB Interpretation No. 34. FIN 45 clarifies the requirements ofFASB Statement No. , Accounting for Contingencies 

relating to the guarantor s accounting for and disclosure of the issuance of certain types of guarantees. The disclosure requirements of 

FIN 45 were effective for financial statements of interim or annual periods that end after December 15 2002. The provisions for initial 

recognition and measurement were effective on a prospective basis for guarantees that were issued or modified after December 31 

2002, iuespective of the guarantor s year-end. FIN 45 requires that upon issuance ofa guarantee, the entity must recognize a liability 

for the fair value of the obligation it assumes under that guarantee. The Company s adoption of FIN 45 did not have a material effect on 

the Company s results of operations, cash flows or financial position. 

In Januar 2003, the FASB issucd FIN 46, Consolidation ofYariable luterest Eutitics - an intcrpretatiou of ARB No. 51 , and in 

December 2003, issued a revised FIN 46(R), Consolidation ofYariablc Interest Entities - an interpretation of ARB No. 51 , both of which 

address consolidation of variable interest entities. In addition, the FASB issued various FASB Staff Positions (FSP) on this topic in 

December 2003. FIN 46 expands the criteria for consideration in detennining whether a variable interest entity should be consolidated 

by a business entity, and requires existing unconsolidated variable interest entities (which include, but are not limited to, Special 

Purpose Entities, or SPEs) to be consolidated by their primary beneficiaries jfthe entities do not effectively disperse risks among 

parties involved. This interpretation was immediately applicable to variable interest entities created after January 31 , 2003. The 

adoption of this portion of FIN 46 has not had a material effect on the Company s results of operations, cash flows or financial 

(g 2005. EDGAR OnI ine, Inc. 
position. FIN 46 was applicable in 2004 to variable interest entities in which an enterprise holds a variable interest that was acquired 

before February 1 2003. The adoption of this portion of FIN 46 did not have a material effect on the results of operations eash flows or 

financial position of the Company. 

In Apri12003 , the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instrments and Hedging Activities, which 

is effective for contracts entered into or modified after June 30, 2003. This Statement amends and clarifies financial accounting and 

reporting for derivative instruments, including certain derivative instruments embedded in other contracts 

(g 2005. EDGAR Online Ine. 
and for hedging activities. The Company s adoption of SF AS No. 149 did not have a material effect on the Company s results of 

operations, cash flows or financial position. 

In December 2003 , the FASB issued FSP FAS No. 106- , Accounting and Disclosure Requirements Related to the Medicare 

Prescription Drug, Improvement and Modernization Act of2003 , which is effective for interim or annual financial statements of fiscal 

years ending after December 7, 2003. The Company elected to defer adoption ofFSP F AS No. 106- 1 until authoritative guidance was 

issued, as allowed by the Standard. This guidance was issued in by the F ASB in May 2004 via FSP F AS No. 106-2. The Company 

adopted FSP PAS No. 106- 1 and 106-2 in the fiscal third quarter of2004. This adoption did not have a material effect on the Company 

results of operations, cash flows or financial position. 

In July 2004, the F ASB ratified the EITF consensus on Issue 02- , Whether an Investor should apply the Equity Method of 

Accounting to Investments other than Common Stock, which is effective for the fourth quarter of 2004. This consensus clarifies that 

when an investor has the ability to exercise significant influence over the operating and financial policies of an investee , the equity 

method of accounting should be applied only when the investor has an investment in common stock and/or an investment that is 

in- substance common stock. The adoption of this consensus did not have a material effect on the Company s results of operations 

cash flows or financial position. 

In October 2004, the FASB ratified the EITF consensus on Issue 04- , Accounting for Preexisting Relationships between the Parties to 

a Business Combination. This consensus describes the accounting for the settlement of preexisting relationships and the 

re-acquisition of certain rights in a business combination. This consensus was effective for the fourth quarter of 2004 and was adopted 

by the Company in that quarter. This adoption did not have a material effect on the Company's results of operations , cash flows or 

financial position, but may impact future transactions. 

In November 2004, the FASB issued SFAS No. 151 , Inventory Costs, an amendment of ARB No. 43. This statement clarifies the 

accounting for idle capacity expense, freight, handling costs, and wasted material and is effective for the third quarter of2005. The 

statement will not have a material effect on its results of operations, cash flows or financial 

position. 

Company believes the adoption of this 


In December 2004 , the F ASB issued SF AS No. I23(R), Share Based Payment. This statement establishes standards for the accounting 

for transactions in which an entity exchanges its equity instruments for goods and services. It focuscs primarily on accounting for 

transactions in which an entity obtains employee services in share-based payment transactions (employee stock options). The 

statement requires the measurement of the cost of employee services received in exchange for an award of equity instruments (such as 

employee stock options) at fair value on the grant date. That cost will be recognized over the period during which an employee is 

required to provide services in exchange for the award (the requisite service period). The effective date of this statement is the fiscal 

third quarter of2005. The Company is still considcring transition methods under this standard. The Company cUITently estimates the 

annualized cost associated with expensing stock options to be approximately $0. 12 per share in 2005. Refer to Note I for more details. 

The Company is proposing a new long-term incentive plan incJuding various fonns of stock compensation , such as stock options and 

restricted stock.


In December 2004, the FASB issued SPAS No. 153 , Exchanges of Non-monetary Assets, an amendment of APB 29. This statement 

clarifies that all non-monetary transactions that have commercial substance should be recorded at fair value and is effective for the first 

statement will not have a material effect on its results of operations, cash 

flows or financial position. 

quarter of2005. The Company believes the adoption of this 


In December 2004, the FASB issued FSP FAS No. 109- 1 and FAS 109- , which address accounting and disclosure requirements related 

to ccrtain provisions of the 
American Jobs Creation Act of2004. These requirements were effective immediately. The Company has 

adopted these provisions , the impact of which 
 is more fully described in Notc I and 8.

Economic and Market Factors 

Johnson & Johnson is aware that its products are used in an environment where, for more than a decade, policymakers, consumers and 

care. In response to these concerns, Johnson & Johnson has a 

long standing policy of pricing products responsibly. For the period 1994-2004, in the United States, the weighted average compound 

annual growth rate of Johnson & Johnson net price increases for health care products (prescription and over-the-counter drugs 

businesses have expressed concerns about the rising cost of health 


hospital and professional products) was below the U.S. Consumer Price Index (CPI). 

Inflation rates , even though moderate in many parts of the world during 2004, continue to have an effect on worldwide economies and 

consequently, on the way companies operate. In the face of increasing costs, the Company strives to maintain its profit margins 

through cost reduction programs, productivity improvements and periodic price increases. The Company faces various worldwide 

health care changes that may result in pricing pressures that include health care cost containment and government legislation relating 

to sales, promotions and reimbursement. 

(1 2005. EDGAR OnI ine Ine. 
The Company also operates in an environment which has become increasingly hostile to intellectual propert rights. Generic drg finns 

have filed Abbreviated New Drug Applications seeking to market generic fonns of most of the Company s key phannaceutical 

products , prior to expiration of the applicable patents covering those products. In the event the Company is not successful 

defending a lawsuit resulting from an Abbreviated New Drug Application filing, the generic finns will then introduce generic versions 

ofthc product at issue, resulting in the potential for substantial market share and revenue loss for that product. For further information 

see the discussion on " Litigation Against Filers of Abbreviated New Drug Applications" in Note 18. 

(g 2005. EDGAR Onl ine, Ine. 
    

Common Stock Market Prices 

The Company s common stock is listed on the New York Stock Exchange under the symbol JNJ. The composite market price ranges for 

Johnson & Jnhnson common stock during 2004 and 2003 were: 

2004 2003 

High Low High Low 

First quarter $54. 49. 58. 

49.


Second quarter 57. 49. 59.


50.


Third quarter 58. 54. 54.


49.


Fourth quarter 64. 54. 52.


48. 

Year- end close $63. 50. 

Legal Proceedings 

The Company is involved in numerous product liability cases in the United States, many of which concern adverse reactions to drugs 

and medical devices. The damages elaimed are substantial, and while the Company is confident of the adequacy of the warnings and 

instructions for use which accompany such products, it is not feasible to predict the ultimate outcome oflitigation. However, the 

Company believes that if any liability results from such cascs, it will be substantially covered by existing amounts accrued in the 

Company s balance sheet under its self-insurance program and by third part product liability insurance. See Note 18 for further 

infonnation regarding legal proceedings. 

Cautionary Factors That May Affect Future Results 

This Annual Report contains forward-looking statements. Forward-looking statements do not relate strictly to historical or currcnt 

facts and anticipate results based on management' s plans that are subject to uncertainty. Forward-looking statements may be identified 

by the use of words like "plans expects will anticipates estimates " and other words of similar meaning in conjunction with 

among other things , discussions of future operations, financial perfonnance, the Company s strategy for growth, product development 

regulatory approval, market position and expenditures. 

Forward-looking statements are based on current expectations of future events. The Company cannot guarantee that any 

forward-looking statement will be accurate, although the Company believes that it has been reasonable in its expectations and 

assumptions. Investors should realize that if underlying assumptions prove inaccurate or that unknown risks or uncertainties 

materialize , actual results could vary materially from the Company's expectations and projections. Investors are therefore cautioned not 

to place undue reliance on any forward-looking statements. The Company assumes no obligation to update any forward-looking 

statements as a result of new information or future events or developments. 

Risks and uncertainties incJude general industry conditions and competition; economic conditions, such as interest rate and currcncy 

exchange ratc fluctuations; technological advances, new products and patents attained by competitors; challenges inherent in new 

product development, including obtaining regulatory approvals; challenges to patents; U.S. and foreign health care reforms and 

governmental laws and regulations; trends toward health care cost containment; increased scrutiny of the health care industry by 

government agencies; product efficacy or safety concerns resulting in product recalls or regulatory action. 

The Company s report on Form 10-K for the year ended January 2, 2005 contains, as an Exhibit, a discussion of additional factors that 

could cause actual results to differ from expectations. The Company notes these factors as pennitted by the Private Securities 

Litigation Rctonn Act of 1995. 

C9 2005. EDGAR OnI ine, Ine.

Consolidated Balance Sheets


Johnson & Johnson and Subsidiaries 

At January 2, 2005 and December 28, 2003


(Dollars in Millions Except Share and Per Share Data) (Note 1)


2004 2003 

Assets 

Current assets 

Cash and cash equivalents 

(Notes 1 , 14 and 15) 203 377 

Marketable securities 

(Notes 1, 14 and 15) 681 146 

Accounts receivable trade, less allowances for 

doubtful accounts $206 (2003, $192) 831 574 

Inventories (Notes 1 and 2) 744 588 

Deferred taxes on income 

(Note 8) 737 526 

Prepaid expenses and other 

receivables 124 784 

Total current assets 320 22, 995 

Marketable securities,


non-current (Notes 1, 14 and 15)


Property, plant and equipment 


net (Notes 1 and 3) 436 846 

Intangible assets , net 

(Notes 1 and 7) 11 842 539 

Deferred taxes on income


(Note 8) 551 692 

Other assets (Note 5) 122 107 

Total assets $53, 317 48, 263 

Liabilities and Shareholders' Equity


Current liabilities


Loans and notes payable


(Note 6) 280 139 

Accounts payable 227 966 

Accrued liabilities 523 639 

returns 

and promotions 297 308 

Accrued salaries , wages 

and commissions 094 452 

Accrued taxes on income 506 944 

Accrued rebates 


Total current liabilities 13, 927 13, 448 

Long- term debt (Note 565 955 

Deferred tax liability (Note 403 780 

Employee related obligations 

(Notes 5 and 13) 631 262 

Other liabilities 978 949 

Total liabilities 21, 504 , 394 

Shareholders I equity


(Q 2005. EDGAR Onl :!ne. Ine. 
Preferred stock - without par value


(authorized and unissued


000, 000 shares) 

Common stock - par value


$1. 00 per share (Note 20)


(authorized 4 320, 000, 000 shares;


issued 3, 119, 842 000 shares)


Note receivable from employee 

stock ownership plan (Note 16) 

(18 ) 

Accumulated other comprehensive


income (Note 12) 

(590 ) 

Retained earnings


Less: common stock held in


treasury, at cost (Note 20)


(148, 819, 000 and 151, 869, 000)


Total shareholders ! equity


Total liabilities and


shareholders I equity


See Notes to Consolidated Financial Statements 

120 120


(11) 

(515 ) 

35, 223 30, 503


817 33, 015


004 146


31, 813 26, 869


$53 317 48, 263


(Q 2005. EDGAR OnI ine Inc. 
Consolidated Statements of Earnings 

Johnson & Johnson and Subsidiaries 

(Dollars in Milions Except Per Share Figures) (Note 1) 

Sales to customers


Cost of products sold


Gross profit


Sell ing, market ing and


administrative expenses


Research expense


Purchased in-process 

research and development


(Note 17)


Interest income


(256) 

Interest expense, net


of portion capitalized


(Note 3) 

Other (income) expense,


net 

Earnings before provision


for taxes on income


provision for taxes on income


(Note 8) 

Net earnings 

Basic net earnings per share


(Notes 1 and 19)


Diluted net earnings per share


(Notes 1 and 19)


See Notes to Consolidated Financial Statements 

2004


$47 348


422


33, 926


15, 860


203


(195 ) 

187


21, 088


838


329


$ 8, 509


2003


862


12, 176


686


14, 131


684


918


(177) 

207


(385 ) 

19, 378


308


111


197


2002


36, 298


447


25, 851


216


957


189


160


294


560


291


694


597


if 2005. EDGAR Onl ine. Inc. 
Consolidated Statements of Eqnity 

Johnson & Johnson and Subsidiaries 

(Dollars in Millions) (Note I) 

Recei vable 

Bal Dec. 30, 2001 

Net earnings 

Cash dividends paid


Employee stock


Compensation and


stock option plans


Conver. of subordinated


debentures 

Repurchase of common


stock 

Other comprehensive income,


net of tax:


Currency translation adj


Unrealized losses on


securi ties


Pension liability


adjustment

Losses on derivatives 

& hedges


Reclassification adj


Total comprehensive income


Note receivable from ESOP


Bal Dee. 29, 2002 

Net earnings 

Cash dividends paid


Employee stock


compensation and


stock option plans


Conver. of subordinated


debentures 

Repurchase of common


stock 

Business combinations


Other comprehensive income 


net of tax:


Currency translation adj


Unreali zed gains on


securi ties


Pension liability adj


Losses on deri vati yes 

& hedge s 

Reclassification adj


Total comprehensive income


Note 

From Employee 

Compre - Stock Ownerhens i ve Retained ship Plan 

Total I lleome Earnings (ESOP) 

$24 233 23, 066 (30) 

597 597 597


381) 381)


806 (489) 

131 (222) 

(6, 382) 

(10) (10) 

(86) (86) 

(18) (18) 

(198) (198) 

(26) 

6 I 259 

$22, 697 571 (25) 

197 197 197


746) (2, 746)


534 (626) 

(2) 

(1, 183)


109 109


334 334 

(31) (31) 

(80) (80) 

(2) 

7 I 447 

(g 2005. EDGAR Online. Inc. 
Note receivable from ESOP


Bal, Dec. 28 2003 

Net earnings 

Cash dividends paid


Employee stock 

compensation and stock option plans


Conver. of subordinated


debentures 

Repurchase of common


stock 

Other comprehens i ve income, 

net of tax: 

Currency translation adj 

Unrealized gains on 

securi ties 

Pension liability adj 

Gains on derivatives & 

hedges 

Reclassification adj


Total comprehensive income


Note receivable from ESOP


Bal, Jan. 2, 2005 

$26 869 30, 503 (18 ) 

509 509 509 

(3, 251) 251) 

883 (520) 

105 (18 ) 

384) 

268 268 

(282 ) (282) 

(10 ) 

574 

$31 813 35, 223 (ll) 

(Q 2005. EDGAR OnI ine Ine. 
Treasury 

Bal , Dec. 3 0 2001 

Net earnings 

Cash dividends paid


Employee stock


Compensation and


stock option plans


Conver. of subordinated


debentures 

Repurchase of common


stock 

Other comprehensive income


net of tax:


Currency translation adj


Unrealized losses on


securities 

Pension liability


adjustment 

Losses on derivatives


& hedges


Reclassification adj


Total comprehensive income


Note receivable from ESOP


Bal , Dec. 29 2002 

Net earnings 

Cash dividends paid


Employee stock 

compensation and


stock option plans


Conver. of subordinated


deben t ure s 

Repurchase of common


stock 

Business combinations


Other comprehensive income,


net of tax:


Curncy translation adj


Unrealized gains on


securities 

Pension liability adj


Losses on derivatives


& hedges


Reclassification adj


Total comprehensive income


Note receivable from ESOP


iD 2005. 

Accumul 

Other 

Compre ­

hens i ve 

Income 

(530) 

Common 

Stock 

Issued 

Amoun t 

120 

Stock 

Amount 

393) 

(10) 

(86) 

(18 ) 

(198 ) 

295 

353 

(6, 382 ) 

(842 ) 120 (6, 127) 

160 

11, 183) 

334 

(31 ) 

(80) 

EDGAR Online Inc. 
Bal Dec. 28, 2003 (590) 120 146) 

Net earnings 

Cash dividends paid 

Employee stock 

compensation and 

stock option plans 

Conver. subordinated 

debentures 

Repurchase common 

stock 

Other comprehensive income 

net tax: 

Currency translation adj 

Unreal i zed gains 

securi ties 

Pension liability adj 

Gains derivatives 

hedge s

Reclassification adj 

268 

(282) 

403 

123 

(1, 384) 

Total comprehensive income 

Note receivable from ESOP 

Bal, Jan. 2005 $ (515) 120 004) 

See Notes to Consolidated Financial Statements 

(i 2005. EDGAR OnI i:re Inc. 
Consolidated Statements of Cash Flows 

Johnson & Johnson and Subsidiaries 

(Dollars in Millions) (Note I) 

Cash flows from operating

activities 

Net earnings 

Adjustments to reconcile net 

earnings to cash flows: 

Depreciation and amortization 

of property and intangibles 

Purchased in-process 

research and development 

Deferred tax provision 

Accounts receivable 

allowances 

2004 

$ 8, 509 

124 

(498) 

2003 

197 

869 

918 

(720) 

2002 

597 

662 

189 

(74) 

(6) 

Changes in assets and liabilities 

net of effects from acquisi tioD 

of businesses: 

Increase in accounts 

recei vable 

(510) 

Decrease/ (increase)

inventories 

(109) 

Increase in accounts 

payable and accrued liabilities 

Increase in other current 

and non-current assets 

(1, 429) 

Increase in other current and 

non- current liabilities 

(111) 

607 

(395) 

863 

(691) 

192 

(746) 

531 

420 

436 

Net cash flows from 

operating activities 11, 131 10, 595 176 

Cash flows from investing

acti vities 

Addi tions to property 

plant and equipment 

Proceeds from the 

disposal of 

assets 

(2, 175) 

237 

262) 

335 

(2, 099) 

156 

Acquisition of businesses 

net of cash 

acquired (Note 17) 

Purchases of investments 

Sales of investments 

Other 

(580) 

(11 617) 

061 

(273) 

812) 

590) 

062 

(259) 

(478) 

(6, 923) 

353 

(206) 

Net cash used by investing

activities 347) 526) (2, 197) 

Cash flows from financing

activities 

Di vidends to shareholders (3, 2511 746) 381 ) 

Repurchase of common 

rt 2005. EDGAR Onl ine, Ine. 
stock 

Proceeds from shortterm debt


Retirement of short-


term debt


Proceeds from longterm debt


Retirement of longterm debt


Proceeds from the exercise


of stock options


Net cash used by


financing activities


Effect of exchange rate


changes on cash and cash


equi valents

Increase/ (decrease) in

cash and cash equivalents 

Cash and cash equivalents,


beginning of year (Note 


Cash and cash equivalents 

end of year (Note 

Supplemental cash flow data


Cash paid during the year for: Interest 

Income taxes 

Supplemental schedule of 

noncash investing and


financing activities


Treasury stock issued for 

employee compensation and stock 

option plans 

net of cash proceeds 

Conversion of debt


Acquisition of businesses


Fair value of assets


acquired 

Fair value of liabilities


assumed 

Net cash paid for acquisitions


See Notes to Consolidated Financial Statements 

384) 

514 

291 ) 

(395 ) 

642 

148) 

190 

826 

377 

$9, 203 

222 

880 

802 

105 

595 

(15 ) 

580 

183 ) 

062 

134) 

023 

(196) 

311 

(3, 863 ) 

277 

483 

894 

377 

206 

146 

905 

3 I 135 

(323 ) 

812 

(6, 538)


359 

(560) 

(245) 

390 

953 ) 

110 

(864 ) 

3 I 758 

894 

141 

006 

946 

131 

550 

(72 ) 

478 

ce 2005. EDGAR OnI ine, Ine. 
Notes to Consolidated Financial Statements 

1 Summary of Signifcant Accounting Principles 

Principles of Consolidation 

The consolidated financial statements inelude the accounts of Johnson & Johnson and subsidiaries. Intercompany accounts and 

transactions are eliminated. 

Description of the Company and Business Segments 

The Company and its subsidiaries have approximately 109 900 employees worldwide engaged in the manufacture and saJe ofa broad 

range of products in the health care field. The Company conducts business in virtally all countries of the world and its primary focus 

has been in products related to human health and well-being. 

New Accounting Pronouncements 

In June 2002, the FASB issued SF AS No. 146 , Accounting for Costs Associated with Exil or Disposal Activities, which is effective for 

exit or disposal activities that are initiated after December 31 2002. The Company s adoption of SF AS No. 146 did not have a materiaJ 

effect on the Company s results of operations, cash flows or financial position. 

In Novcmber 2002, the F ASB issucd FASB Interpretation No. 45 (FIN 45), Guarantor s Accounting and Disclosure Requirements for 

Guarantees , Including Indirect Guarantees oflndebtedness of Others an interpretation ofFASB Statements No. , 57 and 107 and 

Rescission ofF ASB Interpretation No. 34. FIN 45 clarifies the requirements ofF ASB Statement No. , Accounting for Contingencies 

relating to the guarantor s accounting for and disclosure of the issuance of certain types of guarantees. The disclosure requirements of 

FIN 45 are effective for financial statements of interim or annual periods that end after December 15 2002. The provisions for initial 

recognition and measurement were effective on a prospective basis for guarantees that were issued or modified after December 31 

2002 , irrespective of the guarantor s year-end. FIN 45 requires that upon issuance of a guarantee, the entity must recognize a liability 

for the fair value of the 
 obligation it assumes under that guarantee. The Company s adoption ofFTN 45 did not have a materiaJ effect on 

the Company's results of operations , cash flows or financial position. 

In January 2003 , the F ASB issucd FIN 46, Consolidation ofVariablc Interest Entities - an interpretation of ARB No. 51 , and in 

Deccmbcr 2003, issucd a rcvised FIN 46(R), Consolidation of Variable Interest Entitics - an intcrprctation of ARB No. 51 , both of which 

address consolidation of variable interest entities. In addition, the F ASB issued various rASH Staff Positions (FSP) on this topic in 

December 2003. FIN 46 expands the criteria for consideration in determining whether a variable interest entity should be consolidated 

by a business entity, and requires existing unconsolidated variable interest entities 

(which include, but are not limitcd to, Special Purpose Entities, or SPEs) 

to be consolidated by their primary beneficiaries if the 
entities do not effectively disperse risks among parties involved. This 

interpretation was immediately applicable to variable interest entities created after January 31 , 2003. The adoption of this portion of FIN 

46 has not had a material effect on the Company's results of operations , cash flows or financial position. FIN 46 was applicable in 2004 

to variable interest entities in which an enterprise holds a variable interest that was acquired before February 1 2003. The adoption of 

this portion of FIN 46 did not have a material effect on the results of operations, cash flows or financial position of the Company. 

In April 2003 , the FASB issucd SFAS No. 149, Amendment of Statement 133 on Derivativc Instrments and Hedging Activities, wliich 

is effective for contracts entered into or modified after June 30, 2003. This Statement amends and clarifies financial accounting and 

reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. 

The Company s adoption of SF AS No. 149 did not have a material effect on the Company s results of operations cash flows or 

financial position.


In Decembcr 2003 , the FASH issued FSP FAS No. 106- , Accounting and Disclosure Requirements Related to the Medicare 

Prescription Drug, Improvement and Modernization Act of2003 , which is effective for interim or annual financial statements of fiscal 

ycars cnding after Deccmbcr 7 , 2003. The Company clected to defer adoption ofFSP FAS No. 106- 1 until authoritative guidance was 

issued, as allowcd by the Standard. This guidance was issued in by the FASB in May 2004 via FSP FAS No. 106- 2. The Company 

adopted FSP FAS No. 106- 1 and 106-2 in the ftscal third quartcr of2004. This adoption did not have a material effect on the Company 

results of operations, cash flows or financial position. 

In July 2004, the FASB ratified the ElTF conscnsus on Issue 02- , Whethcr an Investor should apply the Equity Method of 

Accounting to Investments other than Common Stock, which is effective for the fourth quarter of2004. This consensus clarifies that 

when an investor has the ability to exercise significant influence over the operating and financial policies of an investce, the equity 

method of accounting should be applied only when the investor has an investment in common stock and/or an investment that is 

in-substance common stock. The adoption of this consensus did not havc a material effect on the Company's results of operations 

(C 2005. EDGAR anI ine Inc. 
cash flows or financial position. 

In October 2004, the FASB ratified the EITF consensus on Issue 04- , Accounting for Preexisting Relationships between the Parties to 

relationships and the 

re-acquisition of certain rights in a business combination. This consensus was effective for the fourth quarter of 2004 and was adopted 

by the Company in that quarter. This adoption did not have a material effect on the Company s results of operations, cash flows or 

financial position, but may impact future transactions. 

a Business Combination. This consensus describes the accounting for the settlement of preexisting 


In November 2004, the FASB issued SFAS No. 151 , Inventory Costs, an amendment of ARB No. 43. This statement clarifies the 

accounting for idle capacity expense, freight, handling costs, and wasted material and is effective for the third quarter of2005. The 

Company believes the adoption of this statement will not have a material effect on its results of operations, cash flows or financial 

position. 

In December 2004, the FASB issued SFAS No. 123(R), Share Based Payment. This statement establishes standards for the accounting 

for transactions in which an entity exchanges its equity instruments for goods and services. It focuses primarily on accounting for 

transactions in which an entity obtains employee services in share-based payment transactions (employee stock options). The 

statement requires the measurement of the 
 cost of employee services received in exchange for an award of equity instruments (such as

employee stock options) 

(( 2005. EDGAR Online . Inc.

at fair value on the grant date. That cost will be recognized over the period during which an employee is required to provide services in 

exchange for the award (the requisite service period). The effective date of this statement is the fiscal third quarter of2005. The 

Company is stil considering transition methods under this standard. The Company currently estimates the annualized cost associated 

with expensing stock options to be approximately $0. 12 per share in 2005. The Company is proposing a new long-term incentive plan 

including various forms of stock compensation, such as stock options and restricted stock. 

In Dcccmber 2004, the FASB issued SFAS No. 153 , Exchanges of Non- monetary Assets, an amendment of APB 29. This statcmcnt 

clarifies that all non-monetar transactions that have commercial substance should be recorded at fair value and is effective for the first 

quarter of2005. The Company believes the adoption of this statement will not have a material effect on its results of operations , cash 

flows or financial position. 

In Dccember 2004 , the FASB issued FSP FAS No. 109- 1 and FAS 109- , which address accounting and disclosure requirements related 

to certain provisions of the American Jobs Creation Act of2004. These requirements were effective immediately. The Company has 

adopted these provisions , the impact of which is described in Note I and Note 8. 

Cash Equivalents 

The Company considers securities with maturities of three months or less, when purchased, to be cash equivalents. 

Investments 

Short-term marketable securities arc carred at cost, which approximates fair value. Long-term debt securities that the Company has the 

ability and intent to hold until maturity are carried at amortized cost, which also approximates fair value. Investments classified as 

available-for-sale are carried at estimated fair value with unrealized gains and losses recorded as a component of accumulated other 

comprehensive income. Management determines the appropriate classification of its investment in debt and equity securities at the 

time of purchase and re-evaluates such determination at each balance sheet date. The Company periodically reviews its investments in 

non-marketable equity securities for impairment and adjusts these investments to their fair value when a decline in market value is 

deemed to be other than temporary. 

Propert! Plant and Equipment and Depreciation


Property, plant and equipment are stated at cost. The Company utilizes the straight-line method of depreciation over the estimated 

useful lives of the assets: 

Bui Iding and building equipment 20 - 4 0 

years 

Land and leasehold improvements 10­

years 

Machinery and equipment 

years 

The Company capitalizes certain computer software and development costs, included in machinery and equipment, when incurred in 

connection with developing or obtaining computer softare for internal use. Capitalized softare costs are amortized over the 

estimated useful lives of the software, which generally range fTom 3 to 5 years. 

The Company reviews Jong-lived assets to assess recoverability using undiscounted cash flows. When necessary, charges for 

impairments of long-lived assets arc recorded for the amount by which the present value of future cash flows is less than the carring 

value of these assets. 

Revenue Recognition 

The Company recognizes revenue from product sales when the goods are shipped or delivered and title and risk of loss pass to the 

customer. Provisions for certain rebates, sales incentives, trade promotions, coupons, product returns and discounts to customers are 

accounted for as reductions in sales in the same period the related sales are recorded. 

Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well as market 

conditions, including prices charged by competitors. Rebates, the largest being the Medicaid rebate provision, are estimated based on 

(9 2005. EDGAR OnI ine , Inc. 
sales terms, historical experience, trend analysis and projected market conditions in the various markets served. The Company 

evaluates market conditions for products or groups of products primarily through the analysis of wholesaler and other third part 

sell-through and market research data, as well as internally generated information. 

Sales retus are generally estimated and recorded based on historical sales and returs infonnation, analysis of recent wholesale 

purchase information, consideration of stocking levels at wholesalers and forecasted demand amounts. Products that exhibit unusual 

sales or retu patterns due to dating, competition or other marketing matters are specifically investigated and analyzed as part of the 

accounting for accruals. The Company also recognizes service revenue that is received for co-promotion of certain products in sales to 

customers. 

Shipping and Handlig 

Shipping and handling costs incUled were $679 million, $604 million and $S 18 million in 2004, 2003 and 2002, respectively, and arc 

included in selling, marketing and administrative expense. The amount of revenue received for shipping and handling is less than 0. 

of sales to customers for all periods presented. 

Inventories 

Inventories are statcd at the lower of cost or market detennined by the first- , first-out method. 

Goodwil and Intangible Assets 

Effective at the beginning of fiscal year 2002 in accordance with SF AS No. 142, the Company discontinued the amortization relating to 

all existing goodwill and indefinite lived intangible assets, which are non- amortizable. SF AS No. 142 requires that goodwill and 

non-amortizable intangible assets be assessed annually for impainnent. The Company completed the annual impairment test for 2004 in 

the fiscal fourth quarter and no impairment was determined. Future impairment tests will be performed in the fiscal fourth quarter 

annually. 

Intangible assets that have finite useful lives continue to be amortized over their useful lives, and are reviewed for impairment when 

warranted by economic conditions. See Note 7 for further details on IntangibJc Assets. 

t9 2005. EDGAR OnI ine , Inc. 
Financial Instruments 

The Company follows the provisions of SF AS No. 133 , Accounting for Derivativc Instruments and Hedging Activities, as amended by 

SFAS No. 138 , Accounting for Certain Derivative Instruments and Certain Hedging Activities, and SFAS No. 149, Amendment of 

Statement 133 on Derivative Instruments and Hedging Activitics, collectively referred to as SFAS No. 133. SFAS No. 133 requires that 

all derivative instruments be recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each 

period in current earnings or other comprehensive income, depending on whether the derivative is designated as part of a hedge 

transaction, and if so , what tye of hedge transaction. 

, primarily related to the foreign The Company uses forward exchange contracts to manage its exposure to the variability of cash flows

exchange rate changes offuturc intercompany product and third party purchases of raw materials denominated in foreign currency. 

The Company also uses currency swaps to manage currency risk primarily related to borrowings. Both of these tyes of derivatives are 

designated as cash flow hedges. Additionally, the Company uses forward exchange contracts to offset its exposure to certain foreign 

currency assets and liabilities. These forward exchange contracts are not designated as hedges and, therefore, changes in the fair 

values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency 

assets and liabilities. 

, all derivatives are The designation as a cash flow hedge is made at the entrance date into the derivative contract. At inception

expected to be highly effective. Changes in the fair value of a derivative that is designated as a cash flow hedge and is highly effective , and are then reclassified to arc recorded in accumulated other comprehensive income until the underlying transaction affects earnings

earnings in the same account as the hedged transaction. Fair value ofa forward exchange contract rcpresents the present value of the 

change in forward exchange rates times the notional amount of the derivative. The fair value of a currency swap contract is detennined 

by discounting to the present all futue cash flows of the currencies to be exchanged at interest rates prevailing in the market for the 

periods the currency exchanges are due and expressing the result in U. S. dollars at the current spot foreign currency exchange rate. 

On an ongoing basis , the Company assesses whether each derivative continues to be highly effective in offsetting changes in the 

cash flows of hedged items. If and when a derivative is no longer expected to be highly effective , hedge accounting is discontinued. 

Hedge ineffectiveness , if any, is included in current period earnings, and was insignificant in 2004. 

The Company documents all relationships between hedged items and derivatives. The overall risk management strategy includes 

reasons for undertaking hedge transactions and entering into derivatives. The objectives of this strategy are: 

(1) minimize foreign currency exposure s impact on the Company's financial performance; (2) protect the Company s cash flow from 

adverse movements in foreign exchange rates; (3) ensure the appropriateness of financial instruments; and (4) manage the enterprise


risk associated with financial institutions.


Product Liabilty 

Accruals for product liability claims are recorded, on an undiscounted basis, when it is probable that a liability has been incurred and 

the amount of the liability can be reasonably estimated based on existing infonnation. The accruals are adjusted periodically as 

additional infonnation becomes available. Receivables for insurance recoveries related to product Jiability claims are recorded on an 

undiscounted basis, when it is probable that a recovery will be realized. 

Research and Development 

Research and development expenses are expensed as incurred. Upfront and milestone payments made to third parties in connection 

with research and development collaborations are expensed as incurred up to the point of regulatory approval. Payments made to third 

parties subsequent to regulatory approval are capitalized and amortized over the remaining useful life of the relatcd product. Amounts 

capitalized for such payments are included in other intangibles, net of accumulated amortization. 

Advertising 

Costs associated with advertising are expensed in the year incurred and are included in the selling, marketing and administrative 

expenses. Advertising expenses worldwide, which are comprised of television, radio, print media and Internet advertising, were $1.9 

billion in 2004, $1. billion in 2003 and $1. billion in 2002. 

Income Taxes 

The Company has detennincd that it will repatriate $10. 8 billion of undistributed international earnings in 2005 in accordance with the 

American Jobs Creation Act of2004, and has recorded a tax charge of$789 milion during the fourth quarter of2004. (This tax charge 

may be reduced by approximately $225 million, due to technical corrections legislation, expected to be considered by Congress in 

2005.) The legislation was passed during the fourth quartcr of 2004 and pennits U. S. corporations to repatriate earings of foreign 

co 2005. EDGAR OnI ine , Ine. 
subsidiaries at a special one-time favorable effective tax rate. At January 2, 2005 and December 28 , 2003 , the cumulative amount of 

undistributed international earings were approximately $18.6 billon and $14. 8 bilion, respectively. The Company intends to continue 

to reinvest its undistributed international earnings to expand its international operations; therefore, no U. S. tax expense has been 

recorded to cover the undistributed portion not intended for repatriation. 

Deferrcd income taxes arc recognized for tax consequences of temporary differences by applying enacted statutory tax rates, applicable 

to future years, to differences between the financial reporting and the tax basis of existing assets and liabilities. 

Net Earnings Per Share 

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of 

common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities were 

exercised or converted into common stock using the treasury stock method. 

2005. EDGAR Onl ine. Jne. 
Stock Options 

At Januar 2 200S the Company had 20 stock-based employee compensation plans that are described in Note 10. The Company 

accounts for those plans under the recognition and measurement principles of Accounting Principle Board Opinion No. 25 

Accounting for Stock Issued to Employees (APB 25), and its related Interpretations. Compensation costs arc not recorded in net 

income for stock options as all options granted under those plans had an exercise price equal to the market value of the underlying 

common stock on the date of grant. 

As required by SFAS No. 148 , Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment ofFASB 

Statement No. 123 , the following table shows the estimated effect on net income and earnings per share if the Company had applied the 

fair value recognition provision of SFAS No. 123 , Accounting for Stock-Based Compensation, to stock-based employee compensation. 

(Dollars in Millions 

Except Per Share Data) 

2002 

Net income, 

597 

as reported 

2004 

$ 8 509 

2003 

197 

Less: 

Compens a t i on 

320 

expense (1) 329 349 

Pro forma 

277 

180 848 

Earnings per share: 

Basic - as reported 

pro forma 

Diluted ­ as reported 

- pro forma 

(I) Detennined under fair value based method for all awards, net oftax. 

Use of Estimates 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U. S. requires 

management to make estimates and assumptions that affect the amounts reported. Estimates are used when accounting for sales 

discounts, rebates , allowances and incentives , product liabilities, depreciation , amortization, employee benefits , contingencies and 

asset and liability valuations. For instance , in detennining annual pension and post-cmpJoyment benefit costs, the Company estimates 

the rate of return on plan assets, and the cost of future health care benefits. Actual results mayor may not differ from those estimates. 

Annual Closing Date 

The Company follows the concept ofa fiscal year which ends on the Sunday nearest to the end of the month of December. Nonnally


each fiseal year consists of 52 weeks, but every five or six years, the fiscal year consists of 53 weeks , as was the case in 2004.


Reclassification


Certain prior year amounts have been reclassified to conform with current year presentation.


2 Inventories


At the end of2004 and 2003 , inventories were comprised of:


(g 2005. EDGAR OnI ine Ine. 
(Dollars in Millions) 2004 

2003 

Raw materials and supplies 964 

966 

Goods in process 113 

981 

Finished goods 667 

641 

$ 3, 744 

588 

3 Propert, Plant and Equipment 

At the end of 2004 and 2003 , propert, plant and equipment at cost and accumulated depreciation were: 

(Dollars in Millions) 2004 2003 

Land and land improvements 515 

491 

Bui ldings and 

building equipment 907 

242 

Machinery and equipment 10, 455 

638 

Construction in progress 787 

681 

18, 664 

052 

Less accumulated 

depreciation 228 

206 

$10, 436 

846 

The Company capitalizes interest expense as part of the cost of construction of facilities and equipment. Interest expense capitalized in 

2004, 2003 and 2002 was $ 136 milion, $108 million and $98 million, respectively. 

Depreciation expense, including the amortization of capitalized interest in 2004, 2003 and 2002 was $1. 5 billion, $1.4 billion and $1. 

billion, respectively. 

Upon retirement or other disposal of fixed assets, the cost and related amount of accumulated depreciation or amortization arc 

eliminated from the asset and accumulated depreciation accounts, respectively. The difference, if any, between the net asset value and 

the proceeds is recorded in earnings. 

4 Rental Expense and Lease Commitments 

Rentals of space , vehicles, manufacruring equipment and office and data processing equipment under operating leases were 

approximately $254 million in 2004, $279 million in 2003 and $298 million in 2002. 

The approximate minimum rental payments required under operating leases that have initial or remaining noncanceJablc lease tenns in 

excess of onc year at Januar 2, 2005 arc: 

C9 2005. EDGAR Onl i e, Inc. 
(Dollars 

in Millions) 

Total 

2005 2006 2007 2008 2009 

After 

2009 

$144 132 110 173 

725 

Commitments under capital leases arc not significant. 

(9 2005. EDGAR Onl ine Ine. 
5 Employee Related Obligations 

At the end of2004 and 2003 , employee related obligations were: 

(Dollars in Millions) 2004 

2003 

Pension benefits $1, 109 

862 

postretirement benefits 071 

966 

Postemployment benefits 244 

213 

Deferred compensation 397 

362 

821 

403 

Less current benefits payable 190 

141 

Employee related obligations 631 

262 

Prepaid employee related obligations of $1 ,001 million and $1 021 million for 2004 and 2003 , respectively, arc included in other assets on 

the consolidated balance sheet. 

6 Borrowings 

The components of long-tcnn debt are as follows: 

Effective 

Effecti ve 

(Dollars in Millions) 2004 Rate% 2003 Rate% 

3 % Zero Coupon 

Convertible 

Subordinated Debentures


560	 639 due 2020


95% Debentures


500	 500 due 2033


80% Debentures


due 2013 500 500


72% Debentures


due 2024 (2) 300


293 293
 95% Notes due 2029


73 % Debentures 

250 250 due 2023


25% Eurodollar Notes


200 due 2004


198	 198 625% Notes due 2009


50% Convertible


Subordinated Notes


177	 182 due 2009


Industrial Revenue Bonds


Other 

583 63 (1)	 179 23 (1) 

224 Less current portion


565	 955 

CD 2005. EDGAR OnI ine Inc. 
(1) Weighted average effective rate. 

(2) 8. 72% Debentures redeemed in November 2004. 

at numerous banks worldwide. Total unused credit available to the Company 

approximates $3.9 billion, including $1. billion of credit commitments, of which $0.75 billion expire September 29 2005 and $0. 75 billion 

expire September 30, 2009. Also included, are $0.9 billion of uncommitted lines with various banks worldwide that expire during 2005. 

Interest charged on borrowings under the credit line agreements is based on either bids provided by banks, the prime rate or London 

Interban Offered Rates (LIBOR), plus applicable margins. Commitment fees under the agreement are not material. 

The Company has access to substantial sources of funds 


The Company fied a shelf registration with the Securities and Exchange Commission that became effective January 21 , 2004, which 

enables the Company to issue up to $1.985 bilion in debt securities and walTants for the purchase of debt securities. No debt was 

issued off the shelf during 2004 and the full amount remained available as of Januar 2, 2005. 

In August 2002, Seios Inc. issued in a private offering $150 million of5.5% Convertible Subordinated Notes due 2009; interest payable 

semi-annuaIly, on February 15 and August 15. The Notes were convertible at the option of the holder at any time prior to redcmption 

repurchase or maturity at a conversion price of$39.30. Following the acquisition by Johnson & Johnson in April 2003 , each $1 ,000 in 

principal amount of the notes became convertible into the right to receive $1 145.04 in cash without interest. Semi-annual interest 

remains payable until conversion, repurchase or maturity. At January 2 , 2005 the book value of these Notes approximatcs fair value. 

On July 28 , 2000 , ALZA Corporation completed a private offering of 3% Zero Coupon Convertible Subordinated Debentures, which 

were issued at a price of $551. 26 per $1 000 principal amount at maturity. At January 2, 2005 the outstanding 3% Debentures had a total 

principal amount at maturity of$890. 8 million with a yield to matuity of 3% per annum, computed on a semiannual bond equivalent 

basis. There are no periodic interest payments. Under the tenns of the 3% Debentures, holders are entitled to convert their Debentures 

into approximately 15. 0 million shares of Johnson & Johnson stock at a price of$40. 102 per share. Approximately 2.7 milion shares 

have been issued as of January 2 , 2005 , due to voluntary convcrsions by note holders. At the option ofthc holder, the 3% Debentures 

may be repurchased by the Company on July 28 , 2008 or 2013 , at a purchase price equal to the issue price plus accreted original issue 

discount to such purchase date. The Company, at its option, may elect to deliver either Johnson & Johnson common stock or cash, or 

a combination of stock and cash , in the event of repurchase of the 3% Dcbcntures. The Company, at its option, may also redeem any 

or all of the 3% Debentures after July 28 2003 at the issue price plus accreted original issue discount. At January 2 , 2005 , and 

December 28, 2003 , the fair value based on quoted market value of the 3% Debentues was $780.5 million and $712.3 million 

respectively. 

On November 1 2004 the Company exercised its right to redeem all of its $300 million aggregate principal amount of 8.72% Debentures 

due in 2024. The redemption price was 104.360% of the principal amount or $ 1 ,043 .36 per $1 ,000 principal amount of Debentures, with 

accrued interest to the date of redemption. 

Short-tena borrowings and current portion oflong-tena debt amounted to $280 milion at the end of2004, principally local borrowing 

by international subsidiaries. 

(t 2005. EDGAR Onl ine, Ine. 
Aggregate maturities oflong-tenn obligations commencing in 2005 are: 

After 

(Dollars in Millions) 

139 

2005 

$ 18 

2006 2007 2008 2009 

384 

2009 

7 Intangible Assets 

At the end of 2004 and 2003 , the gross and net amounts of intangible assets were: 

(Dollars in Millions)

Goodwill - gross 

085 

Less accumulated amortization 

695 

2004 

597 

734 

2003 

Goodwill - net 

390 

863 

Trademarks (non-amortizable) - gross 

098 

Less accumulated amortization 

136 

232 

142 

Trademarks 

962 

(non- amortizable) - net 090 

Patents and trademarks - gross 

3 I 798 

974 

Less accumulated amorti zation 

818 

125 

Patents and trademarks - net 

980 

849 

Other intangibles - gross 

187 

Less accumulated amortization 

980 

302 

262 

Other intangibles - net 

207 

040 

Total intangible 

168 

Less accumulated 

629 

assets - gross 

amortization 

$15, 105 

263 

Total intangible assets - net $11 842 

11, 539 

(9 2005. EDGAR Onl ine Ine. 
Goodwill as of January 2, 2005 , as allocated by segments of business is as follows: 

Med Dev


(Dollars in Millions) Consumer Pharm and Diag 

Total 

Goodwill, net of 

accumulated


amortization at


882 781 3 I 727 December 28, 2003


390 

Acquisi tions 232 138 

402 

Translation & other


Goodwill at 

January 2005 160 832 871 

863 

The weighted average amortization periods for patents and trademarks and other intangible assets are 15 years and 17 years , 2005 , was $603 million respectively. The amortization expense of amortizable intangible assets for the fiscal year ended January 2


before tax. Ccrtain patents and intangibles were written down to fair value during 2004 with the resulting charge included in , per year.
 amortization expense. The estimated amortization expense for the five succeeding years approximates $550 million before tax


Substantially all of the amortization expense is included in cost of products sold.


8 Income Taxes 

The provision for taxes on income consists of: 

(Dollars in Millions) 2004 2003 2002 

Currently payable: 

S. taxes $ 3, 654 934 042 

International taxes 173 897 726 

827 831 768 

Deferred: 

S. taxes (70) (409 ) 

International taxes (428 ) (311) 

(94 ) 

(498 ) (720) 

(74 ) 

$ 4 329 111 694 

A comparison of income tax expense at the federa1 statutory rate of 35% in 2004, 2003 and 2002 , to the Company s effective tax rate is as 

follows: 

(Dollars in Millions) 2004 2003 2002 

895 333 189 

International 943 975 102 

Earnings before taxes 

(g 2005. EDGAR On) ine,
 Inc. 
income: 12, 838 10, 308 9 , 291 

Tax rates: 

Statutory 35. 35. 0% 

35. 

Puerto Rico and 

Ireland operations (5. (6. 

(4. 

Research tax credits (0. (1. 0) 

(0. 

state and local 1. 6 2. a 1. 2 

International 

subsidiaries 

excluding Ireland (1. 7) (2. 0) 

(2.

Repatriation

International earnings 

IPR&D a . 7 

All other (0. (0. 

(0. 

Effective tax rate 33. 3 a . 2% 

29. 0% 

During 2004, 2003 and 2002, the Company had subsidiaries operating in Pucrto Rico under various tax incentive grants. In addition, the 

Company had subsidiaries manufacturing in Ireland under an incentive tax rate. The American Jobs Creation Act of 2004 tax legislation 

permits U. S. corporations to repatriate earnings of foreign subsidiaries at a special onc-time favorable effective federal tax rate versus 

35%, before consideration of foreign taxes paid. The Company has detennined that it will repatriate approximately $10. 8 billion. The 

Company accrued $789 million for federal and state taxes attibutable to the repatriation of earnings. (This tax charge may be reduced 

by approximately $225 million, due to technical corrections legislation, expected to be considered by Congress in 2005.) The increase in 

the 2004 worldwide effective tax rate was primarily due to the repatriation of foreign earnings under this legislation, which added 6. 1 % 

to the 2004 effective tax rate. 

CD 2005. EDGAR Online. Inc.

Temporar differences and cany forwards for 2004 and 2003 are as follows: 

2004 2003 

Deferred Tax Deferred Tax 

(Dollars in Millions) As set Liability Asset Liability 

Employee related 

obligations 483 356 

Depreciation (378) 

(248)


Non- deductible


intangibles 366)


455)


International R&D


capitalized for tax 905 574


Reserves liabilities 720 592


Income reported


for tax purposes 463 416


Miscellaneous


international 535 (236) 502


(258)


Capi tal i zed intangibles 147 131


Miscellaneous U. 515 724


Total deferred


income taxes 768 (1, 980) 3 I 295


(1, 961)


The difference between the net defen-cd tax on income per the balance sheet and the net deferrcd tax above is included in taxes on 

income on the balance sheet. 

9 International Currency Translation 

For translation of its subsidiaries operating in nOTIw S. dollar currencies, the Company has determined that the local currencies of its 

international subsidiaries are the functional currencies except those in highly inflationary economics, which are defined as those which 

have had compound cumulative rates of inflation of 100% or more during thc past three years, or where a substantial portion of its 

cash flows are not in the local currency. 

In consolidating international subsidiaries , balance sheet currency effects are recorded as a component of accumulated other 

comprehensive income. This equity account includes the results of translating all balance sheet assets and liabilities at current 

exchange rates, except for those located in highly inflationary economics that are reflected in operating results. 

An analysis of the changes during 2004 and 2003 for foreign currency translation adjustments is included in Note 12. 

Net currency transaction and translation gains and losses included in other expense were losses of$38 milion, $22 million and $29 

million in 2004, 2003 and 2002, respectively. 

Common Stock, Stock Option Plans and Stock Compensation Agreements 

At January 2 , 2005 , the Company had 20 stock-based compensation plans. Under the 2000 Stock Option Plan, the Company may grant 

options to its employees for up to 1.6% of the issued shares of the Company s Common Stock plus the number of shares available from 

thc previous year that were not issued, as well as shares issued under the Plan that expired or tenninated without being exercised. The 

shares outstanding are for contracts under the Company s 1991 , 1995 and 2000 Stock Option Plans , the 1997 Non-Employee Director 

Plan and the Cordis, Biosense, Gynecare, Centocor, lnnovasive Devices, ALZA, Inverness and Scios Stock Option Plans. During 2004 

no options were granted under any of these plans except the 2000 Stock Option Plan. 

Stock options expire 10 years from the date they are granted and vest over service periods that range from one to five years. All 

options are granted at current market price on the date of grant. Shares available under the 2000 Stock Option Plan for future grants are 

based on 1.6% of the issued shares each year, and 49. 9 million shares could be granted each year during the years 2000 through 2005 

cg 2005. EDGAR anI ine Inc. 

10 
(g 

in addition to any other available shares as described above. Shares available for future grants under the 2000 plan were 83.3 milion at 

the end of 2004. 

A summary of the status ofthc Company s stock option plans as of January 2 , 2005 , Dccembcr 28 2003 and December 29, 2002, and 

changes during the years ending on those dates are presented below: 

Weighted 

Options Average 

(Shares Thousands) Outstanding Exercise 

Price 

Balance December 30, 2001 167 224 34. 

Options granted 072 57. 

Options exercised (21, 012) 19. 

Options canceled/ forfeited (4, 543) 50. 

Balance December 2002 189 741 41.42 

Options granted 880(1) 49. 

Options exercised (21 242) 17. 

Options canceled/forfeited (5, 430) 52. 

Balance December 2003 213, 949 45. 

Options granted 815 53. 

Options exercised (24 066) 28. 

Options canceled/forfeited 694) 53. 

Balance January 2005 229, 004 48. 

(1) Includes 7 002 options issued to replace Scios options outstanding at or granted prior to the acquisition. 

2005. EDGAR OnI ine Ine. 
The average fair value of options granted was $13. 11 in 2004, $13.58 in 2003 , and $15.49 in 2002. The fair value was estimated using the 

Black-Scholes option pricing model based on the weighted average assumptions of: 

2004 2003 2002 

Risk- free rate 15% 09% 39% 

Volatility 27. 28. 26. 

Expected life yrs yrs 

yrs 

Di vidend yield 76% 35% 33% 

The following table summarizes stock options outstanding and exercisable at January 2, 2005: 

(Shares in Thousands) Outstanding Exercisable 

Average Average 

Exercise Average Exercise 

Exercise 

Price Range Options Life (1) Price Options Price 

22. 336 1. 4 $20. 329 20. 

23. 39. 703	 30. 048 30. 

40. 50. 952	 46. 615 45. 

50. 52. 953	 50. 371 50. 

52. 53. 39, 403	 52. 173 52. 

53. 54. 46, 012	 53. 399 54. 

55.	 65. 42, 645 57. 553 59. 

229, 004 $48. 100, 488 41.26 

(1) Average contractual life remaining in years. 

Stock options exercisable at December 28 , 2003 and December 29 2002 were 119 663 options at an average price of$38. 51 and 100 702 

options at an average price of $30.47, respectively. 

11 Segments of Business and Geographic Areas 

See page 64 for information on segments of business and geographic areas. 

12 Accumulatcd Othcr Comprehcnsivc Income 

Components of other comprehensive income/Closs) consist of the following: 

Total 

Unrealized Gains/ Accumulated 

Foreign Gains/ Pens (Losses) Other 

Cur. (Losses) Liab on Deriv Comprehens i ve 

(Dollars in Millions) Trans. On Sec Adj. & Hedg Inc/ (Loss) 

Dec. 3D , 2001 $ (697) (151 (5301 

2002 changes 

Net change


due to hedging


transactions	 (3941 

Net amount


reclassed to 

(C 2005. EDGAR Onl ine , Ine. 
net earnings 196 

Net 2002 

changes (10) (86) (18) (198) (312) 

Dec. 

2003 

29, 2002 

changes 

$ (707) (2) (33) (100) (842) 

Net change 

due to hedging 

transactions (567) 

Net amount 

reclassed to 

net earnings 487 

Net 2003 

changes 334 (31) (80) 252 

Dec. 2003 $ (373) (64) (180) (590)

2004 change s 

Net change


due to hedging


transactions 

Net amount


reclassed to 

net earnings


Net 2004


changes 268 (282) 

Jan. 2005 $ (105) (346) (150) (515) 

Total other comprehensive income for 2004 includes reclassification adjustment gains of$16 milion reaJized from the sale of equity securities and thc associated tax expense of $6 million. Total other comprehensive income for 2003 includes reclassification adjustment 

gains of $3 million realized from the sale of equity securities and the associated tax expense of $1 million. Total other comprehensive 

income for 2002 includes reclassification adjustment gains of $45 million realized from the sale of equity securities and the associated 

tax expense of$19 million. 

The tax effect on the unrealized gains/(losses) on equity securities is an expense of$47 milIion in 2004, an expense of$15 miJlion in 2003 and a benefit of$l million in 2002. The tax effect on the gains/(losses) on derivatives and hedges are benefits of$81 million, $99 million and $56 million in 2004, 2003 and 2002 , respectively. See Note 15 for additional infonnation relating to derivatives and hedging. 

The currency transJation adjustments are not currently adjusted for income taxes as they relate to penn anent investments in 

international subsidiaries.


(9 2005. EDGAR Onl ine Inc. 
13 Pensions and Other Benefit Plans 

The Company sponsors various retirement and pension plans, including defined benefit, defined contribution and termination 

indemnity plans, which cover most employees worldwide. The Company also provides postretirement benefits, primarly health care , to

all U. S. retired employees and their dependents. 

Many international employees are covered by government-sponsored programs for which the cost to the Company is not significant. 

Retirement plan benefits are primarily based on the employee s compensation during the last three to five years before retirement and 

the number of years of service. International subsidiaries have plans under which funds are deposited with trustees, annuities are 

purchased under group contracts or reserves are provided. 

The Company does not fund retiree health care benefits in advance and has the right to modify these plans in the future. 

The Company uses the date of its consolidated financial statements (January 2, 2005 and December 28 , 2003 , respectively) as the
 measurement date for all U. S. and international retirement and other benefit plans.


Net periodic benefit cost for the Company s defined benefit retirement plans and other benefit plans for 2004, 2003 and 2002 include the following components: 

Retirement Plans Other Benefit Plans (Dollars in Millions) 2004 2003 2002 2004 2003 

2002 

Service cost 409 325 249 Interest cost 444 391 354 

Expected return on


plan assets (529) (495) (447) (3) (3) (4) Amortization of prior service cost (4) (3) (3) Amortization of net 

transi tion asset (3) (4) (7) 

Recognized actuarial


losses! (gains) 173 109 (41)
 Curtailments and


settlements (1)
 Special termination


benefits


Net periodic benefit


cost 512 440 122 $167


The net periodic benefit cost attbutable to U.S. retirement plans was $329 million in 2004, $309 million in 2003 and $61 million in 2002. 

During 2003 , the Company offered a voluntary retirement program with enhanced benefits called the Retirement Enhancement Program 

(REP) to eligible U. S. regular, full-time employees who have attained age 55 with at least 10 years of pension credited service by June 

2004. The program enhancements included the elimination of the early retirement reduction for pension benefit purposes (nonnally 

4% per year prior to age 62) and a special tennination benefit (one week of pay per year of credited service). The program resulted in a 

one-time increase in U. S. pension expense of$95 million in 2003 to reflect the value of the retirement enhancement. 

The weighted-average assumptions in the following table represent the rates used to develop the actuarial present value of projected 

benefit obligation for the year listed and also the net periodic benefit cost for the following year. 

Retirement Plans


S. Benefit Plans 2004 2003 2002 2001 Discount rate 75% 

rf 2005. EDGAR OnI ine Ine. 
Expected long-term rate return


on plan assets


Rate increase


compensation levels


International Benefit plans
 Discount rate 00%


Expected long-term rate return


plan assets B . 00


Rate increase


compensation levels


Other Benefit Plans


u. s. Benefit Plans 2004 2003 2002 

2001


Discount rate 75%


Expected long- term rate of return


on plan assets


Rate of increase in


compensation levels


International Benefit Plans


Discount rate 50% 

Expected long- term rate of return


on plan assets


Rate of increase in


compensation levels


The expected long-term rate of return on plan assets assumptions are detennined using a building block approach, considering historical averages and real returns of each asset class. In certain countries, where historical returns are not meaningful, consideration 

is given to local market expectations of long-tenn returns. 

2005. EDGAR Onl ine. Ine. 
The following table displays the assumed health care trend rales , for all individuals: 

Heal th Care Plans 

Heal th care trend rate 

assumed f or next year 

10. 

Rate to which the cost trend


rate is assumed to decline


(ultimate trend)


Year the rate reaches the


ultimate trend rate 

2010 

2004 2003 

00% 

50% 

2010 

A one-percentagc-point change in assumed health care cost trend rates wouJd have the following effect: 

One - percentageOne- percentage­

(Dollars in Millions) Point Increase Point Decrease


Heal th Care Plans


Total interest and


service cost


Postretirement benefit 

obligation 

$ 27 (22) 

256 (206 ) 

The following table sets forth infonnation related to the benefit obligation and the fair value of plan assets at year-end 2004 and 2003 

for the Company s defined benefit retirement plans and other postretirement plans: 

(Dollars in Millions)


Plans 

Change in Benefit Obligation


Projected benefit obligation


- beginning of year


Service cost 

Interest cost


Plan participant


can t r ibu t ions 

Amendmen t s 

Actuarial losses


Divestitures &


acquisitions 

Curtailments &


settlements 

Benefits paid


from plan


Effect of exchange rates


proj ected benefit

obligation 

- end of year


Retirement Plans Other Benefit 

2004 2003	 2004 2003 

680 051 329 015 

409 325 

444 391 

(65) 110 (46) 

609 714 229 261 

(1) (3) 

(7) (1) 

(401)	 (268) (73) (55) 

252 341 

941 680	 593 329 

C9 2005. EDGAR Online. Inc.

Change in Plan Assets 

Plan assets 

fair value


beginning of year Actual return on 

plan assets 

Company contributions


Plan participant


contributions 

Di vesti tures 

Benefi ts paid from 

plan assets

Effect exchange rates 

Plan assets fair value 

end of year


$6, 050 705 

713 963


531 393


(2) 

(359)	 (258) (71) (53) 

171 227 

125 6 1 050 

Strategic asset allocations are determined by country, based on the nature of the liabilities and considering the demographic 

composition of the plan participants (average age, years of service and active versus retiree status). The Company s plans arc considered non-mature plans and the long-term strategic asset aIJocations arc consistent with these types of plans. Emphasis is placed 

on diversifying equities on a broad basis combined with cUITency matching of the fixed income assets. 

The following table displays the projected future benefit payments from the Company s retirement and other benefit plans: 

(Dollars in Millions)

proj ected future 

benefi t payments 2005 2006 2007 2008 2009 

2010­

Retirement plans $335 349 364 361 377 235 

Other benefit plans 

gross 

Medicare rebates 

Other benefit plans 

(5) (5) (6) (7) 

542 

(41) 

net 501 

The Company is not expected to have to fund its U. S. retirement plans in 2005 in order to meet minimum statutory funding 

requirements. International plans wil be funded in accordance with local regulations. Additional discretionary contributions will be 

made when deemed appropriate to meet the long-tenn obligations of the plans. In certain countries other than the United States, the funding of pension plans is not a common practice as funding provides no economic benefit. Consequently, the Company has several 

pension plans which are not funded. 

If 2005. EDGAR Onl ine. Inc.

The following table displays the projected future contributions to the Company s U. S. and international unfunded retirement plans: 

(Dollars in Millions)


proj ected future


contributions 2005 2006 2007 2008 2009


2010­


Unfunded retirement


plans $19 148 

Unfunded International 

retirement plans $16 124 

The Company s retirement plan asset allocation at the end of 2004 and 2003 and target allocations for 2005 are as follows: 

Percent Target 

(Dollars Millions) Plan Assets 

Allocation 

Retirement Plans 2004 2003 2005 

Equi ty securities 76% 78 % 75% 

Debt securities 

Total plan assets 100% 100% 100% 

International Retirement Plans 

Equi ty securities 69% 67% 75% 

Debt securities 

Real estate and other 

Total plan assets 100% 100% 100% 

The Company's other benefit plans are unfunded except for U. life insurance contract assets of$37 million and 539 million at January 

2005 and December 28 , 2003, respectively. 

The fair value of Johnson & Johnson common stock directly held in plan assets was $440 million (6.2% of total plan assets) at January 

2005, and $363 million (6.0% oftota! plan assets) at December 28, 2003. 

Amounts recognized in the Company s balance sheet consist of the following: 

Retirement Plans Othe r Benefit 

Plans 

(Dollars Millions) 2004 2003 2004 2003 

Plan assets 

fair value 125 050 

Projected benefit

obligation 941 680 593 329 

Funded status 816) 630) 556)


(1, 290)


Unrecognized actuarial losses 055 749 541 336


Unrecogni zed prior


service cost 133 (56) 

(i 2005. EDGAR Onl ine, Inc.

(12) 

Unrecogni zed net


transition asset


Total recogni zed 

consolidated 

in the 

balance sheet 

(966) 

$288 252 $(1 071) 

Book accrual s 

(966) 

$(1, 109) (862) $(1, 071) 

Prepaid benefits

Intangible assets 

001 021 

Accumulated comprehensive 

income 346 

Total recognized 

in the consolidated 

balance sheet 

(966) 

$288 252 $(1, 071) 

The accumulated benefit obligation for all U. S. and international defined benefit retirement plans was $7 488 million and $6,475 million 

at January 2, 2005 and December 28 2003, respectively. 

A minimum pension liability adjustment is required when the actuarial present value of the accumulated benefits obligation (ABO) 

exceeds the fair value of plan assets and accrued pension liabilities. The minimum pension liabilities (intangible assets and 

accumulated comprehensive income) in 2004 and 2003 of$396 milion and $93 million, respectively, relate primarily to plans outside of 

the U. S. The increase in the minimum liability included in comprehensive income was $282 milion and $31 miIlion in 2004 and 

2003 respectively. 

Plans with accumulated benefit obligations in excess of plan assets consist of the following: 

Retirement Plans
 (Dollars in Millions) 2004 2003 

Accumulated benefit obligation $ (2 , 703)

(1, 328 ) 

Projected benefit obligation 327) 

729) 

Plan assets at fair value 727 591 

2005. EDGAR Onl ine. Ine. 
(g 

On December 8, 2003 , the Medicare Prescription Drug Improvement and Modernization Act of2003 was enacted that introduces a 

prescription drug benefit under Medicare as well as a subsidy to sponsors of retiree health care benefit plans. The Company 

prescription plan is " actuarially equivalent" to the Medicare Part D Coverage due to the fact that at all levels of annual claim amounts 

the Plan provides a greater reimbursement than the Medicare benefit. There is no change in estimated participation rates or per capita 

claims costs as a result of the Act. The Company has recognized the effect ofthc subsidy on a prospective basis from June 28 , 2004. 

The recognition reduces before-tax and after-tax expense by $10 million and the APBO by $131 million. 

14 Marketable Securities 

Current Investments


Government securities


and obligations


212 

Corporate debt securities


797 

Money market funds


153 

Time deposits 

325 

January , 2005 

UnrealAmort ­ ized Est 

ized Gains! Fair 

Cost (Losses) Value 

$ 4 213 ( 1) 

798 (1) 

153 

325 

Collateralized mortgage obligations


and asset backed securities 397 

397 

Bank notes 

Total current marketable securities


10, 904 

Non- Current Investments 

Marketable securi ties 

Val ue 

Current Investments


Government securi ties 

and obligations 

845 

Corporate debt securities


565 

Money market funds


559 

Time deposits 

663 

$10, 906 (2 ) 

December 2003 

UnrealAmort- ized Est 

ized Gains! Fair 

Cost (Losses) 

844 

565 

559 

663 

Collateralized mortgage obligations


and asset backed securities


2005. EDGAR OnI ine 
 Ine.
15 

Bank notes 

Total current marketable securities $7, 653 

654 

Non- Current Investments 

Marketable securi ties 

Current marketable securities include $7.2 biJIion and $3.5 bilion that are classified as cash equivalents on the balance sheet at January 

2005 and December 28 , 2003 , respectively. 

Financial Instruments 

The Company foHows the provisions of SF AS 133 requiring that all derivative instruments be recorded on the balance sheet at fair 

value. 

As of January 2, 2005 , the balance of deferred net losses on derivatives included in accumulated other comprehensive income was $150 

million after-tax. For additional infonnation, see Note 12. The Company expects that substantially all of this amount wil be reclassified 

into earnings over the next 12 months as a result of transactions that are expected to occur over that period. The amount ultimately 

realized in earnings will differ as foreign exchange rates change. Realized gains and losses are ultimately detennined by actual exchange 

rates at maturity of the derivative. Transactions with third parics wil cause the amount in accumulated other comprehensive income to 

affect net earnings. The maximum length of time over which the Company is hedging is 18 months. 

For the year ended January 2 , 2005 , the net impact of the hedges' ineffectiveness to the Company s financiaJ statements was 

insignificant. The Company has recorded a net loss of $2 million in other (income) expense, representing the impact of discontinuance 

of cash flow hedges because it is probable that the originally forecasted transactions will not occur by the end of the originally 

specified time period.


Refer to Note 12 for disclosures of movements in Accumulated Other Comprehensive Income. 

Concentration of Credit Risk 

The Company invests its excess cash in both deposits with major banks throughout the world and other high quality money market 

instruments. The Company has a policy of making investments only with commercial institutions that have at least an A (or equivalent) 

credit rating. These investments generaJly mature within six months, and the Company has not incurred any related losses. 

16 Savings Plan 

The Company has voluntary 401 (k) savings plans designed to enhance the existing retirement programs covering eligible employees. 

The Company matches a percentage of each employee s contributions consistent with the provisions of the plan for which he/she is 

eligible. 

In the U.S. salaried plan, one-third ofthe Company match was paid in Company stock under an employee stock ownership plan (ESOP) 

unless the employee chose to redirect his or her investment. In 1990, to establish the ESOP, the Company loaned $100 million to the 

ESOP Trust to purchase shares of the Company stock on the open market. In exchange, the Company received a note, the balance of 

which is recorded as a reduction of shareholders' equity. The remaining shares held by the ESOP trust are expected to be allocated to 

participant accounts by the end of February, 2005. 

Total Company contrbutions to the plans were $143 million in 2004, $128 million in 2003 and $111 million in 2002. 

(g 20 0 EDGAR OnI ine. Inc. 
17 Mergers, Acquisitions and Divestitures 

On December 15 , 2004, Johnson & Johnson announced the signing ofa definitive agreement to acquire Guidant Corporation (Guidant), 

a world leader in the trcatment of cardiac and vascular disease , for $25.4 billion in fully diluted equity value. 

The Board of Directors of Johnson & Johnson and Guidant have given their respective approvals to the transaction, which is subject 

to clearance under the Har-Scott-Rodino Antitrust Improvements Act, the European Union merger control regulation, and other 

customary closing conditions. The acquisition could result in the divestiture of certain assets and operations, if required by regulatory 

agencies. The agreement requires the approval of Guidant' s shareholders. Subject to the aforementioned approvals, the acquisition is 

expected to close in the third quarer of 2005. 

Under the terms of the agreement, upon the close of the transaction each share of Guidant common stock would be exchanged for 

$30.40 in cash and $45. 60 in Johnson & Johnson common stock, provided the average Johnson & Johnson common stock price is 

between $55.45 and $67. 09 during the 15-day trading period ending three days prior to the transaction closing. Each Guidant common 

share exchanged would be converted into Johnson & Johnson common stock of not more than . 8224 and not less than . 6797 shares 

plus S30.40 in cash. Based on Guidant s approximately 319 milion common shares outstanding as of the close of business on December 

2004, this would result in the issuance of not more than approximately 262 million and not less than 217 million shares of Johnson & 

Johnson common stock. Guidant's approximatcly 35 million option shares outstanding as of the close of business on December 15 

2004 would be converted into options to acquire Johnson & Johnson common stock on the same terms and conditions as were 

applicable under Guidant' s option plan. The option shares would convert to Johnson & Johnson common stock utilizing a floating 

exchange ratio, the Exchange Ratio and the Cash Portion Option Exchange Multiple as defined in the Agreement and Plan of Merger 

dated as of December 15 , 2004. 

Certain businesses were acquired for $455 milion in cash and $15 million ofliabihties assumed during 2004. These acquisitions were 

accounted for by the purchase method and, accordingly, results of operations have been included in the financial statements from their 

respective dates of acquisition. 

In addition, per the tcrms of the 2003 acquisition agreement with the Link Spine Group, Inc., $125 million in cash was paid to the owners 

ofthc Link Spine Group, Inc. in 2004 based on the date the U. S. Food and Drug Administration (FDA) approved the CHARITE 

Arificial Disc. Thus, the 2004 total cash expenditures related to acquisition were $580 million. 

The 2004 acquisitions included: Merck' s 50% interest in the Johnson & Johnson-Merck Consumer Pharmaceuticals Co. European 

non-prescription pharmaceutical joint venture including all of the infrastructure and brand assets managed by the European joint 

venture; Egca Biosciences, Inc. through the exercise of the option to acquire the remaining outstanding stock not owned by Johnson 

& Johnson, which has developed a proprietary technology platform called Gene Writer, that allows for the rapid and highly accurate 

synthesis of DNA sequences, gene assembly, and construction of large synthetic gene libraries; Artemis Medical, Inc., a privately 

held company with ultrasound and x-ray visible biopsy site breast markers as well as hybrid markers; U. S. commercial rights to certain 

patents and know-how in the field of sedation and analgesia from Scott Lab, Inc. ; Biapharm SAS , a privately held French producer and 

marketer of skin care products centered around the leading brand BIAFINE; the assets of Micomed, a privately owned manufacturer of 

spinal implants primarily focused on supplying the German market; and the acquisition of the AMBI skin care brand for women of 

color. 

The excess of purchase price over the estimated fair value of tangible assets acquired amounted to $425 million and has been allocated 

to identifiable intangibles and goodwill. The $125 million related to the U.S. FDA approval of the CHARITE Artificial Disc was recorded 

as additional goodwill associated with the 2003 Link Spine Group, Inc. acquisition. Thus total additions to intangibles and goodwill in 

2004 were $550 million. Approximately $18 million has been identified as the value of in-process research and development (lPR&D) 

associated with thc Scott Lab acquisition. The value of the IPR&D was calculated using cash flow projections discounted for the risk 

inherent in such projects. The discount rate was 25%. 

Certain businesses were acquired for $2.8 biIlion in cash and $323 milion of liabilities assumed during 2003. These acquisitions were 

accounted for by the purchase method and, accordingly, results of operations have been included in the financial statements from their 

respective dates of acquisition. 

The 2003 acquisitions included: Link Spine Group, Inc., a privately owned corporation with exclusive worldwide rights to the CHARTE 

Artificial Disc; Scios Inc. a biopharmaccutical company with a marketed product for cardiovascular disease and research projects 

focused on auto-immune diseascs; 3-Dimensional Pharmaceuticals , Inc. , a company with a technology platform focused on thc 

discovery and development of therapeutic small molecules; OraPhanna, Inc. , a specialty pharmaceutical company focused on the 

development and commercialization of unique oral therapeutics; and certain assets of Or quest, Inc. , a privately held biotechnology 

company focused on developing biologicaUy-based implants for orthopaedics and spine surgery. 

The excess of purchase price over the estimated fair value of tangible assets acquired amounted to $1. 8 biJ1ion and has been alJocated 

(f 2005. EDGAR OnI ine. Inc. 
to identifiable intangibles and goodwill. Approximately $918 million has been identified as the value of in- process research and 

development (IPR&D) primarily associated with the acquisition of Link Spine Group, Inc. and Scios Inc. 

The IPR&D charge related to the Link Spine Group, Inc. acquisition was $170 million and is associated with the CHARITE Artificial 

Disc. The CHARITE Arificial Disc is marketed in more than 30 countries outside the U. , and a Premarket Approval Application was 

fied with U. S. Food and Drug Administration on Fcbruary 17 2004. The value of the IPR&D was calculated with the assistance of a 

third party appraiser using cash flow projections discounted for the risk inherent in 

if 2005. EDGAR Online, Inc.

such projects. A probability of success factor of95% was used to reflect inherent clinical and regulatory risk. The discount rate was 

19%. The purchase price for the Link Spine Group, Inc. acquisition was allocated to the tangible and identifiable intangible assets 

acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over the 

fair values of assets and liabilities acquired was approximately $84 million and was allocated to goodwil. Substantially all of the amount 

allocated to goodwil will not be deductible for tax purposes. 

The IPR&D charge related to Scios Inc. was $730 million and is largely associated with its p-38 kinase inhibitor program. The value of 

the IPR&D was calculated with the assistance of a third part appraiser using cash flow projections discounted for the risk inherent in 

such projects using a 16% probability of success factor and a 9% discount rate. The purchase price for the Scios Inc. acquisition was 

allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the 

acquisition date. Identifiable intangible assets included patents and trademarks valued at approximately $1.5 billion. The excess of the 

purchase price over the fair values of assets and liabilities acquired was approximately 5440 million and was allocated to goodwiJl. 

Substantially all of the amount allocated to goodwill will not be deductible for tax purposes. 

The remaining IPR&D was associated with Orguest, Inc., and 3-Dimensional Phanaceuticals, Inc. , with charges of$11 million and $7 

million, respectively. In both cases the value of the IPR&D was calculated with the assistance of a third part appraiser. 

Certain businesses were acquired for $478 milion in cash and liabilities assumed of $72 million during 2002. These acquisitions were 

accounted for by the purchase method, and, accordingly, results of operations have been included in the financial statements from 

their respective dates of acquisition. 

The 2002 acquisitions included Tibotec-Yirco N, , a privately-held biophanaceutical company focused on developing anti-viral 

treatments; Micro Typing Systems, Inc. , a manufacturer of reagents and supplier of distributed instruments known as the ID-Micro 

Typing System and Obtech Medical AG, a privately-held company that markets an adjustablc gastric band for the treatment of morbid 

obesity. 

The excess of purchase price over the estimated fair value of tangible assets of the acquired entities amounted to $325 million and has 

been allocated to identifiable intangibles and goodwill. Approximately $ I 89 million has been identified as the value ofIPR&D 

associated with the Tibotec-Yirco N.Y. and Obtech Medical AG acquisitions. 

The IPR&D charge related to Tibotec- Virco N.Y. was $150 million and is associated with two early stage HIY compounds. The value of 

the IPR&D was calculated with the assistance of a third part appraiser using cash flow projections discounted for the risk inherent in 

such projects using probability of success factors ranging from 30-33%. The discount rate was 9%. 

The IPR&D charge related to Obtech Medical AG was $39 million and is associated with the development of the current Swedish 

Adjustable Gastric Band (SAGB) for use in the United States as welJ as development of a next generation technology platform. The 

value of the IPR&D was calculated with the assistance ofa third part appraiser using cash flow projections discounted for the risk 

inherent in such projects using a 70% probability of success factor and a 20% discount rate. 

Supplemental pro fonna infonnation for 2004 2003 and 2002 per SFAS No. 141 , Business Combinations, and SF AS No. 142, Goodwill 

and Other Intangible Assets, are not provided as the impact of the aforementioned acquisitions did not have a material effect on the 

Company's results of operations , cash flows or financial position. 

Divestitures in 2004, 2003 and 2002 did not have a materiaJ effect on the Company s results of operations, cash flows or financial 

position. 

18 Legal Proceedings 

Product Liabilty 

The Company is involved in numerous product liability cases in the United States , many of 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 and 

instructions for use which accompany such products, it is not feasible to predict the ultimate outcome of litigation. However, the 

Company believes that if any liability results from such cases, it will be substantially covered by existing amounts accrued in the 

Company s balance sheet under its self-insurance program and by third part product liability insurance. 

One group of cases against the Company concerns the Janssen Pharmaceutic a Inc. product PROPULSID (cisapride), which was 

withdrawn from general sale and restricted to limited use in 2000. In the wake of publicity about those events, numerous lawsuits have 

been filed against Janssen, which is a wholly owned subsidiary of the Company, and the Company regarding PROPULSID, in state and 

federal courts across the country. There are approximately 423 such cases curently pending, including the claims of approximately 

900 plaintiffs. In the active cases, 415 individuals are alleged to have died ITom the use ofPROPULSID. These actions seck 

(g 2005. EDGAR OnI ir. e, Inc. 
substantial compensatory and punitive damages and accuse Janssen and the Company of inadequately testing for and warning about 

the drug s side effects of promoting it for off-label use and of over promotion. In addition, Janssen and the Company have entered into 

agreements (tolling agreements) with various plaintiffs ' counsel halting the running of the statutes of limitations with respect to the 

potential claims of a significant number of individuals while those attorneys evaluate whether or not to sue Janssen and the Company 

on their behalf. 

In September 2001 , the first ten plaintiffs in the Rankin case, which comprises the claims of 155 PROPULSID plaintiffs, went to tral in state court in Claiborne County, Mississippi. The jur returned compensatory damage verdicts for each plaintiff in the amount of$lO 

million, for a total of$100 million. The tral judge thereafter dismissed the claims of punitive damages. On March 4 2002, the tral judge 

reduced these verdicts to a total of$48 million, and denied the motions of Janssen and the Company for a new trial. On May 13 2004 

the Supreme Court of Mississippi 
 reversed the verdicts against Janssen and the Company, and remanded the case to the trial court. 

The Supreme Court found the joint tral of multiple plaintiffs' cases against Janssen was prejudicial and directed the trial cour to return 

the cases 
 of the individual plaintiffs for separate trials to their home counties. A motion for rehearing was denied on August 5 2004. 

(i 2005. EDGAR OnI ine , Inc. 
In April 2002, a state court judge in New Jersey denied plaintiffs' motion to certifY a national class ofPROPULSID users for purposes 

of medical monitoring and refund of the costs of purchasing PROPULSID. An effort to appeal that ruling has been denied. In June 

2002, the federal judge presiding over the PROPULSID Multi-District Litigation in New Orleans, Louisiana similarly denied plaintiffs 

motion there to certify a national class ofPROPULSID users. Plaintiffs in the Multi-District Litigation have said they are preserving 

their right to appeal that ruling, and other complaints fied against Janssen and the Company include class action al1egations, which 

could be the basis for future attempts to have classes certified. 

On February 5 , 2004, Janssen announced that it had reached an agreement in principle with the Plaintiffs Steering Committee (PSC), of 

the PROPULSID Federal Multi-District Litigation (MDL), to resolve federal lawsuits related to PROPULSID. There arc approximately 

000 individuals included in the Federal MDL of whom approximately 300 are alleged to have died horn use ofthe drug. The agreement 

becomes effective once 85 percent of the death claims , and 75 percent of the remainder, agree to the terms of the settlement. In 

addition , 12 000 individuals who have not fied lawsuits, but whose claims are the subject of tolling agreements suspending the 

running of the statutes of limitations against those claims, must also agree to participate in the settlement before it will become 

effective. Those agreeing to participate in the settlement will submit medical records to an independent panel of physicians who wilJ 

detennine whether the claimed injuries were caused by PROPULSID and otheIWise meet the standards for compensation. If those 

standards arc met, a court-appointed special master wil detennine compensatory damages. If the agreement becomes effective 

Janssen will pay as compensation a minimum of$69.5 milion and a maximum of$90 million, depending upon the number of plaintiffs 

who enroll in the program. Janssen will also establish an administrative fund not to exceed $15 milion, and will pay legal fees to the 

PSC up to $22. 5 million, subject to court approval. 

With respect to all the various PROPULSID actions against them, Janssen and the Company dispute the claims in those lawsuits and 

are vigorously defending against them except where, in their judgment, settlement is appropriate. Janssen and the Company bclieve 

thcy have adequate self-insurance accruals and third part product liability insurance with respect to these cases. In communications 

to the Company, the excess insurance carriers have raised certain defenses to their liability under the policies and to date have 

declined to reimburse Janssen and the Company for PROPULSID-reJated costs despite demand for payment. However, in the opinion 

of the Company, those defenses are pro fonna and lack substance and the carriers will honor their obligations under the policies either 

voluntarily or after litigation. In March 2004, the Company commenced arbitration against Allianz UndcIWritcrs Insurance Company, 

which issued the first layer of applicable excess insurance coverage, to obtain reimbursement of PROPULSID-related costs. The 

arbitration is currently scheduled to begin mid- May 2005 and last several weeks. 

The Company s Ethicon, Inc. subsidiary has over the last several years had a number of claims and lawsuits filed against it relating to 

VICRYL sutures. The actions allege that the sterility ofVICRYL sutures was compromised by inadequacies in Ethicon s systems and 

controls, causing patients who were exposed to these sutures to incur infections which would not otheIWise have occurred. Ethicon 

on several occasions recalled batches of VICRYL sutures in light of questions raised about sterility but does not believe any 

contamination of suture products in fact occurred. In November 2003 , a trial judge in West Virginia certified for class tTeatmcnt al1 West 

Virginia residents who had VICRYL sutures implanted during Class I or II surgeries horn May I , 1994 to December 3 I , 1997. The 

certification is subject to later challenge following the conclusion of discovery. A previous trial date has been adjourned and not reset. 

Ethicon has been and intends to continue vigorously defending against the claims. 

Affrmative Stent Patent Litigation 

In patent infringement actions tried in Delaware Fcderal Court in late 2000, Cordis Corporation, a subsidiary of Johnson & Johnson 

obtained verdicts of infringement and patent validity, and damage awards, against Boston Scientific Corporation and Medtronic AVE 

Inc. , based on a number of Cordis vascular stent patents. On December 15, 2000, the jury in the damage action against Boston 

Scientific returned a verdict of $324 million and on December 2 I , 2000, the jur in the Medtronic AVE action retued a verdict of $27 I 

million. These sums represent lost profit and reasonable royalty damages to compensate Cordis for infTingement but do not include pre 

or post judgment interest. In February 200 I a hearing was held on the claims of Boston Scientific and Medtronic AVE that the patents 

at issue were unenforceable owing to alleged inequitable conduct before the patent office. 

In March and May 2002, the district judge issued post trial rulings that confiD1ed the validity and enforceability of the main Cordis 

stent patent claims but found ecrtain other Cordis patents unenforceable. Further, the district judge granted Boston Scientific a new 

trial on liability and damages and vacated the verdict against Medtronic AVE on legal grounds. On August 12 2003 , the Court of 

Appeals for thc Federal Circuit found the trial judge eITed in vacating the verdict against Medtronic A VE and remanded thc case to the 

trial judge for further proceedings. The trial judge has scheduled a trial in March 2005 against Boston Scientific and Medtronic A VE in 

connection with Cordis ' efforts to obtain reinstatement of the original verdicts. 

In January 2003 , Cordis fied an additional patent infringement action against Boston Scientific in Delaware Federal Court accusing its 

Express2 and TAXUS stents ofinfTinging onc of the Cordis patents involved in the earlier actions against Boston Scientific and 

Medtronic AVE. In February 2003 , Cordis moved in that action for a preliminary injunction seeking to bar the introduction of the 

TAXUS stent based on that patent. On November 21 2003 , the district judge denied that request for a preliminary injunction and that 

decision was affirmed by the Court of Appeals for the Federal Circuit in May 2004. Trial of the case is scheduled for June 2005. Cordis 

2005. EDGAR Onl ine Ine. 
also has pending in Delaware Federal Court another action against Mcdtronic AVE accusing Medtronic A VE of infringement by sale of 

stent products introduced by Medtronic AVE subsequent to its GFX and MicroStent products, the subject of the earlier action 

referenced abovc.


In early June 2003 , an arbitration panel in Chicago, in a preliminary ruling, found in favor of Cordis in its arbitration against 

(f 2005. EDGAR anI ine Ine. 
ACS/Guidant involving infingement by ACS/Gnidant of a Cordis stent patent. On August 19 2003 , the panel confinned that ruling, 

rejecting the challenge of ACS/Guidant. Under the terms of an earlier agreement between Cordis and ACS/Guidant, the arbitration 

panel' s ruling obligated ACS/Guidant to make a payment ofS425 million to Cordis which was made in the fiscal fourth quarter 01'2003. 

As a result ofrcso!ving this matter, in the fiscal fourth quarter, $230 million was recorded in other income and expense (approximateJy 

SI42 million after tax) relating to past periods. The balance of the award, SI95 million (approximately S120 million after tax), will be 

recognized in income in futue periods over the estimated remaining life of the inteIJectual propert, commencing in the first fiscal 

quarer of2004. No additional royalties for ACS/Guidant s continued use of the technology and no injunction arc involved. 

Patent Litigation Against Various Johnson & Johnson Operating Companies 

The products of various Johnson & Johnson operating companies are the subject of various patent lawsuits, which could potentially 

affect the ability of those operating companies to sell those products, or require the payment of past damages and future royalties. The 

following chart summarizes various patent lawsuits concerning important products of Johnson & Johnson operating companies. With 

respect to all ofthcse matters, the Johnson & Johnson operating company involved is vigorously defending against the claims of 

infringement and disputing where appropriate the validity and enforceability of the patent claims asserted against it. 

Product 

Filed 

J&J 

Oper 

Company Patents 

Plaintiff/

Patent 

Holder Court 

Trial 

Date 

Date 

Stents Cordi s Jang Boston 

Scientific 

D. Del. 6/13/05 3/03 

Corporation 

Drug 

Eluting

Stents 

Cordi s Ding Boston 

Scientific 

Corporation 

D. Del. 6/13/05 4/03 

Drug 

Eluting

Stents 

Cordi s Kunz 

Grainger 

Boston 

S c i en t i f i c 

Corporation 

D. Del. 10/17/05 12/03 

Stents Cordi s Rockey Arlaine and 

Gena Rockey Inc. 

Fla. TBD 7/02 

Stents Cordi s Boneau Medtronic 

Inc. 

D. Del. TBD 4/02 

Twolayer 

Cordis Kastenhofer 

Boston 

Scientific 

N. D. Cal. TBD 2/02 

Cathet - Forman Corporation 

ers 

Remi ­

cade 

Centocor Cerami Rockefeller 

University 

E . D . Tex. 2/06 4/04 

and Chi ron 

Corporation 

Twolayer

Catheters 

Cordi s Kastenhofer 

Boston 

Scientific 

Corporation 

(Schneider) 

Belgium 4/05 12/03 

Stents Cordis Israel Medinol Multiple 1st

trial 5/03 

Juris ­ Netherdictions lands 

1/05 

(Q 2005. EDGAR On) ine . Ine. 
Contact Vision Nicolson CIBA D. Fla. 2/06 9/03

Lenses Care Vision 

Litigation Against Filers of Abbreviated New Drug Applicatiuns (ANDAs) 

The following char indicates lawsuits pending against generic finns that fied Abbreviated New Drug Applications seeking to market 

generic fonns of products soldby various subsidiaries of the Company prior to expiration of the applicable patents covering those 

products. These ANDAs typically include allegations of non-infringement, invalidity and unenforccability of these patents, In the 

event the subsidiary of the Company involved is not successful in these actions, the finns involved will then introduce generic 

versions of the product at issue resulting in very substantial market share and revenue losses for the product of the Company 

subsidiary . 

(f 2005. EDGAR OnI ine Ine. 
100 

Brand Name Patent/NDA Generic Court Trial 

Date 

Product Holder Challenger Date 

Filed 

Aciphex Eisai Teva SDNY TBD 

11/03 

mg delay (for Dr. SDNY TBD 

11/03

release Janssen) Reddy I s SDNY TED 

01/04

tablet Mylan 

Ditropan XL Ortho- Mylan DWV 2/14/05

05/03 

McNeil Impax NDCal TED


09/03


controlled ALZA


release


tablet 

Duragesic Janssen Mylan D Vt 8/25/03

01/02 

75, ALZA 

micrograms Ihr 

patch 

Levaguin Daiichi I Mylan DWV 5/24/04

02/02 

Tablets J JPRD 

250, 500 750 Ortho- McNeil Teva DNJ TED 

06/02

tablets 

Levaquin 

Inj ectable Daiichi Eedf ord/ DNJ TED 

03/03 

Single use J JPRD Ben 

vials and Ortho- Venue 

ml /mg, McNeil Sicor DNJ TED 

12/03 

premix (Teva) 

Levaguin Daiichi I American DNJ TED 

12/03 

Inj ectable JJPRD Pharmac ­

Single use Ortho - eutical 

vials McNeil Partners 

Quixin Daiichi Hi - Tech DNJ TED 

12/03 

Ophthalmic Ortho - Pharmacal 

Solution McNeil 

(Levofloxacin) 

Ophthalmic

solution 

If 2 005. EDGAR Online Ine. 
Grtha Tri - Grtha - Barr DNJ TBD 

10/03 

cyclen LO McNeil 

mg/O. 025


mg, 215


mg/O. 025 mg


and 

mg/O. 025


Risperdal Janssen My1an DNJ TBD 

12/03 

Tablets Dr. DNJ TBD 

12/03 r s Reddy 

tablets 

Sparanax Janssen Eon Labs EDNY 5/17/04 

04/ a 1


100 mg


capsule 

Topamax Ortho- Mylan DNJ TBD 

04/04 

25, 100 200 McNeil 

tabl et 

VI tracet Ortho- Kali (Pari DNJ TBD 

11/02 

37. tram/ McNeil Teva DNJ TBD 

02/04 

325 apap Caraco TBD 

09/04

tablet Mich 

PEPCID McNeil- Perrigo SDNY TBD 

02/05 

Complete PPC, Inc. 

In the DURAGESIC (fentanyl trans dermal system) matter rcferenccd abovc, the district court in March 2004 found ALZA' s patent valid, enforceable and infringed by Mylan s generic. That decision was affinned by the Court of Appeals for the Federal Court. In June 

2004, FDA ruled that Mylan s ANDA would be subjcct to ALZA's period of pediatric cxclusivity ending in January 2005. In late Junc 

Mylan filcd actions against FDA seeking to require the agency to grant it approval to market on July 24, 2004 , the day after the DURAGESIC patent expired. On August 17 2004 , the district court ruled against Mylan and in favor of FDA' recognition of pediatric exclusivity for DURAGESIC, which dccision was affrmed by the Cour of Appeals for thc Distrct of Columbia Clrcuit. 

In the action against Mylan involving LEV AQUIN, the trial judge on Decembcr 23 , 2004, found the patent at issuc valid, enforceable and infringed by Mylan s contemplated ANDA product and issued an injunction precluding sale of the 
 product until patent expiration in late 2010. Mylan has appealcd to the Court of Appeals for the Fcderal Circuit. 

In the action against Eon Labs involving SPORANOX (itraconazole), the district court ruled on July 28, 2004 that Janssen s patent was valid but not infringed by Eon s generic. Janssen has appealed this ruling to the Court of Appeals for the Federal Circuit. Eon launched 

its generic version ofSPORANOX on Februar 9 , 2005. 

In the action against Kali involving UL TRACET (tramadol hydrochloridel acetaminophen), Kali has moved for summar judgment on 

the issues of infringement 
 and invalidity. The briefing on that motion was completed in October 2004 and a decision is expected 

anytime. With respect to claims other than that at issue in the litigation against Kali , Ortho-McNeil 

If 2005. EDGAR OnI ine Inc. 
if 2005. EDGAR Onl ine Inc. 
has filed a reissue application in the U.S. Patent and Trademark Offce seeking to narrow the scope of the claims. 

In the action against Mylan involving DITROPAN XL (oxybutyin chloride), Mylan moved for summary judgment on July 14 2004 on 

the issues of non-infringement and invalidity. That motion was denied in December 2004. 

In the action against Mylan relating to TOPAMAX (topiramate), Mylan on October 8, 2004 filed a motion for summary judgment of 

non-infringement ofOrtho-McNeil' s patent. A decision is expected after Februar 1 2005. 

With respect to all of the above matters, the Johnson & Johnson operating company involved is vigorously defending the validity and 

enforceabilty and asserting the infringement of its own or its licensor s patents. 

Average Wholesale Price (A WP) Litigation 

Johnson & Johnson and its pharmaceutical operating companies, along with numerous other pharmaceutical companies, are 

defendants in a series oflawsuits in state and federal courts involving allegations that the pricing and marketing of certain 

pharmaceutical products amounted to fraudulent and otherwise actionable conduct because, among other things, the companies 

allegedly reported an inflated Average Wholesale Price for the drugs at issue. Most of these cases, both federal actions and state 

actions removed to federal cour, have been consolidated for pre-trial purposes in a Multi-District Litigation (MDL) in federal court in 

Boston, Massachusetts. The plaintiffs in these cases include classes of private persons or entities that paid for any portion of the 

purchase of the drugs at issue based on A WP, and state government entities that made Medicaid payments for the drugs at issue 

based on A WP. In the MDL procecding in Boston, plaintiffs have moved for class certification of all or some portion of their claims. A 

decision is expected on that motion in the second or third quarter of 2005. 

Ethicon Endo-Surgery, Inc. , a Johnson & Johnson operating company which markets endoscopic surgical instruments, and the 

Company, are named defendants in a North Carolina state court class action lawsuit alleging A WP inflation and improper marketing 

activities against TAP Pharmaceuticals. Ethicon Endo-Surgery, Inc. is a defendant based on claims that several of its fonner sales 

representatives are alleged to have been involved in arbitrage of a TAP drug. The allegation is that these sales representatives 

persuaded certain physicians in states where the drug s price was low to purchase from TAP excess quantities of the drug and then 

resell it in states where its price was higher. Ethicon Endo-Surgery, Inc. and the Company deny any liability for the claims made against 

them in this case and are vigorously defending against it. On April 24, 2003 , the trial judge certified a national class of purchasers of 

the TAP product at issue. On July 6 , 2004 , that class was decertified by the North CaroJina Court of Appeals and the matter remanded 

to the trial court for additional consideration. On January 5 , 2005 , the trial judge certified a North Carolina State class ofpurehases of 

the TAP product in question. No trial date has been set in this matter. 

Other 

The New York State Attorney General' s office and the Federal Trade Commission issued subpoenas in January and February 2003 

seeking documents relating to the marketing of sutures and endoscopic instruments by the Company s Ethicon, Inc. and Ethicon 

Endo-Surgery, Inc. subsidiaries. The Connecticut Attorney General' s office also issued a subpoena for the same documents. These 

subpoenas focus on the bundling of sutures and endoscopic instruments in contracts offered to Group Purchasing Organizations and 

individual hospitals in which discounts are predicated on the hospital achieving specified market share targets for both categories of 

products. The operating companies involved have responded to the subpoenas. 

On June 26 , 2003 , the Company received a request for records and information from the U. S. House of Representatives ' Committee on 

Energy and Commerce in connection with its investigation into pharmaceutical reimbursements and rebates under Medicaid. The 

Committee s request focuses on the drug REMICADE (infliximab), marketed by the Company s Centocor, Inc. subsidiary. On July 2 

2003 , Centocor received a request that it voluntarily provide documents and information to the criminal division of the U. S. Attorney's 

Office, District of New Jersey, in connection with its investigation into various Centoeor marketing practices. Both the Company and 

Centocor have responded to these requests for documents and information. 

On August 1 2003 , the Securities and Exchange Commission (SEC) advised the Company of its informal investigation under the 

Foreign COmIpt Practices Act of allegations of payments to Polish governmental officials by U. S. pharmaceutical companies. On 

November 21 2003 , the SEC advised the Company that the investigation had become formal and issued a subpoena for the infonnation 

previously requested in an infonnal fashion, plus other background documents. The Company and its operating units in Poland have 

responded to these requests. 

On December 8, 2003 , the Company's Ortho-McNeil Pharmaceutical unit received a subpoena from the United States Attorney s office 

in Boston, Massachusetts seeking documents relating to the marketing, including alleged off-label marketing, of the drug TOPAMAX 

(topiramate). Ortho-McNeil is cooperating in responding to the subpoena. In October 2004, the U. S. Attorney s Office in Boston asked 

attorneys for Ortho-McNeil Pharmaceutical to cooperate in facilitating the subpoenaed testimony of several present and former 

Ortho-McNeil witnesses before a grand jury in Boston, for which cooperation is being provided. 

\E' 2005. EDGAR OnI ine Ine. 
On January 20 2004, the Company s Janssen unit received a subpoena from the Office of the Inspector General of the United States 

Office of Personnel Management seeking documents concerning sales and marketing of, any and an payments to physicians in 

connection with sales and marketing of, and clinical trials for, RlSPERDAL (risperidone) from 1997 to 2002. Documents subsequent to 

2002 have also been requested. Janssen is cooperating in responding to the subpoena. 

In April 2004, the Company s phannaceutical units were requested to submit infonnation to the Senate Finance Committee on their use 

nominal pricing exception" in calculating Best Price under the Medicaid Rebate Program. This request was sent to 

manufacturers for the top twenty drugs reimbursed under the Medicaid Program. The Company's phannaccutical units have responded 

to the request. 

of the 


On July 27 , 2004 , the Company received a letter request from the New York State Attorney General's Offce for documents pertaining to 

marketing, off-label sales and clinical trials for TOPAMAX (topiramate), RISPERDAL (rispcridone), PROCRIT (Epoetin alfa), REMINYL 

(galantamine HBr), REMICADE (infliximab) and ACIPHEX (rabeprazole sodium). The Company is responding to the request. 

(g 2005. EDGAR OnI ine . Inc. 
On August 9, 2004 , Johnson & Johnson Health Care Systems, Inc., a Johnson & Johnson operating company, received a subpoena 

ftom the Dallas, Texas U. S. Attorney s Office seeking documents relating to the relationships between the group purchasing 

organization Novation and HCS and other Johnson & Johnson operating companies. The Company s operating entities involved are 

responding to the subpoena. 

On September 30 2004, Ortho Biotech Inc. received a subpoena ITom the U. S. Offce ofInspector General's Denver, Colorado field 

office seeking documents directed to sales and marketing ofPROCRIT (Epoetin alfa) ITom 1997 to the present. Ortho Biotech is 

responding to the subpoena. 

In September 2004, plaintiffs in an employment discrimination litigation initiated against the Company in 2001 moved to certify a class 

of all African American and Hispanic salaried employees of the Company and its affiiates in the United States, who were employed at 

any time from November 1997 to the present. Plaintiffs seck monetary damages for the period 1997 through the present (including 

punitive damages) and equitable relief. The Company is expected to file its response to plaintiffs' class certification motion in the first 

halfof200S. A decision by the district court is not expected before late 2005. The Company disputes the allegations in the lawsuit and

is vigorously defending against them. 

After a remand from the Federal Circuit Court of Appeals in January 2003 , a partial retrial was commenced in October and concluded in 

November 2003 in Boston, Massachusetts in the action Amgen v. Transkaryotic Therapies, Inc. (TKT) and Aventis Phannaceutical 

Inc. The matter is a patent infringement action brought by Amgcn against TKT, the developer ofa gene-activated EPO product, and 

Aventis, which holds marketing rights to the TKT product, asserting that TKT's product infringes various Amgen patent claims. TKT 

and A ventis dispute infringement and are seeking to invalidate the Amgen patents asserted against them. On October 15 2004, the 

district court issued rulings that upheld its initial findings in 2001 , that Amgen s patent claims were valid and inftinged. Further 

proceedings and an appeal will follow. The Amgen patents at issue in the case are exclusively licensed to Ortho Biotech Inc. , a 

Johnson & Johnson operating company, in the U.S. for non-dialysis indications. Ortho Biotech Inc. is not a part to the action. On 

October 21 2004, in a companion action brought by TKT and Avcntis against Amgen and Grtho Biotech' s U. K. affiliate in the United 

Kingdom, the House of Lords, acting as the highest court in the U. , invalidated the pertinent claims of Amgen s U. K. patent on EPO 

which expired in December 2004. 

The Company is also involved in a number of other patent, trademark and other lawsuits incidcntal to its business. The ultimate legal 

and financiaJ liability of the Company in respect to all claims, lawsuits and proceedings referred to above cannot be estimated with any 

certainty. However, in thc opinion of management, based on its examination of these matters, its experience to date and discussions 

with counsel, the ultimate outcome oflegaJ proccedings, net of liabilities already accrued in the Company's balance sheet , is not 

expected to have a material adverse effect on the Company s financial position, although the resolution in any reporting period of one 

or more of these matters could have a significant impact on the Company s results of operations and cash flows for that period. 

19 Earnings Per Share 

The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the years ended January 2, 2005 

December 28 2003 and December 29, 2002: 

(Shares in Millions) 2004 2003 2002 

Basic earnings per share 

Average shares

outstanding - basic 968. 968. 998. 

Potential shares 

exercisable under 

stock option plans 186. 166. 188. 

Less: shares repurchased 

under treasury 

stock method (163. (141.4) 

(146. 

Convertible debt shares 12. 14. 14 . 

Adjusted average shares 

outstanding - diluted 003. 008. 054. 

Diluted earnings 

per share 

(g 2005. EDGAR Online Ine. 
The diluted earnings per share calculation includes the dilution effect of convertible debt: a decrease in interest expense of$14 million 

$15 million and $12 million after tax for years 2004, 2003 and 2002, respectively. 

Diluted earings per share excludes 42 million, 47 million and I million shares underlying stock options for 2004, 2003 and 2002 

respectively, as the exercise price of these options was greater than their average market value, resulting in an anti-dilutive effect on 

diluted earnings per share.


20 Capital and Treasury Stock Changes in treasur stock were: 

(Amounts in Millions Except


Number of Shares in Thousands)


Balance at December 30 f 2001


Employee compensation and stock


option plans


(1, 295) 

Conversion of subordinated


deben t ure s 

(353 ) 

Repurchase of common stock


Balance at December 29 , 2002


Employee compensation and stock


option plans


(1, 160) 

Conversion of subordinated


debentures 

(4 ) 

Repurchase of common stock 

Balance at December 28 , 2003


Employee compensation and stock


option plans


403 ) 

Conversion of subordinated


debentures 

(123 ) 

Repurchase of common stock


Balance at January 2, 2005


Treasury Stock 

Shares Amount 

627 393 

(22, 720) 

(5, 742 ) 

107, 382 382 

151, 547 127 

(21 729) 

(83 ) 

22, 134 183 

151 869 146 

(25, 340) 

(2, 432) 

722 384 

148, 819 004 

Shares of common stock issued were 3 119 842 000 shares at the end of2004 , 2003 and 2002.


Cash dividends paid were $1.095 per share in 2004, compared with dividends of$0.925 per share in 2003 and $0. 795 per share in 2002.


cg 2005. EDGAR anI ine , Inc. 
21 Selected Quarterly Financial Data (Unaudited)


Selected unaudited quarterly tinaneial data for the years 2004 and 2003 are summarized below:


(Dollars Millions 

Fourth 

Except Per Share Data) 

Qtr(2) 

Segment sales 

customers


Consumer


262


Pharmaceutical


840


Med Devices


Diagnostics


650


Total sales


752


Gross prof i t


046


Earnings before


provision for


taxes income


625


Net earnings


217


Basic net earnings


per share


Diluted net earnings


per share


(Dollars Millions 

Except Per Share Data) 

Qtr (5) 

Segment sales 

customers Consume 

Pharmaceutical 

Med Devices


Diagnostics 

Total sales 

Gross profit


Earnings before


provision for 

2004


First Second Third


Qtr Qtr Qtr (1) 

047 000 024 

376 427 485


136 057 044 

11, 559 484 553


192 322 366


504 435 274


493 2 I 458 341


84 83 


83 82 


2003


First Second Third Fourth


Qtr (3) Qtr (4) Qtr


791 819 841 979


666 884 835 134


364 629 779 141


821 332 455 254


099 366 475 746


CD 2005. EDGAR Online, Inc. 
taxes income 929 056 949 2 , 374 

Net earnings 070 210 072 845 

Basic net earnings 

per share 

Diluted net 

per share earnings 

(I) The third quarter of 2004 includes an after-tax charge of $12 million for In-Process Research and Development (IPR&D) costs. 

(2) The fourth quarter of 2004 includes 5789 milion for taxes on the repatriation of unremitted foreign earnings associated with the 

American Jobs Creation Act of2004. 

(3) The first quarter of2003 includes an after-tax charge of $15 million for IPR&D costs. 

(4) The second quarer of 2003 includes an after-tax charge of$900 million for IPR&D costs. 

(5) The fourth quarter of2003 includes after-tax income ofSl42 million for an arbitration ruling on stcnt patents and the cost of the 

retirement enhancement program of $61 milion. 

Management' s Report on Internal Control over Financial Reportng 

Under Section 404 of The Sarbanes-Oxley Act of2002, our management is required to assess the effectiveness of the Company 

internal control over financial reporting as of the end of each fiscal year and report, based on that assessment, whether the Company 

internal control over financial reporting is effective. 

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The 

Company s internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company 

financiaJ reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting 

principles. 

Internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, internal control over financial 

reporting determined to be effective can provide only reasonable assurance with respect to financial statement preparation and may 

not prevent or detect aU misstatements. Moreover, projections of any evaluation of effectiveness to future periods are subject to the 

risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or 

procedures may deteriorate. 

The Company s management has assessed the effectiveness of the Company's internal control over financial reporting as of January 2 

2005. In making this assessment, the Company used the criteria established by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO) in "Internal Control-Integrated Framework. " These criteria are in the areas ofcontroJ environment, risk 

assessment, control activities, infonnation and communication, and monitoring. The Company s assessment included extensive 

documenting, evaluating and testing the design and operating effectiveness of its internal control over financial reporting. 

Based on the Company s processes and assessment, as described above , management has concluded that, as of January 2 , 2005 , the 

Company s internal control over financial reporting was effective. 

Our management' s assessment of the effectiveness of the Company's internal control over financial reporting as of January 2 , 2005 has 

been audited by PricewaterhouseCoopers LLP, an independent registered public accounting finn, as stated in their report which 

appears herein. 

(9 2005. EDGAR OnI ine Inc. 
          ,               

Report of Independent Registered Public Accounting Firm 

To the Shareholders and Board of Directors of Johnson & Johnson: 

We have completed an integrated audit of Johnson & Johnson s fiscal 2004 consolidated financial statements and of its internal 

control over financial reporting as of Januar 2, 2005 and audits of its fiscal 2003 and fiscal 2002 consolidated financial statements in 

accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based onour 

audits , are presented below. 

Consolidated financial statements 

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, statements of 

equity and statements of cash flows present fairly, in all material respects, the financial position of Johnson & Johnson and 

Subsidiaries (the "Company ) at January 2, 2005 and December 28 2003 , and the results of their operations and tbeir cash flows for 

each ofthc three years in thc period ended January 2, 2005 in confonnity with accounting principles generally accepted in the United 

States of America. 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 audits. Wc conducted our audits of these statements in accordance with the 

standards of the Public Company Accounting Oversight Board (United States). 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 of financial 

statements includes examining, on a test basis, evidence supporting the amounts and disclosures in thc financial statements 

assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial 

statement presentation. We believe that our audits provide a reasonable basis for our opinion. 

Internal control over financial reporting 

Also , in our opinion, management' s assessment Management' s Report on Internal Control over Financial Reporting, " appearing on 

page 62 of the 2004 Annual Report to Shareholders, that the Company maintained effective internal control over financial reporting as 

of January 2, 2005 based on criteria established in Intcrnal Control - Integrated Framework issued by the Committee of Sponsoring 

Organizations of the Treadway Commission "COSO" , is fairly stated, in aU material respects, based on those criteria. Furthennore, in 

our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 2, 2005 

based on criteria established in Intcrnal Control - Integrated Framework issued by the COSO. The Company s management is 

responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal 

control over financial reporting. Our responsibility is to express opinions on management' s assessment and on the effectiveness of the 

Company s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial 

reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 

require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial 

reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an 

understanding of internal control over financial reporting, evaluating management' s assessment , testing and evaluating the design and 

operating effectiveness of internal control, and perfonning such other procedures as we consider necessary in the circumstances. We 

believe that our audit provides a reasonable basis for our opinions. 

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of 

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting 

principles. A company s internal control over financial reporting includes those policies and procedures that (i) pertain to the 

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions ofthc assets of the 

company; (ii) provide reasonable assurance that transactions are recorded as necessary to pennit preparation of financial statements in 

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in 

accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding 

prevention or timely detection of unauthorized acquisition, use , or disposition of the company s assets that could have a material effect 

on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections 

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in 

conditions, or that the degree of compliance with the policies or procedures may deteriorate. 

By: /s/ PricewaterhouseCoopers LLP


New York , New York 

If 2005. EDGAR Onl ine Ine. 
February 28, 2005 

(0 2005. EDGAR OnI ine Inc. 
Segments of Business(1) and Geographic Areas Johnson & Johnson and Subsidiaries

Sales to Customers (2) 

(Dollars in Millions) 2004 2003 2002 

Consumer 

- United States	 $ 4 224 968


605


International 109 463


959


Total 333 431


564


Pharmaceutical 

- United States , 96 0 13, 271


11, 919


International 168 246


232


Total 22, 128 517


151


Med Devices and Diag


- United States	 586 035


931


International 301 879


652


Total 16, 887 914


583


Worldwide total $47 348 862


36, 298


Operating Prof i t 

(Dollars Millions) 2004(5) 2003 (6) 

2002 (7) 

Consumer 514 393 229 

Pharmaceu tical 608 896 787 

Medical Devices 

and Diagnostics	 091 370 489 

Segments total 13, 213 659 505 

Expenses not allocated segments (3)	 (375) (351)

(214) 

General corporate (4)

Worldwide total	 $12 838 308 291 

Identifiable Assets


(9 2005. EDGAR On 1 i ne Ioe. 
(Dollars Millions) 2004 2003 2002 

Consumer 142 371 

056 

Pharmaceutical 16, 058 15, 001 

112 

Medical Devices 

and Diagnostics 805 16, 082 

052


Segments total 38, 005 36, 454


31, 220


Expenses not allocated


segments (3) 

General corporate (4) 15, 312 809

336 

Worldwide total $53 317 48, 263


40, 556


Addi tions


Property, Plant Equipment 

(Dollars in Millions) 2004 2003 2002 

Consumer 227 229 222 

Pharmaceutical 197 236 012 

Medical Devices 

and Diagnostics 630 639 713 

Segments total 054 104 947 

General corporate 121 158 152 

Worldwide total $2, 175 262 099 

Depreciation and


Amortization


(Dollars in Millions) 2004 2003


2002


Consumer 222 246


244


Pharmaceu t ieal 008 765


557


Medical Devices


and Diagnostics 769 761


776


Segments total 999 772


577


General corporate 125


Worldwide total 124 869


662


(f 2005. EDGAR On) inc. Ine. 
(Dollars in Millions)


United States


22, 455


Europe


636 

Western Hemisphere


excluding U. s. 

018 

Asia- Pacific, Africa 

189 

Segments total


36, 298 

Worldwide total


298 

(Dollars in Millions)


Uni ted States 

822 

Europe 

613 

Western Hemisphere


excluding U. S. 

583 

Asia- Pacific , Africa 

555 

Segments total


573 

General corporate 

383 

Other non long- lived 

assets 

22, 600 

Worldwide total


556 

Sales to Customers (2) 2004 2003 2002 

$27, 770 25 274 

151 483 

589 236 

838 869 

47, 348 862 

$47 348 41, 862 

Long- Lived Assets(B) 2004 2003 2002 

$14 324 14 367 

142 193 

748 772 

620 605 

834 937 

444 448 

039 26, 878 

$53, 317 263 

(1) See Management' s Discussion and Analysis , page 28 for a description of the segments in which the Company does business. 

(2) Export sales and intersegment sales are not significant. Sales to our top three distributors accounted for 10. , 10. 0% and 7.5% in 

2004 10. 5%, 1% and 9.0% in 2003 and 10.3% 8% and 9.2% in 2002. 

(3) Amounts not allocated to segments include interest income/expense, minority interest and general corporate income and expense. 

(4) General corporate includes cash and marketable securities. 

(5) Includes $18 million ofIu-Proccss Rcscarch & Development (IPR&D) in the Medical Devices and Diaguostics segment. 

(9 2005. EDGAR Onljne , Inc. 
(6) Includes $737 million of IPR&D in the Phannaceutical segment and $181 milion of IPR&D and $230 million of an arbitration ruling on 

stent patents in the Medical Devices and Diagnostics segment. 

(7) Includes $150 million of IPR&D, $150 million and $85 million of costs related to an arbitration settlement on PROCRlT in the 

Pharmaceutical segment and $39 million of IPR&D in the Medical Devices and Diagnostics segment. 

(8) Long-lived assets include propert, plant and equipment, net for 2004 2003 and 2002 of$10 436 , $9 846 and $8 710, respectively, and 

intangible assets , net for 2004, 2003 and 2002 of$II 842, $11 539 and $9 246, respectivcly. 

cg 2005. EDGAR Onl ine Inc. 
Summary of Operations and Statistical Data 1994-2004 Johnson & Johnson and Subsidiaries 

(Dollars in Millions Except Per Share Figures) 

Sales to customers 

- u. S. 

Sales to customers 

- International 

2004 

$ 27 770 

19, 578 

2003 

25, 274 

16, 588 

2002 

455 

13, 843 

2001 

825 

492 

2000 

316 

856 

1999 

532 

825 

Total sales 348 862 298 317 172 357 

Cost of products sold 

Selling, marketing 

and admin expenses 

Research expense 

Purchased in- process 

research and development 

Interest income 

Interest expense I net of 

portion capitalized 

Other (income) 

expense , net 

13 I 422 

860 

203 

(195 ) 

187 

176 

131 

684 

918 

(177 ) 

(385) 

207 

447 

216 

957 

189 

(256 ) 

294 

160 

581 

260 

591 

105 

(456 ) 

153 

185 

957 

495 

105 

(429) 

204 

(94 ) 

539 

065 

768 

(266 ) 

255 

119 

510 554 007 419 304 21, 480 

Earnings before 

provision 

for taxes on income 

Provision for taxes 

83 B 10, 308 291 898 868 877 

on income 329 111 694 230 915 604 

Net earnings 509 197 597 668 953 273 

Percent of sales to 

customers 

Diluted net earnings per 

share of common stock 

Percent return on 

average shareholders I equi ty 

18. 

29. 

17. 

29. 

18. 

28. 

17. 

25. 

17. 

26. 

15. 

1. 39 

27. 

Percent increase over 

previous year; 

Sales to customers 

Diluted net earnings 

per share 

13 . 

18. 

15. 

11. 

12. 

17. 

10. 

14. 15. 

14. 

36. 

Supplementary expense 

data;

Cost of materials and services (1) 

Total employment 

costs 

Depreciation and 

amortization 

Maint and repairs (2) 

Total tax expense (3) 

053 

074 

124 

462 

393 

568 

005 

869 

395 

078 

16, 540 

450 

662 

360 

497 

333 

749 

605 

372 

995 

113 

085 

592 

327 

619 

13, 922 

537 

510 

322 

271 

Supplementary balance 

sheet data; 

Property, plant and 

equipment, net 

Additions to property, 

equipment

Total assets 

Long- term debt 

Operating cash flow 

plant and 

436 

175 

317 

565 

131 

846 

262 

263 

955 

595 

710 

099 

556 

022 

176 

719 

731 

488 

217 

864 

409 

689 

245 

163 

903 

155 

822 

064 

429 

920 

(t 2005. EDGAR Onl ine Ine. 
Common stock information 

Di vidends paid per share 

Shareholders equi ty 

per share 

Market price per 

share 

(year- end close) 

Average shares 

outstanding (millions)

basic 

diluted 

$1. 095 

$10. 

$63. 

968. 

003. 

925 

50. 

968. 

008. 

Employees (thousands) 109. 110. 

Sales to customers 

- u. S. 

Sales to customers 

International 

1998 

$ 12 901 

910 

Total sales 811 

Cost of products sold 

Selling, marketing 

and admin expenses 

Research expense 

Purchased in- process 

research and development 

Interest income 

Interest expense 

net of portion capitalized 

Other (income) expense , net 

700 

525 

506 

298 

(302 ) 

186 

565 

19, 478 

Earnings before provision 

for taxes on income 

provision for taxes 

on lncome 

333 

232 

Net earnings 101 

Percent of sales to 

customers 

Diluted net earnings per 

share of common stock 

Percent return on average 

shareholders I equity 

13. 

22. 

Percent increase over 

Sales to customers 

Diluted net earnings 

per share 

previous year; 

Supplementary expense 

data: 

Cost of materials 

and services(l) 

Total employment 

costs 

Depreciation and 

amortization 

Maint and repairs (2) 

Total tax expense (3) 

779 

908 

335 

286 

881 

(Q 2005. EDGAR Onl ine 

795 

53. 

998. 

054. 

lOB. 3


1997 

814 

708 

522 

350 

185 

373 

108 

(263) 

179 

248 

18, 180 

342 

237 

105 

13. 

24. 

702 

586 

117 

270 

824 

Ine. 

59. 

033. 

099. 

101. 

1996 

851 

536 

387 

185 

848 

109 

(196 ) 

176 

122 

244 

143 

185 

958 

13. 

27. 

15. 

16. 

341 

447 

047 

285 

753 

52. 

993. 

099. 

100. 

1995 

065 

472 

537 

352 

950 

788 

(151 ) 

184 

193 

344 

926 

418 

13. 

27. 

19. 

21. 

984 

849 

886 

25 "1


458 

46. 

978. 

100. 

99. 

1994 

731 

723 

454 

393 

901 

416 

(85 ) 

182 

151 

839 

615 

654 

961 

12. 

28. 

11. 

104 

401 

754 

222 

132 
Supplementary balance sheet data: 

Property, plant and 

equipment, net 

Addi t ions property, plant and equipment 

Total assets 

Long- term debt 

Operating cash flow 

767 

610 

28, 966 

652 

106 

204 

454 

23, 615 

084 

210 

025 

427 

248 

347 

001 

544 

307 

355 

702 

436 

230 

979 

027 

776 

984 

Common stock information 

Dividends paid per share 

Shareholders I equity 

per share 

Market price per share 

(year- end close) 

Average shares outstanding (millions)

basic 

diluted 

41. 

973. 

082. 

425 

32. 

951.9 

073. 

368 

25. 

938. 

046. 

21. 38 

820. 

890. 

283 

13. 

796. 

843. 

Employees (thousands) 96. 92. 91. 84. 83. 

(1) Net of interest and other income. 

(2) Also included in cost of materials and services category. 

(3) Includes taxes on income , payroll , propert and other business taxes. 

cg 2005. EDGAR Onl ine Ine. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    ..................................... .........  ................. ....... .......... ....... ................. ............................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .. ........ . . . . . . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............... . . . . . . . . .... . . . . . . . ......... ......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EXHIT 21


SUBSIDIAIES


Johnson & Johnson, a New Jersey corporation, has the domestic and international subsidiaries shown below. Certain U. S. subsidiaries 

and international subsidiaries arc not named because they are not significant in the aggregate. Johnson & Johnson has no parent. 

NAME OF SUBSIDIARY


u. S. Subsidiaries: 

ALZA Corporation................................


ALZA Land Management, Ine. 


Biosense Webster, Ine. 


Centocor Biologics, LLC.... 


Centocor l Ine. ............ 

Centocor Research & Development l
 Ine.
 Cadman & Shurtleff 
 Ine. .......


Cordis Corporation... 

Cordis Development Corporation... 


Cordis International Corporation... 


Cordi s LLC....... 


Cordis Neurovascular , Inc. ...............................


Crescendo Pharmaceuticals Corporation........ 


DePuy Disc , Inc. .........................................


DePuy, Inc. 


DePuy Mitek , Inc.

DePuy Orthopaedics
, Inc.

DePuy Products, Inc. ................ 


DePuy Spine , Inc. ........... 


DePuy Spine Sales Limited Partnership... 


Diabetes Diagnostics I Inc. ..


Egea Biosciences , LLC.


Ethicon Endo- Surgery, Inc. ...............


Ethicon Endo- Surgery, L. L. C. 


Ethicon Endo-Surgery Services, L. P. .........-............


Ethicon, Inc. ....................... 


Ethicon LLC. 


Global Biologics Supply Chain , LLC........................


GynoPharma Inc. ..................................


Iso Merger Corp. 


Janssen Finance Company..........


Janssen Inc. .................. 


Janssen Ortho LLC. 

Janssen Pharmaceutica Inc. 


Janssen Pharmaceutica Products, L. P. .....................


JJHC, LLC...............


Johnson & Johnson Baby Products, Inc. 


Johnson & Johnson Consumer Companies, Inc. 


Johnson & Johnson Development Corporation.. 


JURISDICTION 

ORGANIZATION 

Delaware 

Delaware 

California 

pennsyl vania 

pennsyl vania 

pennsyl vania 

New Jersey


Florida 

Florida 

Delaware 

Delaware 

Florida 

Delaware 

Delaware 

Delaware 

Massachusetts 

Indiana 

Indiana 

Ohio 

Massachusetts 

Delaware 

Delaware 

Ohio 

New Mexico 

Texas 

New Jersey


Delaware 

pennsyl vania 

Delaware 

Delaware 

Florida 

Delaware 

Delaware 

pennsyl vania 

New Jersey


Delaware 

Delaware 

New Jersey


New Jersey


(g 2005. EDGAR Online, Inc. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................................................ . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................... . . . . . . . . . . ....................................... ....... . . . . . . . . . . . . . . . . . . . . . . ..................... ................. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . . . . . . . ........,. . . . . . . . . . . . . . . . . .

NAME OF SUBSIDIARY


Johnson & Johnson Finance Corporation........ 


Johnson & Johnson Health Care Systems Ine. ...............


Johnson & Johnson International...........................


Johnson & Johnson Japan Ine. .............................


Johnson & Johnson - Merck Consumer Pharmaceuticals Co.


Johnson & Johnson (Middle East) Ine. 


Johnson & Johnson Pharmaceutical Research & Development,


L. C. 

Johnson & Johnson Professional Co. (P. R. ) Ine. ...........


Johnson & Johnson Services l Ine. .........................


Johnson & Johnson Urban Renewal Associates............ 


Johnson & Johnson Vi s ion Care , Ine. ......................


Joint Medical Products Corporation........................


LifeScan , Inc. ...........................


LifeScan LLC. 


McNeil Nutritionals, LLC..................................


McNEIL- PPC, Inc. .........................................


Middlesex Assurance Company Limited.......................


Neutrogena Corporation.............. 


Nitinol Development Corporation.


Noramco, Inc. .......................................


OMJ Pharmaceuticals, Inc. ................................


OraPharma , Inc. ....................... 


Ortho Biologics LLC.......... 


Ortho Biotech Holding Corp. ..............................


Ortho Biotech Inc. "


Ortho Biotech Products , L. P. .


Ortho- Clinical Diagnostics, Inc. 


Ortho- McNeil Finance Co. 


Grtho- McNeil Pharmaceutical , Inc. ........................


Rutan Realty LLC. 


Scios Inc. ...............................................


SweetFranchise, Inc. .....................................


TERAed Corporation. . . . . 

Therakos, Inc. ........................................... 

Therapeutic Discovery Corporation......................... 

The Tylenol Company............................... 

Winthorpe & Valentine , Inc. .............................. 

International subsidiaries: 

ALZA Ireland Limited. 

Apsis S. S. ............................................. 

Biapharm, SAS............................................. 

Centocor Biologics (Ireland) Limited...................... 

Centocor B. V. 

Cilag Advanced Technologies GmbH.......................... 

Cilag AG. 

Cilag AG International.................................... 

Cilag Holding AG. 

JURISDICTION 

ORGANIZATION 

New Jersey


New Jersey


New Jersey


New Jersey


New Jersey


New Jersey


New Jersey


Delaware 

New Jersey


New Jersey


Florida 

Delaware 

California 

Delaware 

Delaware 

New Jersey


Vermont 

Delaware 

California 

Georgia 

Delaware 

Delaware 

Delaware 

Delaware 

New Jersey


New Jersey


New York 

Florida 

Delaware 

New Jersey


Delaware 

Delaware 

Delaware 

Florida 

Delaware 

New Jersey


Delaware 

Ireland 

France 

France 

Ireland 

Netherlands 

Switzerland 

Switzerland 

Switzerland 

Switzerland 

cg 2005. EDGAR Online, Ine. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ......... . . . . . . . . .. . .. . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . ....... . . . . . . .  . . . . . . . .

NAME OF SUBSIDIARY


Cadman SarI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Cordis Europa N. V. ................. 

Cordis Medizinische Apparate GmbH.. 

Cordis S. A. S. 

DePuy Ace SarI...........................................


DePuy Australia Pty. Ltd. ................................


DePuy France B, S. ...........................,..........


DePuy International Limited...............................


DePuy IntI. (Holdings) Limited............................


DePuy (Ireland) Limited...................................


DePuy Mitek SarI........... 


DePuy Orthopadie GmbH. 


DePuy Orthopedie S. A. S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

DePuy Spine SarI.... 


DePuy UK Holdings Limited. 


Ethicon GmbH. 


Ethicon Ireland Limited. . 

Ethi con SarI. . . . 

Ethicon SAS. 


Ethnor (Proprietary) Limited..............................


Greiter AG. 


Greiter (International) AG................................


Janssen Animal Health BVBA. 


Janssen Cilag A/S. . .


Janssen Cilag AB..........


Janssen- Cilag AG. 


Janssen- Cilag B . V. .......................................


Janssen- Cilag Farmaceutica, Lda. 


Janssen- Cilag Farmaceutica Ltda. .........................


Janssen- Cilag GmbH. 


Janssen- Cilag Ltd. ................................. 


Janssen Cilag N. V. .......................................


Janssen-Cilag Pharmaceutical S. I. ....................


Janssen- Cilag Pharma GmbH.......... 


Janssen- Cilag Polska , Sp. z 0. 0...........................


Janssen- Cilag Pty. Ltd. ..................................


Janssen-Cilag S .A. 

Janssen- Cilag, S. A. de C. V. ..............................


Janssen- Cilag S . A. S. 


Janssen- Cilag S. A. .....................................


Janssen Korea, Ltd. ......................................


Janssen Pharmaceutica N. V. ...............................


Janssen Pharmaceutica (pty) Limited.......................


Janssen Pharmaceutical K. K. ..............................


Janssen Pharmaceutical Limited.......... 


J. C. General Services CVBA.............. 


C Healthcare Ltd. ......................................


JURISDICTION 

ORGANIZATION 

Switzerland 

Netherlands 

Germany 

France 

Switzerland 

Australia 

France 

United Kingdom


Uni ted Kingdom

Ireland 

Switzerland 

Germany 

France 

Switzerland 

Uni ted Kingdom 

Germany

Ireland 

Scotland 

France 

Sou th Af rica


Swi tzerland


Switzerland 

Belgium 

Norway 

Sweden 

Switzerland 

Netherlands 

Portugal

Brazil 

Germany 

Uni ted Kingdom


Belgium 

Greece 

Austria 

Poland 

Australia 

Spain 

Mexico 

France 

Italy 

Korea 

Belgium 

South Africa


Japan

Ireland 

Belgium

Israel 

(9 2005. EDGAR OnI ine. Inc. 
               ....................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................... ............... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........... .......... .......... .

NAME OF SUBSIDIARY


JHC Nederland B. V. 


Johnson & Johnson AB. . 


Johnson & Johnson AG. 


Johnson & Johnson (China) Investment Co., Ltd. 


Johnson & Johnson (China) Ltd. ...........................


Johnson & Johnson Comercio E Distribuicao Ltda. 


Johnson & Johnson Consumer France SAS ....................


Johnson & Johnson de Argentina, S. e I. 


Johnson & Johnson de Colombia S. A. .......................


Johnson & Johnson de Venezuela , S . A. """""


Johnson & Johnson European Treasury Company. 


Johnson & Johnson (Egypt) S. E. .........................


Johnson & Johnson Finance Limited.........................


Johnson & Johnson Gesellschaft m.
 H.................


Johnson & Johnson GmbH. 


Johnson & Johnson Group Holdings G. H "


Johnson & Johnson Hellas S. A. ............................


Johnson & Johnson Holding AB. 

Johnson & Johnson Holding GmbH. 


Johnson & Johnson (Hong Kong) Limited.....................


Johnson & Johnson Inc. ...................................


Johnson & Johnson International Financial Services


Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Johnson & Johnson International S. A. 


Johnson & Johnson (Ireland) Limited.......................


Johnson & Johnson Kft. ...................................


Johnson & Johnson K. K. .............-.....................


Johnson & Johnson Korea, Ltd. ............................


Johnson & Johnson Limi tada. . . . . 

Johnson & Johnson Limited. . . . 

Johnson & Johnson Management Limited......................


Johnson & Johnson Medical B. V. ...........................


Johnson & Johnson Medical (China) Ltd. 


Johnson & Johnson Medical Holding S. p. A. .................


Johnson & Johnson Medical Korea Limited....... 


Johnson & Johnson Medical Limited.........................


Johnson & Johnson Medical Mexico, S. A. de C. V. ...........


Johnson & Johnson Medical Products GmbH...................


Johnson & Johnson Medical (pty) Limited..................


Johnson & Johnson Medical Pty. Limited...................


Johnson & Johnson Medical S. A. "


Johnson & Johnson Medical S. A. .........................


Johnson & Johnson Morocco S. A. ...........................


Johnson & Johnson Pacific Pty. Limited...................


Johnson & Johnson Pakistan (Private) Limited.........


Johnson & Johnson (Philippines), Inc. ...............


Johnson & Johnson Poland Sp. z 0. 0 .......................


Johnson & Johnson Produtos Profissionais Ltda. .......


JURISDICTION 

ORGANIZATION 

Netherlands 

Sweden 

Swi tzerland


China 

China 

Brazil 

France 

Argentina 

Colombia 

Venezuela 

Ireland 

Egypt 

Eng 1 and 

Austria 

Germany 

Germany 

Greece 

Sweden 

Germany 

Hong Kong


Canada 

Ireland 

France 

Ireland 

Hungary 

Japan 

Korea 

Portugal

India 

Eng 1 and 

Netherlands 

China 

Italy 

Korea 

Scotland 

Mexi co 

Austria 

South Africa 

Australia 

Argentina

Italy 

Morocco 

Austral ia 

Pakistan 

Philippines 

Poland 

Brazil 

CD 2005. EDGAR Onl ine Inc. 
. . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . .   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................................ ............................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ . . .

NAME OF SUBSIDIARY


Johnson & Johnson (Proprietary) Limited...................


Johnson & Johnson Pte. Ltd. ..............................


Johnson & Johnson Pty. Limited.......................


Johnson & Johnson Research Pty. Ltd. '..............


Johnson & Johnson S. A. ...................................


Johnson & Johnson S. A. de C. V. .......................... 

Johnson & Johnson SDN. BHD. .............................. 

Johnson & Johnson S. p. A .................................. 

Johnson & Johnson , s. r. o. 

Johnson & Johnson Swiss Finance Company Limited. 

Johnson & Johnson Taiwan Ltd. " 

Johnson & Johnson (Thailand) Ltd..........................


Johnson & Johnson Vision Care (Ireland) Limited..........


K. K. DePuy Japan. . . . . . . . . . . . . . 


Laboratoires Poli ve S. N. C. 


Lifescan Canada Ltd. .....................................


Lifescan Scotland Ltd. ...................................


McNeil GmbH & Co. Arzneimittelvertrieb oHG................


McNeil GmbH & Co. oHG.....................................


McNeil Iberica S. V. ....................................


McNEIL PDI Inc. "


McNeil SAS................................................


Medos International SarI..................................


Medos SarI................................................


OMJ Ireland Limited. 


OMJ Manufacturing Limited. 


Grtho- Clinical Diagnostics................................


Grtho-Clinical Diagnostics GmbH......... .
 Grtho- Clinical Diagnostics K. K. "


Grtho-Clinical Diagnostics S . A. "


P. T. Johnson & Johnson Indonesia..................


Shanghai Johnson & Johnson Pharmaceuticals I Ltd...........


Tasmanian Alkaloids Pty. Ltd. ............................


Tibotec BVBA................... 


Tibotec Pharmaceuticals Ltd. .............................


Tibotec- Virco Comm. VA....................................


Vania Expansion, S. C....................................


Virco BVBA.. 


Xian- Janssen Pharmaceutical Ltd. .........................


JURISDICTION 

ORGANIZATION 

South Africa


Singapore

Australia 

Australia 

Spain 

Mexico 

Malaysia

Italy

Czech Republic 

United Kingdom


Tai wan 

Thailand 

Ireland 

Japan 

France 

Canada 

Scotland 

Germany 

Germany 

Spain 

Canada 

France 

Switzerland 

Swi t zerl and 

Ireland 

Ireland 

Uni ted Kingdom 

Germany 

Japan 

France 

Indonesia 

China 

Australia 

Belgium

Ireland 

Belgium 

France 

Belgium 

China 

(E' 2005. EDGAR OnI ine Inc. 
                                    

EXlIT 

CONSENT OF INEPENDENT REGISTERED PUBLIC ACCOUNING 

We hereby consent to the incorporation by reference in the Registration Statements on Fonn S-8 (File No. 333- 106007 333- 104828 

333-87736 333-67370 333-59380, 33-52252, 33-40294, 33-40295, 33-32875, 033-59009, 333-38055, 333-40681 , 333-26979 

333-96541 

333-39238 333-94367 033-57583 and 333-86611) and Fonn S-3 (File No. 333- 111082 , 333- 104821 , 333-67020, 33-55977, 333-91349 and 

33-47424) of Johnson & Johnson afoUT report dated February 28 , 2005 , relating to the financial statements , management's assessment 

of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which 

appears in the Annual Report to Shareholders , which is incorporated in this Annual Report on Fonn lO-K. We also consent to the 

incorporation by reference of our report dated March 11 2005 relating to the financial statement schedule, which appears in this Fonn 

IO­

/s/ PRICEWATERHOUSECOOPERS LLP


PricewaterhouseCoopers LLP


New York New York 

March 2005

co 2005. EDGAR OnI ine. Inc. 
- - - -- - - - - - -- - 

EXlIT 31(A) 

CERTICA nON OF CHIEF EXCI OFFCER


PURSUAN TO SECTION 302 OF THE SARBANES-XLEY ACT


, William C. Weldon, certify that: 

I. I have reviewed this annual report on Fonn 10-K of Johnson & Johnson (the "Company 

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact 

necessary to make the statements made, in light of the circumstances under which such statements were made , not misleading with 

respect to the period covered by this report; 

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all 

material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in 

this report; 

4. The Company s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as 

defined in Exchange Aet Rules 13a- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a- 15(f)) for 

the Company and have: 

a) Designed such disclosure controls and procedures , or causcd such disclosure controls and procedures to be designed under our 

supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us 

by others within those entities, particularly during the period in which this report is being prepared; 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed 

under our supervision, to provide rcasonable assurance regarding the reliability of financial reporting and the preparation of financial 

statements for external purposes in accordance with generally acccpted accounting principles; 

c) Evaluated the effectiveness of the Company s disclosure controls and procedures and presented in this report our conclusions 

about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such 

evaluation; and 

d) Disclosed in this report any change in the Company s internal control over financial reporting that occurred during the Company 

fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company s internal control over 

financial reporting; and 

5. The Company s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial 

reporting, to the Company s auditors and the audit committee of the Company s board of directors (or persons performing the 

equivalent functions): 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are 

reasonably likely to adversely affect the Company s ability to record, process, summarize and report financial infonnation; and 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company 

internal control over financial reporting. 

/s/ WILLIAM C. WELDON 

Weldon 

Chief Executive Officer William C. 

Date: March 14, 2005 

CD 2005. EDGAR OnJ ine Inc. 
(f 2005. EDGAR OnI ine Ine. 
                                   

EXHIBIT 31(8) 

CERID1CA TION OF CHIF FINANCIA OFFCER


PURUAN TO SECTION 302 OF '1m SARBANES-XLEY ACT


, Robcrt J. DarTctta, ccrtifY that: 

1. I have reviewed this annual report on Fonn IO-K of Johnson & Johnson (the "Company 

2. Based on my knowledge, this annual report docs not contain any untrue statement of a material fact or omit to state a material fact 

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with 

respect to the period covered by this report; 

3. Based on my knowledge , the financial statements, and other financial information included in this annual report, fairly present in all 

material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in 

this report; 

4. The Company s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as 

defined in Exchange Act Rule 13a- 15(c)) and internal contTOI over financial reporting (as dcfined in Exchange Act Rulcs 13a- 15(f)) for 

the Company and have: 

a) Designed such disclosure controls and procedures , or caused such disclosure controls and procedures to be designed under our 

supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us 

by others within those entities, particularly during the period in which this report is being prepared; 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed 

. under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial 

statements for external purposes in accordance with generaJly accepted accounting principles; 

c) Evaluated the effectiveness of the Company s disclosure controls and procedures and presented in this report our conclusions


about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such


evaluation; and


d) Disclosed in this report any change in the Company s internal control over financial reporting that occurred during the Company


fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company s internal control over


financial reporting; and


5. The Company's othcr certifying officer and I have disclosed , based on our most recent evaluation of internal control over financial 

reporting, to the Company s auditors and the audit committee of the Company s board of directors (or persons performing the 

equivalent functions): 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are 

reasonably likely to adversely affect the Company s ability to record, process, summarize and report financial information; and 

b) Any fraud, whether or not material , that involves management or other employees who have a significant roJe in the Company's


internal control over financial reporting.


/s/ ROBERT J. DARRETTA


Robert J. Darretta 

Chief Financial Officer


Date: March , 2005


2005. EDGAR anI ine. Inc. 
co 2005. EDGAR Dnl ine Ine. 
                             

EXHBIT 32(A) 

CEKI1ICA nON OF ' EXClIVE onlCER


PURUAN TO SECTION 906 OF THE SARBM'ES-XLEY ACT


Thc undersign cd, William C. Wcldon, the Chief Executive Officcr of Johnson & Johnson, a New Jcrsey corporation (the " Company 

pursuant to 18 U. C. 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of2002, hcreby certifies that: 

(1) thc Company s Annual Report on Fonn 10-K for the fiscal year ended Januar 2, 2005 (thc " Report ) fully complies with thc 

requirements of


Section 13(a) of the Securities Exchangc Act of 1934; and 

(2) the infonnation contained in the Report fairly presents, in all material respects, the financial condition and results of operations of 

the Company. 

/s/ WILLIAM C. WELDON 

Weldon 

Chief Executive Officer William C. 

Dated; March 
 14, 2005

This certification is being furnishcd to the SEC with this Report on Fonn 10-K pursuant to Section 906 ofthe Sarbanes-Oxley Act of 

2002 and shall not, except to the extcnt required by such Act, bc deemcd fied by thc Company for purposes of Section 18 of the 

Securities Exchange Act of 1934. 

CD 2005. EDGAR On1 ine Ine. 
                        

EXHIBIT 32(B) 

CERTICA nON OF CHlF HNANOAL OFHCER


PURUANT TO SECTION 906 OF TI SARANES-XLEY ACT


The undersigned, Robert 1. Darrctta, the Chief Financial Offcer of Johnson & Johnson, a New Jersey corporation (the " Company 

pursuant to 18 U.S. c. 1350 , as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of2002, hereby certifies that: 

(1) the Company s Annual Report on Form 10-K for the fiscal year ended Januar 2, 2005 (the " Report") fully complies with the 

requirements of


Section 13(a) of the Securities Exchange Act of 1934; and 

(2) the infonnation contained in the Report fairly presents, in all material respects, the financial condition and results of operations of 

the Company. 

/s/ ROBERT J. DARRETTA


Robert J. Darretta 

Chief Financial Officer


Dated: March 
 2005 

This certification is being furnished to the SEC with this Report on Fonn JO-K pursuant to Section 906 of the Sarbancs-Ox1ey Act of 

2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the 

Securities Exchange Act of 1934. 

(g 2005. EDGAR OnI ine, 
 Ine.
   

EXHIBIT 99(b) 

CAUTIONARY STATEMENT PURUAN TO PRlY ATE SECURIIE LmGA nON REFORNI


ACT OF 1995 - "SAFE HAOR" FOR FORWARD-LOOKIG STATEMENTS


The Company may from time to time make certain forward-looking statements in publicly-released materials, both written and oral. 

Forward-looking statements do not relate strictly to historical or current facts and anticipate results based on management' s plans that 

are subject to uncertainty. Forward-looking statements may be identified by the use of words like "plans expects wil 

anticipates estimates " and other words of similar meaning in conjunction with , among other things, discussions of future 

operations, financial perfonnance, the Company s strategy for growth, product development, regulatory approvals, market position and 

expenditures. 

Forward-looking statements are based on current expectations of future events. The Company cannot guarantee that any 

forward-looking statement will be accurate, although the Company believes that it has been reasonabJe in its expectations and 

assumptions. Investors should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize 

actual results could vary materially from the Company s expectations and projections. Investors are therefore cautioned not to place 

undue reliance on any forward-looking statements. Furthennore, the Company assumes no obligation to update any forward-looking 

statements as a result of new information or future events or developments. 

Some important factors that could cause the Company s actual results to differ from the Company s expectations in any 

forward-looking statements are as follows: 

Economic factors, including inflation and fluctuations in interest rates and currency exchange rates and the potential effect of such 

fluctuations on revenues, expenses and resuJting margins; 

Competitive factors, including technologicaJ advances achieved and patents attained by competitors as well as new products 

introduced by competitors , including the fact that there is continued competition in the U. S. for PROCRIT, the top-selling product in 

the Company s portfolio and, within the last year, competition for the CYPHER drug-eluting stent; 

ChaJIenges to the Company s patents by competitors or allegations that the Company s products infringe the patents of third parties 

which could potentially affect the Company's competitive position and ability to sell the products in question and require the payment 

of past damages and future royalties. In particular, generic drug finns have fied Abbreviated New Drug Applications seeking to market 

generic forms of most of the Company's key phannaceutical products , prior to expiration of the applicable patents covering those 

products. In the event that the Company is not successful in defending the resulting lawsuits, generic versions of the product at issue 

will be introduced, resulting in very substantial market share and revenue losses; 

Financial distress and bankptcies experienced by significant customers and suppliers that could impair their ability, as the case may 

, to purchase the Company s products, pay for products previously purchased or meet their obligations to the Company under 

supply arrangements;


The impact on political and economic conditions due to terrorist attacks in the U.S. and other parts of the world or U. S. military action 

overseas , as well as instability in the financial markets which could result ITom such terrorism or military actions; 

InteITptions of computer and communication systems, including computer viruses, that could impair the Company s ability to conduct 

business and communicate internally and with its customers; 

Health care changes in the U. S. and other countrics resulting in pricing pressures, including the continued consolidation among health 

care providers, trends toward managed care and health care cost 

if 2005. EDGAR anI ine Ine. 
containment and government Jaws and regulations relating to sales and promotion, reimbursement and pricing generally; 

Government laws and regulations , affecting U. S. and foreign operations, including those relating to securities laws compliance, trade 

monetary and fiscal policies, taxes , price controls, regulatory approval of new products, licensing and patent rights, and including, in 

particular, proposed amendments to the Hatch-Waxman Act, implementation of the recently enacted Medicare Prescription Drug, 

Improvement and Modernization Act of 2003 and possible drug reimportation legislation; 

Competition in research, involving the development and the improvement of new and existing products and processes, is particularly 

significant and results from time to time in product and process obsolescence. The development of new and improved products is 

important to the Company s success in all areas of its business; 

Difficulties inherent in product development, including the potential inability to successfully continue technological innovation 

complete clinical trials, obtain regulatory approvals in the United States and abroad, gain and maintain market approval of products 

and the possibility of encountering infringement claims by competitors with respect to patent or other intellectual propert rights 

which ean preclude or delay commercialization of a product; 

Significant litigation adverse to the Company including product liability claims, patent infringement claims, and antitrust claims; 

The health care industry has comc under increased scrutiny by government agencies and state attorney generals and resulting 

investigations and prosecutions carr the risk of significant civil and criminal penalties, including debarment from government 

business; 

Product efficacy or safety concerns resulting in product recalls, regulatory action on the part of the FDA (or foreign counterparts) or 

declining sales. While the Company's affiliates do not sell any COX-2 inhibitor medicines, the recent developments involving those 

medicines demonstrate these risks and are likely to have implications throughout the health care industry; 

The impact of business combinations, including acquisitions and divestitures, both internally for the Company and externally in the 

pharmaceutical and hcalth care industries; and 

Issuance of new or revised accounting standards by the American Institute of Certified Public Accountants, the Financial Accounting 

Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board. 

The foregoing list sets forth many, but not all, of the factors that could impact upon the Company s ability to achieve results described 

in any forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should 

not consider this list to be a complete statement of all potential risks and uncertainties. The Company has identified the factors on this 

list as pennitted by the Private Securities Litigation Refonn Act of 1995. 

(Q 2005. EDGAR Online Inc. 
End of Filng


CD 2005. EDGAR OnI ine Ine. 

PUBLIC RECORD VERSION 

FTC Docket No. C-4151


File No. 051-0115


EXHIBIT 3


Johnson & Johnson SEC Form lO-Q For Period Ending July 3, 2005

Address 

Telephone 

CIK 

Industry 

Sector 

Fiscal Year 

JOHNSON & JOHNSON


FORM 10­

(Quarterly Report) 

Filed 8/10/2005 For Period Ending 7/3/2005 

ONE JOHNSON & JOHNSON PLZ 

NEW BRUNSWICK, New Jersey 08933 

732-524-2454 

0000200406 

Major Drugs 

Healthcare 

01/03 

""d By Enc" rf iI!m httc :" N,W ;:-:i:g:3 r-c I i , ;:. C:'Y 

g ::::;:y:i-grt 28:): All Rigi"t5 i,,-

CistriCLti::,'" 3 Li;., ::ftri; ::cu., rt rE.t'iaE,j L,rd.;." ECG.i R 8rlir=. T2r"t ;::f UX' 
UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549 

FORM lO-Q 

, 2005 (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended July 3 

() Transition Report Pursuantto Section 13 or l5(d) of the Securities Exchange Aet of 1934 forthe for the transition period from 

Commission file number 1-3215 

JOHNSON & JOHNSON


(Exact name of registrant as specified in its charter) 

22- 1024210 NEW JERSEY 

(Stat8 or other jurisdiction of (1 .R. S. Employer 

Incorporation or organization) Identification No. 

One Johnson & Johnson Plaza


New Brunswick, New Jersey 08933


(Address of principal executive offices)


Registrant' s telephone number, including area code (732) 524-0400 

Indicate by check mark whether the registrant (1) 

has filed all reports required to be filed by Section 

13 or 15(d) of the Securities Exchange Act of 1934 

during the preceding 12 months (or for such shorter period that the registrant was required to fie such reports), and (2) has been subject to such 

filing requirements for the past 90 days. Yes (X) No () 

Indicate by check mark whether the registrant is an accelerated fier (as defined in Rule 12b-2 ofthc Exchange Act). Yes (X) No ( )


Indicate the number of shares outstanding of each of the issuer s classes of common stock, as of the latest practicable date.


On July 31 2005 , 2 974 694 094 shares of Common Stock, $1.00 par value, were outstanding.


JOHNSON & JOHNSON AND SUBSIDIARIES 

TABLE OF CONTENTS


Part I - Financial Information Page No. 

Item 1. Financial Statements (unaudited) 

Consolidated Balance Sheets ­

July 3, 2005 and January 2 , 2005


Consolidated Statements of Earnings for the Fiscal


Quarters Ended July 3, 2005 and

June 27 , 2001


Consolidated Statements of Earnings for the Fiscal


Six Months Ended July 3, 2005 and


June 27, 2004


Consolidated Stateme ts of Cash Flows for the Fiscal 

Six Months Ended July 3, 2005 and 

June 27 , 2004 

Notes to Consolidated Financial Statements


Item 2.	 Management' s Discussion and Analysis of

Financial Condi t ion and Results 

of operations 

Item 3.	 Quantitative and Qualitative Disclosures 

About Market Risk 

Item 4.	 Controls and Procedures 

?art II - Other Information


Item 1 - Legal Proceedings


Item 2 - Unregistered Sales of Equity Securities


and Use of Proceeds


Item 4 - Submission of Matters to a Vote of Security


Holders 

Item 6 - Exhibits


Signatures 

Part I - FINANCIAL INFORMATION 

Item 1 - Financial Statements

JOHNSON & JOHNSON AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS


(Unaudited; Dollars in Milions) 

ASSETS 

July 3, January 2, 

2005 2005 

Current Assets: 

Cash and cash equivalents $12, 156 203 

Marketable securities	 005 681 

Accounts receivable, trade, less 

allowances for doubtful accounts 

$180 (2004 , $206) 379 831 

Inventories (Note 4)	 963 714 

Deferred taxes on income	 830 737 

prepaid expenses and other 

current assets 387 124 

Total current assets 720 320 

Marketable securities , non- current 

Property, plant and equipment, 

at cost 672 18, 664 

Less accumulated

depreciation 581 228 

Property, plant and equipment, net 10, 091 10, 436 

Intangible assets (Note 5) 15, 681 15, 105 

Less accumulated amortization
 486 263 

Intangible assets, net 195 11, 842 

363 551 Deferred taxes on income


Other assets 135 122 

Total assets $54 553 53, 317 

See Notes to Consolidated Financial Statements 

JOHNSON & JOHNSON AND SUBSIDIARIES 

CONSOLIDATED BALANCE SHEETS 

(Unaudited; Dollars in Millions) 

LIABILITIES AND SHAREHOLDERS' EQUITY 

July 3, January 2 

2005 2005 

Current Liabilities: 

Loans and notes payable 304 280 

Accounts payable 949 227 

Accrued liabilities 153 523 

Accrued rebates returns


and promot ions 312 297


Accrued salaries, wages and


commisS1ons 892 091 

030 506 

Total current liabilities 11, 640 13, 927 

Long- term debt 329 565 

Deferred tax liability 418 403 

Employee related obligations 936 631 

Other liabilities 061 978 

Total liabilities 19, 384 504 

Shareholders I equi ty: 

Taxes on income


Preferred stock without par


value (authorized and unissued


000, 000 shares) 

Common stock - par value $1.


per share (authorized 

320, 000, 000 shares; issued 

119, 842, 000 shares) 120 120 

Note receivable from employee 

stock ownership plan (11) 

Accumulated other comprehensive


income (Note 8) (805) (515) 

Retained earnings 38, 853 35, 223 

Less common stock held in treasury,

001 at cost (145, 616 000 & 148, 819, 000


shares) 999


Total shareholders I equity 35, 169 31, 813 

Total liabilities and shareholders
 equity $51
553 53, 317

See Notes to Consolidated Financial Statements 

JOHNSON & JOHNSON AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF EARNINGS 

(Unaudited; doJlars & shares in millions 

except per share figures) 

Fiscal Second Quarter Ended July 3 , Percent June 27 , Percent 2005 to Sales 2004 to Sales 

Sales customers


(Note $12 762 100. 484 100.


Cost product s sold 508 27. 162 27. 

Gross profit 251 72. 322 72. 

Selling, marketing and


administrative expenses 4 19432. 8 3 711 32.


Research expense 487 11. 6 182 10. 

Purchased in- process 

research and


development 353 

Interest ncome (109) (35) 

Interest expense, net of


portion capitalized


Other (income) expense, net (88) (23) 

Earnings before provision 

for taxes on income 402 26. 435 29. 

Provision for taxes on


income (Note 3) 726 977 

NET EARNINGS 676 21. 0 458 21. 

NET EARNINGS PER SHARE


(Note 7)

Basic 

Diluted 

CASH DIVIDENDS PER SHARE $ 285

AVG. SHARES OUTSTANDING


Basic 973. 968. 

Diluted 024. 005. 

See Notes to Consolidated Financial Statements 

JOHNSON & JOHNSON AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF EARNINGS 

(Unaudited; dollars & shares in millions 

except per share figures) 
Fiscal Six Months Endcd July 3, Percent June 27 , Percent 2005 to Sales 2004 to Sales 

Sales customers


(Note $25, 591 100. 23, 043 100.


Cost products sold 990 27. 529 28. 

Gross prof i t 18 I 604 72. 16, 514 71. 7 

Selling, marketing and 

administrative expenses 8 237 32. 35131.9 

Research expense 834 11.1 278 

Purchased in- process research and 

development 353 1. 4 

Interest income (193) (0. (74) 

Interest expense I net 

portion capitalized 

Other (incomc)cxpense , net (121) (. 5) (77) (. 

Earnings before provision 

for taxes income 464 29. 939 30. 

Provision for taxes 

income (Note 861 988 

NET EARNINGS $5, 603 21. 9 951 21. 5 

NET EARNINGS PER SHARE 

(Note 

Basic 1. 88 1. 67 

Diluted 1. 86 1. 65 

CASH DIVIDENDS PER 

SHARE 615 525 

AVG. SHARES OUTSTANDING 

Basic 2 , 973. 968. 

Diluted 3 , 021. B 004. 

See Notes to Consolidated Financial Statements 

JOHNSON & JOHNSON AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Unaudited; Dollars in Millions) 

Fiscal Six Months Ended


July 3, June 27, 

2005 2004 

CASH FLOWS FROM OPERATIONS 

Net earnings $ 5 603 951 

Adjustment to reconcile net 

earnings to cash flows;


Depreciation and amortization of

property and intangibles 063 027 

Purchased in- process research and 

development 353 

Deferred tax provision (117) (429) 

Accounts receivable allowances (17) 

Changes in assets and liabilities, net 

of effects from acquisition of


businesses; 

Increase in accounts receivable (876) (624) 

(Increase) decrease in inventories (380) 

Decrease in accounts 
payable and accrued liabilities 651) (1, 146 ) 

Decrease in other current 

and non- current assets 578 248 

Increase in other current 

and non- current liabilities 131 729 

NET CASH FLOWS FROM OPERATING


ACTIVITIES 

CASH FLOWS FROM INVESTING ACTIVITIES


Additions to property, plant


and equipment


Proceeds from the disposal of assets


Acquisitions, net of cash


acquired 

Purchases of investments 

Sales of investments 

Other 

NET CASH PROVIDED! (USED) BY INVESTING 

ACTIVITIES 

CASH FLOWS FROM FINANCING ACTIVITIES


Dividends to shareholders


Repurchase of common stock


Proceeds from short - term debt 

Retirement of short- term debt 

Proceeds from long- term debt 

Retirement of long-term debt 

Proceeds from the exercise of 

stock options


NET CASH USED BY FINANCING


ACTIVITIES 

Effect of exchange rate changes


on cash and cash equivalents 

Increase in cash and


cash equivalents

Cash and cash equivalents, 

beginning of period


CASH AND CASH EQUIVALENTS


END OF PERIOD


ACQUISITIONS 

Fair value of assets acquired


687 781 

(874)	 (714 ) 

233 

(693)	 (300 ) 

999) (5, 654) 

611 684 

(282) (113 ) 

840 864 ) 

(1, 829) 559) 

(988) ( 760) 

351 332 

(314) (911 ) 

(20)	 (1) 

417 311 

379) (2, 572) 

(195)	 (41) 

953 304 

203 377 

$12, 156 681 

854 339 

Fair value of liabilities assumed ( 161) (39)


Net cash paid for acquisitions 693 300


See Notes to Consolidated Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

NOTE 1 - The accompanying unaudited interim 

financial statements and related notes should be read in conjunction with the Consolidated Financial Statements of Johnson & Johnson and 

Subsidiaries (the " Company ) and related notes as contained in the Company s Annual Report on Fonn lO-K for the fiscal year ended January 

2005. The unaudited interim financial statements include all adjustments (consisting only ofnonnal recurring adjustments) and accruals 

necessary in the judgment of management for a fair statement of the results for the periods presented. 

NOTE 2 - FINANCIAL INSTRUMENTS 

The Company follows the provisions of Statement of Financial Accounting Standards (SF AS) 133 , SF AS 138 and SF AS 149 requiring that all 

derivative instruments be recorded on the balance sheet at fair value. 

As of July 3 , 2005 , the balance of deferred net losses on derivatives included in accumulated other comprehensive income was $65 million 

after-tax. The Company expects that substantially all of this amount will be reclassified into earnings over the next 12 months as a result of 

transactions that arc expected to occur over that period. The amount ultimately realized in earnings will differ as foreign exchange rates change. 

Realized gains and losses are ultimately determined by actual exchange rates at maturity of the derivative. Transactions with third parties will 

cause the amount in accumulated other comprehensive income to affect net earnings. The maximum length of time over which the Company is 
hedging is 18 months. The Company also uses currency swaps to manage currency risk primarily related to borrowings , which may exceed 18 

months. 

For the first fiseal six months cnded July 3 , 2005 , the net impact of the hedges' ineffectiveness to the Company's financial statements was 

insignificant. For the first fiscal six months ended July 3 2005 , the Company has recorded a net loss ofS3 million after tax in other (income) 

expense , representing the impact of discontinuance of cash flow hedges because it is probable that the originally forecasted transactions will 

not occur by the end of the originally specified time period. 

Refer to Note 8 for disclosures of movements in Accumulated Other Comprehensive Income. 

NOTE 3 - INCOME TAXES 

The worldwide effective income tax rates for the first fiscal six months of 2005 and 2004 were 24. 9% and 28. , a decrease of 3. 7%. Of this 

decrease , 1.9% was attributed to increases in taxable income in lower tax jurisdictions relative to taxable income in higher tax jurisdictions. The 

remaining net decrease of 1.8% was attributed to a one-time tax benefit partially offset by IPR&D, as described below. 

Acquisition related In-process Research & Development (IPR&D) charges of$353 million that are non- deductible for tax purposes were 

recorded in the fiscal second quarter of200S. 

The fiscal second quarter of 2005 included a benefit of $225 million, due to the reversal of a tax liability previously recorded during the fiscal 

fourth quarter of2004, associated with a technical correction made to the American Jobs Creation Act of2004, in May 2005. 

NOTE 4 - INVENTORIES 

(Dollars in Millions) 

July 3, 2005 January 2 , 2005


Raw materials and supplies $ 1 193 964 

Goods in process 134 113 

Finished goods 636 667 

$ 3, 963 744 

NOTE 5 - INTANGIBLE ASSETS 

Intangible assets that have finite useful lives are amortized over their estimated useful lives. Goodwill and indefinite lived intangible assets are 

assessed annually for impainnent. The latest impainnent assessment of goodwill and indefinite lived intangible assets was completed in the 

fiscal fourth quarter of2004 and no impainnent was determined. Future impainnent tests will be perfonned annually in the fiscal fourth 

quarter, or sooner if warranted by 

economic condi tions. 

(Dollars in Millions)


July 3, 2005 January 2, 2005


Goodwill $ 6, 716 597 

Less accumulated amortization 714 734 

Goodwi 11 - net 002 863 

Trademarks (non- amortizable) 205 232


Less accumulated amortization 139 142


Trademarks (nonamortizable) - net 066 090 

Patents and trademarks 175 971 

Less accumulated amortization 272 125 

Patents and trademarks - net 903 849 

Other amortizable intangibles 585 302 

Less accumulated amortization 361 262 

Other intangibles - net 224 040 

Total intangible assets 15, 681 15, 105 

Less accumulated amortization 486 263 

Total intangibles - net $12, 195 11, 842 

Goodwill as of July 3 , 2005 as allocated by segment of business is as follows: 
(Dollars in Millions) 

Med. Dev 

Consumer Pha rm Diag Total 

Goodwi 11, net 

January 2005 160 832 871 863 

Acquisitions	 184 255 

Translation	 (62) (25) (29) (116) 

Goodwill, not 

July 2005 $1, 098 878 026 002 

The weighted average amortization periods for patents and trademarks and other intangible assets are 15 years and 17 years, respectively. The 

amortization expense of amortizable intangible assets for the fiscal six months ended July 3 , 2005 was $262 million and the estimated 

amortization expense for the five succeeding years approximates $550 million , annually. 

NOTE 6 - SEGMENTS OF BUSINESS AND GEOGRAPHIC AREAS 

(Dollars in Millions) 

SALES BY SEGMENT OF BUSINESS (1) 

Fiscal Second Quarter Percent 

2005 2004 Change 

Consumer 

092 987 10.
 International 186 013 17.


278 , 000 13.


?harmaceutical 

595 613 (1. 3) % International 033 784 14. 

628 127 

Med Devices and Diagnostics
 U. s. 
378 038 16. International	 478 019 22. 

856 057 19. 

7, 065 668 International 697 816 18. 

Worldwide $ 12, 762 484 11. 

Fiscal Six Months 

Percent 

2005 2004 Change 

Consumer 

206 067 International 352 980 18. 

558 047 12. 

Pharmaceutical 

S. 	 378 286 1. 3% International 005 517 13. 

11, 383 803 

Med Devices and Diagnostics


739 233 12.
 International 914 960 24.


653 193 17.


$ 14, 323 13, 586 International 11, 271 457 19. 

Worldwide $ 25 594 23, 043 11. 

(I) Export and intersegment sales arc not significant. 

OPERATING PROFIT BY SEGMENT OF BUSINESS 
Fiscal Second Quarter Percent 

2005 2004 Change 

Consumer 41B 382 

Pharmaceutical (1) 585 108 (24. 

Med. Dev. Diag. (2) 409 055 33. 

Segments total 112 545 (J . 8) 

Expenses not allocated 

segments (10) (110) 

Worldwide total 402 435 (1.0)% 

Fiscal six Months 

Percent 

2005 2004 Change 

Consumer B75 B29 

Pharmaceutical (1) 722 194 (11. 

Med. Dev. Diag. (2) 902 118 37. 

Segments total 499 141 

Expenses not allocated 

segments (J 5) (202) 

Worldwide total 461 939 

(1) Includes $302 million ofIPR&D charges related to acquisitions 

completed in the fiscal second quarter of 2005. 

(2) Includes $51 million of IPR&D charges related to acquisitions completed in the fiscal second qoarter of 2005. 

SALES BY GEOGRAPHIC AREA 

Fiscal Second Quarter Percent 

2005 2004 change 

065 668 

Europe 186 779 14. 

Western Hemisphere,


excluding U. 751 622 20. 

Asia- Pacific, Africa 760 415 2il 4 

Total $ 12 762 11, 484 11. 

Fiscal six Months 

Percent 

2005 2004 Change 

u. s. 14, 323 13, 586 

Europe 362 486 16. 

Western Hemi sphere, 

excluding 4.77 219 21. 2 

Asia- Pacific, Africa 432 752 21. 

Total 25, 594 23, 043 11. 

NOTE 7 - EARNINGS PER SHARE 

The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal second quarters ended July 3 

and June 27 , 2004.


(Shares in Millions)


Fiscal Second Quarter Ended


July 3, June 27, 

2005 2004 

Basic net earnings per share


Average shares outstanding 

2005 
- basic 973. 968. 

Potential shares exercisable under 

stock option plans 260. 152. 

Less: shares which could be repurchased under treasury stock method (216. (130. Convertible debt shares 7. 14. 

Average shares outstanding - diluted 024. 005. 

Diluted earnings per share


The diluted earnings per share calculation included the dilutive effect of convcrtible debt that was offset by the related reduction in interest 

expense of$3 million each for the fiscal second quarters ended July 3 , 2005 and June 27 , 2004. 

The diluted earnings per share calculation excluded 0.4 million and 91 million shares related to options for the fiscal second quarters ended 

July 3 , 2005 and June 27 , 2004 , respectively, as the exercise price per share of these options was greater than the average market value. If these 

shares were includcd it would result in an anti-dilutive effect on diluted earnings pcr share. 

The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal six months ended July 3 , 2005 

and 

June 27 , 2004.


(Shares in Millions)


Fiscal Six Months Ended


July 3, June 27


2005 2004


Basic net earnings per share 1. 88 1. 67 

Average shares outstanding - basic 973. 968. 

Potential shares exercisable under 

stock option plans 214. 3 152. 7 Less: shares which could be repurchased 

under treasury stock method (172. (131.2) 

Convertible debt shares 14. 

Average shares outstanding diluted 021. 8 004. 

Diluted earnings per share 1. 86 1. 65 

The diluted earnings per share calculation included the dilutive effect of convertible debt that was offset by the related reduction in interest 

expense of $7 million for the first fiscal six months ended July 3 , 2005 and June 27, 2004, respectively. 

The diluted earnings per share calculation excluded 46 million and 92 million shares related to options for the first fiscal six months cnded July 

2005 and June 27 , 2004 , respectively, as the exercise price per share of these options was greater than the average market value. If these 

shares were included it would result in an anti-dilutive effect on diluted earnings per share. 

NOTE 8 - ACCUMULATED OTHER COMPREHENSIVE INCOME 

The total comprehensive income for the first fiscal six months ended July 3 , 2005 was $5. 3 billion , compared with $5.0 bilion for the same 

period a year ago. The total comprehensive income for the fiscal second quarter ended July 3 , 2005 was $2. 5 billion, which is unchanged from 

the same period a year ago. Total comprehensive income included net earnings, net unrealized currency gains and losses on translation, net 

unrealized gains and losses on available for sale securities and net gains and losses on derivative instruments qualifying and designated as cash 

flow hedges. The following table sets forth the components of accumulated other comprehensive income. 

Total 

Unrld Gains/ Accum 

For. Gains/ Pens (Losses) Other 

Cur. (Losses) Liab on Deriv Camp

Trans. on See Adj. & Hedg Ine/ 

(Loss) 

January 2 , 2005 $ (105) 86 (346) (150) (515) 2005 six months changes: 

Net change associated 

wi th current period 

hedging 
, 

 ,  

transactions - - - 402 Net amount reclassed to 

net earnings (317) * 

Net six months 

changes (343) (32) (290) 

July 3, 2005 (448) (346) (65) (805) 

Amounts in accumulated other comprehensive income are presented net of the related tax impact. Foreign currency transJation adjustments arc 

oot currently adjusted for income taxes, as they relate to pennaneot investments in international subsidiaries. 

Primarily offset in net earnings by changes in value of the underlying transactions. 

NOTE 9 - MERGERS, ACQUISITIONS AND DIVESTITURES 

On December 15 , 2004 , Johnson & Johnson announced the signing ofa definitive agreement to acquire Guidant Corporation (Guidant), a 

world leader in the treatment of cardiac and vascular disease, for $25.4 billion in fully diluted equity value. The Boards of Directors of Johnson 

& Johnson and Guidant, as well as the shareholders of Guidant have given their respective approvals for the transaction. The transaction is 

subject to clearance under the Hart Scott-Rodino Antitrust Improvements Act, the European Union merger control regulation, and other 

customary closing conditions. The Company is currently in the process of responding to an information and materials request from the U. 

Federal Trade Commission and has entered into a second phase review with the European Union. In addition, the Company is engaged in 

discussions with Guidant to hclp the Company understand the issues surrounding the recent product notifications and product recalls. The 

Company continues to work toward a fiscal third quarter close of the acquisition, which is subject to the outcome of the previously mentioned 

activities. 

On April 4, 2005 the Company completed its acquisition of TransForm Phannaceuticals, Inc. , a company specializing in the discovery of 

superior formulations and novel crystallne fonns of drug molecules, for $230 million. During the fiscal second quarter of2005 a one-time 

before and after- tax charge of $50 million reflecting thc expensing ofIPR&D charges was incured. 

On June 3 , 2005 the Company completed its acquisition of CLOSURE Medical, a company with expertise and intellectual propert in the 

biosurgicals market, for a net purchase price of $364 million. During the fiscal second quarter of 2005 a one time before and after-tax charge of 

approximately $51 million reflecting the expensing of IPR&D charges was incurred. 

On June 30 , 2005 the Company completed its acquisition of Peninsula Phannaceuticals, Inc. , a privately held biophannaceutical company 

focused on developing and commercializing antibiotics to treat life-threatening infections , for a purchase price of approximately $245 million. 

During the fiscal second quarter of 2005 , a one timc before and after-tax charge of approximately $252 million reflecting the expensing of 

IPR&D charges was incurred. 

The Company's 2004 acquisitions included: Merck' s 50% interest in the Johnson & Johnson-Merck Consumer Pharmaceuticals Co. European 

non-prescription pharmaceutical joint venture including all of the infrastructure and brand assets managed by the European joint venture; Egea 

Biosciences, Inc. , which has developed a proprietary technology platform called Gene Writer, that allows for the rapid and highly accurate 

synthesis of DNA sequences, gene assembly, and construction oflargc synthetic gene libraries, through the exercise of the option to acquire the 

remaining outstanding stock not owned by Johnson & Johnson; Artemis Medical, Inc. a privately held company with ultrasound and x-ray 

visible biopsy site breast markers as well as hybrid markers; u.s. commercial rights to certain patents and know-how in the field of sedation 

and analgesia from Scott Lab, Inc. ; Biapharm SAS , a privately held French producer and marketer of skin care products centered around the 

leading brand BIAFINE(r); the assets of Micomed, a privately owned manufacturer of spinal implants primarily focused on supplying the 

Gennan market; and the acquisition of the AMBI skin care brand for women of color. 

NOTE 10 - PRO FORMA STOCK BASED COMPENSATION 

At July 3 , 2005 , the Company had 18 stock-based employee compensation plans. The Company accounts for those plans under the recognition 

and measurement principles of Accounting Principle Board Opinion No. 25 "Accounting for Stock Issued to Employees" and its related 

Interpretations. Compensation costs were not recorded in net income for stock options, as all options granted under those plans had an exercise 

price equal to the market value of the underlying common stock on the date of grant. 

As required by SF AS No. 148 Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment ofFASB Statement 

No. 123 " the following table shows the estimated effect on net income and earnings per share if the Company had applied the fair value 

recognition provision of SF AS No. 123 Accounting for Stock-Based Compensation " to stock- based employee compensation. 

(Dollars in Millions 
Except Per Share Data)


Net income,


as reported


Less: 

Compensation 

expense (1) 

Net Income pro forma


Earnings per share: 

Basic - as reported


- pro forma


Diluted - as reported


- pro forma


Fiscal Second Quarter Ended
 July 3, 2005 June 27 , 2004 

676 458 

588 370 

. BO 

(l) Detennined under fair value based method for all awards , net of tax. 

(Dollars in Millions


Except Per Share Data)


Net income,


as reported


Less: 

Compensation 

expense (1) 

Net Income , pro forma


Earnings per share: 

Basic - as reported


- pro forma


Diluted - as reported


- pro forma


Fiscal six Months ended
 July 3, 2005 June 27 , 2004


603 951 

176 166 

427 785 

$1. $1. 

1. 83 1. 61 

$1. $1. 65 

1. 80 1. 59 

(1) Determined under fair value based method for all awards, net of tax. 

NOTE II - PENSIONS AND OTHER POSTRETIREMENT BENEFITS 

Components of Net Periodic Benefit Cost 

Net periodic benefit cost for the Company s defined benefit retirement plans and other benefit plans for the fiscal second quarters of 2005 and 

2004 include the following components: 

(Dollars in Millions) 

Retirement Plans Other Benefit Plans 

Service cost 

Interest cost


Expected return on


plan assets 

Amortization of prior


service cost


Amortization of net 

transition asset


Recognized actuarial


losses 

Net periodic benefit


cost 

Fiscal Second Quarter ended 

July 3, June 27, July 3, June 

2005 2004 2005 2004 

106 104 

12B 106 

(159) (127) (I) 

(2) 

$ 132 145 

Net periodic benefit cost for the Company s defined benefit retirement plans and other benefit plans for the first fiscal six months of 2005 and 2004 include the following components: 

(Dollars in Millions)


Retirement Plans Other Benefit Plans


Fiscal Six Months ended 

July 3 , June 27 July 3, June 27, 2005 2004 2005 2004

Service cost $ 216 212 
Interest cost 246 225 

Expected return 

plan assets (291) (258) (2) (1) 

Amortization prior service cost (3) (I) 

Amortization net 

transition asset (1) (1) 

Recognized actuarial 

losses 111 103 

Net periodic benefit 

cost 287 288 

Company Contributions 

As of July 3 , 2005 , the Company contributed $11 million and $23 million to its U. S. and international retirement plans , respectively, in 2005. 

The Company does not anticipate a minimum statutory funding requirement for its U. S. retirement plans in 2005. However the Company may 

or may not choose to further fund the plans in 2005. International plans will be funded in accordance with local regulations. 

NOTE 12 - LEGAL PROCEEDINGS 

Product Liability 

The Company is involved in numerous product liability cases in the United States, many of 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 and instructions 

for use that accompany such products, it is not feasible to predict the ultimate outcome of litigation. However, the Company believes that if any 

liabilty results from such cases, it will be substantially covered by existing amounts accrued in the Company's balance sheet under its sclfinsurance program and by third-part product liability insurance. 

One group of cases against the Company concerns thc Janssen Pharmaceutica Inc. ("Janssen ) product PROPULSID (cisapride), which was 

withdrawn from general sale and restricted to limitcd use in 2000. In the wake of publicity about those events, numerous 

lawsuits were fied against Janssen and the Company regarding PROPULSID in state and federal courts across the country. 

These actions seek substantial compensatory and punitive damages and accuse Janssen and the Company of inadequately testing for and 

warning about the drug s side effects , of promoting it for off-label use and over promotion. In addition, Janssen and the Company have entered 

into tollng agreements with various plaintiffs' counsel halting the running of the statutes oflimitations with respect to the potential claims ofa 

significant number of individuals while those attorneys evaluate whether or not to sue Janssen and the Company on their behalf. 

On February 5 , 2004 , Janssen announced that it had reached an agreement in principle with the Plaintiff, Steering Committee (PSC) of the 

PROPULSID Federal Multi-District Litigation (MDL), to resolve federal lawsuits related to PROPULSID. The agreement was to become 

effective once 85% of the death claimants, and 75% of the remainder, agreed to the terms of the settlement. In addition , 12 000 individuals who 

had not fied lawsuits , but whose claims were the subject of tolling agreements suspending the running of the statutes of limitations against 

those claims, also had to agree to participate in the settlement before it became effective. 

On March 24, 2005, it was confirmed that the PSC of the MDL had enrolled enough plaintiffs and claimants in the settlement program to make 

the agreement effective. Of the 282 death plaintiffs subject to the program , 247 (88%) arc confirmed enrolled. Of the 3 543 other plaintiffs 

subject to the program, 3 082 (87%) are confirmed enrolled. In addition , 19 788 " tolled" claimants arc confirmed as enrolled. Those 

participating in the settlement will submit medical records to an independent panel of physicians who will detcrmine whether the claimed 

injuries were caused by PROPULSID and otherwise meet the standards for compensation. If those standards are met, a court- appointed special 

master wil determine compensatory damages. Janssen has paid into a compensation escrow account $72. 3 million and could pay up to an 

additional $17. 7 million depending on the number of plaintiffs that enroll in the program. Enrollment will remain open until October 1 , 2005. 

Janssen has established an administrative fund of$15 million, and paid legal fees to the PSC of$22.5 million, which amount was approved by 

the court. 

Not participating in the settlement program are 2 547 plaintiffs and 7 843 tolled claimants. Of those, 453 plaintiffs arc potentially subject to the 

MDL settlement but have not to date enrolled in it; 1 532 plaintiffs fied cases in federal court subsequent to February I , 2004, and thus are not 

subject to the MOL settlement; and 562 have state court actions and thus are not subject to the settlement. Of those not participating in or 

subject to the MDL settlement, 159 plaintiffs arc alleged to have died from use of the drug and 2,388 assert other personal injury claims. The 

nature of the claims of the tolled claimants arc unknown. Gfthc remaining federal and state plaintiffs, 2 254 cases (89%) are venued in 

Mississippi. 

With respect to all the various PROPULSID actions against them, Janssen and the Company dispute the claims in those lawsuits and are 

vigorously defending against them except where, in their judgment, settlement is appropriate. Janssen and the Company believe they have 
adequate self-insurance accruals and third-part product liability insurance with respect to these cases. In communications to the Company, the 

excess insurance carriers have raised certain defenses to their liability under the policies and to date have declined to reimburse Janssen and the 

Company for PROPULSID-related costs despite demand for payment. In May 2005, hearings were held in London in the arbitration 

proceeding commenced by Janssen and the Company against Allianz Underwriters Insurance Company, which issued the first layer of 

applicable excess insurance coverage, to obtain reimbursement of PROPULSID-related costs. Final arguments in that matter were held on July 

2005 and a decision is expected before the end of2005. In May 2005 , the Company commenced arbitration against Lexington Insurance 

Company, which issued the second layer of excess insurance coverage. In the opinion of the Company, the excess carriers remain legally 

obligated to provide coverage for the PROPULSID-reIatcd losses at issue. 

The Company s Ethicon, Inc. ("Ethicon ) subsidiary has over the last several years had a number of claims and lawsuits ficd against it relating 

to VICRYL sutures. The actions allege that the sterility ofVICRYL sutures was compromised by inadequacies in Ethicon s systems and 

controls, causing patients who were exposed to these sutures to incur infections that would not otherwise have occurred. Ethicon on several 

occasions recalled batches of VICR YL sutures in light of questions raised about sterility but does not believe any contamination of suture 

products in fact occurred. In November 2003 , a state court judge in West Virginia certified for class treatment all West Virginia residents who 

had VICRYL sutures implanted during Class I or II surgeries from May I , 1994 to December 31 1997. A motion to decertifY the class was 

granted on May 17 2005. Ethicon has been and intends to continue vigorously defending against the claims. 

Affirmative Stent Patent Litigation 

In patent infringement actions tried in Delaware Federal District Court in late 2000, Cordis Corporation (Cordis), a subsidiary of Johnson & 

Johnson, obtained verdicts of infringement and patent validity, and damage awards against Boston Scientific Corporation (Boston Scientific) 

and Medtronie AVE, Inc. (Medtronic) based on a number of Cordis vascular stent patents. On December IS , 2000 , the jury in the damage 

action against Boston Scientific returned a verdict of $324 million and on December 21 , 2000, the jury in the Medtronic action returned a 

verdict of $271 million. These sums represent lost profit and reasonable royalty damages to compensate Cordis for infringement but do not 

include pre or post judgment interest. In February 2001 a hearing was held on the claims of Boston Scientific and Medtronic that the patents at 

issue were unenforceable owing to alleged inequitable conduct before the patent office. 

In March and May 2002, the district judge issued post trial rulings that confirmed the validity and enforceability of the main Cordis stent patent 

claims but found certain other Cordis patents unenforceable. Further, the district judge granted Boston Scientific a new trial on liability and 

damages and vacated the verdict against Medtronic on legal grounds. On August 12 2003 , the Court of Appeals for the Federal Circuit found 

the trial judge erred in vacating the verdict against Medtronic and remanded the case to the trial judge for further proceedings. In March 2005 

the remaining issues were tried in the remanded case against Medtronic and the retrial proceeded against Boston Scientific. Juries returned 

verdicts of infringement and patent validity in favor of Cordis in both retrials. Cordis has requested the trial court to reinstate with intcrest the 

verdicts obtained against those entities in 2000. Defendants in both cases have filed post-trial motions seeking to vacate the jury verdicts or 

alternatively, grant them a new trial on damages. Cordis also has pending in Delaware Federal District Court a second action against Medtronic 

A VE accusing Medtronic of infringement by sale of stent products introduced by Medtronic subsequent to its GFX and MicroStent products 

the subject of the earlier action referenced above. That second action was stayed in April 2005 pending the outcome of an arbitration 

concerning Medtronic s claim that the products at issue in that case arc licensed pursuant to a 1997 license. 

In January 2003 , Cordis fied a patent infringement action against Boston Scientific in Delaware Federal District Court accusing its Express2 

TAXUS and Liberte stents of infTinging the Palmaz patent that expires in November 2005. The Liberte stent was also accused of infringing 

Cordis' Gray patent that expires in 2016. In June 2005 , a jury found that the Express2, Taxus and Liberte stents infringed the Palmaz patent and 

that the Liberte stent also infringed the Gray patent. Boston Scientific will ask the trial judge to vacate the verdicts and, if unsuccessful, there 

will be a trial on damages and willfulness in the future. 

Patent Litigation Against Various Johnson & Johnson Subsidiaries 

The products of various Johnson & Johnson subsidiaries are the subject of various patent lawsuits, the outcomes of which could potentially 

adversely affect the ability of those subsidiaries to sell those products, or require the payment of past damages and future royalties. With 

respect to all of these matters, the Johnson & Johnson subsidiary involved is vigorously defending against the claims of infringement and 

disputing where appropriate the validity and enforceability of the patent claims asserted against it. 

On July I , 2005 , a jury in Federal District Court in Delaware found that the Cordis Cypher stent infringed Boston Scientific s Ding ' 536 patent 

and that the Cordis Cypher and Bx Velocity stents also infringed Boston Scientific Corporation s Jang ' 021 patent. The jury also found both 

those patents valid. Cordis will ask the judge to overturn the jury verdicts or grant a new trial. If the judge does not overtrn the jury verdicts 

there will be a damage 

and willfulness trial in 2006 and Boston Scientific will seek an injunction against Cypher. If upheld by the trial court, Cordis will appeal the 

jury verdicts to the Court of Appeals for the Federal Circuit. In November 2005 , Boston Scientific s case asserting infringement by the Cypher 

stent of another Boston Scientific patent is scheduled for trial in Delaware Federal District Court. In that case as well, Boston Scientific seeks 

an injunction and substantial damages. 
On January 26 2005 , the Federal District Court for the Southern District of Florida granted Cordis summary judgment dismissing a breach of 

contract and patent infringement suit fied against Cordis by Arlaine and Gina Rockey seeking royalties on the sales of all Cordis balloon 

expandable stents. Plaintiffs have fied an appeal with the Conrt of Appeals for the Federal Cirenit. 

On June 8, 2005 , in an action brought by Boston Scientific against Cordis in the Netherlands under the Kastenhofer patent, Cordis was enjoined 

from manufacturing and selling in the Netherlands two- layer catheters , including those used with the Cypher StenL The injunction was stayed 

by another Dutch court. This stay decision is bcing appealed by Boston Scientific. In any event, Cordis does not anticipate a disruption in the 

supply of Cypher product outside the Netherlands, even if the injunction becomes effective. 

The following chart summarizes various patent lawsuits concerning products of Johnson & Johnson subsidiaries. 

Product J&J Patents Plaintiff/Patent Court Trial Date Company Holder Date Filcd 

Drug Cordis Ding Boston Scientific Germany TED 02/04

Eluting Corp. Stents 

Drug Cordis Grain- Boston Scientific D. Del. 10/05 12/03

Eluting ger Corp. Stents 

Stents Cordis Boneau Medtronic Inc. Arbitration TBD 4/02 

Two-layer Cordis Kasten- Boston Scientific N. Ca!. TBD 2/02 Catheters horer Corp. Netherlands 04/05 05/04 Forman Belgium la/OS 12/03 

D. Cal TBD 02/02 

Remicade Centocor Cerami Rockefeller E. Tex. 2/06 04/04 University and Chiron Corporation 

Stents Cordis Isracl Medinol Multiple TBD 05103 

Contact Vision Nicolson CIBA Vision M.D. Fla. TBD 09/03 Lenses Care 

Trocars Ethieon Hart Applied Medical C.D. Ca!. la/os 9103 Endo Resonrees 

Litigation Against Filers of Abbreviated New Drug Applications CANDAs) 

The following chart indicates lawsuits pending against generic firms that fied Abbreviated New Drug Applications seeking to market generic 

forms of products sold by various subsidiaries of the Company prior to expiration of the applicable patents covering those products. These 

ANDAs tyically include allegations of non-infringement, invalidity and unenforeeability of these patents. In the event the subsidiary of the 

Company involved is not successful in these actions, or the 3D-month stay expires before a ruling from the district court is obtained, the firms 

involved will have the ability to introduce generic versions of the product at issue resulting in very substantial market share and revenue losses 

for the product of the Company s snbsidiary. 

Brand Name 

Product 

Patent/NDA 

Holder 

Generic 

Challenger 

Court Trial 

Date 

Date 

Filed 

30­

Month 

Stay Expires 

Aciphex delay release tablet Eisai 

(for

Janssen) 

Teva 

Dr. Reddy ' s 

Mylan 

N. Y. 

N. Y. 

N. Y. 

TBD 

TBD 

TED 

11/03 

11/03 

01/04 

02/07 

02/07 

02/07 

Ditropan XL 

10, 

controlled 

release tablet 

QrthoMcNeil 

ALZA 

Mylan 

Impax Cal. 

2/05 

12/05 

05/03 

09/03 

09/05 

01/06 

Levaquin

Tablets 

Daiichi Mylan 05/04 02/02 07/04 

250, 500, 750 

tablets 

J JPRD 

OrthoMcNeil Teva TBO 06/02 11/04 

Levaquin Daiichi Sicor (Teva) TED 12/03 05/06 
Inj ectable J JPRD


Single use Grtho ­


vials and McNeil


mg/ml premix


Levaquin Daiichi, American T3D 12/03 05/06 

Inj ectable JJPRD Pharmaceutical 

Single use Ortho- Partners 

vials McNeil 

Quixin Daiichi, Hi- Tech TBD 12/03 05/06 

Ophthalmic Pharmacal 

Solution 

(Levofloxacin) Ortho ­

Ophthalmic McNeil 

solution 

Ortho Tri- Ortho- Barr TBD 10/03 02/06 

cyclen McNeil 

mg/O. 025


mg.


215 mg/O. 025


and 

mg/O. 025


PEPCID Complete McNeil-PPC Perrigo S. Y. TBD 02/05 06/07 

Razadyne Jans sen Teva Del TBD 07/05 01/08 

Mylan Del TBD 07/05 01/08 

Dr. Reddy Del TBD 07/05 01/08 

Purepac Del TBD 07/05 01/08 

Barr Del TBD 07/05 01/08 

Par Del TBD 07/05 01/08 

AlphaPharm Del TBD 07/05 01/08 

Risperdal Janssen Mylan TBD 12/03 05/06 

Tablets 

25, Dr. Reddy TBD 12/03 06/06 

tablets 

Risperdal Tab Janssen Dr. Reddy TBD 02/05 07/07 

Sporanox Janssen Eon Labs N. Y. 5/04 04/01 03/04 

100 capsule 

Topamax Ortho- Mylan TBD 04/04 09/06 

McNeil 

25, 100, 200 

tablet 

Ultracet 37. Qrtho- Kali (Par) TBD 11/02 04/05 

tram/ McNeil 

325 apap tablet Teva TBD 02/01 07/06 

Caraeo E.D, Mieh, 03/06 09/04 02107 

In the action against Mylan involving Ortho McNeil' s DITROPAN XL (oxybutynin chloridc), the court held a ten-day bench trial, which 

concluded on April 18 , 2005. A decision is expccted in thc third or fourth quartcr of2005. 

In the action against Mylan Pharmaccuticals USA (Mylan) involving Ortho-McNeil Pharmaceutical, Inc. (Ortha-McNeil) for LEV AQUIN 

(levofloxacin), the trial judge on December 23 , 2004 found the patent at issue valid, enforceable and infringed by Mylan s contemplated ANDA 

product and issued an injunction precluding sale of the product until patent expiration in late 2010. Mylan has appealed to the Court of Appeals 

for the Federal Circuit. 

In the action against Eon Labs (Eon) involving Janssen s SPORANOX (itraconazole), the district court ruled on July 28 , 2004 that Janssen 

patent was valid but not infringed by Eon s generic. The Court of Appeals for the Federal Circuit affirmed the district court' s decision on June 

2005. Eon Labs launched its generic product in February 2005. 

In the action against Mylan relating to Orto- McNeil's TOPAMAX (topiramate), Mylan on October 8 , 2004 filed a motion for summary 

judgment of non- infringement ofOrtho-McNeil' s patent. The court denied Mylan s motion on July 18 2005. 
In the action against Kali involving Ortho McNeil' s ULTRACET (tramadol hydrochloride/ acetaminophen), Kali movcd for summary 

judgment on the issues of infringement and invalidity. The briefing on that motion was completed in October 2004 and a decision is expected 

anytime. With respect to claims other than that at issue in the litigation against Kali, Ortho-McNcii has fied a reissue application in the U. 

Patent and Trademark Office seeking to narrow the scope of the claims. Kali received final approval of its ANDA at expiration of the 3D-month 

stay on April 21 , 2005 , and launched its generic product the same day. IfOrtho-McNeil ultimately prevails in its patent infringement action 

against Kali, Kali will be subject to an injunction and damages. 

In the action against Teva Phannaceuticals USA (Teva) involving Ortho-McNeil' s UL TRACET (tramadol hydrocholoride/ acetaminophen), 

Teva has moved for sunuary judgment on the issues of infringement and validity. The briefing on that motion was completed in March 2005. 

With respect to all of the above matters, the Johnson & Johnson subsidiary involved is vigorously defending the validity and enforceability and 

asserting the infringement of its own or its licensor s patents. 

A verage Wholesale Price (A WP) Litigation


Johnson & Johnson and its pharmaceutical subsidiaries, along with numerous other pharmaceutical companies, are defendants in a series of 

lawsuits in state and federal courts involving allegations that the pricing and marketing of certain pharmaceutical products amounted to 

tTaudulent and otherwise actionable conduct because, among other things, the companies allegedly reported an inflated Average Wholesale 

Price (A WP) for the drugs at issue. Most of these cases, both federal actions and state actions removed to federal court, have been consolidated 

for pre-trial purposes in a Multi- District Litigation (MDL) in federal district court in Boston, Massachusetts. The plaintiffs in these cases 

include classes of private persons or entities that paid for any portion of the purchase of the drugs at issue based on A WP, and state government 

entities that made Medicaid payments for the drgs at issue based on A WP. In the MDL proceeding in Boston, plaintiffs have moved for class 

certification of all or some portion of their claims. A decision is expected on that motion in the third or fourth quarter of2005. 

Ethicon Endo-Surgery, Inc. ("Ethicon Endo ), a Johnson & Johnson subsidiary which markets endoscopic surgical instruments, and the 

Company, are named defendants in a North Carolina state court class action lawsuit alleging A WP inflation and improper marketing activities 

against TAP Pharmaceuticals. Ethicon Endo is a defendant based on claims that several of its former sales representatives are alleged to have 

been involved in arbitrage of aT AP drug. The allegation is that these sales representatives persuaded certain physicians in states where the 

drug s priee was low to purchase from TAP excess quantities of the drug and then resell it in states where its price was higher. Ethicon Endo 

and the Company deny any liability for the claims made against them in this case and are vigorously defending against it. On April 24 

2003 , the trial judge certificd a national class of purchasers of the TAP product at issue. On July 6, 2004 , that class was decertified by the North 

Carolina Court of Appeals and thc matter remanded to the trial court for additional consideration. On January 5 , 2005 , the trial judge certified a 

North Carolina State class of purchasers of the TAP product in question. No trial datc has been set in this matter. 

Other 

The New York State Attorney General' s office (N. Y. AG) and the Federal Trade Commission issued subpoenas in January and Fcbruary 2003 

seeking documents relating to the marketing of sutures and endoscopic instruments by the Company's Ethicon and Ethicon Bndo subsidiaries. 

In February 2005 , the N. Y. AG advised that it had closed its investigation. The Connecticut State Attorney General' s office also issued a 

subpoena for the same documents. These subpoenas focus on the bundling of sutures and endoscopic instruments in contracts offered to Group 

Purchasing Organizations and individual hospitals in which discounts are predicated on the hospital achieving specified market share targets 

for both categories of products. The operating companies involved have responded to the subpoenas. 

On June 26, 2003 , the Company received a request for records and information from the U. S. House of Representatives' Committee on Energy 

and Commerce in connection with its investigation into pharmaceutical reimbursements and rebates under Medicaid. The Committee s requcst 

focuses on the drug REMICADE (infliximab), marketed by thc Company s Centocor, Inc. ("Centocor ) subsidiary. On July 2 2003 , Centocor 

received a request that it voluntarily provide documents and information to the criminal division of the U. S. Attorney s Office, District of New 

Jersey, in connection with its investigation into various Centocor marketing practices. Subsequent requests for documents have been received 

from the U. S. Attorney s Office. Both the Company and Centocor responded, or are in the process of responding, to these requests for 

documents and infonnation. 

On August 1 , 2003 , the Securities and Exchange Commission (SEC) advised the Company of its informal investigation under the Foreign 

Corrpt Practices Act of allegations of payments to Polish governental officials by U. S. pharmaceutical companies. On November 21 , 2003 

the SEC advised the Company that the investigation had become formaJ and issued a subpoena for the infonnation previously requested in an 

infonnal fashion , in addition to other background documents. The Company and its operating units in Poland have responded to these requests. 

On December 8, 2003 , Ortho-McNeil, a subsidiary of Johnson & Johnson, received a subpoena from the United States Attorney s Office in 

Boston, Massachusctts seeking documents relating to the marketing, including alleged off-label marketing, of the drg TOPAMAX 

(topiramate). Ortho-McNeil is cooperating in responding to the subpoena. In October 2004, the U. S. Attorney s Office in Boston asked 
attorneys for Ortho- McNeil to cooperate in 

facilitating the subpoenaed testimony of several present and former Ortho-McNeil employees before a grand jury in Boston. Cooperation in 

securing the testimony of additional witnesses before the grand jury has been requested and is being provided. 

On January 20, 2004 , the Company s subsidiary, Janssen, received a subpoena from the Offce of the Inspcctor General of the United States 

Office of Personnel Management seeking documents concerning sales and marketing of, any and all payments to physicians in connection with 

sales and marketing of, and clinical trials for, RISPERDAL (risperidone) from 1997 to 2002. Documcnts subscquent to 2002 have also been 

requested. Janssen is cooperating in responding to the subpoena. 

In April 2004, the Company s pharmaceutical companies were requested to submit information to the U. S. Senate Finance Committee on their 

use of the " nominal pricing exception" in calculating Best Price under the Medicaid Rebate Program. This request was sent to manufacturers 

for the top twenty drugs reimbursed under the Medicaid Program. The Company s pharmaceutical companies have responded to the request. In 

February 2005 a request for supplemental information was received from the Senate Finance Committee , which has been responded to by the 

Company s phannaceutical companies. 

On July 27 , 2004 , the Company received a letter request from the New York State Attorney General' s Office for documents pertaining to 

marketing, off- label sales and clinical trials for TOPAMAX (topiramate), RISPERDAL (risperidone), PROCRIT (Epoetin alfa), REMINYL 

(galantamine HUr), REMICADE (infliximab) and ACIPHEX (rabeprazole sodium). The Company is responding to the request. 

On August 9, 2004, Johnson & Johnson Health Care Systems, Inc. (HCS), a Johnson & Johnson subsidiary, received a subpoena from the 

Dallas, Texas U. S. Attorney s Office seeking documents relating to the relationships between the group purchasing organization Novation and 

HCS and other Johnson & Johnson subsidiaries. The Company s subsidiaries involved are responding to the subpoena. 

On September 30 2004 , Ortho Biotech Inc. ("Ortho Biotech"), a Johnson & Johnson subsidiary, received a subpoena from the U. S. Offce of 

Inspector General' s Denver, Colorado field office seeking documents directed to sales and marketing ofPROCRIT (Epoetin alfa) from 1997 to 

the present. Ortho Biotech is responding to the subpoena. 

In March 2005 , DePuy Orthopaedics , Inc. (" DePuy ), a Johnson & Johnson subsidiary, received a subpoena from the U.S. Attorney s Offce 

District of New Jersey, seeking records concerning contractual reJationships between DePuy and surgeons or surgeons in training involved in 

hip and knee replacement and reconstructive surgery. Other leading orthopaedic companies are known to have received the same subpoena. 

DePuy is responding to the subpoena. 

On June 9 , 2005 , The United States Senate Committee on Finance requested the Company to produce infonnation regarding its use of 

educational grants. 

A similar request was sent to other major phannaceutical companies. On July 5 , 2005 , the Committee specifically requested information about 

educational grants in connection with the drg PROPULSID. The Company is in the process of responding to the request. 

On July 20 , 2005 , Scios, Inc. ("Scios ), a Johnson & Johnson subsidiary, received a subpoena from the United States Attorney s Offce, District 

of Massachusetts, seeking documents related to the sales and marketing ofNATRECOR. Scios is responding to the subpoena. In earJy August 

2005, Scios was advised that the investigation will be handled by the United States Attorney s Office for the Northern District of California in 

San Francisco, rather than the United States Attorney s Office in Boston, Massachusetts. 

In September 2004, plaintiffs in an employment discrimination litigation initiated against the Company in 2001 in Federal District Court in 

New Jersey moved to certify a class of all African American and Hispanic salaried employees of the Company and its affiliates in the United 

States, who were employed at any time from November 1997 to the present. Plaintiffs seek monetary damages for the period 1997 through the 

present (including punitive damages) and equitable relief. The Company fied its response to plaintiffs' class certification motion in May 2005. 

A decision by the District Court is not expected until 2006. The Company disputes the allegations in the lawsuit and is vigorously defending 

against them. 

The Company, along with its wholly owned Ethicon and Ethicon-Endo subsidiaries, are defendants in three federal antitrust actions challenging 

suture and endo- mechanical contracts with Group Purchasing Organizations and hospitals in which discounts are predicated on a hospital 

achieving specified market share targets for both categories of products. In each case, plaintiffs seek substantial monetary damages and 

injunctive relief. In Applied Medical v. Ethicon Inc. et al (C.D. , filed September 5 , 2003), fact discovery is complete and the defendants 

have moved for summary judgment on all claims. In Conmed 

v. Johnson & Johnson ct al (S. , fied November 6, 2003), fact discovery is also complete and summary judgment motions are due 

September 30, 2005. In Genico v. Ethieon, Inc. et al (E. D. TX, filed October 15 2004) written discovery is underway. 

After a remand from the Federal Circuit Court of Appeals in January 2003 , a partial retrial was commenced in October and concluded in 

November 2003 in Federal District Court in Boston, Massachusetts in the action Amgen v. Transkaryotic Therapies, Inc. (TKT) and Aventis 
Pharmaceutical, Inc. (Aventis). The matter is a patent infringement action brought by Amgen against TKT, the developer ofa gene- activated 

EPa product, and Aventis, which held marketing rights to the TKT product, asserting that TKT's product infringes various Amgen , Inc. 

(Amgen) patent claims. TKT and Aventis dispute infringement and are seeking to invalidate the Amgen patents asserted against them. On 

October 15 2004, the district court issued rulings that upheld its initial findings in 2001 that Amgen s patent claims were valid and inftinged. 

Further proceedings and an appeal will follow. The Amgen patents at issue 

in the case are exclusively licensed to Ortho Biotech Inc. in the U. S. for non-dialysis indications. Ortho Biotech Inc. is not a party to the action. 

The Company is also involved in a number of other patent, trademark and other lawsuits incidental to its business. The ultimatc legal and 

financial liability of the Company in respect to all claims, lawsuits and proceedings referred to above cannot be estimated with any certainty. 

However, in the Company's opinion , based on its examination of these matters, its experience to date and discussions with counsel, the ultimate 

outcome oflegal proceedings, net of liabilities already accrued in the Company s balance sheet, is not expected to have a material adverse 

effect on the Company s financial position, although the resolution in any reporting period of one or more of these matters could have a 

significant impact on the Company s results of operations and cash flows for that period. 

Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF 

FINANCIAL CONDITION AND RESULTS OF OPERA TIONS 

Results of Operations 

Analysis of Consolidated Sales 

For the first fiscal six months of 2005 , worldwide sales were $25. 6 billion , an increase of 11.1 % over 2004 first fiscal six month sales of $23. 

billion. The impact of foreign currencies accounted for 2. 1 % of the total reported fiscal six month increase. 

Sales by U. S. companies were $14. 3 bilion in the first fiscal six months of2005, which represented an increase of5.4% over the same period 

last year. Sales by international companies were $11. 3 billion , which represented an increase of 19.2%, of which 5. 1 % was due to currency 

fluctuations. 

All international regions throughout the world posted double digit sales increases during the first fiscal six months of 2005 as sales increased 

16.0% in Europe , 21.2% in the Western Hemisphere (excluding the U. ) and 24. 7% in the Asia-Pacific , Africa region. These sales gains 

included the positive impact of currency fluctuations between the U. S. dollar and foreign currencies in Europe of 5. , in the Western 

Hemisphere (excluding the U. ) of 8. 1 % and in the Asia-Pacific , Africa region of3.4%. 

For the fiscal second quarter of200S , worldwide sales were $12. 8 billion , an increase of 11.1 % over 2004 fiscal second quarter sales of $11.5 

billion. The impact of foreign currencies accounted for 2.0% of the total reported fiscal second quarter 2005 increase. 

Sales by U. S. companies were $7. 1 billion in the fiscal second quarter of2005 , which represented an increase of6.0%. Sales by international 

companies were $5. 7 billion , which represented an increase of 18. , of which 4. 9% was due to positive currency fluctuations. 

All international regions throughout the world posted double digit sales increases during the fiscal second quarter of2005 as sales increased 

14. 6% in Europe, 20. 7% in the Western Hemisphere (excluding the U. ) and 24.4% in the Asia-Pacific, Africa region. These sales gains 

included the positive impact of currency fluctuations bctween the U. S. dollar and foreign currencies in Europe of 4. , in the Western 

Hemisphere (excluding the U. ) of 10. 0% and in the Asia-Pacific , Africa region 00. 1%. 

Analysis of Sales by Business Segments 

Consumer 

Consumer segment sales in the first fiscal six months of 2005 were 54.6 billion, an increase of 12. 6% over the same period a year ago with 

10.0% of operational growth and a positive currency impact of2. 6%. U. S. Consumer segment sales increased by 6. 7% while international sales 

gains of 18. 8% included a positive currency impact of 5.4%. 

Major Consumer Franchise Sales - First Fiscal Six 

Months 

Total Operations Currency 

2005 2004 %Change %Change %Change 

OTe Pharm 

Nutr. 313 096 19. 18. 1. 6% 

Skin Care 223 071 14. 11. 2 

Women 

Heal th 782 716 
Baby Kids 

Care 772 703 

Other 468 461 1. 5 1. 0 

Total 558 $4, 047 12. 10. 

Consumer segment sales in the fiscal second quarter of2005 were $2. 3 billion , an increase of 13. 9% over the same period a year ago with 

11. 1 % of operational growth and a positive currency impact of 2. 8%. U. S. Consumer segment sales increased by 10. 6% while international 

sales gains of 17. 1 % included a positive currency impact of 5. 5%. 

Major Consumer Franchise Sales - Fiscal Second Quarter 

Total Operations Currency 

2005 2004 %Change %Change %Change 

OTC Pha rm 

& Nutr. 628 532 18. 15. 

Skin Care 602 509 18. 15. 

Women I s 

Health 406 368 10. 

Baby Kids 

Care 393 360 

Other 249 231 1. 9 

Total 278 000 13. 11. 

Consumer segment sales growth in the fiscal second quarter was attributable to strong sales perfonnancc in the major franchises in this segment 

including OTC Pharmaceutical & Nutritional products, Skin Care , Women s Health and Baby & Kids Care. OTC 

Pharmaceutical & Nutritional operational sales growth of 15. 7% was primarily driven by continued growth in SPLENDA(r) No Caloric


Sweetener and pediatric analgesics. The Skin Care franchise operational sales growth of 15. 5% was attributed to NEUTROGENA(r),


A VEENO(r), Racer), CLEAN & CLEAR(r) and JOHNSON' S(r) adult brands. The key drivers of U. S. Skin Care growth were the continued


success with the NEUTROGENA(r) Advanced Solutions Microdermabrasion kit, along with new products launched in the first halfof200S.


The Women s Health franchise achieved operational growth of6. 7% resulting from strong contributions from the K-Y(r) and STA YFREE(r)


product lines. The Baby & Kids Care franchise operational sales growth of 5. 9% resulted from continued success with JOHNSON' S(r)


SOFTW ASH(r) AND SOFTLOTION(r) product lines. 

Pharmaceutical 

Pharmaceutical segment sales in the first fiscal six months of 2005 were $11.4 billion, an increase of 5.4% over the same period a year ago 

with 3. 8% of this change due to operational increases and the remaining 1.6% increase related to the positive impact of currency. The U. 

Phannaceutical sales increase was 1.3% and the growth in international Pharmaceutical sales was 13.9% which included 5. 1 % related to the 

positive impact of currency. 

Major Pharmaceutical Product Revenues - First Fiscal Six Months 

Total Operations Currency 

2005 2004 %Change %Change %Change 

RISPERDAL(r) 738 $1, 458 19. 16. 

PROCRIT (r) / 

EPREX (r) 682 852 (9. (10. 1. 6 

REMICADE (r) 219 003 21. 5 21. 5 

TOPAMAX (r) 837 663 26. 24. 1. 7 

DURAGESIC (r) / 

Fentanyl


Transdermal 832 011 (17. (20.


LEVAQUIN (r) / 

FLOXIN (r) 760 651 16. 16. 

Hormonal 

Contraceptives 598 671 (10. (11. 1. 0 

Aciphex (r) /

Pariet (r) 559 510 

Other 158 984 1. 9 

Total $11, 383 $10 803 1. 6% 

Pharaceutical segment sales in the fiscal second quarter of2005 were $5. 6 billion, an increase of3. 7% over the same period a year ago with 
1 % of this change due to operational increases and the remaining 1. 6% increase related to thc positive impact of currency. The U. 

Phannaceutical sales decrease was 1.3% and the growth in international Phannaccutical sales was 14. 0% which included 4. 8% related to the 

positive impact of currency. 

Major Pharmaceutical Product Revenues - Fiscal Second Quarter 

Total Operations Currency 

2005 2004 %Change %Change %Changc 

RISPERDAL (r) $894 $727 23. 20. 

PROCRIT (r) / 

EPREX (r) 846 875 (3. (5. 1. 6 

REMICADE (r) 642 539 19. 19. 

TOPAM (r) 431 335 28. 27. 1. 6 

DURAGESIC (r) / 

Fentanyl


Transdermal 382 557 (31. 5) (33.


LEVAQUIN (r) / 

FLOXIN (r) 320 269 19. 19. 

Hormonal 

Contraceptives 296 366 (19. (20. 1. 1 

Aciphex (r) /

pariet (r) 281 263 

Other 536 496 

Total $5, 628 $5, 427 1. 6%


2005 was led by strong performances from RISPERDAL(r), REMICADE(r), Phannaceutical segment sales growth in the second quarter of 


TOPAMAX(r) and LEV AQU!N(r). The discussion to follow correlates to the sequence of the chart above. Growth was fueled by the continued 

success of RISPERDAL(r) (risperidonc), and RJSPERDAL CONSTA(r) (risperidone), a long acting injection medication that treats the 

symptoms of schIzophrenia, with operational growth of 20. 8%. PROCRIT(r) (Epoetin alfa) and EPREX(r) (Epoetio alfa) performance 

continued to be adversely affected by competition. Combined these two products had an operational decline of 5. 0% in the second quarter of 

2005. Volume associated with share loss to competitive products was the primary driver of the decline. PROCRIT(r) pricing has stabilized in 

REMICADE(r) (infliximab), a biologic approved for the treatment ofCrohn s disease , ankylosing spondylitis, and 

use in the treatment of rheumatoid arthritis experienced strong operational growth of 19. 1 % over prior year fiscal second quarter. thc second quarter of200S. 

Sales ofTOPAMAX(r) (topiramate), which has been approved for adjunctive use in epilepsy, as well as for the prophylactic treatment of 

migraines, experienced strong operational growth of27 . , over prior year fiscal second quarter. In June of 2005 TOP AMAX(r) was also 

approved for use as an initial monothcrapy in the treatment of epilepsy. 

33. 5% operationally, which was primarily driven by the negative impact of DURAGESICCr) (fentanyl transdennal system) sales declined by 


generic competition in the U. S. beginning in January 2005. An authorized generic version of DURAGESIC(r) being marketed for the Company 

in the U. S. has captured a strong portion of the generic market. 

LEV AQUIN(r) (levofloxacin) achieved operational sales growth of 19. 0% over prior year benefiting from the late respiratory infection season. 

The honnonal contraceptive franchise experienced an operational decline of20. 3%. Adjusted for the impact of the performance based rebate 

allowances that benefited the second quarter of 2004 , sales growth in the second quarter of 2005 was approximately 6. 0%. The adjusted sales 

growth of 6. 0% was the result of strong perfonnances by ORTHO EVRA(r), the tirst contraceptive patch approved by the FDA, and ORTHO 

TRI-CYCLEN(r) LO (norgcstimate/ethinyl estradiol), a low dose oral contraceptive , however this was partially offset by the impact of generic 

competition. 

CONCERTA(r) (methylphenidate HCL), a product for the treatment of attention deficit hyperactivity disorder, sales continued to grow 

despite the lack of patent exclusivity in the U. S. At present, the FDA has not approved any generic version that is substitutable for 

CONCERTA(r). Abbreviated New Drug Applications (ANDAs) for generic versions ofCONCERTA(r) are pending and may be approved at 

any time. 

Medical Devices and Diagnostics


Medical Devices and Diagnostics segment sales in the first fiscal six months of2005 were $9. 7 billion , an increase of 17. 8% over the same

period a year ago with 15.4% of this change due to operational increases and thc remaining 2.4% increase related to the positive impact of 

currency. The U. S. Medical Devices and Diagnostics sales increase was 12.0% and the growth in international Medical Devices and 

Diagnostics sales was 24. 1 % which included 5.0% related to the positive impact of currency. 

Major Medical Devices and Diagnostics franchise Sales 

- First Fiscal Six Months 

Total Operations Currency 2005 2004 %Change %Change %Changc 

CORDIS (r) $1, 983 $1, 541 28. 26. 

DEPUY(r) 973 678 17. 15. 

ETHICON(r) 587 397 13. 10. 

ETHICON ENDOSURGERY (r) 550 375 12. 10. 

LIFESCAN(r) 975 820 18. 16. 

Vision Care 833 731 13. 11. 

ORTHO- CLINICAL 

DIAGNOSTICS (r) 721 619 16. 14. 1. 9 

Other (3. (2. (1. 

Total $9, 653 $8, 193 17. 15. 

Medical Devices and Diagnostics segment sales in the fiscal second quarter of 2005 were S4. 9 billion , an increase of 19. 7% over the same 

period a year ago with 17.4% of this change due to operational growth and the remaining 2.3% increase related to the positive impact of 

currency. The U. S. Medical Devices and Diagnostics sales increase was 16. 7% and the growth in international Medical Devices and 

Diagnostics sales was 22.7% which included 4, 6% related to the positive impact of currency. 

Major Medical Devices and Diagnostics Franchise Sales 

- Fiscal Second Quarter 

Total Operations Currency 2005 2004 %Change %Change %Change 

CORDIS (r) $1, 011 $664 52. 50. 1. 9
 DEPUY(r) 980 839 16. 15. 

ETHICON (r) 798 716 11. 5 

ETH I CON ENDOSURGERY (r) 785 710 10. 

LIFESCAN (r) 474 420 12. 10. 

Vision Care 426 377 13. 11. 1. 9 

ORTHO- CLINICAL 1. 8
 DIAGNOSTICS (r) 366 317 15. 13. 

Other (7. (6. (1. 0) 

Total 856 $4, 057 19. 17. 

Sales growth in the Medical Devices and Diagnostics segment was led by strong results experienced across the segment. The Cordis franchise 

was a major driver, with operational growth of 50.0%. The primary growth driver of the Cordis franchise was the CYPHER(r) Sirolimuseluting Stent in both U. S. and international markets, with excellent growth in Japan. In addition, the Biosense Webster business also had a 

strong quarter with its navigational catheter line of products. 

In April and July of2004, Cordis Cardiology Division of Cordis Corporation received warning letters from the FDA regarding Good 

Manufacturing Practice and Good Clinical Practice regulations. These observations followed post- approval site inspections completed in 2003 

, Cordis and early 2004 including sites involved in the production of the CYPHER(r) Sirolimus- eluting sten!. In response to the warning letters

has made improvements to their quality system. The FDA has completed inspections of the three facilities involved in the April warning letter 

and Cordis has provided written responses to the recent inspection observations. 

The DePuy franchise s operational growth of 15. 0% was primarily attributed to DePuy s orthopaedic joint reconstruction products including the 

hip and knee product lines. Strong perfonnance was also achieved in DePuy s spine unit and Mitek sports medicine products. 

Ethicon worldwide sales grew operationally by 8.5% from the same period in the prior year. Contributing to the strong results was the


continued penetration ofVICRYL(r) (polyglactin 910) Plus, an anti- bacterial coated suture, growth ofDERMABOND(r), a liquid skin


adhesive and continued adoption ofa variety ofniehe products. The Ethicon Endo-Surgery franchise experienced operational growth of8.


over prior year. This growth was mainly driven by endocutter sales that include products used in performing bariatric procedures for the


treatment of obesity, an important focus area for the franchise. HARMONIC SCALPEL(r) sales led by excellent results achieved with the


recently introduced HARMONIC(r) ACE were also a significant source of growth in the quarter.

The LifeScan fmnehise operational growth of 10. 8% was a result of continued growth of U. S. sales, as well as strong growth in international 

markets. ONETOUCH(r) ULTRA, blood glucose meter, has been the key growth driver in this franchise. 

Vision Care franchise operational sales growth of 11. 1 % was led by the continued success of ACUVUE(r) ADV ANCETM brand contact 

lenses with HYDRACLEARTM and I-DAY ACUVUE(r). 

The Ortho-Clinical Diagnostics franchise reported operational growth of 13. 9% over prior year, which was driven by its market penetration of 

the automated blood typing products, continued growth of the ECI product, and growth in the clinical chemistry sales driven by success with 

the Vitros(r) 5. 1 FS instrument platform and the Vitros(r) 350 Chemistry System. 

Cost of Products Sold and Selling, Marketing and Administrative Expenses 

Consolidated costs of products sold for the first fiscal six months of2005 decreased to 27.3% from 28.3% of sales over the same period a year 

ago. The decrease resulted from cost improvement initiatives and improved gross margins in the Medical Devices & Diagnostics segment 

primarily driven by lower manufacturing costs related to CYPHER(r) Sirolimus- eluting Stent, which more than offset an unfavorable product 

mix. The cost of products sold for the fiscal second quarter of2005 was 27. 5% of sales, which is consistent with the same period in prior year. 

During the quarter, unfavorable mix was offset by cost improvement initiatives and improved gross margins in the Medical Devices and 

Diagnostics segment. 

Consolidated selling, marketing and administrative expenses for the first fiscal six months of 2005 increased 12. 1 % over the same period a year 

ago. Consolidated selling, marketing and administrative expenses as a percent to sales for the first fiscal six months of 2005 were 32. 1 % versus 

31. 9% for the same period a year ago. Consolidated selling, marketing and administrative expenses for the fiscal second quarter of 2005


increased 13. 0% over the same period a year ago. As a percent to sales, consolidated selling, marketing and administrative expenses were


32. 8% versus 32. 3% for the same period a year ago. Increases in the quarterly and six month periods were primarily associated with higher


levels of advertising spend.


Research & Development


Research activities represent a significant part of the Company's business. These expenditures relate to the development of new products


improvement of existing products, technical support of products and compliance with governmental regulations for the protection of the


consumer. Worldwide costs of research activities, for the first fiscal six months of2005 were S2. 8 bilIion, an increase of24.4% over the same


period a year ago. Research and development spending in the fiscal second quarter of2005 was $1.5 billion, an increase of25. 8% over the


fiscal second quarter of2004. This increase is a reflection of the solid progress achieved in products in late stage development.


In-Process Research & Development 

In the tiscal second quarter of2005 , the Company recorded In-process Research & Development (IPR&D) charges ofS353 million before and 

after tax related to acquisitions in the Pharmaceutical and Medical Devices and Diagnostics segments. These acquisitions included TransForm 

Pharmaceuticals , Inc. , Peninsula Pharmaceuticals, Inc. and CLOSURE Medical Corporation. 

Other (Income) Expense , Net 

Other (income) expense is the account where the Company records gains and losses related to the sale and write-down of ccrtain equity 

securities of the Johnson & Johnson Development Corporation, losses on the disposal of fixed assets, currency gains & losses, minority 

interests, litigation settlements, as well as royalty income. 

OPERATING PROFIT BY SEGMENT 

Consumer Segment


Operating profit for the Consumer segment as a percent to sales in the first fiscal six months of2005 was 19.2% versus 20. 5% over the same 

period a year ago. Operating profit as a percent to sales in the fiscal second quarter of 2005 was 18. 3% versus 19. 1 % over the same period a 

year ago. This decrease was due to increased investment spending in consumer promotions and advertising for the OTC Phannaceutical and 

Nutritional franchise.


Pharmaceutical Segment 

Operating profit for the Pharmaceutical segment as a percent to sales in the first fiscal six months of2005 was 32. 7% versus 38. 8% over the 

same period a year ago. Operating profit as a percent to sales in the fiscal second quarter of2005 was 28. 2% versus 38. 8% over the same 

period a year ago. For both periods operating profit was negatively impacted by increased research and development spending and IPR&D. 

IPR&D of$302 million reduced operating profit as a percent to sales by 2. 7% and 5. 3% for the first fiscal six months and the fiscal second 

quarter, respectively. 

Medical Devices and Diagnostics Segment 

Operating profit for the Medical Devices and Diagnostics segment as a percent to sales in the first fiscal six months of2005 was 30. 1 % versus 

25. 9% over the same period a year ago. Operating profit as a percent to sales in the fiscal second quarter of2005 was 29. 0% versus 26. 0% over 

the same period a year ago. The increase in 2005 was due to improved gross profit, resulting from cost reduction programs, lower 
manufacturing costs related to CYPHER(r) Sirolimus-eluting Stent and favorable product mix. 

Interest (Income) Expense 

Interest income increased in both the first fiscal six months and fiscal second quarter of 2005 as compared to the same periods a year ago. The 

increase reflected an improved cash position as well as higher rates of interest being earned on cash holdings. The cash balance including 

marketable securities at the cnd ofthc fiscal second quarter of2005 was $13. 2 billion , which was $2.4 billion higher than the samc period a 

year ago. 

Interest expense decreased in both the first fiscal six months and fiscal second quarter of 2005 as compared to the same periods a year ago 

resulting from lower average debt balances. 

Provision For Taxes on Income 

The worldwide effective income tax rates for the first fiscal six months of2005 and 2004 were 24.9% and 28. , a decrease of3.7%. Of this 

decrease , 1.9% was attributed to increases in taxable income in lower tax jurisdictions relative to taxable income in higher tax jurisdictions. The 

remaining net decrease of 1. 8% was attributed to a one-time tax benefit partially offset by IPR&D, as described below. 

Acquisition related In-process Research & Development (IPR&D) charges of $353 million that are non- deductible for tax purposes were 

recorded in the fiscal second quarter of 2005. 

The fiscal second quarter of 2005 included a benefit of $225 million, due to the reversal of a tax liability previously recorded during the fiscal 

fourth quarter of2004, associated with a technical correction made to the American Jobs Creation Act of2004, in May 2005. 

LIQUIDITY AND CAPITAL RESOURCES 

Cash Flows 

Cash generated from operations provided the major sources of funds for the growth of the business, including working capital , capital 

expenditures , acquisitions, share repurchases, dividends and debt repayments. In the first fiscal six months of2005 , cash flow from operations 

was $4. 7 billion , a decrease of $0. 1 billion over the same period a year ago. Investing activities provided $0. 8 bilion in the first fiscal six 

months of2005 , as compared to the usage of $1. 9 billion during the same period a year ago. The increase in cash generated by investing 

activities was a result of higher sales activity of investment securities , partially offset by an increase in acquisitions. Net cash used by financing 

activities decreased by $0.2 billion primarily due to lower levels of debt retirement, partially offset by an increase in dividends and the 

repurchase of common stock. 

Dividends 

On April 28 , 2005 , the Board of Directors declared a regular cash dividend of$0. 33 per share , payable on June 7 , 2005 to shareholders of 

record as of May 17 2005. This represented an increase of 15. 8% in the quarterly dividend rate and was the 43rd consecutive year of cash 

dividend increases. 

On July 18 2005 , the Board of Directors declared a regular cash dividend of$0.33 per share, payable on September 13 2005 to shareholders of 

record as of August 23 , 2005. The Company expects to continue the practice of paying regular cash dividends. 

OTHER INFORMATION 

New Accounting Standards 

In December 2004, the FASB issued SFAS No. 123(R), Share Based Payment. This statement establishes standards for the accounting for 

transactions in which an entity exchanges its equity instruments for goods and services. It focuses primarily on accounting for transactions in 

which an entity obtains employee services in share-based payment transactions (such as employee stock options and restricted stock units). The 

statement requires the measurement of the cost of employee services received in exchange for an award of equity instruments (such as 

employee stock options and restricted stock units) at fair value on thc grant date. That cost will be recognized over the period during which an 

employee is required to provide services in exchange for the award (the requisite service period). On April 14, 2005 the SEC approved a new 

rule that delays the effective datc of SF AS No. 123(R) for annual, rather than interim, periods that bcgin aner June 15 2005. As a result, the 

Company will adopt this statement in the first fiscal quarter of 2006. 

The Company will implement SF AS 151 , Inventory Costs, an amendment of ARB No. 43 and SF AS 153 , Exchanges of Non-monctary Assets 

an amendment of APB 29 in the first quarter of2006 and the third quarter of2005 respectively, as allowed by the Standards. The Company 

believes the adoption of these statements will not have a material effect on its results of operations, cash flows or financial position. 

The following recent accounting pronouncements became effective in 2004 and did not have a material impact on the Company s results of 

operations, cash flows or financial position. 

*EITF Issue 02- 14: Whether an Investor should apply the Equity Method of Accounting to Investments other than Common Stock. 
    

*EITF Issue 04- 1: Accounting for Preexisting Relationships between the Parties to a Business Combination. 

Economic and Market Factors 

Johnson & Johnson is aware that its products are used in an environment where, for more than a decade, policymakers , consumers and 

businesses have expressed concern about the rising cost of health care. Johnson & Johnson has a long-standing policy of pricing products 

responsibly. For the period 1994 through 2004 in the United States, the weighted average compound annual growth rate of Johnson & Johnson 

price increases for health care products (prescription and over-the-counter drugs , hospital and professional products) was below the U. 

Consumer Price Index (CPI). 

Inflation rates , even though moderate in many parts of the world during 2004, continue to have an effect on worldwide economies and 

consequently, on the way companies operate. In the face of increasing costs, the Company strives to maintain its profit margins through cost 

reduction programs, productivity improvements and periodic price increases. The Company faces various worldwide health care changes that 

may result in pricing pressures that include health care cost containment and government legislation relating to sales , promotions and 

reimbursement. 

The Company also operates in an environment increasingly hostile to intellectual propert rights. Generic drug firms have fied Abbreviated 

New Drug Applications seeking to market generic forms of most of the Company s key pharmaceutical products, prior to expiration of the 

applicable patents covering those products. In the event the Company is not successful in defending a lawsuit resulting from an Abbreviated 

New Drug Application fiing, the generic firms will then introduce generic versions of the product at issue, resulting in very substantial market 

share and revenue losses. For further information see the discussion on " Litigation Against Filers of Abbreviated New Drug Applications " in 

Note 12 to the unaudited interim consolidated financial statements. 

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS This Form 10-Q contains forward-looking statements. Forwardlooking statements do not relate strictly to historical or current facts and anticipate results based on management' s plans that are subject to 

uncertainty. Forward-looking statements may be identified by the use of words like "plans expects will anticipates estimates " and 

other words of similar meaning in conjunction with, among other things , discussions of future operations, financial performance , the 

Company s strategy for growth, product development, regulatory approval, market position and expenditures. 

Forward-looking statements are bascd on current expectations of future events. The Company cannot guarantee that any forward- looking 

statement wil be accurate , although the Company believes that it has been reasonable in its expectations and assumptions. Investors should 

realize that if underlying assumptions prove inaccurate or that unknown risks or uncertainties materialize , actual results could vary materially 

from the Company s expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking 

statements. The Company assumes no obligation to update any forward-looking statements as a result of new infonnation or future events or 

developments. 

Risks and uncertainties include general industry conditions and competition; economic conditions, such as interest rate and currency exchange 

rate fluctuations; technological advances, new products and patents attained by competitors; challenges inherent in new product development 

including obtaining regulatory approvals; challenges to patents; u.s. and foreign health care reforms and governmental laws and regulations; 

trends toward health care cost containment; increased scrutiny of the health care industry by government agencies; product effcacy or safety 

concerns resulting in product recalls or regulatory action. 

The Company's Annual Report on Form lO-K for the fiscal year ended January 2, 2005 contains, as an Exhibit, a discussion of additional 

factors that could cause actual results to differ from expectations. The Company notes these factors as permitted by the Private Securities 

Litigation Refonn Act of 1995. 

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES 

ABOUT MARKET RISK 

There has been no material change in the Company s assessment of its sensitivity to market risk since its presentation set forth in Item 7 A 

Quantitative and Qualitative Disclosures About Market Risk " in its Annual Report on Form 10-K for the fiscal year ended January 2 , 2005. 

Item 4 - CONTROLS AND PROCEDURES-EV ALUA TION OF 

DISCLOSURE CONTROLS AND PROCEDURES 

Disclosure controls and procedures. As of the end of the period covered by this report, management evaluated the effectiveness of 

the Company s disclosure controls and procedures. The Company s disclosure controls and procedures are designed to ensure that the Company 

records , processes , summarizes and reports in a timely manner the infonnation the Company is required to disclose in its reports filed under the 

Securities Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that 

infonnation required to be disclosed by the Company in the reports that it fies or submits under the Securities Exchange Act is accumulated 
and communicated to the Company s management, including its principal executive and principal financial officers, or persons performing 

similar functions, as appropriate to allow timely decisions regarding required disclosure. William C. Weldon, Chairman and Chief Executive 

Officer, and Robert J. Darretta, Vice Chairman and Chief Financial Officer, reviewed and participated in this evaluation. Based on this 

evaluation, Messrs. Weldon and Darrctta concluded that, as of the date of their evaluation, the Company s disclosure controls and procedures 

were effective. 

Internal control. During the period covered by this report, there were no changes in the Company s internal control over financial reporting that 

have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 

Part II - Other Information 

Item I - Legal Proceedings 

The information called for by this item is incorporated herein by reference to Note 12 included in Part Notes to Consolidated Financial 

Statements. 

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds 

(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers. The following table provides information with respect to Common 

Stock purchases by the Company during the fiscal second quarter of 2005. Common Stock purchases on the open market are made as part of a 

systematic plan to meet the Company s compensation 

programs. 

Fiscal Month Total Number of Average Price Paid


Shares Purchased Per Share 

April 4 - May 1 , 2005 386, 000 $68. 

May 2 - May 29, 2005 785, 300 $67. 

May 30 - July 3, 2005 780, 400 $65. 

Item 4 - Submission of Matters to a Vote of Security Holders 

(a) The annual meeting of the shareholders of the Company was held on April 28 , 2005. 

(b) Election of the directors is set forth in (c) below. 

(c) The shareholders elected all the Company s nominees for director and ratified the appointment of Price waterhouse Coopers LLP as the 

Company's independent auditors for the fiscal year 2005. The shareholders also approved of the 2005 Long- Term Incentive Plan. 

Election of Directors;


Shares For Shares wi thheld 

M. S. Coleman 562 818, 361 31, 562, 661 

J. G. Cullen 564 660 453 29, 720, 569 

R. J. Darretta 468, 716, 847 125 664, 175 

M. M. E. Johns 566, 448, 108 27, 932, 914 

A. D. Jordan 535, 248, 036 132 986 

A. G. Langbo 537, 950, 461 430, 561 

S. L. Lindquist 565, 402, 713 978 309 

L. F. Mullin 562, 474 674 906 348 

C. A. Poon 532, 852, 391 528, 631 

S. S Reinemund 566, 276, 547 104 475 

D. Satcher 564, 456, 446 924 576 

w. C. Weldon 533, 669, 335 711 687 

Abstain 26, 983, 548


Broker Non- vote


Approval for Appointment of PricewaterhouseCoopers LLP;


For 532 518, 257


Aga ins t 39, 560 123


Abstain 272 642


Broker Non- vote

3. Approval for the 2005 Long-Term Incentive Plan. 

For 730, 947, 712 

Against 343, 780, 724 

Abstain 29, 924 967 

Broker Non-vote 489, 727 , 619 

Item 6 - Exhibits 

Exhibit 10. 1 Fonn of Stock Option Certificate and Restricted Shares to Non-Employee Directors Certificate under the Johnson & Johnson 2005 

Long- Tenn Incentive Plan - Filed with this document. * 

Exhibit 31. Certifications under Rule 13a- 14(a) of the Securities Exchange Act pursuant to Section 302 of the Sarbancs-Oxley Act of2002­

Filed with this document. 

Exhibit 32. 1 Certifications pursuant to


Section 906 of the Sarbanes-Oxley Act of 2002 - Furnished with this document.


*Managemcnt contract or compensatory plan. 

SIGNATURES 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its bchalfby the 

undersigned thereunto duly authorized. 

JOHNSON & JOHNSON 

(Registrant) 

Date: August 10, 2005 By /s/ R. J. DARRETTA 

R. J. DARRETTA 

Vice Chairman, Board 


Directors; Chief Financial


Officer and Director


(Principal Financial Officer) 

Date: August 10, 2005 By Isl S. J. COSGROVE 

S. J. COSGROVE 

Controller


(Principal Accounting Officer)

Exhibit 31


CERTIFICA TlON OF CHIEF FINANCIAL OFFIn:R PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT 

, Robert 1. Darretta, certifY that: 

I. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended July 3 , 2005 (the "report" ) of Johnson & Johnson (the 

Company 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to 

make the statements made, in light of the circumstances under which such statements were made , not misleading with respect to the period 

covered by this report; 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material 

respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 

4. The Company s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined 

in Exchange Aet Rule 13a- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a- 15(1)) for the Company 

and have: 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision 

to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those 

entities, particularly during the period in which this report is being prepared; 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our 

supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for 

external purposes in accordance with generally accepted accounting principles; 

c) Evaluated the effectiveness of the Company s disclosure controls and procedures and presented in this report our conclusions about the 

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most 

recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial 

reporting; and 

5. The Company s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 

to the Company s auditors and the audit committee of the Company s board of directors (or persons performing the equivalent functions): 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are 

reasonably likely to adversely affect the Company's ability to record , process , summarize and report financial information; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal 

control over financial reporting. 

/s/ 	 Robert J. Darretta 

Robert J. Darretta 

Chief Financial Officer 

Date: August 8, 2005 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER


PURSUANT TO SECTION 302 THE SARBANES- OXLEY ACT


, William C. Weldon, certify that: 

I. I have reviewed this Quarterly Report on Fonn 10-Q for the quarterly period ended July 3 2005 (the "report" ) of Johnson & Johnson (the 

Company 

2. Based on my knowledge, this report docs not contain any untrue statement of a material fact or omit to state a material fact necessary to 

make the statements made , in light of the circumstances under which such statements were made, not misleading with respect to the period 

covered by this report; 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material 

respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 
4. The Company s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined 

in Exchange Act Rule 13a- 15(e)) and internal control ovcr financial reporting (as defined in Exchange Act Rule 13a- 15(1) for the Company 

and have: 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision 

to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those 

entities, particularly during the period in which this report is being prepared; 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our 

supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for 

external purposes in accordance with generally accepted accounting principles; 

c) Evaluated the effectiveness of the Company s disclosure controls and procedures and presented in this report our conclusions about the 

effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d) Disclosed in this report any change in the Company s internal control over financial reporting that occuITed during the Company s most 

recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company s internal control over financial 

reporting; and 

5. The Company s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 

to the Company s auditors and the audit committee of the Company s board of directors (or persons performing the equivalent functions): 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whieh are 

reasonably likely to adversely affect the Company s ability to record , process , summarize and report financial information; and 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company s internal 

control over financial reporting. 

/s/ william C. Weldon 

William C. Weldon 

Chief Executive Officer 

Date: August 8, 2005 
Exhibit 32 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER


PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT


The undersigned, William C. Weldon, the Chief Executive Offcer of Johnson & Johnson, a New Jersey corporation (the "Company ), pursuant to 18 U. c. 1350, as adopted pursuant to 

Section 906 of the Sarbanes-Oxley Act of 2002, hereby certifies that, to the best of my knowledge: 

(1) the Company s Quarterly Report on Form lO-Q for the quarterly period endcd July 3 2005 (thc "Report" ) fully complies with the
 requirements of Section 13(a) of the Securities Exchangc Act of 1934; and


(2) the infonnation contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the


Company.


Is/ William C. Weldon


William C. Weldon 

Chief Executive Officer


Dated: August 8, 2005 

This certification is being furnished to the SEC with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of2002 and shall not except to the extent required by such Act, be deemed filed by the Company for purposes of Scction 18 of the Securities Exchangc Act of 1934. 

CERTIFICATION OF CHIEF FINANCIAL OFFICER


PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT


The undersigned, Robert J. Darrctta, the Chief Financial Officer of Johnson & Johnson, a New Jersey corporation (the "Company ), pursuant to 

18 U. c. 1350, as adoptcd pursuant to Scction 906 ofthc Sarbanes-Oxley Act of2002, hereby certifies that, to the best of my knowledgc: 

(1) the Company s Quarterly Report on Form 10-Q for the quarterly period ended July 3 , 2005 (the " Report" ) fully complies with the requirements of Section 13(a) of the Sccurities Exchangc Act of 1934; and 

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the 

Company. 

/s/ Robert J. Darretta Robert J. Darret ta 

Chief Financial Officer 

Dated: August 8, 2005 

This certification is being furnished to the SEC with this Report pursuant to Section 906 ofthc Sarbanes-Oxley Act of2002 and shall not except to the extent required by such Act, be deemed filed by thc Company for purposes of Section 18 of the Securities Exchange Act of 1934. 

End of Filing -lJ 

(9 2005 I EDGAR Online, Inc.