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Home , Acuvue, Alex Gorsky, Aveeno, Cilag, Ethicon, James Wood Johnson

Our "a history of" article this month looks into the creation of Johnson & Johnson and how it has become one of the fastest growing pharma companies in the US, Europe and Japan over the past 127 years.

Every year, global business magazine Fortune publishes a list of the top 50 "most admired companies" around the world. In 2012, only one pharmaceutical company made it into the top 50 names.1 Which pharma company was it? Johnson & Johnson.

J&J, as it's more commonly known, was found over 125 years ago in the year 1886. However, it wasn't until 1959 – 73 years and 2 major acquisitions later – that J&J developed its significant presence in the .

So where did it all begin?

In 1886, three brothers – Robert Wood Johnson, and Edward Mead Johnson – began the company, Johnson & Johnson, in New Brunswick, New Jersey in the . It's said that the Johnson brothers were inspired to start the business in order to create a line of ready- to-use surgical dressings, after hearing a speech by advocate , in 1885. Robert Wood Johnson served as the first president – the company became incorporated in 1887 and throughout the nineteenth century, Robert worked to improve sanitation practices.

"It's said that the Johnson brothers were inspired to start the business in order to create a line of ready-to-use surgical dressings..."

A year later, J&J pioneered the first commercial first aid kits, which were initially designed to help railroad workers, but soon became the standard practise in treating injuries. In 1894, J&J's heritage baby business began, by the launch of maternity kits. These kits had the aim of making childbirth safer for mother and babies. JOHNSON's Baby Powder also went on sale during this year and was extremely successful. Robert Wood's granddaughter, Mary Lea, was the first baby to be used on the baby powder label.

Between 1896 and 1897, J&J enabled a huge step forward for women's health when it manufactured the first mass-produced sanitary protection products.

When Robert Wood died in 1910, his brother James Wood became president, before James' son, Robert Wood Johnson II became president in 1932.

One of J&J's subsidiaries is , which is a manufacturer of surgical sutures and wound closure devices. It was incorporated as a separate company in 1949 so as to expand and diversify the J&J product line. Following World War II, Ethicon's market share in surgical sutures rose from 15% to 70% worldwide.

In 1959, J&J acquired McNeil Laboratories in the US and also Chemie, AG in Europe. These two acquisitions enabled the company to gain a significant presence in the field of pharmaceutical medicines for the first time. One McNeil product was the first prescription aspirin-free pain reliever, (acetaminophen) elixir for children. Under J&J's acquisition, the product became available without a prescription a year later and earned the status as the pain reliever doctors and paediatricians recommend the most, according to the company's history.

The joining of Janssen

It was in 1961 that Belgium's Janssen Pharmaceutica N.V. joined the J&J Family of Companies. Its founder, Dr , is recognised as one of the "most innovative and prolific pharmaceutical researchers of the 20th century".

Today, Janssen is one of the world's leading research-based pharma companies and markets prescription medicines in the areas of gastroenterology, women's health, mental health, neurology and HIV / AIDS, to name a few.

"Dr Paul Janssen is recognised as one of the "most innovative and prolific pharmaceutical researchers of the 20th century"."

United under the common name of J&J, Janssen is now split into three different businesses – Janssen Research & Development, Janssen Healthcare Innovation and Janssen Diagnostics. Some of the most well-known Janssen products include diarrhoea treatment, Immodium (), antipsychotic Risperdal () and Alzheimer's disease drug, Reminyl ().

Risperdal is well-known due to the controversy in the US following its product launch in 1994. Juries in several US states found J&J guilty of hiding information about adverse effects of the antipsychotic medication. In 2012, J&J agreed to pay US $181 million to 26 states in order to settle these claims.

J&J in the 70s and beyond

Between 1976 and 1989, James E. Burke was Chairman and CEO of J&J. During this tenure, J&J entered into the areas of vision care, mechanical wound closure and diabetes management. It was also during this time that J&J opened the first operating companies in China and Egypt.

During the 1990s, Ethicon's Endo- pioneered minimally invasive surgery, which uses very small incisions and helps patients recover faster than with traditional surgery.

In 1994, the first coronary stent was created by J&J and was called the Palmaz-Schatz stent. This move revolutionized cardiology – coronary stents keep vessels open so blood can flow to the heart. Later, another of J&J's companies, Cordis Corporation, introduced the first drug-eluting stent, which helped prevent the arteries from re-clogging. Cordis was founded in Miami in 1959 and develops and produces medical equipment to treat patients who suffer from cardiovascular disease.

"In 1994, the first coronary stent was created by J&J..."

Beginning in 2003, J&J became involved in a series of litigations with Boston Scientific involving patents covering heart stent medical devices. Both parties claimed that the other had infringed upon their patents. The litigation was settled in 2009, when Boston Scientific agreed to pay $716 million in September and an additional $1.73 billion the following February.

William C. Weldon became the Chairman and CEO of J&J in 2002. Under his leadership, the company entered new therapeutic areas. One of these new areas was HIV / AIDSs, which came about through the acquisition of -Virco BVBA, to help address the vast unmet needs of patients with HIV / AIDS and other infectious diseases like tuberculosis.

In 2006, J&J acquired Consumer Healthcare for $16.6 billion in cash. The acquisition included worldwide leading brands such as oral care products and the line of treatments.

"This combination creates the world's premier consumer health care company. Our consumer business has a long tradition of outstanding performance and a proven track record in growing consumer brands at above-category levels through innovation. This acquisition builds upon our broad base in health care products and our leadership objectives in the consumer, pharmaceutical and medical devices and diagnostics markets." William C. Weldon, Chairman and Chief Executive Officer of Johnson & Johnson [July 26th 2006 press release].2

J&J in 2012 and beyond

In 2012, was appointed Chief Executive Officer of Johnson & Johnson.

Today, the J&J Corporation includes over 250 subsidiary companies, with operations in over 57 countries and products sold in over 175 countries around the world. The company focuses on three main areas:

• Consumer

• Medical devices and diagnostics

• Pharmaceutical

In 2012, worldwide sales were $67.2 billion, while the total investment in research and development was approximately $7.7 billion.

"Johnson & Johnson delivered solid results in 2012 reflecting continued sales momentum in many parts of our business driven by our focus on delivering meaningful innovation in health care to patients and customers. Our results included strong growth of key products, successful new product launches, and the addition of to our family of companies. In addition, we continued to make important investments building strategic partnerships and in advancing our pipeline, positioning us well for delivering sustainable growth as we enter 2013. I would also like to thank our talented colleagues at Johnson & Johnson for their extraordinary achievements in helping advance health and well-being for patients and customers around the world."

Alex Gorsky, Chairman and Chief Executive Officer.

"...it announced plans to submit 10 new product filings for regulatory approval over the next four years."

While no one can predict the future for J&J and its subsidiaries, the company's pharmaceutical segment has an idea of where it wants to be after it announced plans to submit 10 new product filings for regulatory approval over the next four years. These products are aimed at addressing serious unmet medical needs, such as Hepatitis C, schizophrenia and influenza.

"Our investment in transformational innovation has enabled strong growth that has allowed us to continue investing in our future portfolio. With a steadfast focus on the most serious unmet medical needs, our approach is to identify the best science — internal and external — to deliver new options and solutions to patients. Today, we have an industry-leading pipeline of truly differentiated products and a track record of success resulting in more new molecular entity (NME) approvals per year at a lower development cost than the industry average."

Paul Stoffels, M.D., Chief Scientific Officer, Johnson & Johnson, and Worldwide Chairman, Pharmaceuticals Group.

According to IMS Health, the total global pharma market is expected to grow approximately 4.5% annually and a market size of around US $1.2 trillion by 2017. J&J's pharmaceuticals segment was the fastest growing pharma business in the US, Europe and Japan in 2012. We'll have to wait and see if this continues...

Company Perspectives:

Our Credo: We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers' orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize theirmerit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical. We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens--support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return. Key Dates: Key Dates:

1886: Johnson brothers begin producing dressings in New Brunswick, New Jersey. 1887: Company is incorporated as Johnson & Johnson. 1893: Johnson's Baby Powder is introduced. 1921: Band-Aid brand adhesive bandages make their debut. 1924: Overseas expansion begins with the establishment of Johnson & Johnson Limited in the United Kingdom. 1932: Robert Johnson, known as 'the General,' takes over leadership as president. 1943: Johnson writes the company credo. 1944: Company goes public on the New York Stock Exchange. 1959: McNeil Laboratories, Inc. (McNeil Labs) is acquired. 1960: McNeil Labs introduces Tylenol as an over-the-counter (OTC) pain reliever. 1961: Janssen Pharmaceutica is acquired. 1975: Through a significant price decrease, Tylenol is transformed into a mass-marketed product. 1982: Tylenol tampering tragedy occurs. 1988: disposable contact lenses are introduced. 1989: J & J and Merck form joint venture to develop OTC versions of Merck's prescription medications. 1994: Corporation is acquired. 1995: Merck and J & J launch Pepcid AC; company acquires the clinical diagnostics unit of Eastman Kodak Company. 1996: J & J acquires Cordis Corporation. 1998: DePuy, Inc. is acquired, and a companywide restructuring is launched. 1999: Centocor, Inc. merges with J & J. Company History:

One of America's most admired companies, Johnson & Johnson (J & J) is one of the largest healthcare firms in the world and one of the most diversified. Its operations are organized into three business segments: pharmaceutical, which generates 39 percent of revenues and 61 percent of operating income; professional, which accounts for 36 percent of revenues and 27 percent of operating income; and consumer, which contributes 25 percent of revenues and 12 percent of operating income. J & J's pharmaceutical products--which are sold under such brands as Janssen Pharmaceutica, Ortho-McNeil Pharmaceutical, and Centocor--include drugs for family planning, mental illness, gastroenterology, oncology, pain management, and other areas. The professional segment includes surgical and patient care equipment and devices, diagnostic products, joint replacements, and disposable contact lenses. The company's well-known line of consumer products includes the Johnson's baby care line, the Neutrogena skin and hair care line, Tylenol and Motrin pain relievers, o.b. and Stayfree feminine hygiene products, the Reach oral care line, Band-Aid brand adhesive bandages, Imodium A-D diarrhea treatment, gastrointestinal products, and Pepcid AC acid controller. J & J generates about half of its revenues outside the United States, through its network of 190 operating companies in 51 countries and its marketing organization that sells in more than 175 countries. Early History: From Surgical Dressings to Baby Cream J & J traces its beginnings to the late 1800s, when Joseph Lister's discovery that airborne germs were a source of infection in operating rooms sparked the imagination of Robert Wood Johnson, a New England druggist. Johnson joined forces with his brothers, James Wood Johnson and Edward Mead Johnson, and the three began producing dressings in 1886 in New Brunswick, New Jersey, with 14 employees in a former wallpaper factory.

Because Lister's recommended method for sterilization--spraying the operating room with carbolic acid-- was found to be impractical and cumbersome, Johnson & Johnson (which was incorporated in 1887) found a ready market for its product. The percentage of deaths due to infections following surgery was quite high and hospitals were eager to find a solution. J & J's first product was an improved medicinal plaster that used medical compounds mixed in an adhesive. Soon afterward, the company designed a soft, absorbent cotton-and-gauze dressing, and Robert Wood Johnson's dream was realized. Mass production began and the dressings were shipped in large quantities throughout the United States. By 1890 J & J was using dry heat to sterilize the bandages.

The establishment of a bacteriological laboratory in 1891 gave research a boost, and by the following year the company had met accepted requirements for a sterile product. By introducing dry heat, steam, and pressure throughout the manufacturing process, J & J was able to guarantee the sterility of its bandages. The adhesive bandage was further improved in 1899 when, with the cooperation of surgeons, J & J introduced a zinc oxide-based adhesive plaster that was stronger and overcame much of the problem of the skin irritation that plagued many patients. J & J's fourth original design was an improved method for sterilizing catgut sutures.

From the beginning, J & J was an advocate of antiseptic surgical procedures. In 1888 the company published Modern Methods of Antiseptic Wound Treatment, a text used by physicians for many years. That same year, Fred B. Kilmer began his 45-year stint as scientific director at J & J. A well-known science and medicine writer, and father of poet Joyce Kilmer, Fred Kilmer wrote influential articles for J & J's publications, including Red Cross Notes and the Red Cross Messenger. Physicians, pharmacists, and the general public were encouraged to use antiseptic methods, and J & J products were promoted. R.W. Johnson died in 1910 and was succeeded as chairman by his brother James. It was then that the company began to grow quickly. To guarantee a source for the company's increasing need for textile materials, J & J purchased Chicopee Manufacturing Corporation in 1916. The first international affiliate was founded in Canada in 1919. A few years later, in 1923, Robert W. Johnson's sons, Robert Johnson and J. Seward Johnson, took an around-the-world tour that convinced them that J & J should expand overseas, and Johnson & Johnson Limited was established in Great Britain a year later. Diversification continued with the introduction in 1921 of Band-Aid brand adhesive bandages and Johnson's Baby Cream (Johnson's Baby Powder had debuted in 1893) and the debut of the company's first feminine hygiene product, Modess sanitary napkins, in 1927. 1932--63: The General at the Helm The younger Robert Johnson, who came to be known as 'the General,' had joined the company as a mill hand while still in his teens. By the age of 25 he had become a vice-president, and he was elected president in 1932. Described as dynamic and restless with a keen sense of duty, Johnson had attained the rank of brigadier general in World War II and served as vice-chairman of the War Production Board.

The General firmly believed in decentralization in business; he was the driving force behind J & J's organizational structure, in which divisions and affiliates were given autonomy to direct their own operations. This policy coincided with a move into pharmaceuticals, hygiene products, and textiles. During Robert Johnson's tenure, the division for the manufacture of surgical packs and gowns became Surgikos, Inc.; the department for sanitary napkin production was initially called the Modess division and then became the Personal Products Company; birth control products were under the supervision of the Corporation; and the separate division for suture business became Ethicon, Inc. Under the General's leadership, annual sales grew from $11 million to $700 million at the time of his death in 1968.

Following his father's lead as a champion of social issues, Johnson spoke out in favor of raising the minimum wage, improving conditions in factories, and emphasizing business's responsibility to society. Johnson called for management to treat workers with respect and to create programs that would improve workers' skills and better prepare them for success in a modern industrial society. In 1943 Johnson wrote a credo outlining the company's four areas of social responsibility: first to its customers; second to its employees; third to the community and environment; and fourth to the stockholders. On the heels of the credo came the company's change from family-owned firm to public company, as J & J was listed on the New York Stock Exchange in 1944.

In 1959 J & J acquired McNeil Laboratories, Inc., maker of a non-aspirin (acetaminophen) pain reliever called Tylenol--which was at that time available only by prescription. Just one year after the acquisition, McNeil launched Tylenol as an over-the-counter (OTC) medication. Also in 1959, Cilag-Chemie, a Swiss pharmaceutical firm, was purchased, followed in two years by the purchase of Janssen Pharmaceutica, maker of the major antipsychotic drug Haldol, which had been introduced in 1958.

In 1963 Johnson retired. Although he remained active in the business, chairmanship of the company went outside the family for the first time. Johnson's immediate successor was Philip Hofmann, who, much like the General, had started as a shipping clerk and worked his way up the ladder. During Hofmann's ten- year term as chairman, J & J's domestic and overseas affiliates flourished. Hofmann was another firm believer in decentralization and encouraged the training of local experts to supervise operations in their respective countries. Foreign management was organized along product lines rather than geographically, with plant managers reporting to a person with expertise in the field.

1960s--70s: Increased Promotion of Consumer Products In the early 1960s federal regulation of the healthcare industry was increasing. When James Burke--who had come to J & J from the marketing department of the Procter & Gamble Company--became president of J & J's Domestic Operating Company in 1966, the company was looking for ways to increase profits from its consumer products to offset possible slowdowns in the professional products divisions. By luring top marketing people from Procter & Gamble, Burke was able to put together several highly successful advertising campaigns. The first introduced Carefree and Stayfree sanitary napkins into a market that was dominated by the acknowledged feminine products leader, Kimberly-Clark. Usually limited to women's magazines, advertisements for feminine hygiene products were low-key and discreet. Under Burke's direction, J & J took a more open approach and advertised Carefree and Stayfree on television. By 1978 J & J had captured half of the market. Meantime, the company expanded its feminine hygiene line through the 1973 acquisition of the German firm Dr. Carl Hahn G.m.b.H., maker of the o.b. brand of tampons.

One of Burke's biggest challenges was Tylenol. Ever since J & J had acquired McNeil Laboratories, maker of Tylenol, the drug had been marketed as a high-priced product. Burke saw other possibilities, and in 1975 he got the chance he was waiting for. Bristol-Myers Company introduced Datril and advertised that it had the same ingredients as Tylenol but was available at a significantly lower price. Burke convinced J & J Chairman Richard Sellars that they should meet this competition head on by dropping Tylenol's price to meet Datril's. With Sellars's approval, Burke took Tylenol into the mass- marketing arena, slashed its price, and ended up beating not only Datril, but number one Anacin as well. This signaled the beginning of an ongoing battle between American Home Products Corporation, maker of Anacin, and McNeil Laboratories. Sellars, Hofmann's protégé, had become chairman in 1973, and served in that position for three years. Burke succeeded Sellars in 1976 as CEO and chairman of the board, and David R. Clare was appointed president. J & J had always maintained a balance between the many divisions in its operations, particularly between mass consumer products and specialized professional products. No single J & J product accounted for as much as five percent of the company's total sales. With Burke at the helm, consumer products began to be promoted aggressively, and Tylenol pain reliever became J & J's number one seller.

At the same time, Burke did not turn his back on the company's position as a leader in professional healthcare products. In May 1977 Extracorporeal Medical Specialties, a manufacturer of kidney dialysis and intravenous treatment products, became part of the corporation. Three years later, J & J acquired Iolab Corporation, maker of ocular lenses for cataract surgery, and effectively entered the field of eye care and ophthalmic pharmaceuticals. In 1981 the company extended its involvement in eye care through the acquisition of Frontier Contact Lenses. The increased in-house development of critical care products resulted in the creation of Critikon, Inc., in 1979, and in 1983 Johnson & Johnson Hospital Services was created to develop and implement corporate marketing programs.

1980s Tylenol Tampering Tragedy In September 1982 tragedy struck J & J when seven people died from ingesting Tylenol capsules that had been laced with cyanide. Advertising was canceled immediately, and J & J recalled all Tylenol products from store shelves. After the Food and Drug Administration (FDA) found that the tampering had been done at the retail level rather than during manufacturing, J & J was left with the problem of how to save its number one product and its reputation. In the week after the deaths, J & J's stock dropped 18 percent and its prime competitors' products, Datril and Anacin-3, were in such demand that supplies were back-ordered.

J & J was able to recoup its losses through several marketing strategies. The company ran a one-time ad that explained how to exchange Tylenol capsules for tablets or refunds and worked closely with the press, responding directly to reporters' questions as a means of keeping the public up to date. The company also placed a coupon for $2.50 off any Tylenol product in newspapers across the country to reimburse consumers for Tylenol capsules they may have discarded during the tampering incident and offer an incentive to purchase Tylenol in other forms.

Within weeks of the poisoning incidents, the FDA issued guidelines for tamper-resistant packaging for the entire food and drug industry. To bolster public confidence in its product, J & J used three layers of protection, two more than recommended, when Tylenol was put back on store shelves. Within months of the cyanide poisoning, J & J was gaining back its share of the pain-reliever market, and soon regained more than 90 percent of its former customers. By 1989 Tylenol sales were $500 million annually, and in 1990 the line was expanded into the burgeoning cold remedy market with several Tylenol Cold products; the following year saw the launch of Tylenol P.M., a sleep aid. James Burke's savvy, yet honest, handling of the Tylenol tampering incident earned him a spot in the National Business Hall of Fame, an honor awarded in 1990. Litigation over the incident was finally resolved in 1991, almost a decade after the initial tampering. McNeil Labs settled with over 30 survivors of the poisonings for more than $35 million. In 1989 Bristol-Myers launched an aggressive advertising campaign that positioned its Nuprin brand pain reliever in direct competition with Tylenol. The move compounded market share erosion from American Home Products' Advil ibuprofen. Both products claimed to work better than Tylenol's acetaminophen formulation.

There were a number of other important developments in the second half of the 1980s. In 1986 J & J acquired LifeScan, Inc., maker of at-home blood-monitoring products for diabetics. That same year, the company expanded its world leading position in baby care products through the acquisition of G.m.b.H., the market leader in Germany. Following the acquisition of Frontier Contact Lenses, which was renamed Vistakon, J & J introduced the Acuvue brand of disposable contact lenses in the United States in 1988. The popularity of the Acuvue lenses helped propel Vistakon into the number one position in contact lenses worldwide. In 1989 J & J and drug giant Merck & Co., Inc. entered into a joint venture-- Johnson & Johnson-Merck Consumer Pharmaceuticals Co.&mdashø develop OTC versions of Merck's prescription medications, initially for the U.S. market, later expanded to Europe and Canada. One of the first product lines developed by this venture was the Mylanta brand of gastrointestinal products.

Burke and Clare retired in 1989 and were succeeded by three executives: CEO and Chairman Ralph S. Larsen, who came from the consumer sector; Vice-Chairman Robert E. Campbell, who had headed the professional sector; and President Robert N. Wilson, who had headed the pharmaceutical sector. The three men were responsible for overseeing the network of 168 companies in 53 countries.

Larsen moved quickly to reduce some of the inefficiencies that a history of decentralization had caused. In 1989 the infant products division was joined with the health and dental units to form a broader consumer products segment, eliminating approximately 300 jobs in the process. Over the next two years, the reorganization was extended to overseas units. The number of professional operating departments in Europe was reduced from 28 to 18 through consolidation under three primary companies: Ethicon, Johnson & Johnson Medical, and Johnson & Johnson Professional Products. In 1990, meantime, J & J formed Ortho Biotech Inc. to consolidate the company's research in the burgeoning biotechnology field, an area J & J had been active in since the 1970s.

Dealmaking in the 1990s and Beyond J & J was able to counter increasing criticisms of rising healthcare costs in the United States and around the world in the 1990s due in part to the company's longstanding history of social responsibility. The company pioneered several progressive programs including child care, family leave, and 'corporate wellness' that were beginning to be recognized as healthcare cost reducers and productivity enhancers. In addition, weighted average compound prices of J & J's healthcare products, including prescription and OTC drugs and hospital and professional products, grew more slowly than the U.S. consumer price index from 1980 through 1992. These practices supported the company's claim that it was part of the solution to the healthcare crisis. In 1992 J & J instituted its 'Signature of Quality' program, which urged the corporation's operating companies to focus on three general goals: 'Continuously improving customer satisfaction, cost efficiency and the speed of bringing new products to market.'

J & J grew at a relatively slow pace in the early 1990s, in part because of the difficult economic climate. Revenues increased from $11.23 billion in 1990 to $14.14 billion in 1993, an increase of just 26 percent. A series of acquisitions in the mid-1990s, however, ushered in a period of more rapid growth, with revenues hitting $21.62 billion by 1996, a leap of 53 percent from the 1993 level. The skin care line had received a boost in 1993 through the purchase of RoC S.A. of France, a maker of hypoallergenic facial, hand, body, and other products under the RoC name. More significant was the acquisition the following year of Neutrogena Corporation for nearly $1 billion. Neutrogena was well-known for its line of dermatologist-recommended skin and hair care products. J & J spent another billion dollars in 1995 for the clinical diagnostics unit of Eastman Kodak Company, which was particularly strong in the areas of clinical chemistry, which involves the analysis of simple compounds in the body, and immuno-diagnostics. In 1997 J & J combined its existing Ortho Diagnostics Systems unit with the operations acquired from Kodak to form Ortho-Clinical Diagnostics, Inc. (LifeScan remained a separately run diagnostics company.)

Another subsidiary that grew through acquisitions in this period was Ethicon Endo-Surgery, Inc., which had been spun off from Ethicon in 1992 to concentrate on endoscopic, or minimally invasive, surgical instruments. J & J acquired Indigo Medical, which specialized in minimally invasive technology in urology and related areas, in 1996, while Biopsys Medical, Inc., specializing in minimally invasive breast biopsies, was purchased in 1997. Another large acquisition occurred in 1996 when J & J spent about $1.8 billion for Cordis Corporation, a world leader in the treatment of cardiovascular diseases through its stents, balloons, and catheters. In 1997, in exchange for several consumer products, J & J acquired the OTC rights to the Motrin brand of ibuprofen pain relievers from Pharmacia & . Other important developments during this period included the 1995 introduction of an Acuvue disposable contact lens designed to be worn for just one day but priced at a reasonable level, and the 1995 U.S. approval of the antacid Pepcid AC, an OTC version of Merck's Pepcid that was developed by the Johnson & Johnson- Merck joint venture.

The company's aggressive program of acquisition continued in the late 1990s, beginning with the 1998 purchase of DePuy, Inc. for $3.7 billion in cash, J & J's largest acquisition yet. DePuy was a leader in orthopedic products, such as hip replacement devices. J & J already marketed one of the leading knee replacement devices in the United States, making for a nice fit between the two companies. On the negative side, J & J was forced to initiate a restructuring in 1998 following a number of difficulties. J & J had been a pioneer in the market for coronary stents, devices used to keep arteries open following angioplasty, but its stent sales fell from $700 million in 1996 to just over $200 million in 1998 after competitors introduced second-generation stents and J & J did not. Also troubled was the firm's pharmaceutical operation, which in 1997 and 1998 had seen nine drugs in the development pipeline fail in testing, fail to get government approval, or be delayed. In late 1998 J & J announced that it would reduce its workforce by 4,100 and close 36 plants around the world over the succeeding 18 months. Taking $697 million in restructuring and in-process research and development charges, J & J aimed to save between $250 million and $300 million per year through this effort.

To bolster its drug R & D efforts, J & J completed its first major pharmaceutical deal since the 1961 purchase of Janssen Pharmaceutica. In October 1999 J & J merged with major biotechnology firm Centocor, Inc. in a $4.9 billion stock-for-stock transaction, the largest such deal in company history. With Centocor and Ortho Biotech under its wing, J & J was now one of the world's leading biotech firms. Soon after the merger with Centocor was completed, the FDA approved a key Centocor-developed drug, Remicade, for the treatment of rheumatoid arthritis. Centocor was also developing other pharmaceuticals in the areas of cancer, autoimmune diseases, and cardiology. Also in 1999 J & J acquired the dermatological skin care business of S.C. Johnson & Son, Inc.--which was primarily made up of the brand--for an undisclosed amount.

Despite its late 1990s troubles, J & J reported record results for 1999, earning $4.17 billion on revenues of $27.47 billion. Net earnings had nearly quadrupled since 1989, while net sales nearly tripled over the same period. The year 2000 got off to a rough start for the company, however, as it was forced to withdraw from the market a prescription heartburn medication, Propulsid, after the drug had been linked to 100 deaths and hundreds of cases of cardiac irregularity. Propulsid had nearly $1 billion in sales in 1999. Also in early 2000, J & J joined with General Electric Company's GE Medical Systems unit, Inc., , and Medtronic, Inc. in a venture to create a global Internet-based purchasing exchange for healthcare providers.

Principal Subsidiaries: Advanced Sterilization Products; Centocor; Cordis Corporation; DePuy; Ethicon, Inc.; Ethicon Endo-Surgery, Inc.; Independence Technology; Indigo Medical, Inc.; Janssen Pharmaceutica Inc.; Johnson & Johnson Consumer Products, Inc.; Johnson & Johnson Development Corporation; Johnson & Johnson Health Care Systems Inc.; Johnson & Johnson Medical; Johnson & Johnson-Merck Consumer Pharmaceuticals Co. (50%); Johnson & Johnson Sales and Logistics Company; Johnson & Johnson Vision Care, Inc.; LifeScan, Inc.; McNeil Consumer Healthcare; McNeil Specialty Products Company; Neutrogena Corporation; Noramco, Inc.; Ortho Biotech Inc.; Ortho-Clinical Diagnostics, Inc.; Ortho Dermatological; Ortho-McNeil Pharmaceutical, Inc.; Personal Products Company; R.W. Johnson Pharmaceutical Research Institute; Therakos, Inc. The company has additional subsidiaries in Canada, Argentina, Brazil, Chile, Colombia, Mexico, Panama, Peru, Uruguay, Venezuela, Austria, Belgium, the Czech Republic, France, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Poland, Portugal, Russia, Scotland, Slovenia, Spain, , , Turkey, the United Kingdom, Australia, China, Egypt, Hong Kong, India, Indonesia, Israel, Japan, Korea, Malaysia, Morocco, Pakistan, the Philippines, Singapore, South Africa, Taiwan, Thailand, the United Arab Emirates, and Zimbabwe. Principal Operating Units: Consumer and Personal Care Group; Medical Devices and Diagnostics Group; Pharmaceuticals Group. Principal Competitors: Abbott Laboratories; Affymetrix, Inc.; Alberto-Culver Company; American Home Products Corporation; Inc.; Aventis; Bausch & Lomb Incorporated; Baxter International Inc.; Bayer AG; Beckman Coulter, Inc.; Becton, Dickinson & Company; Bristol-Myers Squibb Company; Carter- Wallace, Inc.; Colgate-Palmolive Company; Dade Behring Inc.; The Dial Corporation; ; , Inc.; The Gillette Company; Glaxo Wellcome plc; Kimberly-Clark Corporation; L'Oréal USA, Inc.; Medtronic, Inc.; Merck & Co., Inc.; Minnesota Mining and Manufacturing Company; Nestlé S.A.; AG; Company; Pfizer Inc.; Pharmacia Corporation; The Procter & Gamble Company; Roche Holding Ltd.; SmithKline Beecham plc; St. Jude Medical, Inc.; Unilever; United States Surgical Corporation.

Certificate of Incorporation

Restated Certificate of Incorporation

Filed with the Secretary of State of New Jersey April 26, 1990 Amendments effective: May 19, 1992 May 21, 1996 May 22, 2001 April 27, 2006

RESTATED CERTIFICATE OF INCORPORATION OF JOHNSON & JOHNSON

Pursuant to Section 14A:9 5 of the New Jersey Business Corporation Act, Johnson & Johnson restates, and integrates its Certificate of Incorporation, as heretofore amended and restated, to read as follows.

FIRST : The name of the Corporation is "Johnson & Johnson".

SECOND : The address of the Corporation's registered office is One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933.

The name of the Corporation's registered agent at such address is M. H. Ullmann.

THIRD : The purpose for which the Corporation is organized is:

To engage in any activity within the purposes for which corporations may be organized under the New Jersey Business Corporation Act.

FOURTH : The aggregate number of shares of all classes of stock which the Corporation has authority to issue is Four Billion Three Hundred Twenty Two Million (4,322,000,000), divided into Two Million (2,000,000) shares of Preferred Stock without par value and Four Billion Three Hundred Twenty Million (4,320,000,000) shares of Common Stock of the par value of One Dollar ($1.00) each. The shares of any class of stock of the Corporation may be issued from time to time in such manner and for such lawful consideration as may from time to time be fixed by the Board of Directors and, in the case of shares of Preferred Stock, the Board of Directors shall have discretion to determine what portion of the consideration received for such shares to allocate to capital surplus.

The designations, preferences and voting and other rights of and restrictions and limitations on the Preferred Stock and the Common Stock of the Corporation shall be as follows:

A. PREFERRED STOCK :

The Preferred Stock may be issued from time to time by the Board of Directors in any amounts as Preferred Stock of one or more series, as hereinafter set forth, provided that no more than 2,000,000 shares of Preferred Stock may at any one time be outstanding. Upon the creation of any such series, the designation, rights, preferences, limitations, description and terms thereof, and number of shares therein, shall, subject to the terms of this Article FOURTH, be set forth in an amendment of the Certificate of Incorporation of the Corporation which the Board of Directors is hereby expressly authorized to make in accordance with the laws of the State of New Jersey. In particular, and without limiting the general power to provide for such other rights, preferences and priorities (not inconsistent with the Corporation's Certificate of Incorporation) as may be permitted to be fixed under the laws of the State of New Jersey as in effect at the time of the creation of any such series, the Board of Directors of the Corporation is hereby expressly authorized to create and provide for the issuance of series of Preferred Stock:

(a) entitling the holders thereof to cumulative, non cumulative or partially cumulative dividends; (b) entitling the holders thereof to receive dividends payable on a parity with, or in preference to, the dividends payable on any other class or series of capital stock of the Corporation;

(c) entitling the holders thereof to preferential rights upon the liquidation of, or upon any distribution of the assets of, the Corporation;

(d) convertible, at the option of the holder or of the Corporation or both, into shares of any other class or classes of capital stock of the Corporation or of any series of the same or any other class or classes;

(e) redeemable, in whole or in part, at the option of the Corporation, in cash, bonds or other property, at such price or prices, within such period or periods, and under such conditions as the Board of Directors shall so provide, including provision for the creation of a sinking fund for the redemption thereof; and

(f) lacking voting rights or having limited voting rights or enjoying special or multiple voting rights.

The Board of Directors may change the designation, rights, preferences, limitations, description and terms of, and number of shares in, any series as to which no shares have theretofore been issued

Board Of Directors Our Board of Directors is a group of people who meet a set of General Criteria for membership and are elected to the Board by our shareholders each year. We currently have 13 Board members, 12 of whom are "independent" under the rules of the New York Stock Exchange.

Our Board holds the ultimate authority of our Company, except to the extent that shareholders are granted certain powers under the Company's Certificate of Incorporation and By-Laws.

The Board:

 Appoints senior management of the Company, who are responsible for conducting business and operations,  Provides oversight of management, and  Forms standing Board Committees to assist in fulfilling its obligations.

Our Management Team meets throughout each year with our Board members to discuss strategic direction and major developments of the Company's various businesses.

Our Directors are:

Alex Gorsky Chairman, Board of Directors; Chief Executive Officer; Chairman, Executive Committee, Johnson & Johnson

Mary Sue Coleman President, University of Michigan

James G. Cullen Retired President and Chief Operating Officer, Bell Atlantic Corporation

Ian E. L. Davis Senior Advisor, Apax Partners; Former Chairman and Worldwide Managing Director, McKinsey & Company

Michael M.E. Johns Professor, Emory School of Medicine and Rollins School of Public Health; Chancellor and Executive Vice President of Health Affairs Emeritus, Emory University

Susan L. Lindquist Member and Former Director, Whitehead Institute for Biomedical Research; Professor of Biology, Massachusetts Institute of Technology

Mark B. McClellan Senior Fellow in Economic Studies and Director of the Initiative on Value and Innovation in Health Care, Brookings Institution

Anne M. Mulcahy Lead Director, Board of Directors, Johnson & Johnson Former Chairman and Chief Executive Officer, Xerox Corporation

Leo F. Mullin Retired Chairman and Chief Executive Officer, Delta Air Lines, Inc.

William D. Perez Senior Advisor, Greenhill & Co., Inc.; Retired President and Chief Executive Officer, Wm. Wrigley Jr. Company

Charles Prince Retired Chairman and Chief Executive Officer, Citigroup Inc.

A. Eugene Washington Vice Chancellor of Health Sciences, Dean of the David Geffen School of Medicine at the University of California, Los Angeles (UCLA); Chief Executive Officer of the UCLA Health System

Ronald A. Williams Former Chairman and Chief Executive Officer, Aetna Inc.

Johnson & Johnson’s antipsychotic medicine Risperdal Consta

Pharmaceutical pitchmen may weigh their words more carefully from now on afterJohnson & Johnson (JNJ) agreed on Monday to pay $2.2 billion to settle charges that it was overly broad in its marketing. The settlement with the federal government and 45 states ends a decade-long inquiry into Risperdal Consta, one of the company’s best-selling drugs approved by regulators to treat schizophrenia in adults. J&J allegedly tried to broaden the market a bit, pitching the drug as a treatment for symptoms triggered by afflictions ranging from dementia to anxiety. The case rests on a strange wrinkle in U.S. health-care rules: Physicians can prescribe a drug to treat unapproved medical conditions even though it remains illegal for the drugmaker to market its pills for those treatments.

J&J also faced accusations of setting up an illegal kickback system with Omnicare(OCR), a huge supplier of nursing-home drugs, according to the investigation. “These companies lined their pockets at the expense of the American taxpayers, patients, and the private insurance industry,” U.S. Attorney General Eric Holder said at a news conference in Washington today. The settlement is not an admission of guilt, and J&J denied the allegations. VIDEO: $36M: Average Class Action Settlement in 2012

The deal represents the government’s third-largest settlement with a pharmaceutical company, yet the deception may still have been worth it for J&J: It sold $24.2 billion of Risperdal from 2003 to 2010. In 2007 alone, Risperdal accounted for 6 percent of all sales for the company. Patent protection expired in 2008, so the drug is now much less critical to J&J’s financial health.

The settlement also came as no big surprise, as J&J has been setting aside hundreds of millions of dollars in expectation of such a deal. In August the company said the resolution of the charges would not have “a material adverse effect” on its finances. The $2.2 billion agreement represents just 12.5 percent of J&J’s revenue in itsbullish recent quarter. Johnson & Johnson

All amounts in Millions of US Dollars except per share items

2008/12 Select start date for annual reports

BALANCE SHEET (At A Glance)

2008/12 2009/12 2010/12 2011/12 2012/12

INDICATORS

Year End 2008/12 2009/12 2010/12 2011/12 2012/12 Date

Date Preliminary 2009-02-24 2010-01-28 2011-01-26 2012-01-25 2013-01-23 Data Loaded

Earnings Period F F F F F Indicator

Quarterly 4 4 4 4 4 Indicator

Basic Earnings Y Y Y Y Y Indicator

Template Indicator

Preliminary Full Context N N N N N Ind

Projected 0000-00-00 0000-00-00 0000-00-00 0000-00-00 0000-00-00 Fiscal Year Date

Number Of Months Last 12 12 12 12 12 Report Period

INCOME STATEMENT

Operating 63,747.0 61,897.0 61,587.0 65,030.0 67,224.0 Revenue

Total 63,747.0 61,897.0 61,587.0 65,030.0 67,224.0 Revenue

Adjustments 0.0 0.0 0.0 0.0 0.0 To Revenue

Cost Of Sales 15,679.0 15,673.0 15,853.0 17,202.0 17,992.0

Cost Of Sales With 18,511.0 18,447.0 18,792.0 20,360.0 21,658.0 Depreciation

Gross Margin 48,068.0 46,224.0 45,734.0 47,828.0 49,232.0

Gross Operating 48,068.0 46,224.0 45,734.0 47,828.0 49,232.0 Profit

Research & Development 7,577.0 6,986.0 6,844.0 7,548.0 7,665.0 (R&D) Expense

Selling, General & Administrativ 21,490.0 19,801.0 19,424.0 20,969.0 20,869.0 e (SG&A) Expense

Advertising 0.0 0.0 0.0 0.0 0.0

Operating 15,988.0 15,590.0 16,527.0 16,153.0 15,869.0 Income

EBITDA 19,001.0 19,437.0 19,466.0 19,311.0 20,698.0

Depreciation 2,832.0 2,774.0 2,939.0 3,158.0 3,666.0

Depreciation (Unrecognize 0.0 0.0 0.0 0.0 0.0 d) Amortization 0.0 0.0 0.0 0.0 0.0

Amortization 0.0 0.0 0.0 0.0 0.0 Of Intangibles

Operating Profit After 16,169.0 16,663.0 16,527.0 16,153.0 17,032.0 Depreciation

Interest 361.0 90.0 107.0 91.0 64.0 Income

Earnings From Equity 0.0 0.0 0.0 0.0 0.0 Interest

Other Income 1,015.0 526.0 768.0 -3,312.0 -1,626.0 Net

Income, Acquired In 181.0 0.0 0.0 0.0 1,163.0 Process R&A

Income, Restructuring 0.0 -1,073.0 0.0 0.0 0.0 And M&A

Other Special -362.0 0.0 0.0 0.0 -2,326.0 Charges

Special Income -181.0 -1,073.0 0.0 0.0 -1,163.0 Charges

EBIT 17,364.0 16,206.0 17,402.0 12,932.0 14,307.0

Interest 435.0 451.0 455.0 571.0 532.0 Expense

Pre-Tax 16,929.0 15,755.0 16,947.0 12,361.0 13,775.0 Income

Income 3,980.0 3,489.0 3,613.0 2,689.0 3,261.0 Taxes

Minority 0.0 0.0 0.0 0.0 -339.0 Interest

Pref. Securities Of 0.0 0.0 0.0 0.0 0.0 Subsid. Trust

Income 16,929.0 15,755.0 16,947.0 12,361.0 13,775.0 Before Income Taxes

Net Income (Continuing 12,949.0 12,266.0 13,334.0 9,672.0 10,514.0 Operations)

Net Income (Discontinued 0.0 0.0 0.0 0.0 0.0 Operations)

Net Income (Total 12,949.0 12,266.0 13,334.0 9,672.0 10,514.0 Operations)

Extraordinary Income/Losse 0.0 0.0 0.0 0.0 0.0 s

Income From Cum. Effect 0.0 0.0 0.0 0.0 0.0 Of Acct. Change

Income From Tax Loss 0.0 0.0 0.0 0.0 0.0 Carryforward

Other 0.0 0.0 0.0 0.0 0.0 Gains/Losses

Total Net 12,949.0 12,266.0 13,334.0 9,672.0 10,853.0 Income

Normalized 13,130.0 13,339.0 13,334.0 9,672.0 11,677.0 Income

Net Income Available For 12,949.0 12,266.0 13,334.0 9,672.0 10,514.0 Common

Preferred 0.0 0.0 0.0 0.0 0.0 Dividends

Excise Taxes 0.0 0.0 0.0 0.0 0.0

*

Basic EPS 4.62 4.45 4.85 3.54 3.94 (Continuing)

Basic EPS 0.00 0.00 0.00 0.00 0.00 (Discontinued )

Basic EPS From Total 4.62 4.45 4.85 3.54 3.94 Operations

Basic EPS (Extraordinar 0.00 0.00 0.00 0.00 0.00 y Items)

Basic EPS (Cum. Effect 0.00 0.00 0.00 0.00 0.00 Of Acct. Change)

Basic EPS (Tax Loss 0.00 0.00 0.00 0.00 0.00 Carry Forward)

Basic EPS (Other 0.00 0.00 0.00 0.00 0.00 Gains/Losses )

Basic EPS - 4.62 4.45 4.85 3.54 3.94 Total

Basic EPS - 4.68 4.84 4.85 3.54 4.38 Normalized

*

Diluted EPS 4.57 4.40 4.78 3.49 3.86 (Continuing)

Diluted EPS (Discontinued 0.00 0.00 0.00 0.00 0.00 )

Diluted EPS From Total 4.57 4.40 4.78 3.49 3.86 Operations

Diluted EPS (Extraordinar 0.00 0.00 0.00 0.00 0.00 y)

Diluted EPS (Cum. Effect 0.00 0.00 0.00 0.00 0.00 Of Acct. Change) Diluted EPS (Tax Loss 0.00 0.00 0.00 0.00 0.00 Carry Forward)

Diluted EPS (Other 0.00 0.00 0.00 0.00 0.00 Gains/Losses )

Diluted EPS 4.57 4.40 4.78 3.49 3.86 - Total

Diluted EPS 4.63 4.78 4.78 3.49 4.29 - Normalized

Dividends Paid Per 1.80 1.93 2.11 2.25 2.40 Share (DPS)

INCOME STATEMENT (YEAR-TO-DATE)

Revenue 63,747.0 61,897.0 61,587.0 65,030.0 67,224.0 (YTD)

Net Income From Total 12,949.0 12,266.0 13,334.0 9,672.0 10,514.0 Operations (YTD)

EPS From Total 4.57 4.40 4.78 3.49 3.86 Operations (YTD)

Dividends Paid Per 1.80 1.93 2.11 2.25 2.40 Share (YTD)

BALANCE SHEET

ASSETS

Cash & 10,768.0 15,810.0 19,355.0 24,542.0 14,911.0 Equivalents

Restricted 0.0 0.0 0.0 0.0 0.0 Cash

Marketable 2,041.0 3,615.0 8,303.0 7,719.0 6,178.0 Securities Accounts 9,719.0 9,646.0 9,774.0 10,581.0 11,309.0 Receivable

Loans 0.0 0.0 0.0 0.0 0.0 Receivable

Other 0.0 0.0 0.0 0.0 0.0 Receivable

Receivables 9,719.0 9,646.0 9,774.0 10,581.0 11,309.0

Inventories, Raw 839.0 1,144.0 1,073.0 1,206.0 1,416.0 Materials

Inventories, Work In 1,372.0 1,395.0 1,460.0 1,637.0 2,262.0 Progress

Inventories, Purchased 0.0 0.0 0.0 0.0 0.0 Components

Inventories, Finished 2,841.0 2,641.0 2,845.0 3,442.0 3,817.0 Goods

Inventories, 0.0 0.0 0.0 0.0 0.0 Other

Inventories, Adjustments 0.0 0.0 0.0 0.0 0.0 & Allowances

Inventories 5,052.0 5,180.0 5,378.0 6,285.0 7,495.0

Prepaid 3,367.0 2,497.0 2,273.0 2,633.0 3,084.0 Expenses

Current Defered 3,430.0 2,793.0 2,224.0 2,556.0 3,139.0 Income Taxes

Other Current 0.0 0.0 0.0 0.0 0.0 Assets

Total Current 34,377.0 39,541.0 47,307.0 54,316.0 46,116.0 Assets

Land And 886.0 714.0 738.0 754.0 793.0 Improvement s

Building And Improvement 7,720.0 8,863.0 9,079.0 9,389.0 10,000.0 s

Machinery, Furniture & 10,000.0 10,000.0 10,000.0 10,000.0 10,000.0 Equipment

Construction 3,552.0 2,521.0 2,577.0 2,504.0 2,740.0 In Progress

Other Fixed 0.0 0.0 0.0 0.0 0.0 Assets

Total Fixed 27,392.0 29,251.0 30,426.0 31,829.0 34,654.0 Assets

Gross Fixed 27,392.0 29,251.0 30,426.0 31,829.0 34,654.0 Assets

Accumulated 13,027.0 14,492.0 15,873.0 17,090.0 18,557.0 Depreciation

Net Fixed 14,365.0 14,759.0 14,553.0 14,739.0 16,097.0 Assets

Intangibles 13,976.0 16,323.0 16,716.0 18,138.0 28,752.0

Cost In 13,719.0 14,862.0 15,294.0 16,138.0 22,424.0 Excess

Non-Current Deferred 5,841.0 5,507.0 5,096.0 6,540.0 4,541.0 Income Taxes

Other Non- Current 2,634.0 3,690.0 3,942.0 3,773.0 3,417.0 Assets

Total Non- Current 50,535.0 55,141.0 55,601.0 59,328.0 75,231.0 Assets

Total Assets 84,912.0 94,682.0 102,908.0 113,644.0 121,347.0

Inventory Valuation 2 2 2 2 2 Method EQUITY & LIABILITIES

Accounts 7,503.0 5,541.0 5,623.0 5,725.0 5,831.0 Payable

Notes 3,732.0 6,318.0 0.0 0.0 4,676.0 Payable

Short-Term 0.0 0.0 7,617.0 6,658.0 0.0 Debt

Accrued 0.0 0.0 0.0 0.0 0.0 Expenses

Accrued 9,200.0 9,430.0 9,254.0 9,574.0 12,691.0 Liabilities

Deferred 0.0 0.0 0.0 0.0 0.0 Revenues

Current Deferred 0.0 0.0 0.0 0.0 0.0 Income Taxes

Other Current 417.0 442.0 578.0 854.0 1,064.0 Liabilities

Total Current 20,852.0 21,731.0 23,072.0 22,811.0 24,262.0 Liabilities

Long-Term 8,120.0 8,223.0 9,156.0 12,969.0 11,489.0 Debt

Capital Lease 0.0 0.0 0.0 0.0 0.0 Obligations

Deferred Income 1,432.0 1,424.0 1,447.0 1,800.0 3,136.0 Taxes

Other Non- Current 11,997.0 12,716.0 12,654.0 18,984.0 17,634.0 Liabilities

Minority Interest 0.0 0.0 0.0 0.0 0.0 Liability

Preferred Secur. Of 0.0 0.0 0.0 0.0 0.0 Subsid. Trust Preferred Equity 0.0 0.0 0.0 0.0 0.0 Outside Stock Equity

Total Non- Current 21,549.0 22,363.0 23,257.0 33,753.0 32,259.0 Liabilities

Total 42,401.0 44,094.0 46,329.0 56,564.0 56,521.0 Liabilities

Preferred 0.0 0.0 0.0 0.0 0.0 Stock Equity

Common 42,511.0 50,588.0 56,579.0 57,080.0 64,826.0 Stock Equity

Common Par 3,120.0 3,120.0 3,120.0 3,120.0 3,120.0

Additional Paid-In 0.0 0.0 0.0 0.0 0.0 Capital

Cumulative Translation 0.0 0.0 0.0 0.0 0.0 Adjustments

Retained 63,379.0 70,306.0 77,773.0 81,251.0 85,992.0 Earnings

Treasury -19,033.0 -19,780.0 -20,783.0 -21,659.0 -18,476.0 Stock

Other Equity -4,955.0 -3,058.0 -3,531.0 -5,632.0 -5,810.0 Adjustments

Total 50,631.0 58,811.0 65,735.0 70,049.0 76,315.0 Capitalization

Total Equity 42,511.0 50,588.0 56,579.0 57,080.0 64,826.0

Total Liabilities & 84,912.0 94,682.0 102,908.0 113,644.0 121,347.0 Stock Equity

*

Cash Flow 15,781.0 15,040.0 16,273.0 12,830.0 14,180.0

Working 13,525.0 17,810.0 24,235.0 31,505.0 21,854.0 Capital Free Cash 5,668.0 6,409.0 6,928.0 2,452.0 1,362.0 Flow

Invested 50,631.0 58,811.0 65,735.0 70,049.0 76,315.0 Capital

*

Shares Out (Common 2,765.8 2,754.3 2,738.1 2,724.4 2,795.3 Class Only)

Preferred 0.0 0.0 0.0 0.0 0.0 Shares

Total Ordinary 0.0 0.0 0.0 0.0 0.0 Shares

Total Common 2,765.8 2,754.3 2,738.1 2,724.4 2,795.3 Shares Out

Treasury 350.7 365.5 381.7 395.5 682.7 Shares

Basic Weighted 2,802.5 2,759.5 2,751.4 2,736.0 2,753.3 Shares

Diluted Weighted 2,835.6 2,789.1 2,788.8 2,775.3 2,812.6 Shares

Number Of 118700 115500 114000 117900 127600 Employees

Number Of Part-Time Employees

CASH-FLOW STATEMENT

OPERATING ACTIVITIES

Net 12,949.0 12,266.0 13,334.0 9,672.0 10,514.0 Income/Loss

Depreciation 2,832.0 2,774.0 2,939.0 3,158.0 3,666.0

Amortization 0.0 0.0 0.0 0.0 0.0 Amortization 0.0 0.0 0.0 0.0 0.0 Of Intangibles

Deferred Income 22.0 -436.0 356.0 -836.0 -39.0 Taxes

Operating 181.0 0.0 0.0 0.0 0.0 Gains

Extraordinary 0.0 0.0 0.0 0.0 0.0 Gains

(Increase) Decrease In -736.0 453.0 -207.0 -915.0 -9.0 Receivables

(Increase) Decrease In -101.0 95.0 -196.0 -715.0 -1.0 Inventories

(Increase) Decrease In 0.0 0.0 0.0 0.0 0.0 Prepaid Expenses

(Increase) Decrease In 0.0 0.0 0.0 0.0 0.0 Other Current Assets

Decrease (Increase) In -272.0 -507.0 20.0 493.0 2,768.0 Payables

Decrease (Increase) In 0.0 0.0 0.0 0.0 0.0 Other Current Liabilities

Decrease (Increase) In Other -616.0 1,240.0 -487.0 2,788.0 -4,727.0 Working Capital

Other Non- 713.0 686.0 626.0 653.0 3,224.0 Cash Items

Net Cash From 14,972.0 16,571.0 16,385.0 14,298.0 15,396.0 Continuing Operations Net Cash From 0.0 0.0 0.0 0.0 0.0 Discontinued Operations

Net Cash From Total 14,972.0 16,571.0 16,385.0 14,298.0 15,396.0 Operating Activities

INVESTING ACTIVITIES

Sale Of Property, 0.0 0.0 0.0 0.0 1,509.0 Plant & Equipment

Sale Of Long- Term 3,059.0 7,232.0 11,101.0 30,396.0 14,797.0 Investments

Sale Of Short-Term 0.0 0.0 0.0 0.0 0.0 Investments

Purchase Of Property, -3,066.0 -2,365.0 -2,384.0 -2,893.0 -2,934.0 Plant & Equipment

Acquisitions -1,214.0 -2,470.0 -1,269.0 -2,797.0 -4,486.0

Purchase Of Long-Term -3,668.0 -10,040.0 -15,788.0 -29,882.0 -13,434.0 Investments

Purchase Of Short-Term 0.0 0.0 0.0 0.0 0.0 Investments

Other Investing 702.0 45.0 486.0 564.0 38.0 Changes, Net

Cash From Discontinued 0.0 0.0 0.0 0.0 0.0 Investing Activities

Net Cash From -4,187.0 -7,598.0 -7,854.0 -4,612.0 -4,510.0 Investing Activities FINANCING ACTIVITIES

Issuance Of 10,068.0 9,493.0 8,992.0 14,199.0 3,313.0 Debt

Issuance Of 1,486.0 882.0 1,226.0 1,246.0 2,720.0 Capital Stock

Repayment Of Long-Term -7,343.0 -7,010.0 -6,597.0 -11,216.0 -6,979.0 Debt

Repurchase Of Capital -6,651.0 -2,130.0 -2,797.0 -2,525.0 -12,919.0 Stock

Payment Of Cash -5,024.0 -5,327.0 -5,804.0 -6,156.0 -6,614.0 Dividends

Other Financing 0.0 0.0 0.0 0.0 -83.0 Charges, Net

Cash From Discontinued 0.0 0.0 0.0 0.0 0.0 Financing Activities

Net Cash From -7,464.0 -4,092.0 -4,980.0 -4,452.0 -20,562.0 Financing Activities

NET CASH FLOW

Effect Exchange -323.0 161.0 -6.0 -47.0 45.0 Rate Changes

Net Change In Cash & 2,998.0 5,042.0 3,545.0 5,187.0 -9,631.0 Equivalents

Cash At Beginning Of 7,770.0 10,768.0 15,810.0 19,355.0 24,542.0 Period

Cash End Of 10,768.0 15,810.0 19,355.0 24,542.0 14,911.0 Period

* Foreign Sales 31,438.0 31,008.0 32,137.0 36,122.0 37,394.0

Domestic 32,309.0 30,889.0 29,450.0 28,908.0 29,830.0 Sales

PricewaterhouseCoo PricewaterhouseCoo PricewaterhouseCoo PricewaterhouseCoo PricewaterhouseCoo Auditor Name pers pers LLP pers LLP pers LLP pers LLP

Auditor UQ UQ UQ UQ UQ Report

RATIOS CALCULATIONS

PROFIT MARGINS

Close PE 13.1 14.6 12.9 18.8 18.2 Ratio

High PE 15.9 14.9 13.8 19.5 18.8 Ratio

Low PE Ratio 11.4 10.5 11.9 16.5 16.0

Gross Profit 75.4 74.7 74.3 73.5 73.2 Margin

Pre-Tax Profit 26.6 25.5 27.5 19.0 20.5 Margin

Post-Tax 20.3 19.8 21.7 14.9 15.6 Profit Margin

Net Profit 20.3 19.8 21.7 14.9 15.6 Margin

Interest Coverage 39.9 35.9 38.2 22.6 26.9 (Cont. Operations)

Interest As % Of Invested 0.9 0.8 0.7 0.8 0.7 Capital

Effective Tax 23.5 22.1 21.3 21.8 23.7 Rate

Income Per 109090 106199 116965 82036 82398 Employee

NORMALIZED RATIOS Normalized Close PE 12.9 13.5 12.9 18.8 16.3 Ratio

Normalized High PE 15.7 13.7 13.8 19.5 17.0 Ratio

Normalized 11.2 9.7 11.9 16.5 14.4 Low PE Ratio

Normalized Net Profit 20.6 21.6 21.7 14.9 17.4 Margin

Normalized 30.9 26.4 23.6 16.9 18.0 ROE

Normalized 15.5 14.1 13.0 8.5 9.6 ROA

Normalized 25.9 22.7 20.3 13.8 15.3 ROCI

Normalized Income Per 110615 115489 116965 82036 91513 Employee

SOLVENCY RATIOS

Quick Ratio 1.1 1.3 1.6 1.9 1.3

Current Ratio 1.6 1.8 2.1 2.4 1.9

Payout Ratio 39 44 44 64 62

Total Debt/Equity 0.28 0.29 0.30 0.34 0.25 Ratio

Long-Term Debt/Total 0.16 0.14 0.14 0.19 0.15 Capital

EFFICIENCY RATIOS

Leverage 2.0 1.9 1.8 2.0 1.9 Ratio

Asset 0.8 0.7 0.6 0.6 0.6 Turnover Cash As % 16.9 25.5 31.4 37.7 22.2 Of Revenue

Receivables As % Of 15.2 15.6 15.9 16.3 16.8 Revenue

SG&A As % 33.7 32.0 31.5 32.2 31.0 Of Revenue

R&D As % Of 11.9 11.3 11.1 11.6 11.4 Revenue

ACTIVITY RATIOS

Revenue Per 5.92 3.92 3.18 2.65 4.51 $ Cash

Revenue Per 4.44 4.19 4.23 4.41 4.18 $ Plant (Net)

Revenue Per $ Common 1.50 1.22 1.09 1.14 1.04 Equity

Revenue Per $ Invested 1.26 1.05 0.94 0.93 0.88 Capital

LIQUIDITY RATIOS

Receivables 6.7 6.4 6.3 6.4 6.1 Turnover

Inventory 3.1 3.1 3.0 2.9 2.6 Turnover

Receivables Per Day 54.89 56.10 57.13 58.58 60.56 Sales

Sales Per $ 6.56 6.42 6.30 6.15 5.94 Receivables

Sales Per $ 12.62 11.95 11.45 10.35 8.97 Inventory

Revenue/Ass 0.8 0.7 0.6 0.6 0.6 ets

Number Of 117 118 120 122 138 Days Cost Of Goods In Inventory

Current Assets Per 12.43 14.36 17.28 19.94 16.50 Share

Total Assets 30.70 34.38 37.58 41.71 43.41 Per Share

Intangibles As % Of 65.1 61.6 56.6 60.0 78.9 Book-Value

Inventory As % Of 7.9 8.4 8.7 9.7 11.1 Revenue

CAPITAL STRUCTURE RATIOS

Long-Term Debt Per 2.94 2.99 3.34 4.76 4.11 Share

Current Liabilities Per 7.54 7.89 8.43 8.37 8.68 Share

Cash Per 3.89 5.74 7.07 9.01 5.33 Share

LT-Debt To 0.19 0.16 0.16 0.23 0.18 Equity Ratio

LT-Debt As % Of Invested 16.0 14.0 13.9 18.5 15.1 Capital

LT-Debt As % 19.2 18.6 19.8 22.9 20.3 Of Total Debt

Total Debt As % Total 49.9 46.6 45.0 49.8 46.6 Assets

Working Captial As % 31.8 35.2 42.8 55.2 33.7 Of Equity

Revenue Per 23.05 22.47 22.49 23.87 24.05 Share

Book Value 15.37 18.37 20.66 20.95 23.19 Per Share Tangible Book Value 5.36 7.04 8.97 8.37 4.88 Per Share

Price/Revenu 2.60 2.87 2.75 2.75 2.91 e Ratio

Price/Equity 3.89 3.51 2.99 3.13 3.02 Ratio

Price/Tangibl 11.16 9.15 6.90 7.84 14.36 e Book Ratio

Working Capital As % 8.2 10.0 14.3 17.6 11.2 Of Price

PROFITABILITY

Working Capital Per 4.89 6.47 8.85 11.56 7.82 Share

Cash Flow 5.71 5.46 5.94 4.71 5.07 Per Share

Free Cash Flow Per 2.05 2.33 2.53 0.90 0.49 Share

Return On Stock Equity 30.5 24.2 23.6 16.9 16.2 (ROE)

Return On Capital 25.6 20.9 20.3 13.8 13.8 Invested (ROCI)

Return On 15.2 13.0 13.0 8.5 8.7 Assets (ROA)

Price/Cash 10.5 11.8 10.4 13.9 13.8 Flow Ratio

Price/Free Cash Flow 29.2 27.6 24.4 72.9 143.1 Ratio

Sales Per 537043 535905 540237 551569 526834 Employee AGAINST THE INDUSTRY RATIOS

% Of Sales- 15.1 16.2 14.3 15.2 16.4 To-Industry

% Of Earnings-To- 16.7 13.8 20.3 24.1 16.6 Industry

% Of EPS- 193.2 147.6 221.0 146.4 151.5 To-Industry

% Of Price- 179.3 177.3 176.3 169.3 165.6 To-Industry

% Of PE-To- 93.0 120.1 79.7 115.4 109.4 Industry

% Of Price/Book- 138.4 141.0 128.9 119.0 104.5 To-Industry

% Of Price/Sales- 113.5 107.1 120.1 108.3 100.3 To-Industry

% Of Price/Cashflo 120.9 134.1 107.8 96.7 112.1 w-To-Industry

% Of Pric/Free 72.6 -76.1 16.7 214.4 365.0 Cashlow-To- Industry

% Of Debt/Equity- 63.3 45.7 47.1 71.9 50.0 To-Industry

% Of Current Ratio-To- 100.0 105.9 123.5 141.2 118.8 Industry

% Of Gross Profit Margin- 95.6 94.9 96.1 94.5 94.6 To-Industry

% Of Pre-Tax Profit Margin- 112.2 94.1 141.0 89.2 98.6 To-Industry

% Of Post- 113.4 93.0 143.7 163.7 109.9 Tax Profit Margin-To- Industry

% Of Net Profit Margin- 110.3 85.0 142.8 158.5 101.3 To-Industry

% Of ROE- 134.4 112.0 152.3 172.4 105.2 To-Industry

% Of Leverage-To- 90.9 90.5 85.7 95.2 86.4 Industry