CORPORATE GOVERNANCE AND MANAGEMENT'S RESPONSIBILITY TABLE OF CONTENTS Johnson & Johnson is governed by the values set forth in Our Credo, created by General Robert Wood Johnson in 1943. These principles have guided us over the years and continue to set the tone of integrity for the entire Company. At all levels, the employees of Johnson & Johnson are committed to the ethical principles embodied in Our Credo and these principles have been woven into the fabric of the Company. The Credo values extend to our accounting and financial reporting responsibilities that we have to our shareholders and investors. We, the management of Johnson & Johnson, are responsible for the integrity and objectivity of the accompany- ing financial statements and related information. We are also responsible for ensuring that financial data are reported accu- rately and in a manner that facilitates the understanding of this data. As evidence of our commitment to this responsibility, we maintain a well-designed system of internal accounting con- trols, encourage strong and effective corporate governance from our Board of Directors, continuously review our business results and strategic choices and focus on financial stewardship. Our corporate staff of professionally trained internal audi- tors, who travel worldwide, monitor our system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded and that transactions and events are recorded properly. Our internal controls include self- assessments and internal reviews of our operating companies. While most of the groundwork surrounding compliance with Section 404 of the Sarbanes-Oxley Act of 2002 was firmly in place, the Company continued to invest significant time and resources in 2005 to ensure continued compliance. Based on the work performed, we have concluded that our internal con- trol over financial reporting was effective as of January 1, 2006. We refer you to Management's Report on Internal Control over Financial Reporting on page 64. We also require the management teams of our operating companies to certify their compliance with our Policy on Busi- ness Conduct and we have a systematic program to ensure compliance with these policies at all employee levels. PricewaterhouseCoopers LLP, an independent registered public accounting firm, is engaged to perform an integrated Management's Discussion and Analysis 28 Organization and Business Segments 28 Results of Operations 29 Analysis of Sales by Business Segments 32 Analysis of Consolidated Earnings Before Provision for Taxes on Income 34 Liquidity and Capital Resources 36 Other Information 38 Cautionary Factors That May Affect Future Results audit of our consolidated financial statements and internal control over financial reporting. Their Report of Independent Registered Public Accounting Firm is on page 65. Our Audit Committee of the Board of Directors is composed solely of independent directors with the financial knowledge and experience to provide appropriate oversight. We review internal control matters and key accounting and financial reporting issues with the Audit Committee on a regular basis. In addition, the independent auditors, the General Counsel and the Vice President of Internal Audit regularly meet in private sessions with our Audit Committee to discuss the results of their work including observations on the adequacy of internal financial controls, the quality of financial reporting and confirmation that they are properly discharging their responsibilities and other relevant matters. Our Executive Committee is continuously involved in the review of financial results as well as developing and understanding strategies and key initiatives for long-term growth. Our intent is to ensure that we maintain objectivity in our business assessments, constructively challenge the approach to business opportunities and issues and monitor our business results and the related controls. Our consolidated financial statements and financial data that follow have been prepared in conformity with accounting principles generally accepted in the United States of America and include amounts that are based upon our best judgments. We are committed to present and discuss results of operations in a clear and transparent manner in order to provide timely, accurate and understandable information to our shareholders. William C. Weldon Robert J. Darretta Chairman, Board of Vice Chairman, Board of Directors, and Chief Directors, and Chief Executive Officer Financial Officer Audited Consolidated Financial Statements 39 Consolidated Balance Sheets 40 Consolidated Statements of Earnings 41 Consolidated Statements of Equity 42 Consolidated Statements of Cash Flows 43 Notes to Consolidated Financial Statements 64 Management's Report on Internal Control over Financial Reporting 65 Report of Independent Registered Public Accounting Firm 66 Summary of Operations and Statistical Data 1995–2005 67 Reconciliation of Non-GAAP Measures JOHNSON & JOHNSON 2005 ANNUAL REPORT PAGE 27

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