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## Corporate Governance and Management’s Responsibility 

Johnson & Johnson is guided 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 embod- ied in Our Credo and these principles have been woven into the fabric of the Company. 

The values articulated in Our Credo extend to our accounting and financial responsibilities to Johnson & Johnson shareholders and investors. We, the management of Johnson & Johnson, are responsible for the integrity and objectivity of the accompanying financial statements and related information. We are also responsi- ble for ensuring that financial data is reported accurately 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 controls, 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 auditors, 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. 

During 2010, the Company continued to invest significant time and resources in order to ensure compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Based on the work performed, we have concluded that our internal control over financial reporting was effective as of January 2, 2011. We refer you to Management’s Report on Internal Control Over Financial Reporting on page 73. 

We require the management teams of our operating compa- nies to certify their compliance with our Policy on Business Conduct, which sets forth the Company’s commitment to conduct its busi- ness affairs with integrity and comply with the governing laws and regulations. We have a systematic program designed to ensure compliance with these policies and provide means of reporting any concerns about violations of the policy. Please visit our website at www.investor.jnj.com/governance/conduct.cfm to view our Policy on Business Conduct. 

## Table of Contents 

## MANAGEMENT’S DISCUSSION AND ANALYSIS 

30 Organization and Business Segments 

30 Results of Operations 

31 Analysis of Sales by Business Segments 

33 Analysis of Consolidated Earnings Before Provision for Taxes on Income 

36 Liquidity and Capital Resources 

37 Other Information 

40 Cautionary Factors That May Affect Future Results 

PricewaterhouseCoopers LLP, an independent registered public accounting firm, is engaged to perform an integrated audit of our consolidated financial statements and internal control over financial reporting. The Report of Independent Registered Public Accounting Firm is on page 72. 

The Audit Committee of our 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 inde- pendent auditors, the General Counsel, the Chief Financial Officer, the Chief Compliance Officer 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 commit- ted to present and discuss results of operations in a clear and transparent manner in order to provide timely, comprehensive and understandable information to our shareholders. 

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## AUDITED CONSOLIDATED FINANCIAL STATEMENTS 

41 Consolidated Balance Sheets 

42 Consolidated Statements of Earnings 

43 Consolidated Statements of Equity 

44 Consolidated Statements of Cash Flows 

45 Notes to Consolidated Financial Statements 

72 Report of Independent Registered Public Accounting Firm 

73 Management’s Report on Internal Control Over Financial Reporting 

## SUPPORTING SCHEDULES 

74 Summary of Operations and Statistical Data 2000–2010 

75 Shareholder Return Performance Graphs 

76 Reconciliation of Non-GAAP Financial Measures 

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