Results of Operations
Analysis of Consolidated Sales
For the fiscal first quarter of 2009, worldwide sales were $15.0 billion, a decrease of 7.2% including an operational decrease of 1.2% as compared to 2008 fiscal first quarter sales of $16.2 billion. Currency had a negative impact of 6.0% on total reported fiscal first quarter 2009 sales.

Sales by U.S. companies were $8.0 billion in the fiscal first quarter of 2009, which represented a decrease of 5.0% as compared to the same period last year. Sales by international companies were $7.0 billion, which represented a total decrease of 9.6% including an operational increase of 3.0%, and a negative impact from currency of 12.6% as compared to the first fiscal quarter sales of 2008.

Sales by companies in Europe experienced a sales decline of 14.8%, including an operational decrease of 0.2% and a negative impact from currency of 14.6%. Sales by companies in the Western Hemisphere, excluding the U.S., experienced a sales decline of 14.7% including operational growth of 4.5% and a negative impact from currency of 19.2%. Sales by companies in the Asia-Pacific, Africa region achieved sales growth of 3.6%, with operational growth of 8.5% and a negative impact from currency of 4.9%.

Analysis of Sales by Business Segments

Consumer
Consumer segment sales in the fiscal first quarter of 2009 were $3.7 billion, a decrease of 8.7% as compared to the same period a year ago, with an operational decrease of 1.0% and a negative currency impact of 7.7%. U.S. Consumer segment sales declined by 5.1% while international sales experienced an overall sales decline of 11.6%, representing an operational increase of 2.4%, with a negative currency impact of 14.0%.

Major Consumer Franchise Sales - Fiscal Quarters Ended

                                                                                                Operations
(Dollars in Millions)              March 29, 2009       March 30, 2008      Total Change          Change          Currency Change
OTC Pharm & Nutr                  $          1,348     $          1,594             (15.4 )%            (8.4 )%               (7.0 )%
Skin Care                                      842                  840               0.2                7.8                  (7.6 )
Baby Care                                      489                  533              (8.3 )              0.9                  (9.2 )
Women's Health                                 423                  461              (8.2 )              0.7                  (8.9 )
Oral Care                                      365                  386              (5.4 )              2.8                  (8.2 )
Wound Care/Other                               244                  250              (2.4 )              4.0                  (6.4 )

Total                             $          3,711     $          4,064              (8.7 )%            (1.0 )%               (7.7 )%

The OTC Pharmaceuticals and Nutritionals franchise experienced an operational decline of 8.4% as compared to prior year fiscal first quarter. The 2008 inventory build for initial stocking related to the U.S. launch of over-the-counter ZYRTEC® negatively impacted year over year growth comparisons. Additionally, competition from private label and a milder flu and fever season in the U.S. have negatively impacted sales.

The Skin Care franchise achieved operational growth of 7.8% over prior year fiscal first quarter. This was attributable to growth in the Neutrogena and Aveeno product lines in addition to sales of recently acquired products from the acquisition of Beijing Dabao Cosmetics Co., Ltd.

The Baby Care franchise operational growth was 0.9% over prior year fiscal first quarter. This was due to growth in the cleanser and powder product lines primarily outside the U.S. partially offset by the impact of BabyCenter exiting the online retail business.

The Oral Care franchise operational growth of 2.8% was driven by the growth of LISTERINE® mouthwash partially offset by lower sales of whitening strips and mouth fresheners.

Pharmaceutical
Pharmaceutical segment sales in the first fiscal quarter of 2009 were $5.8 billion, a total decrease of 10.1% as compared to the same period a year ago with an operational decline of 5.1% and a decrease of 5.0% related to the negative impact of currency. U.S. Pharmaceutical sales declined by 9.7% as compared to the same period a year ago. International Pharmaceutical sales experienced a sales decline of 10.7%, representing an operational increase of 2.8%, and a decrease of 13.5% related to the negative impact of currency.

Major Pharmaceutical Product Revenues - Fiscal Quarters Ended
                                                                                                Operations         Currency
(Dollars in Millions)              March 29, 2009       March 30, 2008      Total Change          Change            Change

REMICADE®                         $          1,028     $            998               3.0 %              3.0 %              - %
TOPAMAX®                                       602                  646              (6.8 )             (3.8 )           (3.0 )
PROCRIT®/EPREX®                                550                  629             (12.6 )             (6.8 )           (5.8 )
LEVAQUIN®/FLOXIN®                              425                  496             (14.3 )            (13.4 )           (0.9 )
CONCERTA®                                      344                  290              18.6               23.9             (5.3 )
RISPERDAL® CONSTA®                             325                  309               5.2               17.5            (12.3 )
RISPERDAL®/risperidone                         275                  809             (66.0 )            (64.2 )           (1.8 )
ACIPHEX®/PARIET®                               263                  277              (5.1 )              3.0             (8.1 )
DURAGESIC®/Fentanyl Transdermal                231                  233              (0.9 )              8.5             (9.4 )
Other                                        1,737                1,742              (0.3 )              9.4             (9.7 )

Total                             $          5,780     $          6,429             (10.1 )%            (5.1 )%          (5.0 )%

REMICADE® (infliximab), a biologic approved for the treatment of Crohn's disease, ankylosing spondylitis, psoriasis, psoriatic arthritis, ulcerative colitis and use in the treatment of rheumatoid arthritis, achieved operational growth of 3.0% over prior year fiscal first quarter. Sales to the U.S. market grew 9.0% versus the prior year primarily driven by market growth. U.S. export sales declined 10.6% versus the prior year due to production planning needs in both fiscal first quarters 2009 and 2008. REMICADE® is competing in a market which is experiencing increased competition due to new entrants and the expansion of indications for existing competitors.

TOPAMAX® (topiramate), which has been approved for adjunctive and monotherapy use in epilepsy, as well as for the prophylactic treatment of migraines, experienced an operational decline of 3.8% as compared to prior year fiscal first quarter. Marketing exclusivity for TOPAMAX® (topiramate) in the U.S. expired in March 2009 and multiple generics have entered the market. The expiration of a product patent or loss of market exclusivity will result in a significant reduction in sales. In 2008, U.S. sales of TOPAMAX® were $2.3 billion. U.S. sales of TOPAMAX® in the fiscal first quarter of 2009 were $0.5 billion.

PROCRIT® (Epoetin alfa)/EPREX® (Epoetin alfa) experienced an operational sales decline of 6.8%, as compared to prior year fiscal first quarter. The decline in PROCRIT® sales was due to the declining markets for Erythropoiesis Stimulating Agents (ESAs) in the U.S. The FDA issued an order requiring a labeling supplement making specific revisions to the label for ESAs, including PROCRIT®. The label for PROCRIT® was updated July 30, 2008 based on review of emerging safety data for the use of ESAs in patients with cancer. Outside the U.S., new competition and the emerging safety data issues have contributed to the lower sales results for EPREX®.

LEVAQUIN®(levofloxacin)/FLOXIN®(ofloxacin), experienced an operational decline of 13.4% primarily due to lower incidence of respiratory illness and flu in the U.S.

CONCERTA® (methylphenidate HCl), a product for the treatment of attention deficit hyperactivity disorder, achieved operational sales growth of 23.9% over the fiscal first quarter of 2008 primarily due to market growth. Although the original CONCERTA® patent expired in 2004, the FDA has not approved any generic version that is substitutable for CONCERTA®. Parties have filed Abbreviated New Drug Applications (ANDAs) for generic versions of CONCERTA®, which are pending and may be approved at any time.

RISPERDAL® CONSTA® (risperidone), a long-acting injectable for the treatment of schizophrenia, achieved operational growth of 17.5% over the fiscal first quarter of 2008. Strong growth was due to a positive shift from daily therapies to longer-acting RISPERDAL® CONSTA®.

RISPERDAL®(risperidone), a medication that treats the symptoms of schizophrenia, bipolar mania and irritability associated with autistic behavior in indicated patients, experienced an operational decline of 64.2% versus the prior year. Market exclusivity for RISPERDAL® oral in the U.S. expired on June 29, 2008. Loss of market exclusivity for the RISPERDAL® oral patent has resulted in a significant reduction in sales in the U.S. In 2008, U.S. sales of RISPERDAL® oral were $1.3 billion. U.S. sales of RISPERDAL® oral were $1.1 billion and $0.2 billion in the first half and the second half of the 2008 fiscal year, respectively.

ACIPHEX®/PARIET® and DURAGESIC®/Fentanyl Transdermal (fentanyl transdermal system) achieved operational growth of 3.0% and 8.5%, respectively, versus the prior year.

In the fiscal first quarter of 2009, Other Pharmaceutical sales achieved operational growth of 9.4% versus the prior year. Contributors to the increase were sales of VELCADE® (bortezomib), a treatment for multiple myeloma, PREZISTA® (darunavir), for the treatment of HIV/AIDS patients and INVEGA® (paliperidone), a once-daily atypical antipsychotic.

Medical Devices and Diagnostics
Medical Devices and Diagnostics segment sales in the first fiscal quarter of
2009 were $5.5 billion, a decrease of 2.9% as compared to the same period a year
ago, with 3.1% of this change due to operational increases and a decrease of
6.0% related to the negative impact of currency. The U.S. Medical Devices and
Diagnostics sales increase was 2.5% and the decline in international Medical
Devices and Diagnostics sales was 7.4%, which included operational increases of
3.6% and a decrease of 11.0% related to the negative impact of currency.

Major Medical Devices and Diagnostics Franchise Sales* - Fiscal Quarters Ended
                                                                                                Operations
(Dollars in Millions)              March 29, 2009       March 30, 2008      Total Change          Change         Currency Change
DEPUY®                            $          1,292     $          1,287               0.4 %              7.3 %               (6.9 )%
ETHICON ENDO-SURGERY®                        1,015                1,003               1.2                8.6                 (7.4 )
ETHICON®                                       953                  945               0.8                9.1                 (8.3 )
CORDIS®                                        668                  801             (16.6 )            (12.9 )               (3.7 )
Vision Care                                    599                  607              (1.3 )              0.6                 (1.9 )
Diabetes Care                                  541                  615             (12.0 )             (6.0 )               (6.0 )
ORTHO-CLINICAL DIAGNOSTICS®                    467                  443               5.4               10.3                 (4.9 )

Total                             $          5,535     $          5,701              (2.9 )%             3.1 %               (6.0 )%

*Prior year amounts have been reclassified to conform to current presentation.

The DePuy franchise achieved operational growth of 7.3% over the same period a year ago. This growth was primarily due to growth in the hip and spine product line. Additionally, new product launches in the Mitek sports medicine product line contributed to the growth.

The Ethicon Endo-Surgery franchise achieved operational growth of 8.6% over prior year fiscal first quarter. This growth was mainly driven by the HARMONIC™ technology business due to the success of newly launched products and the underlying strength of the technology. Additional contributors to the growth were the REALIZE® Gastric Band in the U.S. and endoscopy products outside the U.S.

The Ethicon franchise achieved operational growth of 9.1% over prior year fiscal first quarter. This was attributable to growth in the meshes and biosurgical product lines in addition to sales of newly acquired products from the acquisition of Mentor Corporation.

The Cordis franchise experienced an operational sales decline of 12.9% as compared to the fiscal first quarter of 2008. This decline was caused by lower sales of the CYPHER® Sirolimus-eluting Coronary Stent due to increased global competition. These results were partially offset by growth of the Biosense Webster business.

The Vision Care franchise achieved operational sales growth of 0.6%. ACUVUE® OASYS™, 1-DAY ACUVUE® MOIST™, and ACUVUE® OASYS™ for Astigmatism were the major contributors to this growth offset by slowing category growth due to declines in consumer spending.

The Diabetes Care franchise experienced an operational sales decline of 6.0% as compared to the fiscal first quarter of 2008. This decline reflects the overall decrease in the market due to current economic conditions. These results were partially offset by growth of the Animas business.

The Ortho-Clinical Diagnostics franchise achieved operational growth of 10.3% over the fiscal first quarter of 2008. This was attributable to sales growth in Immunohematology and donor screening products. Additionally, the launch of new VITROS 3600 and 5600 analyzers contributed to the growth.

Cost of Products Sold and Selling, Marketing and Administrative Expenses Consolidated costs of products sold decreased to 28.3% from 28.5% of sales as compared to the same period a year ago. The decrease was primarily due to cost containment, primarily in the Medical Devices and Diagnostics business.

Consolidated selling, marketing and administrative expenses decreased 0.9% of sales as compared to the same period a year ago. Selling, marketing and administrative expenses as a percent to sales were 30.7% versus 31.6% in the fiscal first quarter of 2008. The decreases in the percent to sales was attributable to cost containment efforts across all the businesses, primarily the Consumer business.

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 fiscal first quarter of 2009 were $1.5 billion, a decrease of 11.3% as compared to the same period a year ago. As a percent to sales, the level of research and development spending decreased to 10.1% in the fiscal first quarter of 2009, from 10.6% during the same period a year ago. The decrease as a percent to sales was primarily due to changes to the mix of businesses and increased efficiencies in the Pharmaceutical research and development support.

Other (Income) Expense, Net
Other (income) expense, net is the account where the Company records gains and losses related to the sale and write-down of certain equity securities of the Johnson & Johnson Development Corporation, gains and losses on the disposal of fixed assets, currency gains and losses, gains and losses relating to non-controlling interests, litigation settlements, as well as royalty income. The favorable change in other (income) expense, net for the fiscal first quarter of 2009 as compared to the fiscal first quarter of 2008 was primarily due to integration costs associated with the Consumer Healthcare business of Pfizer Inc. recorded in the fiscal first quarter of 2008.

OPERATING PROFIT BY SEGMENT
Consumer Segment
Operating profit for the Consumer segment as a percent to sales in the fiscal first quarter of 2009 was 21.6% versus 17.9% for the same period a year ago. The increase was primarily due to cost containment initiatives related to selling, marketing and administrative expenses. Additionally, the fiscal first quarter of 2008 included integration costs associated with the acquisition of the Consumer Healthcare business of Pfizer Inc.

Pharmaceutical Segment
Operating profit for the Pharmaceutical segment as a percent to sales in the fiscal first quarter of 2009 was 39.0% versus 36.8% for the same period a year ago. The primary driver of the improved operating profit was due to the savings generated by the cost containment initiatives partially offset by the negative impact of product mix.

Medical Devices and Diagnostics Segment
Operating profit for the Medical Devices and Diagnostics segment as a percent to sales in the fiscal first quarter of 2009 was 32.3% versus 31.6% for the same period a year ago. The primary driver of the improvement in the operating profit margin in the Medical Devices and Diagnostics segment was due to favorable product mix, manufacturing efficiencies and cost containment initiatives.

Interest (Income) Expense
Interest income in the fiscal first quarter of 2009 decreased by $57 million as compared to the fiscal first quarter of 2008, due to lower rates of interest earned, despite higher average cash balances. The ending balance of cash, cash equivalents and marketable securities was $13.9 billion at the end of the fiscal first quarter of 2009. This is an increase of $2.8 billion from the same period a year ago. The increase was primarily due to cash generated from operating activities.

Interest expense in the fiscal first quarter of 2009 increased by $8 million as compared to the fiscal first quarter of 2008, due to a higher debt position of $14.1 billion at the end of the fiscal first quarter of 2009, compared to $11.4 billion from the same period a year ago. The higher debt balance was due to increased borrowings primarily to purchase common stock under the ongoing Common Stock repurchase program announced on July 9, 2007 and to fund acquisitions.

Provision For Taxes on Income
The worldwide effective income tax rates for the first fiscal quarters of 2009 and 2008 were 24.5% and 24.2%, respectively. The increase in the effective tax rate was primarily due to increases in taxable income in higher tax jurisdictions relative to taxable income in lower tax jurisdictions partially offset by the U.S. Research and Development tax credit that was not in effect in the fiscal first quarter of 2008.

As of March 29, 2009 the Company had approximately $2.1 billion of liabilities from unrecognized tax benefits. The Company does not expect that the total amount of unrecognized tax benefits will change significantly during the next twelve months.

See Note 8 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended December 28, 2008 for more detailed information regarding unrecognized tax benefits.

LIQUIDITY AND CAPITAL RESOURCES
Cash Flows

Cash and Cash equivalents were $12.6 billion at the end of the fiscal first quarter of 2009 as compared with $10.8 billion at the fiscal year end of 2008. The primary sources of cash that contributed to the $1.8 billion increase were $2.8 billion generated from operating activities and $2.2 billion net proceeds from short-term debt. The major uses of cash were acquisitions of $1.3 billion, dividends to shareholders of $1.3 billion and the repurchase of common stock of $0.8 billion.

Cash flow from operations of $2.8 billion is the result of $3.5 billion of net earnings and $0.8 billion of non cash charges related to depreciation and amortization and stock based compensation offset by $1.5 billion related to changes in assets, liabilities and the deferred tax provision net of effects from acquisitions.

In the fiscal first quarter of 2009 the Company continued to have access to liquidity through the commercial paper market. The Company anticipates that operating cash flows, existing credit facilities and access to the commercial paper markets will continue to provide sufficient resources to fund operating needs in 2009.

Dividends

On January 5, 2009, the Board of Directors declared a regular cash dividend of $0.460 per share, which was paid on March 10, 2009 to shareholders of record as of February 24, 2009.

On April 23, 2009, the Board of Directors declared a regular cash dividend of $0.490 per share, payable on June 9, 2009 to shareholders of record as of May 26, 2009. This represented an increase of 6.5% in the quarterly dividend rate and was the 47th consecutive year of cash dividend increases. The Company expects to continue the practice of paying regular quarterly cash dividends.

OTHER INFORMATION
New Accounting Standards
During the fiscal first quarter of 2009, the Company adopted, SFAS Statements No. 141(R), Business Combinations, and No. 160, Noncontrolling Interests in Consolidated Financial Statements. These statements aim to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements. These statements have a significant impact on the manner in which the Company accounts for acquisitions beginning in the fiscal year 2009. Significant changes include the capitalization of in process research and development (IPR&D), expensing of acquisition related restructuring actions and transaction related costs and the recognition of contingent purchase price consideration at fair value at the acquisition date. In addition, changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period will be recognized in earnings rather than as an adjustment to the cost of acquisition. This accounting treatment for taxes is applicable to acquisitions that occurred both prior and subsequent to the adoption of SFAS No.
141(R). Noncontrolling interests as related to Johnson & Johnson's financial statements are insignificant therefore, the adoption of SFAS No. 141(R) and SFAS No. 160 did not have a material effect on the Company's results of operations, cash flows or financial position.

During the fiscal first quarter of 2009, the Company adopted, SFAS Statement No. 161, Disclosures About Derivative Instruments and Hedging Activities, to enhance the disclosure regarding the Company's derivative and hedging activities to improve the transparency of financial reporting. The adoption of SFAS No. 161 did not have a significant impact on the Company's results of operations, cash flows or financial position. See Note 2 for more enhanced disclosures.

EITF Issue 07-1: Accounting for Collaborative Arrangements Related to the Development and Commercialization of Intellectual Property. This issue is effective for financial statements issued for fiscal years beginning after December 15, 2008 and was adopted by the Company in the fiscal first quarter of 2009. This issue addresses the income statement classification of payments made between parties in a collaborative arrangement. The adoption of EITF 07-1 did not have a significant impact on the Company's results of operations, cash flows or financial position.

EITF Issue 08-7: Accounting for Defensive Intangible Assets. This issue is effective for financial statements issued for fiscal years beginning after December 15, 2008 and was adopted by the Company in the fiscal first quarter of 2009. This issue applies to acquired intangible assets in situations in which an entity does not intend to actively use the asset but intends to hold the asset to prevent others from obtaining access to the asset, except for intangible assets that are used in research and development activities. The adoption of EITF 08-7 did not have a significant impact on the Company's results of operations, cash flows or financial position.

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 1998 through 2008 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.S. Consumer Price Index (CPI).

Inflation rates 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 continue to result in pricing pressures that include health care cost containment and government legislation relating to sales, promotions and reimbursement.

Changes in the behavior and spending patterns of consumers of health care products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing health care insurance coverage, as a result of a prolonged global economic downturn will continue to impact the Company's businesses.

The Company also operates in an environment increasingly hostile to intellectual property rights. Generic drug firms have filed 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 filing, 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" included in Item 1. Financial Statements (unaudited)- Notes to Consolidated Financial Statements, Note 12.

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
This Form 10-Q contains forward-looking statements. Forward-looking statements . . .