Results of Operations
Analysis of Consolidated Sales
For the fiscal nine months of 2009, worldwide sales were $45.3 billion, a decrease of 6.6% including an operational decrease of 1.8% as compared to 2008 fiscal nine months sales of $48.6 billion. Currency had a negative impact of 4.8% on total reported fiscal nine months 2009 sales.
Sales by U.S. companies were $23.0 billion in the fiscal nine months of 2009, which represented a decrease of 6.6% as compared to the same period last year. Sales by international companies were $22.3 billion, which represented a total decrease of 6.7% including an operational increase of 3.1%, and a negative impact from currency of 9.8% as compared to the fiscal nine months sales of 2008.
Sales by companies in Europe experienced a sales decline of 10.9%, including operational growth of 1.2% and a negative impact from currency of 12.1%. Sales by companies in the Western Hemisphere, excluding the U.S., experienced a sales decline of 9.3% including operational growth of 5.8% and a negative impact from currency of 15.1%. Sales by companies in the Asia-Pacific, Africa region achieved sales growth of 2.6%, including operational growth of 5.1% and a negative impact from currency of 2.5%.
For the fiscal third quarter of 2009, worldwide sales were $15.1 billion, a decrease of 5.3% including an operational decrease of

2.8% as compared to 2008 fiscal third quarter sales of $15.9 billion. Currency negatively impacted sales by 2.5% for the fiscal third quarter of 2009.

Sales by U.S. companies were $7.3 billion in the fiscal third quarter of 2009, which represented a decrease of 8.1% as compared to the same period last year. Sales by international companies were $7.8 billion, which represented a total decrease of 2.5% including an operational increase of 2.4%, and a negative impact from currency of 4.9% as compared to the fiscal third quarter sales of 2008.
Sales by companies in Europe experienced a sales decline of 4.8%, including operational growth of 2.1% and a negative impact from currency of 6.9%. Sales by companies in the Western Hemisphere, excluding the U.S., experienced a sales decline of 8.4% including operational growth of 1.5% and a negative impact from currency of 9.9%. Sales by companies in the Asia-Pacific, Africa region achieved sales growth of 5.0%, including operational growth of 3.5% and an increase of 1.5% related to the positive impact of currency. Analysis of Sales by Business Segments
Consumer
Consumer segment sales in the fiscal nine months of 2009 were $11.5 billion, a decrease of 5.3% as compared to the same period a year ago, including operational growth of 1.0% and a negative currency impact of 6.3%. U.S. Consumer segment sales declined by 3.0% while international sales experienced an overall sales decline of 7.1%, including operational growth of 4.1% and a negative currency impact of 11.2%.
Major Consumer Franchise Sales - Fiscal Nine Months

                              Sept. 27,     Sept. 28,      Total      Operations     Currency
     (Dollars in Millions)      2009          2008        Change        Change        Change
     OTC Pharm & Nutr         $  4,056      $  4,438       (8.6 )%        (2.8 )%      (5.8 )%
     Skin Care                   2,517         2,537       (0.8 )          5.0         (5.8 )
     Baby Care                   1,541         1,691       (8.9 )         (1.4 )       (7.5 )
     Women's Health              1,406         1,475       (4.7 )          3.1         (7.8 )
     Oral Care                   1,161         1,228       (5.5 )          1.1         (6.6 )
     Wound Care/Other              873           830        5.2           10.5         (5.3 )
     Total                    $ 11,554      $ 12,199       (5.3 )%         1.0 %       (6.3 )%

Consumer segment sales in the fiscal third quarter of 2009 were $4.0 billion, a decrease of 2.7% over the same period a year ago, including operational growth of 1.1% and a negative currency impact of 3.8%. U.S. Consumer segment sales declined by 4.4% while international sales experienced an overall sales decline of 1.4%, including operational growth of 5.2%, and a negative currency impact of 6.6%.

Major Consumer Franchise Sales - Fiscal Third Quarters

                             Sept. 27,      Sept. 28,       Total      Operations     Currency
    (Dollars in Millions)       2009           2008        Change        Change        Change
    OTC Pharm & Nutr         $   1,398      $   1,439       (2.8 )%          0.5 %      (3.3 )%
    Skin Care                      842            858       (1.9 )           1.3        (3.2 )
    Baby Care                      544            586       (7.2 )          (2.6 )      (4.6 )
    Women's Health                 502            510       (1.6 )           3.6        (5.2 )
    Oral Care                      410            434       (5.5 )          (1.4 )      (4.1 )
    Wound Care/Other               293            272        7.7            10.5        (2.8 )
    Total                    $   3,989      $   4,099       (2.7 )%          1.1 %      (3.8 )%

The OTC Pharmaceuticals and Nutritionals franchise achieved operational growth of 0.5% as compared to prior year fiscal third quarter. Increased sales in anticipation of the flu season have been partially offset by lower seasonal trade inventory builds in allergy. Increased competitive pressures including private label have negatively impacted sales. The U.S. Food and Drug Administration (FDA) is currently considering certain recommendations made by its advisory committee for reducing the potential for overdose with acetaminophen, the active ingredient in TYLENOLâ. The Company has provided the FDA with its own recommendations and will continue to be actively engaged with the FDA on this topic.
The Skin Care franchise achieved operational growth of 1.3%. Sales grew in the AVEENOâ, Dabao and Vendome product lines.
The Baby Care franchise experienced an operational decline of 2.6% over prior year fiscal third quarter. This was primarily due to lower sales for Babycenter.com as a result of exiting the online retail business. This was partially offset by growth in the haircare and baby oil product lines outside the U.S.
The Women's Health Franchise operational growth of 3.6% was primarily due to sales associated with the buyout of a joint venture partner in France in the fiscal first quarter of 2009. Prior to the buyout of the joint venture partner, sales by the joint venture were not recorded as part of the Company's sales to customers.
The Oral Care franchise experienced an operational decline of 1.4% due to softness in the category in the U.S. partially offset by growth of LISTERINEâ mouthwash outside the U.S.
The Wound Care/Other franchise operational growth of 10.5% was primarily due to the recent acquisitions in the Wellness and Prevention platform and sales associated with the buyout of a joint venture partner in France in the fiscal first quarter of 2009. Prior to the buyout of the joint venture partner, sales by the joint venture were not recorded as part of the Company's sales to customers.
Pharmaceutical
Pharmaceutical segment sales in the fiscal nine months of 2009 were $16.5 billion, a total decrease of 12.5% as compared to the same period a year ago with an operational decline of 8.5% and a decrease of 4.0% related to the negative impact of currency. U.S. Pharmaceutical sales declined by 14.9% as compared to the same period a year ago. International Pharmaceutical sales experienced a sales decline of 8.8%, representing an operational increase of

1.4%, and a decrease of 10.2% related to the negative impact of currency. Major Pharmaceutical Product Revenues - Fiscal Nine Months

                                       Sept. 27,         Sept. 28,           Total          Operations         Currency
(Dollars in Millions)                     2009              2008            Change            Change            Change
REMICADEâ                              $  3,166          $  2,862             10.6 %             10.6 %             - %
PROCRITâ/EPREXâ                           1,669             1,900            (12.2 )             (7.6 )          (4.6 )
LEVAQUINâ/FLOXINâ                         1,098             1,180             (6.9 )             (6.0 )          (0.9 )
RISPERDALâ CONSTAâ                        1,026               990              3.6               13.0            (9.4 )
TOPAMAXâ                                    959             2,051            (53.2 )            (50.9 )          (2.3 )
CONCERTAâ                                   945               967             (2.3 )              1.3            (3.6 )
ACIPHEXâ/PARIETâ                            784               884            (11.3 )             (5.3 )          (6.0 )
RISPERDALâ/Risperidone                      706             1,841            (61.7 )            (60.4 )          (1.3 )
DURAGESICâ/Fentanyl Transdermal             655               764            (14.3 )             (8.0 )          (6.3 )
Other                                     5,519             5,443              1.4                8.1            (6.7 )
Total                                  $ 16,527          $ 18,882            (12.5 )%            (8.5 )%         (4.0 )%

Pharmaceutical segment sales in the fiscal third quarter of 2009 were $5.3 billion, a total decrease of 14.1% over the same period a year ago with an operational decline of 11.9% and a decrease of 2.2% related to the negative impact of currency. U.S. Pharmaceutical sales decreased by 19.2% over the same period a year ago. International Pharmaceutical sales experienced a sales decline of 7.1%, representing an operational decline of 1.9%, and a decrease of 5.2% related to the negative impact of currency.
Major Pharmaceutical Product Revenues - Fiscal Third Quarters

                                        Sept. 27,          Sept. 28,           Total          Operations         Currency
(Dollars in Millions)                     2009               2008             Change            Change            Change
REMICADEâ                              $   1,036          $     978              5.9 %              5.9 %             - %
PROCRITâ/EPREXâ                              542                619            (12.4 )            (10.0 )          (2.4 )
RISPERDALâ CONSTAâ                           353                338              4.4                9.9            (5.5 )
LEVAQUINâ/FLOXINâ                            311                333             (6.6 )             (5.7 )          (0.9 )
CONCERTAâ                                    284                398            (28.6 )            (27.2 )          (1.4 )
ACIPHEXâ/PARIETâ                             261                282             (7.4 )             (4.4 )          (3.0 )
DURAGESICâ/Fentanyl Transdermal              206                259            (20.5 )            (18.3 )          (2.2 )
RISPERDALâ/Risperidone                       192                320            (40.0 )            (40.4 )           0.4
TOPAMAXâ                                     175                728            (76.0 )            (74.7 )          (1.3 )
Other                                      1,889              1,858              1.7                5.5            (3.8 )
Total                                  $   5,249          $   6,113            (14.1 )%           (11.9 )%         (2.2 )%

REMICADEâ (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 5.9% over prior year fiscal third quarter. Sales in the U.S. market grew 5.7% versus the prior year primarily driven by market growth. U.S. export sales grew 5.1% versus the prior year fiscal third quarter primarily driven by increased demand outside the U.S. and inventory adjustments based on customer production planning needs.

U.S. export sales operational growth for the fiscal nine months of 2009 versus the same period a year ago was 14.3%, which the Company believes is more reflective of actual consumption in the three fiscal quarters of 2009. REMICADE® is competing in a market which is experiencing increased competition due to new entrants and the expansion of indications for existing competitors.
PROCRITâ (Epoetin alfa) /EPREXâ (Epoetin alfa), experienced an operational sales decline of 10.0%, as compared to prior year fiscal third quarter. The decline in PROCRITâ sales was due to the declining markets for Erythropoiesis Stimulating Agents (ESAs) in the U.S. Outside the U.S., increased competition has contributed to the lower sales results for EPREXâ.
RISPERDAL® CONSTA® (risperidone), a long-acting injectable for the treatment of schizophrenia, achieved operational growth of 9.9% over the fiscal third quarter of 2008. The growth was primarily due to increased share and the launch of RISPERDAL® CONSTA® in Japan earlier in the year.
LEVAQUIN®(levofloxacin)/FLOXINâ(ofloxacin), experienced an operational decline of 5.7% over the fiscal third quarter of 2008 primarily due to increased competition from generic products.
CONCERTAâ (methylphenidate HCl), a product for the treatment of attention deficit hyperactivity disorder, experienced an operational sales decline of 27.2% over the fiscal third quarter of 2008 primarily due to a reserve reversal of $135 million in the third quarter of 2008 related to sales outside the U.S. Growth in the U.S. was due to market growth. Although the original CONCERTAâ patent expired in 2004, the FDA has not approved any generic version that is substitutable for CONCERTAâ. Parties have filed Abbreviated New Drug Applications (ANDAs) for generic versions of CONCERTAâ, which are pending and may be approved at any time.
ACIPHEXâ/PARIETâ, experienced an operational decline of 4.4% over the fiscal third quarter of 2008 primarily due to generic competition.
DURAGESIC®/Fentanyl Transdermal (fentanyl transdermal system), experienced an operational decline of 18.3% due to continued generic competition.
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 40.4% in the fiscal third quarter of 2009 versus the same period in 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, full year 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,

and $0.2 billion in the fiscal nine months of the 2009 fiscal year. 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 74.7% as compared to prior year fiscal third quarter. Marketing exclusivity for TOPAMAX® (topiramate) in the U.S. expired in March 2009 and multiple generics have entered the market. Loss of market exclusivity for the TOPAMAX® patent has resulted in a significant reduction in sales in the U.S. In 2008, full year U.S. sales of TOPAMAX® were $2.3 billion. U.S. sales of TOPAMAX® were $0.5 billion and $0.6 billion in the fiscal first quarter and the fiscal nine months of 2009 respectively. In the fiscal third quarter of 2009, Other Pharmaceutical sales achieved operational growth of 5.5% versus the prior year. Contributors to the increase were sales of VELCADEâ (bortezomib), a treatment for multiple myeloma, PREZISTAâ (darunavir), for the treatment of HIV/AIDS patients and INVEGAâ (paliperidone), a once-daily atypical antipsychotic. The growth was partially offset by the impact of a generic version of ORTHO TRI-CYCLEN® LO shipped by a competitor. Subsequently, the generic manufacturer recognized the validity of the patent, paid damages for its infringing sales and ceased further shipments of the product.
Medical Devices and Diagnostics
Medical Devices and Diagnostics segment sales in the fiscal nine months of 2009 were $17.3 billion, a decrease of 1.3% as compared to the same period a year ago, with 3.3% of this change due to operational increases and a decrease of 4.6% related to the negative impact of currency. The U.S. Medical Devices and Diagnostics sales increase was 3.0% and the decline in international Medical Devices and Diagnostics sales was 4.8%, which included operational increases of 3.7% and a decrease of 8.5% related to the negative impact of currency. Major Medical Devices and Diagnostics Franchise Sales* - Fiscal Nine Months

                                Sept. 27,     Sept. 28,      Total       Operations      Currency
 (Dollars in Millions)            2009          2008         Change        Change         Change
 DEPUY®                         $  3,899      $  3,846         1.4 %            6.7 %      (5.3 )%
 ETHICON ENDO-SURGERY®             3,236         3,169         2.1              7.7        (5.6 )
 ETHICON®                          3,013         2,922         3.1              9.3        (6.2 )
 CORDIS®                           1,982         2,304       (14.0 )          (10.9 )      (3.1 )
 Vision Care                       1,888         1,898        (0.5 )            0.9        (1.4 )
 Diabetes Care                     1,785         1,956        (8.7 )           (4.1 )      (4.6 )
 ORTHO-CLINICAL DIAGNOSTICS®       1,462         1,389         5.3              9.3        (4.0 )
 Total                          $ 17,265      $ 17,484        (1.3 )%           3.3 %      (4.6 )%

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

Medical Devices and Diagnostics segment sales in the fiscal third quarter of 2009 were $5.8 billion, an increase of 2.3% as compared to the same period a year ago, with 4.1% of this change due to operational increases and a decrease of 1.8% related to the negative impact of currency. The U.S. Medical Devices and Diagnostics sales growth was 4.5% and the increase in international Medical Devices and Diagnostics sales was 0.5%, which included operational increases of 3.8% and a decrease of 3.3% related to the negative impact of currency. Major Medical Devices and Diagnostics Franchise Sales* - Fiscal Third Quarters

                                 Sept. 27,      Sept. 28,      Total      Operations     Currency
  (Dollars in Millions)             2009           2008        Change       Change        Change
  DEPUY®                         $   1,284      $   1,231        4.3 %          6.7 %      (2.4 )%
  ETHICON ENDO-SURGERY®              1,106          1,042        6.1            8.4        (2.3 )
  ETHICON®                           1,019            957        6.5            9.4        (2.9 )
  Vision Care                          659            652        1.1            0.2         0.9
  CORDIS®                              640            690       (7.2 )         (6.6 )      (0.6 )
  Diabetes Care                        634            667       (4.9 )         (2.7 )      (2.2 )
  ORTHO-CLINICAL DIAGNOSTICS®          501            470        6.6            8.2        (1.6 )
  Total                          $   5,843      $   5,709        2.3 %          4.1 %      (1.8 )%

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

The DePuy franchise achieved operational growth of 6.7% over the same period a year ago. This was primarily due to growth in the spine, hip and knee product lines. Additionally, new product launches in the Mitek sports medicine product line contributed to the growth.
The Ethicon Endo-Surgery franchise achieved operational growth of 8.4% over prior year fiscal third quarter. This was attributable to growth in the Endo-Mechanical, HARMONICä, ENSEALâ and Advanced Sterilization product lines. The Ethicon franchise achieved operational growth of 9.4% over prior year fiscal third quarter. This was attributable to growth in the biosurgical and mesh product lines in addition to sales of newly acquired products from the acquisitions of Omrix Biopharmaceuticals, Inc. and Mentor Corporation. The growth was partially offset by the divestiture of the Professional Wound Care business of Ethicon, Inc. in the fiscal fourth quarter of 2008.
The Vision Care franchise achieved operational sales growth of 0.2%. ACUVUE® OASYS™, ACUVUE® OASYS™ for Astigmatism and 1-DAY ACUVUE® TruEyeTM outside the U.S. were the major contributors to

this growth offset by slowing category growth due to declines in consumer spending.
The Cordis franchise experienced an operational sales decline of 6.6% as compared to the fiscal third quarter of 2008. This decline was caused by lower sales of the CYPHER® Sirolimus-eluting Coronary Stent due to increased global competition. This decline was partially offset by growth in balloons and the Biosense Webster business.
The Diabetes Care franchise experienced an operational sales decline of 2.7% as compared to the fiscal third quarter of 2008. This decline reflects the overall decrease in consumer spending. These results were partially offset by growth of the Animas business, an insulin delivery business.
The Ortho-Clinical Diagnostics franchise achieved operational growth of 8.2% over the fiscal third quarter of 2008. This growth was primarily attributable to the recent launch of the VITROS 3600 and 5600 analyzers.
Cost of Products Sold and Selling, Marketing and Administrative Expenses

Consolidated costs of products sold for the fiscal nine months of 2009 decreased to 29.0% from 29.1% of sales as compared to the same period a year ago. The costs of products sold for the fiscal third quarter of 2009 decreased to 29.4% from 30.0% of sales in the same period a year ago. Decreases in the quarterly and nine month periods were due to cost containment initiatives across all the businesses partially offset by the negative impact of product mix. Additionally, the fiscal third quarter of 2008 included inventory write-offs in the Pharmaceutical business.
Consolidated selling, marketing and administrative expenses for the fiscal nine months of 2009 decreased to 31.3% from 32.6% of sales as compared to the same period a year ago. Consolidated selling, marketing and administrative expenses for the fiscal third quarter of 2009 decreased to 31.6% from 32.6% of sales as compared to the same period a year ago. Decreases in the quarterly and nine month periods were due to cost containment efforts across all the businesses. 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 nine months of 2009 were $4.8 billion, a decrease of 12.7% over the same period a year ago. Research and development spending in the fiscal third quarter of 2009 was $1.6 billion, a decrease of 13.1% over the fiscal third quarter of 2008. The decreases as a percent to sales in the quarterly and nine month periods were primarily due to changes in

the mix of businesses and increased efficiencies in Pharmaceutical research and development activities.
In-Process Research & Development(IPR&D) In the fiscal third quarter of 2008, the Company had no IPR&D charges. IPR&D charges of $40 million before and after tax were recorded during the fiscal nine months of 2008 related to the acquisition of Amic AB. 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 change in other (income) expense, net for the fiscal nine months and the fiscal third quarter of 2009 was unfavorable as compared to the same periods a year ago. The Company received a settlement payment of $200 million from Amgen Inc. in the fiscal third quarter of 2008. The Company recorded a net settlement payment of $115 million from Medtronic AVE, Inc. during the fiscal third quarter of 2009 which was partially offset by other Corporate charges. A $270 million settlement payment from Medtronic AVE, Inc. during the fiscal second quarter of 2009 was offset by several smaller litigation matters as well as asset write-downs and other charges.
OPERATING PROFIT BY SEGMENT

Consumer Segment
Operating profit for the Consumer segment as a percent to sales in the fiscal nine months of 2009 was 20.0% versus 17.8% for the same period a year ago. Operating profit for the Consumer segment as a percent to sales in the fiscal third quarter of 2009 was 20.4% versus 18.6% for the same period a year ago. The primary driver of the improved operating profit for both the fiscal nine months and the fiscal third quarter of 2009 was due to cost containment initiatives related to selling, marketing and administrative expenses. Pharmaceutical Segment
Operating profit for the Pharmaceutical segment as a percent to sales in the fiscal nine months of 2009 was 33.9% versus 34.5% for the same period a year ago. Operating profit for the Pharmaceutical segment as a percent to sales in the fiscal third quarter of 2009 was 31.2% versus 32.8% for the same period a year ago. For both periods in 2009, operating profit decreased, as compared to the same periods a year ago. The negative impact of product mix due to the loss of exclusivity of the TOPAMAX® patent and the RISPERADAL® oral patent was the primary driver of the decreased operating profit. Additionally, the fiscal third quarter of 2008 included a settlement of $200 million received from Amgen partially offset by inventory write-offs.

Medical Devices and Diagnostics Segment
Operating profit for the Medical Devices and Diagnostics segment as a percent to sales in the fiscal nine months of 2009 was 34.1% versus 29.5% for the same period a year ago. Operating profit for the Medical Devices and Diagnostics segment as a percent to sales in the fiscal third quarter of 2009 was 34.5% versus 29.0% for the same period a year ago. The primary driver of the . . .