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By-laws - JOHNSON & JOHNSON - 3-27-1998

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By-laws - JOHNSON & JOHNSON - 3-27-1998 Powered By Docstoc
					EXHIBIT 3(b) [JOHNSON & JOHNSON LOGO] BY-LAWS EFFECTIVE July 1, 1980 Amended February 16, 1987 April 26, 1989 April 26, 1990 October 20, 1997

Article I MEETINGS OF STOCKHOLDERS Section 1. Annual Meeting A meeting of the stockholders of the Corporation shall be held annually on such business day and at such time and at such place within or without the State of New Jersey as may be designated by the Board of Directors and stated in the notice of the meeting, for the purpose of electing directors and for the transaction of all other business that is brought before the meeting. Section 2. Special Meetings A special meeting of the stockholders may be called at any time by the Chairman of the Board of Directors, by a Vice-Chairman of the Board of Directors, by the Chairman of the Executive Committee, by a Vice-Chairman of the Executive Committee, by the President, or by a majority of the Board of Directors and shall be held on such business day and at such time and at such place within or without the State of New Jersey as is stated in the notice of the meeting. Section 3. Adjournment of Meetings Any meeting of the stockholders of the Corporation may be adjourned from time to time by the affirmative vote of the holders of a majority of the issued and outstanding stock entitled to vote at such meeting present in person or represented by proxy, for a period not exceeding one month at any one time and upon such notice, if any, as may be determined by the vote. At any adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted at the meeting as originally called. Section 4. Notices of Meetings (A) Notices. At least ten (l0) but not more than sixty (60) days before the date designated for the holding of any meeting of the stockholders, except as otherwise provided herein for adjourned meetings, written or printed notice of the time, place and purpose or purposes of such meeting shall be served by mail, telegram, radiogram, telex, or cablegram upon each stockholder of record entitled to vote at such meeting. (B) Service of Notice. A notice of meeting shall be deemed duly served when deposited in the United States Mail with postage fully paid, or placed in the hands of an agent of a telegraph, radio, or cable or other transmitting company with all transmittal fees fully paid, and plainly addressed to the stockholder at his latest address appearing in the stock records of the Corporation.

Article I MEETINGS OF STOCKHOLDERS Section 1. Annual Meeting A meeting of the stockholders of the Corporation shall be held annually on such business day and at such time and at such place within or without the State of New Jersey as may be designated by the Board of Directors and stated in the notice of the meeting, for the purpose of electing directors and for the transaction of all other business that is brought before the meeting. Section 2. Special Meetings A special meeting of the stockholders may be called at any time by the Chairman of the Board of Directors, by a Vice-Chairman of the Board of Directors, by the Chairman of the Executive Committee, by a Vice-Chairman of the Executive Committee, by the President, or by a majority of the Board of Directors and shall be held on such business day and at such time and at such place within or without the State of New Jersey as is stated in the notice of the meeting. Section 3. Adjournment of Meetings Any meeting of the stockholders of the Corporation may be adjourned from time to time by the affirmative vote of the holders of a majority of the issued and outstanding stock entitled to vote at such meeting present in person or represented by proxy, for a period not exceeding one month at any one time and upon such notice, if any, as may be determined by the vote. At any adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted at the meeting as originally called. Section 4. Notices of Meetings (A) Notices. At least ten (l0) but not more than sixty (60) days before the date designated for the holding of any meeting of the stockholders, except as otherwise provided herein for adjourned meetings, written or printed notice of the time, place and purpose or purposes of such meeting shall be served by mail, telegram, radiogram, telex, or cablegram upon each stockholder of record entitled to vote at such meeting. (B) Service of Notice. A notice of meeting shall be deemed duly served when deposited in the United States Mail with postage fully paid, or placed in the hands of an agent of a telegraph, radio, or cable or other transmitting company with all transmittal fees fully paid, and plainly addressed to the stockholder at his latest address appearing in the stock records of the Corporation. Section 5. Quorum At any meeting of the stockholders, the holders of a majority of the issued and outstanding stock entitled to vote at such meeting shall be present in person or represented by proxy in order to constitute a quorum. -1-

Section 6. Voting (A) Vote Necessary. At any meeting of the stockholders, all questions, except as otherwise expressly provided by statute, the Certificate of Incorporation, or these By-Laws, shall be determined by vote of the holders of a majority of the issued and outstanding stock present in person or represented by proxy at such meeting and entitled to vote. (B) Inspectors. At any meeting of the stockholders, if the chairman of the meeting so directs or if before the voting begins, any stockholder present so requests, the polls shall be opened and closed, the proxies and ballots shall be received

Section 6. Voting (A) Vote Necessary. At any meeting of the stockholders, all questions, except as otherwise expressly provided by statute, the Certificate of Incorporation, or these By-Laws, shall be determined by vote of the holders of a majority of the issued and outstanding stock present in person or represented by proxy at such meeting and entitled to vote. (B) Inspectors. At any meeting of the stockholders, if the chairman of the meeting so directs or if before the voting begins, any stockholder present so requests, the polls shall be opened and closed, the proxies and ballots shall be received and taken in charge, and all questions with respect to the qualifications of voters, the validity of proxies, and the acceptance or rejection of votes, shall be decided by three (3) inspectors to be appointed by the chairman of the meeting. (C) Eligibility to Vote. Each stockholder shall have one vote for each share of stock entitled to vote as provided in the Certificate of Incorporation or otherwise by law and registered in his name in the stock records of the Corporation as of the record date. (D) Methods of Voting. At any meeting of the stockholders each stockholder shall be entitled to vote either in person or by proxy appointed either by instrument in writing subscribed by such stockholder, or by his duly authorized attorney or agent, or by cable, telegram or by any means of electronic communication which results in a writing from such stockholder or his duly authorized attorney or agent, and delivered to the Secretary or to the inspectors at or before the meeting. (E) Record Date. The Board of Directors may fix in advance, a date, not less than ten (l0) but not more than sixty (60) days preceding the date of any meeting as the record date for determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, notwithstanding any transfer of any stock in the stock records of the Corporation after any such record date designated as aforesaid. (F) List of Stockholders. The Board of Directors shall cause the officer or agent, who has charge of the stock transfer books of the Corporation, to make a complete list of all the stockholders entitled to vote at a stockholders' meeting or any adjournment thereof, arranged in alphabetical order, together with the latest address of each stockholder appearing upon the stock records of the Corporation and the number of shares held by each. The Board of Directors shall cause such list of stockholders to be produced (or available by means of a visual display) at the time and place of every meeting of stockholders and shall be open to examination by any stockholder listed therein for reasonable periods during the meeting. -2-

Article II BOARD OF DIRECTORS Section l. Number of Members and Qualification The number of directors of the Corporation shall be not less than nine (9) nor more than eighteen (18) as determined by the Board of Directors from time to time. Section 2. Term of Office Each director shall hold office for one (l) year and until his successor, if any, is duly elected and qualified, provided, however, that any director may be removed from office, with cause, at any time by a majority vote of the stockholders entitled to vote.

Article II BOARD OF DIRECTORS Section l. Number of Members and Qualification The number of directors of the Corporation shall be not less than nine (9) nor more than eighteen (18) as determined by the Board of Directors from time to time. Section 2. Term of Office Each director shall hold office for one (l) year and until his successor, if any, is duly elected and qualified, provided, however, that any director may be removed from office, with cause, at any time by a majority vote of the stockholders entitled to vote. Section 3. Annual Meeting At the place of holding the annual meeting of the stockholders, and immediately following the same, the Board of Directors, as constituted upon final adjournment of such annual meeting, shall convene without further notice for the purpose of electing officers and transacting all other business properly brought before it. Section 4. Regular Meetings Regular meetings of the Board of Directors shall be held at such places, either within or without the State of New Jersey, and on such business days and at such times as the Board may from time to time determine. Section 5. Special Meetings Special meetings of the Board of Directors may be held at any time and place whenever called by the Chairman of the Board of Directors, by a Vice-Chairman of the Board of Directors, by the Chairman of the Executive Committee, by a Vice-Chairman of the Executive Committee, by the President, by a Vice- President, by the Secretary, or by any three (3) or more directors. Section 6. Notices of Meetings (A) Notice Required. If so determined by a majority of the Board of Directors, no advance notice need be given; in the absence of such determination then, at least two (2) days prior to the date designated for the holding of any regular or special meeting of the Board, notice of the time, and place, and purpose of such meeting shall be served in person, by mail or other notice in writing, or by telegram, telephone, radiogram, telex, or cablegram, upon each member of the Board. (B) Waiver of Notice. Notice of the time, place, and purpose of any meeting of the Board of Directors may be waived, before or after any meeting, by instrument in writing or by telegram, radiogram, telex, or cablegram. -3-

Section 7. Quorum and Participation (A) Quorum. A majority of the Board of Directors shall constitute a quorum for all purposes and at all meetings. (B) Participation. Any or all directors may participate in a meeting of the Board of Directors by means of conference telephone or any means of communications by which all persons participating in the meeting are able to hear each other. Section 8. Manner of Acting

Section 7. Quorum and Participation (A) Quorum. A majority of the Board of Directors shall constitute a quorum for all purposes and at all meetings. (B) Participation. Any or all directors may participate in a meeting of the Board of Directors by means of conference telephone or any means of communications by which all persons participating in the meeting are able to hear each other. Section 8. Manner of Acting The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. Section 9. Action without a Meeting Any action required or permitted to be taken pursuant to authorization voted at a meeting of the Board of Directors may be taken without a meeting if, prior to or subsequent to such action, all members of the Board of Directors consent thereto in writing and such written consents are filed with the minutes of the proceedings of the Board of Directors. Article III POWERS OF BOARD OF DIRECTORS Section l. General Powers The business, property, and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In the management and control of the property, business, and affairs of the Corporation, the Board is hereby vested with all powers possessed by the Corporation itself insofar as this delegation of authority is not inconsistent with or repugnant to the laws of the State of New Jersey, the Corporation's Certificate of Incorporation, or these By-Laws or any amendments of them. The Board shall have discretionary power to determine what constitutes net earnings, profits, and surplus, what amount shall be reserved for working capital and for any other purposes, and what amount shall be declared as dividends. Such determinations by the Board shall be final and conclusive. Section 2. Specific Powers (A) Power to Make and Amend By-Laws. Subject to the limitations contained in Article X hereof, the Board of Directors shall have power to make, alter, amend, and repeal any By-Law, including a By-Law designating the number of directors, provided that the Board shall not make, alter, amend, or repeal any By-Law designating the qualification or term of office of any member or members of the then existing Board. -4-

(B) Power to Elect Officers. The Board of Directors shall elect all officers of the Corporation. (C) Power to Remove Officers. Any officer or divisional officer, any agent of the Board of Directors, or any member of any committee or of any Management Board may be removed by the Board of Directors with or without cause, whenever in its sole judgment the interests of the Corporation will be served by such removal. (D) Power to Fill Vacancies. Vacancies in the Board of Directors, however created, shall be filled by appointment made by a majority of the remaining directors. The Board shall have power to fill any vacancy in any office. (E) Power to Fix Record Date.

(B) Power to Elect Officers. The Board of Directors shall elect all officers of the Corporation. (C) Power to Remove Officers. Any officer or divisional officer, any agent of the Board of Directors, or any member of any committee or of any Management Board may be removed by the Board of Directors with or without cause, whenever in its sole judgment the interests of the Corporation will be served by such removal. (D) Power to Fill Vacancies. Vacancies in the Board of Directors, however created, shall be filled by appointment made by a majority of the remaining directors. The Board shall have power to fill any vacancy in any office. (E) Power to Fix Record Date. The Board of Directors may fix in advance a date as the record date for determining the Corporation's stockholders with regard to any corporate action or event and, in particular, for determining the stockholders entitled to receive payment of any dividend or allotment of any right. The record date may in no case be more than sixty (60) days prior to the corporate action or event to which it relates. Section 3. Committees and Delegation of Powers (A) Committees of the Board. The Board of Directors may appoint, from among its members, from time to time one or more committees, each committee to have such name or names and to have such powers and duties as may be determined from time to time by the Board. All committees shall report to the Board. The Board shall have the power to fill vacancies in, to change the membership of, or to dissolve any committee. Each committee may hold meetings and make rules for the conduct of its business and appoint such sub-committees and assistants as it shall from time to time deem necessary. A majority of the members of a committee shall constitute a quorum for all purposes and at all meetings. (B) Finance Committee. The Finance Committee, if one shall be appointed, shall consist of two (2) or more of the directors of the Corporation and shall have and may exercise all of the powers of the Board insofar as may be permitted by law, the Corporation's Certificate of Incorporation or these By-Laws, or any amendments of them, in the management of the business, affairs and property of the Corporation during the intervals between the meetings of the Board. The Finance Committee, however, shall not have the power to make, alter or repeal any By-Law of the Corporation; elect or appoint any director, or remove any officer or director; change the membership of, or fill vacancies in, the Finance Committee; submit to stockholders any action that requires stockholders' approval; nor amend or repeal any resolution theretofore adopted by the Board which by its terms is amendable or repealable only by the Board. (C) Emergency Management Committee. If, as a result of a physical disaster, war, nuclear attack, or other emergency conditions, a quorum of the Board of Directors cannot be convened to act, an Emergency Management Committee, consisting of all readily available -5-

members of the Board of Directors, shall automatically be formed. In such case, two members shall constitute a quorum. If, as a result of such circumstances, a quorum of the Board of Directors cannot readily be convened to act, but a quorum of the Finance Committee can be so convened, the Finance Committee shall automatically become the Emergency Management Committee. All of the powers and duties vested in the Board of Directors, except the power to fill vacancies in the Board of Directors, shall vest automatically in the Emergency Management Committee. Other provisions of these By-Laws notwithstanding, the Emergency Management Committee (l) shall call a meeting of the Board of Directors as soon as circumstances permit for the purpose of filling vacancies on the Board of Directors and its committees and to take such other action as may be appropriate, and (2) if the Emergency Management Committee determines that less than a majority of the members of the Board of Directors are available for service, the Committee shall issue a call for a special meeting of stockholders to be held at the earliest date practicable for the election of directors.

members of the Board of Directors, shall automatically be formed. In such case, two members shall constitute a quorum. If, as a result of such circumstances, a quorum of the Board of Directors cannot readily be convened to act, but a quorum of the Finance Committee can be so convened, the Finance Committee shall automatically become the Emergency Management Committee. All of the powers and duties vested in the Board of Directors, except the power to fill vacancies in the Board of Directors, shall vest automatically in the Emergency Management Committee. Other provisions of these By-Laws notwithstanding, the Emergency Management Committee (l) shall call a meeting of the Board of Directors as soon as circumstances permit for the purpose of filling vacancies on the Board of Directors and its committees and to take such other action as may be appropriate, and (2) if the Emergency Management Committee determines that less than a majority of the members of the Board of Directors are available for service, the Committee shall issue a call for a special meeting of stockholders to be held at the earliest date practicable for the election of directors. (D) Delegation of Duties. The Board of Directors may delegate from time to time to an officer or a committee of officers and/or directors any duties that are authorized or required to be executed during the intervals between meetings of the Board, and such officer or committee shall report to the Board when and as required by the Board. Each committee so established by the Board may hold meetings and make rules for the conduct of its business and appoint such subcommittees and assistants as it shall from time to time deem necessary. A majority of the members of such a committee shall constitute a quorum for all purposes and at all meetings. (E) Executive Committee. The Executive Committee, if one shall be appointed, shall be the management committee of the Corporation. Its members shall be elected by the Board of Directors and thereby become officers of the Corporation. The Executive Committee shall not be a committee of the Board. The Executive Committee shall be responsible for the operation of the business of the Corporation on a day-to-day basis and for establishing and executing operating practices and policies of the Corporation. It shall also perform such other duties as the Board shall designate from time to time. Section 4. Designation of Depositories The Board of Directors shall designate or shall delegate to the Treasurer, or such other officer as it deems advisable, the responsibility to designate the trust company or trust companies, or the bank or banks, in which shall be deposited the moneys and securities of the Corporation. Section 5. Power to Establish Divisions The Board of Directors may establish administrative or operating divisions of the Corporation. Each such division may have a Management Board, the Chairman of which shall be appointed by the Chairman of the Board of Directors. The Chairman of the Management Board of a division shall appoint the other members of its Management Board and that Board may in turn appoint a President, one or more Vice-Presidents, a Treasurer and such other division officers as it may -6-

determine to be necessary or desirable. The Management Board and the officers of the division shall perform the same duties and, except for the power to designate depositories, shall have the same powers as to their division as pertain, respectively, to a board of directors and officers of a corporation. The powers granted in the preceding sentence include, without limitation, the power to execute and deliver on behalf of the Corporation contracts, conveyances and other instruments. Such power and any other power granted in this Section shall at all times be subject to the right of the Board of Directors to act or direct action in the premises. Article IV OFFICERS Section l. Enumeration of Officers. The officers of the Corporation shall be a Chairman of the Board of Directors, a Chairman of the Executive

determine to be necessary or desirable. The Management Board and the officers of the division shall perform the same duties and, except for the power to designate depositories, shall have the same powers as to their division as pertain, respectively, to a board of directors and officers of a corporation. The powers granted in the preceding sentence include, without limitation, the power to execute and deliver on behalf of the Corporation contracts, conveyances and other instruments. Such power and any other power granted in this Section shall at all times be subject to the right of the Board of Directors to act or direct action in the premises. Article IV OFFICERS Section l. Enumeration of Officers. The officers of the Corporation shall be a Chairman of the Board of Directors, a Chairman of the Executive Committee, a President, a Treasurer, and a Secretary. The officers of the Corporation may include one or more Vice-Chairmen of the Board of Directors, one or more Vice-Chairmen of the Executive Committee, one or more Executive Committee members, one or more Vice-Presidents, one or more Assistant Treasurers, one or more Assistant Secretaries, and such other officers as from time to time shall be designated and elected by the Board of Directors. Section 2. Election and Removal of Officers All officers of the Corporation shall be elected at the first meeting of the Board of Directors after the annual election of directors, and shall hold office for one (l) year and until their respective successors, if any, shall have been duly elected and qualified, provided, however, that all officers, agents, and employees of the Corporation shall be subject to removal at any time, with or without cause, by the affirmative vote of a majority of the Board. At its discretion, the Board may leave unfilled, for such period as it may deem proper, any office except that of President, Treasurer, and Secretary. Failure to elect any such officer shall be considered an exercise of this discretionary power. Section 3. Eligibility of Officers The Chairman of the Board, the Vice-Chairmen of the Board and the President shall be chosen from the members of the Board of Directors. No other person need be a director or a stockholder in order to qualify for office. The same person may hold, at the same time, one or more offices. Section 4. Duties of Officers (A) Chairman of the Board of Directors. The Chairman of the Board of Directors shall be the Chief Executive Officer of the Corporation and shall preside at all meetings of stockholders and directors. When presiding at such meetings of stockholders and directors, the Chairman of the Board shall establish and apply such rules of order as may be -7-

advisable in his discretion. Except where by law the signature of the President is required, the Chairman of the Board shall possess the same power as the President to sign all certificates, contracts and other instruments of the Corporation authorized by the Board of Directors. He shall have all powers and shall perform all duties commonly incident to and vested in the office of Chairman of the Board of a corporation. He shall also perform such other duties as the Board shall designate from time to time. (B) Vice-Chairman of the Board of Directors. A Vice-Chairman of the Board of Directors shall perform the duties and have the powers of the Chairman during the absence or disability of the Chairman, and shall also perform such other duties as the Board shall designate from time to time. (C) Chairman of the Executive Committee. The Chairman of the Executive Committee shall preside at all meetings of the Executive Committee. During the absence or disability of the Chairman of the Board and the

advisable in his discretion. Except where by law the signature of the President is required, the Chairman of the Board shall possess the same power as the President to sign all certificates, contracts and other instruments of the Corporation authorized by the Board of Directors. He shall have all powers and shall perform all duties commonly incident to and vested in the office of Chairman of the Board of a corporation. He shall also perform such other duties as the Board shall designate from time to time. (B) Vice-Chairman of the Board of Directors. A Vice-Chairman of the Board of Directors shall perform the duties and have the powers of the Chairman during the absence or disability of the Chairman, and shall also perform such other duties as the Board shall designate from time to time. (C) Chairman of the Executive Committee. The Chairman of the Executive Committee shall preside at all meetings of the Executive Committee. During the absence or disability of the Chairman of the Board and the Vice-Chairman of the Board, he shall perform the duties and have the powers of the Chairman of the Board, and shall also perform such other duties as the Board shall designate from time to time. (D) Vice-Chairman of the Executive Committee. A Vice-Chairman of the Executive Committee shall perform the duties and have the powers of the Chairman of the Executive Committee during the absence or disability of the Chairman of the Executive Committee, and shall also perform such other duties as the Board shall designate from time to time. (E) Executive Committee Member. In addition to the powers and duties incident to his membership on the Executive Committee, an Executive Committee Member, in his individual capacity, shall have all powers and shall perform all duties commonly incident to and vested in an executive officer of a corporation. He shall also perform such other duties as the Board shall designate from time to time. (F) President. The President shall have general charge and supervision of the operations of the Corporation itself, and shall have all powers and shall perform all duties commonly incident to and vested in the office of President of a corporation. He shall also perform such other duties as the Board shall designate from time to time. (G) Vice-President. A Vice-President shall perform such duties and have such powers as the Board of Directors, the Chairman of the Board, a Vice-Chairman of the Board, or the President shall designate from time to time. (H) Treasurer. The Treasurer shall have the care and custody of the funds of the Corporation, and shall have and exercise, under the supervision of the Board of Directors, all powers and duties commonly incident to the office of Treasurer. He shall deposit all funds of the Corporation in such trust company or trust companies, or bank or banks, as the Board, the Treasurer, or any other officer to whom the Board shall have delegated the authority, shall designate from time to -8-

time. He shall endorse for deposit or collection all checks, notes, and drafts payable to the Corporation or to its order, and make drafts on behalf of the Corporation. He shall keep accurate books of accounts of the Corporation's transactions, which books shall be the property of the Corporation, and, together with all its property in his possession, shall be subject at all times to the inspection and control of the Board. He shall have all powers and shall perform all duties commonly incident to and vested in the office of Treasurer of a corporation. He shall also have such other duties as the Board may designate from time to time. (I) Assistant Treasurer. An Assistant Treasurer shall perform the duties and have the powers of the Treasurer during the absence or disability of the Treasurer, and shall perform such other duties and have such other powers as the Board of Directors or Treasurer shall designate from time to time. (J) Secretary.

time. He shall endorse for deposit or collection all checks, notes, and drafts payable to the Corporation or to its order, and make drafts on behalf of the Corporation. He shall keep accurate books of accounts of the Corporation's transactions, which books shall be the property of the Corporation, and, together with all its property in his possession, shall be subject at all times to the inspection and control of the Board. He shall have all powers and shall perform all duties commonly incident to and vested in the office of Treasurer of a corporation. He shall also have such other duties as the Board may designate from time to time. (I) Assistant Treasurer. An Assistant Treasurer shall perform the duties and have the powers of the Treasurer during the absence or disability of the Treasurer, and shall perform such other duties and have such other powers as the Board of Directors or Treasurer shall designate from time to time. (J) Secretary. The Secretary shall attend all meetings of the stockholders, and of the Board of Directors, and shall keep and preserve in books of the Corporation true minutes of the proceedings of all such meetings. He shall have the custody of all valuable papers and documents of the Corporation, and shall keep the Corporation's stock books, stock ledgers, and stock transfer books, and shall prepare, issue, record, transfer, and cancel certificates of stocks as required by the proper transactions of the Corporation and its stockholders unless these functions be performed by a duly appointed and authorized transfer agent or registrar other than this Corporation. He shall keep in his custody the seal of the Corporation, and shall have authority to affix same to all instruments where its use is required. He shall give all notices required by statute, by the Certificate of Incorporation, or by the ByLaws. He shall have all powers and shall perform all duties commonly incident to and vested in the office of Secretary of a corporation. He shall also perform such other duties as the Board shall designate from time to time. (K) Assistant Secretary. An Assistant Secretary shall perform the duties and have the powers of the Secretary during the absence or disability of the Secretary, and shall perform such other duties and have such other powers as the Board of Directors or Secretary shall designate from time to time. Article V INDEMNIFICATION OF DIRECTORS AND OFFICERS To the full extent permitted by the laws of the State of New Jersey, as they exist on the date hereof or as they may hereafter be amended, the Corporation shall indemnify any person (an "Indemnitee") who was or is involved in any manner (including, without limitation, as a party or witness) in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative, arbitrative, legislative or investigative (including, without limitation, any action, suit or proceeding by or in the right of the Corporation to procure a judgement in its favor) (a "Proceeding"), or who is threatened with being so involved, by reason of the fact that he or she is or was a director or officer of the Corporation -9-

or, while serving as a director or officer of the Corporation, is or was at the request of the Corporation also serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan), against all expenses (including attorneys' fees), judgements, fines, penalties, excise taxes and amounts paid in settlement actually and reasonably incurred by the Indemnitee in connection with such Proceeding, provided that, there shall be no indemnification hereunder with respect to any settlement or other nonadjudicated disposition of any threatened or pending Proceeding unless the Corporation has given its prior consent to such settlement or disposition. The right of indemnification created by this Article shall be a contract right enforceable by an Indemnitee against the Corporation, and it shall not be exclusive of any other rights to which an Indemnitee may otherwise be entitled. The provisions of this Article shall inure to the benefit of the heirs and legal representatives of an Indemnitee and shall be applicable to Proceedings commenced or continuing after the adoption of this Article, whether arising from acts or omissions occurring before or after such adoption. No amendment, alteration, change, addition or repeal of or to these ByLaws shall deprive any Indemnitee of any rights under this Article with respect to any act or omission of such Indemnitee occurring prior to such amendment, alteration, change, addition or repeal.

or, while serving as a director or officer of the Corporation, is or was at the request of the Corporation also serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan), against all expenses (including attorneys' fees), judgements, fines, penalties, excise taxes and amounts paid in settlement actually and reasonably incurred by the Indemnitee in connection with such Proceeding, provided that, there shall be no indemnification hereunder with respect to any settlement or other nonadjudicated disposition of any threatened or pending Proceeding unless the Corporation has given its prior consent to such settlement or disposition. The right of indemnification created by this Article shall be a contract right enforceable by an Indemnitee against the Corporation, and it shall not be exclusive of any other rights to which an Indemnitee may otherwise be entitled. The provisions of this Article shall inure to the benefit of the heirs and legal representatives of an Indemnitee and shall be applicable to Proceedings commenced or continuing after the adoption of this Article, whether arising from acts or omissions occurring before or after such adoption. No amendment, alteration, change, addition or repeal of or to these ByLaws shall deprive any Indemnitee of any rights under this Article with respect to any act or omission of such Indemnitee occurring prior to such amendment, alteration, change, addition or repeal. ARTICLE VI STOCK Section l. Form of Stock Certificate Each holder of stock of the Corporation shall be entitled to a stock certificate signed by the President or a VicePresident, and also by the Treasurer or an Assistant Treasurer, or by the Secretary or an Assistant Secretary. Any or all signatures upon a certificate may be facsimiles. The certificates of shares shall be in such form as shall be prescribed by the Board of Directors. Section 2. Loss of Stock Certificate In the case of loss, mutilation, or destruction of an issued and outstanding certificate of stock, a duplicate certificate may be issued upon such terms as the Board of Directors may prescribe. Section 3. Transfer of Shares of Stock Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the registered holder of such shares in person or by his attorney upon surrender and cancellation of a certificate or of certificates for an equivalent number of shares. -10-

Article VII EXECUTION OF INSTRUMENTS Section l. Checks and Drafts All checks, drafts, and orders for payment of moneys shall be signed in the name of the Corporation or one of its divisions, and in its behalf, by such officers or agents as the Board of Directors shall designate from time to time. Section 2. Contracts and Conveyances Any contract, conveyance, or other instrument may be executed by the Chairman of the Board of Directors, a Vice-Chairman of the Board of Directors, any member of the Executive Committee, the President, or a Vice President in the name and on behalf of the Corporation and the Secretary or an Assistant Secretary may affix the Corporate Seal thereto. Section 3. In General The Board of Directors shall have power to designate officers and agents who shall have authority to execute any instrument in behalf of the Corporation.

Article VII EXECUTION OF INSTRUMENTS Section l. Checks and Drafts All checks, drafts, and orders for payment of moneys shall be signed in the name of the Corporation or one of its divisions, and in its behalf, by such officers or agents as the Board of Directors shall designate from time to time. Section 2. Contracts and Conveyances Any contract, conveyance, or other instrument may be executed by the Chairman of the Board of Directors, a Vice-Chairman of the Board of Directors, any member of the Executive Committee, the President, or a Vice President in the name and on behalf of the Corporation and the Secretary or an Assistant Secretary may affix the Corporate Seal thereto. Section 3. In General The Board of Directors shall have power to designate officers and agents who shall have authority to execute any instrument in behalf of the Corporation. Article VIII VOTING UPON STOCK HELD BY THE CORPORATION Unless otherwise ordered by the Board of Directors, the Chairman of the Board of Directors, a Vice-Chairman of the Board of Directors, the Chairman of the Executive Committee, a Vice-Chairman of the Executive Committee, any member of the Executive Committee, the President, any Vice-President, or the Treasurer shall have full power and authority in behalf of the Corporation to attend, to act at, and to vote at any meeting of stockholders of any corporation in which this Corporation may hold stock, and at any such meeting shall possess, and may exercise all rights and powers incident to the ownership of such stock which any owner thereof might possess and exercise if present. Such officers may also, in behalf of the Corporation, appoint attorneys and agents as the Corporation's proxy to exercise any of the foregoing powers. The Board, by resolution, from time to time, may confer like powers upon any other person or persons. Article IX SEAL OF THE CORPORATION The seal of the Corporation shall consist of a flat-faced circular die bearing the words and figures "Johnson & Johnson, Seal l887". -11-

Article X FISCAL YEAR The fiscal year of the Corporation shall end on the Sunday closest to the end of the calendar month of December and shall begin on the Monday following that Sunday. Article XI AMENDMENT OF BY-LAWS These By-Laws may be amended, altered, changed, added to, or repealed at any annual meeting of the stockholders, or at any special meeting of the stock- holders, or by the Board of Directors at any regular or special meeting of the Board, if notice of the proposed amendment, alteration, change, addition, or repeal be contained in the notice of such meeting, provided, however, that action taken by the stockholders intended to supersede action taken by the Board in making, amending, altering, changing, adding to, or repealing any ByLaws, shall supersede prior action of the Board and shall deprive the Board of further jurisdiction in the premises to the extent indicated in the statement, if any, of the stockholders accompanying such action of the stockholders.

Article X FISCAL YEAR The fiscal year of the Corporation shall end on the Sunday closest to the end of the calendar month of December and shall begin on the Monday following that Sunday. Article XI AMENDMENT OF BY-LAWS These By-Laws may be amended, altered, changed, added to, or repealed at any annual meeting of the stockholders, or at any special meeting of the stock- holders, or by the Board of Directors at any regular or special meeting of the Board, if notice of the proposed amendment, alteration, change, addition, or repeal be contained in the notice of such meeting, provided, however, that action taken by the stockholders intended to supersede action taken by the Board in making, amending, altering, changing, adding to, or repealing any ByLaws, shall supersede prior action of the Board and shall deprive the Board of further jurisdiction in the premises to the extent indicated in the statement, if any, of the stockholders accompanying such action of the stockholders. -12-

EXHIBIT 10(b) JOHNSON & JOHNSON 1995 STOCK OPTION PLAN (AS AMENDED NOVEMBER 30, 1995 AND DECEMBER 4, 1997) 1. PURPOSE The purpose of the Johnson & Johnson 1995 Stock Option Plan (the "Plan") is to promote the interests of Johnson & Johnson (the "Company") by ensuring continuity of management and increased incentive on the part of officers and executive employees responsible for major contributions to effective management, through facilitating their acquisition of an equity interest in the Company on reasonable terms. 2. ADMINISTRATION The Plan shall be administered by the Compensation Committee of the Board of Directors (the "Committee"). The Committee shall consist of not less than three directors. No person shall be eligible to serve as a member of such Committee unless such person is a "disinterested person" within the meaning of Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, and an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"). Committee members shall not be eligible to participate in the Plan while members of the Committee. It shall have the power to select optionees, to establish the number of shares and other terms applicable to each such option, to construe the provisions of the Plan, and to adopt rules and regulations governing the administration of the Plan. The Board of Directors, within its discretion, shall have authority to amend the Plan and the terms of any option issued hereunder without the necessity of obtaining further approval of the stockholders, unless such approval is required by law. 3. ELIGIBILITY Those eligible to participate in the Plan will be selected by the Committee from the following: (1) Directors who are employees of the Company or its domestic subsidiaries (excluding members from time to time of the Committee). (2) Officers and other key employees of the Company and its domestic subsidiaries.

EXHIBIT 10(b) JOHNSON & JOHNSON 1995 STOCK OPTION PLAN (AS AMENDED NOVEMBER 30, 1995 AND DECEMBER 4, 1997) 1. PURPOSE The purpose of the Johnson & Johnson 1995 Stock Option Plan (the "Plan") is to promote the interests of Johnson & Johnson (the "Company") by ensuring continuity of management and increased incentive on the part of officers and executive employees responsible for major contributions to effective management, through facilitating their acquisition of an equity interest in the Company on reasonable terms. 2. ADMINISTRATION The Plan shall be administered by the Compensation Committee of the Board of Directors (the "Committee"). The Committee shall consist of not less than three directors. No person shall be eligible to serve as a member of such Committee unless such person is a "disinterested person" within the meaning of Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, and an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"). Committee members shall not be eligible to participate in the Plan while members of the Committee. It shall have the power to select optionees, to establish the number of shares and other terms applicable to each such option, to construe the provisions of the Plan, and to adopt rules and regulations governing the administration of the Plan. The Board of Directors, within its discretion, shall have authority to amend the Plan and the terms of any option issued hereunder without the necessity of obtaining further approval of the stockholders, unless such approval is required by law. 3. ELIGIBILITY Those eligible to participate in the Plan will be selected by the Committee from the following: (1) Directors who are employees of the Company or its domestic subsidiaries (excluding members from time to time of the Committee). (2) Officers and other key employees of the Company and its domestic subsidiaries. (3) Key employees of subsidiaries outside the United States. (4) Key employees of a joint venture operation of the Company or its subsidiaries and key employees of joint venture partners who are assigned to such a joint venture. In all cases, optionees shall be selected on the basis of demonstrated ability to contribute substantially to the effective management of the Company. In no event shall an option be granted to any individual who, immediately after such option is granted, is considered to own stock possessing more than 10% of the combined voting power of all classes of stock of Johnson & Johnson or any of its subsidiaries within the meaning of Section 422 of the Internal Revenue Code. 1

4. ALLOTMENT OF SHARES A maximum of 56,000,000 authorized but unissued shares of the Common Stock of the Company (par value $1.00) will be allotted to the Plan, subject to the required approval by the stockholders. The total number of

4. ALLOTMENT OF SHARES A maximum of 56,000,000 authorized but unissued shares of the Common Stock of the Company (par value $1.00) will be allotted to the Plan, subject to the required approval by the stockholders. The total number of shares which may be awarded under the Plan to any optionee in any one year shall not exceed 5% of the total shares allotted to the Plan. The Committee may, in its discretion, use Treasury shares in lieu of authorized but unissued shares for the options. To the extent this is done, the number of authorized but unissued shares to be used for the Plan will be reduced. Shares covered by options which lapse or have been terminated during the duration of this Plan may be reallocated by the Committee. 5. EFFECTIVE DATE AND TERM OF PLAN The Plan shall become effective on April 27, 1995. No option shall be granted pursuant to this Plan later than April 26, 2000, but options theretofore granted may extend beyond that date in accordance with their terms. 6. TERMS AND CONDITIONS A. All Options The following shall apply to all options granted under the Plan: (i) Option Price The option price per share for each stock option shall be determined by the Committee and shall not be less than the fair market value on the date the option is granted. The fair market value shall be determined as prescribed by the Internal Revenue Code and Regulations. (ii) Time of Exercise of Option The Committee shall establish the time or times within the option period when the stock option may be exercised in whole or in such parts as may be specified from time to time by the Committee. With respect to an optionee whose employment has terminated by reason of death, disability or retirement, the Committee may in its discretion accelerate the time or times when any particular stock option held by said optionee may be so exercised so that such time or times are earlier than those originally provided in said option. In all cases exercise of a stock option shall be subject to the provisions of Section 6B(ii) or 6C(iii), as the case may be. The Committee shall determine, either at the time of grant or later whether, and to what extent and under what circumstances, the transfer of shares issuable in connection with the exercise of a non-qualified option may be deferred at the election of the optionee. (iii) Payment The entire option price may be paid at the time the option is exercised. When an option is exercised prior to termination of employment, the Committee shall have the discretion to arrange for the payment of such price, in whole or in part, in installments. In such cases, the Committee shall obtain such evidence of the optionee's obligation, establish such interest rate and require such security as it may deem appropriate for the adequate protection of the Company. (iv) Non-Transferability of Option Unless otherwise specified by the Committee to the contrary, an option by its terms shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution and 2

shall be exercisable during the optionee's lifetime only by the optionee. The Committee may, in the manner

shall be exercisable during the optionee's lifetime only by the optionee. The Committee may, in the manner established by the Committee, provide for the transfer, without payment of consideration, of a non-qualified option by an optionee to a member of the optionee's immediate family or to a trust or partnership whose beneficiaries are members of the optionee's immediate family. In such case, the option shall be exercisable only by such transferee. For purposes of this provision, an optionee's "immediate family" shall mean the holder's spouse, children and grandchildren. (v) Adjustment in Event of Recapitalization of the Company In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of the Company, the Board of Directors shall make such adjustment as it may deem equitably required in the number and kind of shares authorized by and for the Plan, in the number and kind of shares covered by the options granted, in the number of shares which may be awarded to an optionee in any one year, and in the option price. B. Non-Qualified Stock Options The Committee may, in its discretion, grant options under the Plan which, in whole or in part, do not qualify as incentive stock options under Section 422 of the Internal Revenue Code. In addition to the terms and conditions set forth in Section 6A above, the following terms and conditions shall govern any option (or portion thereof) to the extent that it does not so qualify. (i) Form of Payment Payment of the option price of any option (or portion thereof) not qualifying as an incentive stock option shall be made in cash or, in the discretion of the Committee, in the Common Stock of the Company valued at its fair market value (as the same shall be determined by the Committee), or a combination of such Common Stock and cash. (ii) Rights after Termination of Employment In the event of termination of employment due to any cause including death, disability or retirement, rights to exercise the stock option shall cease, except for those which have accrued to the date of termination, unless the Committee shall otherwise specify. These rights shall remain exercisable for a period of three months, or such longer period (not to exceed three years) as the Committee shall provide, following termination for any cause other than death, disability or retirement and for a period of three years following termination due to death, disability or retirement, unless the Committee otherwise specifies. The Committee may, in its discretion, extend the period within which any particular option may be exercised beyond the expiration date originally provided in said option. However, no stock option shall, in any event, be exercised after the expiration of the full term of the option. (iii) Period of Option The exercise period of each non-qualified stock option shall be specified by the Committee at the time of grant. C. Incentive Stock Options The Committee may, in its discretion, grant options under the Plan which qualify in whole or in part as incentive stock options under Section 422 of the Internal Revenue Code. In addition to the terms and 3

conditions set forth in Section 6A above, the following terms and conditions shall govern any option (or portion thereof) to the extent that it so qualifies: (i) Maximum Fair Market Value of Incentive Stock Options

conditions set forth in Section 6A above, the following terms and conditions shall govern any option (or portion thereof) to the extent that it so qualifies: (i) Maximum Fair Market Value of Incentive Stock Options The aggregate fair market value (determined as of the time such option is granted) of the Common Stock for which any optionee may have stock options which first became vested in any calendar year (under all incentive stock option plans of the Company and its parent and subsidiary corporations) shall not exceed $100,000. (ii) Form of Payment Payment of the option price for incentive stock options shall be made in cash or in the Common Stock of the Company valued at its fair market value (as the same shall be determined by the Committee), or a combination of such Common Stock and cash. Where payment of the option price is to be made with Common Stock acquired under a Company compensation plan (within the meaning of paragraph 11(g) of Opinion No. 25 of the Accounting Principles Board), such Common Stock will not be accepted as payment unless the optionee has beneficially owned such Common Stock for at least six months (increased to one year if such Common Stock was acquired under an incentive stock option) prior to such payment. (iii) Rights after Termination of Employment In the event of termination of employment due to any cause including death, disability or retirement, rights to exercise the stock option shall cease, except for those which have accrued to the date of termination, unless the Committee shall otherwise specify. These rights shall remain exercisable for a period of three months, or such longer period (not to exceed three years) as the Committee shall provide, following termination for any cause other than death, disability or retirement and for a period of three years following termination due to death, disability or retirement, unless the Committee otherwise specifies. However, no incentive stock option shall, in any event, be exercised after the expiration of 10 years from the date such option is granted, or such earlier date as may be specified in the option. (iv) Period of Option The exercise period of each incentive stock option by its terms shall not be more than 10 years from the date the option is granted as specified by the Committee. 4

EXHIBIT 10(c) JOHNSON & JOHNSON 1991 STOCK OPTION PLAN (AS AMENDED DECEMBER 4, 1997) 1. PURPOSE The purpose of the Johnson & Johnson 1991 Stock Option Plan (referred to herein as the "Plan") is to promote the interests of the Company by ensuring continuity of management and increased incentive on the part of officers and executive employees responsible for major contributions to effective management, through facilitating their acquisition of an equity interest in the Company on reasonable terms. 2. ADMINISTRATION The Plan shall be administered by the Compensation Committee of the Board of Directors (referred to herein as the "Committee"). The Committee shall consist of not less than three directors who shall not be eligible to participate in the Plan while members of the Committee. It shall have the power to select optionees, to establish the number of shares and other terms applicable to each such option, to construe the provisions of the Plan, and

EXHIBIT 10(c) JOHNSON & JOHNSON 1991 STOCK OPTION PLAN (AS AMENDED DECEMBER 4, 1997) 1. PURPOSE The purpose of the Johnson & Johnson 1991 Stock Option Plan (referred to herein as the "Plan") is to promote the interests of the Company by ensuring continuity of management and increased incentive on the part of officers and executive employees responsible for major contributions to effective management, through facilitating their acquisition of an equity interest in the Company on reasonable terms. 2. ADMINISTRATION The Plan shall be administered by the Compensation Committee of the Board of Directors (referred to herein as the "Committee"). The Committee shall consist of not less than three directors who shall not be eligible to participate in the Plan while members of the Committee. It shall have the power to select optionees, to establish the number of shares and other terms applicable to each such option, to construe the provisions of the Plan, and to adopt rules and regulations governing the administration of the Plan. The Board, within its discretion, shall have authority to amend the Plan and the terms of any option issued hereunder without the necessity of obtaining further approval of the stockholder, unless such approval is required by law. 3. ELIGIBILITY Those eligible to participate in the Plan will be selected by the Committee from the following: (1) Directors who are employees of the Company or its domestic subsidiaries (excluding members from time to time of the Committee). (2) Officers and other key employees of the Company and its domestic subsidiaries. (3) Key employees of subsidiaries outside the United States. In all cases, optionees shall be selected on the basis of demonstrated ability to contribute substantially to the effective management of the Company. In no event shall an option be granted to any individual who, immediately after such option is granted, is considered to own stock possessing more than 10% of the combined voting power of all classes of stock of Johnson & Johnson or any of its subsidiaries within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (referred to herein as the "Internal Revenue Code"). 4. ALLOTMENT OF SHARES A maximum of 52,000,000 authorized but unissued shares of the Common Stock of the Company (par value $1.00) will be allotted to the Plan, subject to the required approval by the stockholders. The Committee may, in its discretion, use Treasury shares in lieu of authorized but unissued shares for the options. To the extent this is done, the number of authorized but unissued shares to be used for the Plan will be reduced. 1

Shares covered by options which lapse or have been terminated during the duration of this Plan may be reallocated by the Committee.

Shares covered by options which lapse or have been terminated during the duration of this Plan may be reallocated by the Committee. 5. EFFECTIVE DATE AND TERM OF PLAN The Plan shall become effective on April 25, 1991. No option shall be granted pursuant to this Plan later than April 27, 1995, but options theretofore granted may extend beyond that date in accordance with their terms. 6. TERMS AND CONDITIONS A. All Options The following shall apply to all options granted under the Plan: (i) Option Price The option price per share for each stock option shall be determined by the Committee and shall not be less than the fair market value on the date the option is granted. The fair market value shall be determined as prescribed by the Internal Revenue Code and Regulations. (ii) Time of Exercise of Option The Committee shall establish the time or times within the option period when the stock option may be exercised in whole or in such parts as may be specified from time to time by the Committee. With respect to an optionee who is about to retire, the Committee may in its discretion accelerate the time or times when any particular stock option held by said optionee may be so exercised so that such time or times are earlier than those originally provided in said option. In all cases exercise of a stock option shall be subject to the provisions of Section 6B(ii) or 6C(iii), as the case may be. The Committee shall determine, either at the time of grant or later whether, and to what extent and under what circumstances, the transfer of shares issuable in connection with the exercise of a non-qualified option may be deferred at the election of the optionee. (iii) Payment The entire option price may be paid at the time the option is exercised. When an option is exercised prior to termination of employment, the Committee shall have the discretion to arrange for the payment of such price, in whole or in part, in installments. In such cases, the Committee shall obtain such evidence of the optionee's obligation, establish such interest rate and require such security as it may deem appropriate for the adequate protection of the Company. (iv) Non-Transferability of Option An option by its terms shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution and shall be exercisable during the optionee's lifetime only by the optionee. (v) Adjustment in Event of Recapitalization of the Company In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of the Company, the Board of Directors shall make such adjustment as it may deem equitably required in the number and kind of shares authorized by and for the Plan, in the number and kind of shares covered by the options granted, and in the option price. 2

B. Non-Qualified Stock Options The Committee may, in its discretion, grant options under the Plan which, in whole or in part, do not qualify as

B. Non-Qualified Stock Options The Committee may, in its discretion, grant options under the Plan which, in whole or in part, do not qualify as incentive stock options under Section 422 of the Internal Revenue Code. In addition to the terms and conditions set forth in Section 6A above, the following terms and conditions shall govern any option (or portion thereof) to the extent that it does not so qualify. (i) Form of Payment Payment of the option price of any option (or portion thereof) not qualifying as an incentive stock option shall be made in cash or, in the discretion of the Committee, in the Common Stock of the Company valued at its fair market value (as the same shall be determined by the Committee), or a combination of such Common Stock and cash. (ii) Rights after Termination of Employment In the event of termination of employment due to any cause including death, disability or retirement, rights to exercise the stock option shall cease, except for those which have accrued to the date of termination, unless the Committee shall otherwise specify. These rights shall remain exercisable for a period of three months, or such longer period (not to exceed three years) as the Committee shall provide, following termination for any cause other than death, disability or retirement and for a period of three years following termination due to death, disability or retirement, unless the Committee otherwise specifies. The Committee may, in its discretion, extend the period within which any particular option may be exercised beyond the expiration date originally provided in said option. However, no stock option shall, in any event, be exercised after the expiration of the full term of the option. (iii) Period of Option The exercise period of each non-qualified stock option shall be specified by the Committee at the time of grant. C. Incentive Stock Options The Committee may, in its discretion, grant options under the Plan which qualify in whole or in part as incentive stock options under Section 422 of the Internal Revenue Code. In addition to the terms and conditions set forth in Section 6A above, the following terms and conditions shall govern any option (or portion thereof) to the extent that it so qualifies: (i) Maximum Fair Market Value of Incentive Stock Options The aggregate fair market value (determined as of the time such option is granted) of the Common Stock for which any optionee may have stock options vest in any calendar year (under all incentive stock option plans of the Company and its parent and subsidiary corporations) shall not exceed $100,000. (ii) Form of Payment Payment of the option price for incentive stock options shall be made in cash or in the Common Stock of the Company valued at its fair market value (as the same shall be determined by the Committee), or a combination of such Common Stock and cash. Where payment of the option price is to be made with Common Stock acquired under a Company compensation plan (within the 3

meaning of paragraph 11(g) of Opinion No. 25 of the Accounting Principles Board), such Common Stock will not be accepted as payment unless the optionee has beneficially owned such Common Stock for at least six months (increased to one year if such Common Stock was acquired under an incentive stock option) prior to such payment.

meaning of paragraph 11(g) of Opinion No. 25 of the Accounting Principles Board), such Common Stock will not be accepted as payment unless the optionee has beneficially owned such Common Stock for at least six months (increased to one year if such Common Stock was acquired under an incentive stock option) prior to such payment. (iii) Rights after Termination of Employment In the event of termination of employment due to any cause including death, disability or retirement, rights to exercise the stock option shall cease, except for those which have accrued to the date of termination, unless the Committee shall otherwise specify. These rights shall remain exercisable for a period of three months, or such longer period (not to exceed three years) as the Committee shall provide, following termination for any cause other than death, disability or retirement and for a period of three years following termination due to death, disability or retirement, unless the Committee otherwise specifies. However, no incentive stock option shall, in any event, be exercised after the expiration of 10 years from the date such option is granted, or such earlier date as may be specified in the option. (iv) Period of Option The exercise period of each incentive stock option by its terms shall not be more than 10 years from the date the option is granted. 4

EXHIBIT 10(d) JOHNSON & JOHNSON 1986 STOCK OPTION PLAN (AS AMENDED DECEMBER 4, 1986 AND DECEMBER 4, 1997) 1. PURPOSE The purpose of the Plan is to promote the interests of the Company by ensuring continuity of management and increased incentive on the part of officers and executive employees responsible for major contributions to effective management, through facilitating their acquisition of an equity interest in the Company on reasonable terms. 2. ADMINISTRATION The Plan shall be administered by the Compensation Committee of the Board of Directors (referred to herein as the "Committee"). The Committee shall consist of not less than three directors who shall not be eligible to participate in the Plan while members of the Committee. It shall have the power to select optionees, to establish the number of shares and other terms applicable to each such option, to construe the provisions of the Plan, and to adopt rules and regulations governing the administration of the Plan. The Board, within its discretion, shall have authority to amend the Plan and the terms of any option issued hereunder without the necessity of obtaining further approval of the stockholders, unless such approval is required by law. 3. ELIGIBILITY Those eligible to participate in the Plan will be selected by the Committee from the following: (1) Directors who are employees of the Company or its domestic subsidiaries (excluding members from time to time of the Committee). (2) Officers and other key employees of the Company and its domestic subsidiaries.

EXHIBIT 10(d) JOHNSON & JOHNSON 1986 STOCK OPTION PLAN (AS AMENDED DECEMBER 4, 1986 AND DECEMBER 4, 1997) 1. PURPOSE The purpose of the Plan is to promote the interests of the Company by ensuring continuity of management and increased incentive on the part of officers and executive employees responsible for major contributions to effective management, through facilitating their acquisition of an equity interest in the Company on reasonable terms. 2. ADMINISTRATION The Plan shall be administered by the Compensation Committee of the Board of Directors (referred to herein as the "Committee"). The Committee shall consist of not less than three directors who shall not be eligible to participate in the Plan while members of the Committee. It shall have the power to select optionees, to establish the number of shares and other terms applicable to each such option, to construe the provisions of the Plan, and to adopt rules and regulations governing the administration of the Plan. The Board, within its discretion, shall have authority to amend the Plan and the terms of any option issued hereunder without the necessity of obtaining further approval of the stockholders, unless such approval is required by law. 3. ELIGIBILITY Those eligible to participate in the Plan will be selected by the Committee from the following: (1) Directors who are employees of the Company or its domestic subsidiaries (excluding members from time to time of the Committee). (2) Officers and other key employees of the Company and its domestic subsidiaries. (3) Key employees of subsidiaries outside the United States. In all cases, optionees shall be selected on the basis of demonstrated ability to contribute substantially to the effective management of the Company. In no event shall an option be granted to any individual who, immediately after such option is granted, is considered to own stock possessing more than 10% of the combined voting power of all classes of stock of Johnson & Johnson or any of its subsidiaries within the meaning of Section 422A of the Internal Revenue Code. 4. ALLOTMENT OF SHARES A maximum of 64,000,000 authorized but unissued shares of the Common Stock of the Company (par value $1.00) will be allotted to the Plan, subject to the required approval by the stockholders. The Committee may, in its discretion, use Treasury shares in lieu of authorized but unissued shares for the options. To the extent this is done, the number of authorized but unissued shares to be used for the Plan will be reduced. 1

Shares covered by options which lapse or have been terminated during the duration of this Plan may be reallocated by the Committee. 5. EFFECTIVE DATE AND TERM OF PLAN

Shares covered by options which lapse or have been terminated during the duration of this Plan may be reallocated by the Committee. 5. EFFECTIVE DATE AND TERM OF PLAN The Plan shall become effective on April 24, 1986. No option shall be granted pursuant to this Plan later than April 23, 1991, but options theretofore granted may extend beyond that date in accordance with their terms. 6. TERMS AND CONDITIONS A. ALL OPTIONS The following shall apply to all options granted under the Plan: (i) Option Price The option price per share for each stock option shall be determined by the Committee and shall not be less than the fair market value on the date the option is granted. The fair market value shall be determined as prescribed by the Internal Revenue Code and Regulations. (ii) Time of Exercise of Option The Committee shall establish the time or times within the option period when the stock option may be exercised in whole or in such parts as may be specified from time to time by the Committee. With respect to an optionee who is about to retire, the Committee may in its discretion accelerate the time or times when any particular stock option held by said optionee may be so exercised so that such time or times are earlier than those originally provided in said option. However, in no event shall a stock option be exercisable within two years immediately following the date the option is granted. In all cases exercise of a stock option shall be subject to the provisions of Section 6B(ii) or 6C(iv), as the case may be. The Committee shall determine, either at the time of grant or later whether, and to what extent and under what circumstances, the transfer of shares issuable in connection with the exercise of a non-qualified option may be deferred at the election of the optionee. (iii) Payment The entire option price may be paid at the time the option is exercised. When an option is exercised prior to termination of employment, the Committee shall have the discretion to arrange for the payment of such price, in whole or in part, in installments. In such cases, the Committee shall obtain such evidence of the optionee's obligation, establish such interest rate and require such security as it may deem appropriate for the adequate protection of the Company. (iv) Non-transferability of Option An option by its terms shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution and shall be exercisable during the optionee's lifetime only by the optionee. (v) Adjustment in Event of Recapitalization of the Company In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of the Company, the Board of Directors shall make such adjustment as it may deem equitably required in the number and kind of shares authorized by and for the Plan, in the number and kind of shares covered by the options granted, and in the option price. 2

B. NON-QUALIFIED STOCK OPTIONS

B. NON-QUALIFIED STOCK OPTIONS The Committee may, in its discretion, grant options under the Plan which, in whole or in part, do not qualify as incentive stock options under Section 422A of the Internal Revenue Code. In addition to the terms and conditions set forth in Section 6A above, the following terms and conditions shall govern any option (or portion thereof) to the extent that it does not so qualify. (i) Form of Payment Payment of the option price of any option (or portion thereof) not qualifying as an Incentive stock option shall be made in cash or, in the discretion of the Committee, in the Common Stock of the Company valued at its fair market value (as the same shall be determined by the Committee), or a combination of such Common Stock and cash. (ii) Rights after Termination of Employment In the event of termination of employment due to any cause including death or retirement, rights to exercise the stock option shall cease, except for those which have accrued to the date of termination, unless the Committee shall otherwise specify. These rights shall remain exercisable for a period of three months, or such longer period (not to exceed three years) as the Committee shall provide, following termination for any cause other than death or retirement and for a period of three years following termination due to death or retirement, unless the Committee otherwise specifies. With respect to an optionee who is about to retire, the Committee may in its discretion extend the period within which any particular option may be exercised beyond the expiration date originally provided in said option. However, no stock option shall, in any event, be exercised after the expiration of 10 years and one day from the date such option is granted. (iii) Period of Option The exercise period of each non-qualified stock option by its terms shall not be more than 10 years and one day from the date the option is granted as specified by the Committee. C. INCENTIVE STOCK OPTIONS The Committee may, in its discretion, grant options under the Plan which qualify in whole or in part as incentive stock options under Section 422A of the Internal Revenue Code. In addition to the terms and conditions set forth in Section 6A above, the following terms and conditions shall govern any option (or portion thereof) to the extent that it so qualifies: (i) Sequential Exercise No incentive stock option granted prior to January 1, 1987 shall, by its terms, be exercisable while there is outstanding (within the meaning of Section 422A(c)(7) of the Internal Revenue Code) any incentive stock option (as that term is defined in the Internal Revenue Code and Regulations) which was granted, before the granting of such option, to the optionee to purchase stock in the Company or in a corporation which (at the time of the granting of such option) is a parent or subsidiary corporation of the Company, or in a predecessor corporation of any such corporations. The preceding sentence shall not apply with respect to any incentive stock option granted after December 31, 1986. 3

(ii) Maximum Fair Market Value of Incentive Stock Options For incentive stock options granted before January 1, 1987, the aggregate fair market value (determined as of the time such option is granted) of the Common Stock for which any optionee may be granted incentive stock options in any calendar year (under all incentive stock option plans of the Company and its parent and subsidiary

(ii) Maximum Fair Market Value of Incentive Stock Options For incentive stock options granted before January 1, 1987, the aggregate fair market value (determined as of the time such option is granted) of the Common Stock for which any optionee may be granted incentive stock options in any calendar year (under all incentive stock option plans of the Company and its parent and subsidiary corporations) shall not exceed $100,000 plus any unused limit carryover to such year permitted by Section 422A (c)(4) of the Internal Revenue Code. For incentive stock options granted after December 31, 1986, the aggregate fair market value (determined as of the time such option is granted) of the Common Stock with respect to which incentive stock options are first exercisable under the terms of the option and the Plan by any optionee during any calendar year (under all incentive stock option plans of the Company and its parent and subsidiary corporations) shall not exceed $100,000. (iii) Form of Payment Payment of the option price for incentive stock options shall be made in cash or in the Common Stock of the Company valued at its fair market value (as the same shall be determined by the Committee), or a combination of such Common Stock and cash. For options granted prior to December 4, 1986, payment may not be made with Common Stock of the Company unless the Common Stock shall have been held by the optionee for at least one year. For options granted on or after December 4, 1986, where payment of the option price is to be made with Common Stock acquired under a Company compensation plan (within the meaning of paragraph 11(g) of Opinion No. 25 of the Accounting Principles Board), such Common Stock will not be accepted as payment unless the optionee has beneficially owned such Common Stock for at least six months (increased to one year if such Common Stock was acquired under an incentive stock option) prior to such payment. (iv) Rights after Termination of Employment In the event of termination of employment due to any cause including death or retirement, rights to exercise the stock option shall cease, except for those which have accrued to the date of termination, unless the Committee shall otherwise specify. These rights shall remain exercisable for a period of three months, or such longer period (not to exceed three years) as the Committee shall provide, following termination for any cause other than death or retirement and for a period of three years following termination due to death or retirement, unless the Committee otherwise specifies. However, no incentive stock option shall, in any event, be exercised after the expiration of 10 years from the date such option is granted, or such earlier date as may be specified in the option. (v) Period of Option The exercise period of each incentive stock option by its terms shall not be more than 10 years from the date the option is granted as specified by the Committee. 4

EXHIBIT 10(i) Amended as of December 4, 1997 JOHNSON & JOHNSON EXECUTIVE INCOME DEFERRAL PLAN The Johnson & Executive Income Deferral Plan (the "Plan") is intended to permit a select group of executives to defer income which would otherwise be immediately payable to them under various compensation and/or incentive plans of Johnson & Johnson (the "Company"). 1. ADMINISTRATION. This Plan is administered by the Compensation Committee of the Company's Board of Directors. The Committee shall have responsibility for determining which investments will from time to time be available under the Plan and shall review the investment options at least once every three years. The Committee shall make all decisions affecting the timing, price or amount of any and all of the Deferred Awards (as hereinafter

EXHIBIT 10(i) Amended as of December 4, 1997 JOHNSON & JOHNSON EXECUTIVE INCOME DEFERRAL PLAN The Johnson & Executive Income Deferral Plan (the "Plan") is intended to permit a select group of executives to defer income which would otherwise be immediately payable to them under various compensation and/or incentive plans of Johnson & Johnson (the "Company"). 1. ADMINISTRATION. This Plan is administered by the Compensation Committee of the Company's Board of Directors. The Committee shall have responsibility for determining which investments will from time to time be available under the Plan and shall review the investment options at least once every three years. The Committee shall make all decisions affecting the timing, price or amount of any and all of the Deferred Awards (as hereinafter defined) of participants subject to Section 16 of the Securities Exchange Act of 1934, as amended, but may otherwise delegate any of its authority under this Plan. 2. ELIGIBILITY. Eligibility to defer under this Plan will be initially limited to members of the Executive Committee of the Company. The Committee may from time to time expand eligibility to defer compensation under this Plan to other executives of the Company. The Committee, however, has the authority to refuse to permit an participant to participate in this Plan or elect to defer payments, if the Committee determines that such participation would jeopardize the Plan's compliance with applicable law or the Plan's status as a top hat plan under ERISA. 3. DEFERRAL INTO AN INCOME DEFERRAL ACCOUNT. participants may elect to defer up to (i) fifty percent (50%) of annual salary, (ii) one hundred percent (100%) of cash and/or stock awards under the Company's Executive Incentive Plan, (iii) one hundred percent (100%) of dividend equivalents paid under the Company's Certificate of Extra Compensation ("CEC") Plan and (iv) one hundred percent (100%) of dividend equivalents paid on "gain" shares deferred under the Company's Stock Option Plans. Amounts so deferred are known as "Deferred Awards" and will be credited to a participant's "Income Deferral Account". A participant's decision to defer under the Plan must be made on or before September 30 of the year prior to the commencement of the fiscal year as to which the compensation, incentive payment or dividend equivalent monies to be deferred will be earned. At the Plan's inception, amounts otherwise payable in 1997 (regardless of the year in which earned) may be deferred under this Plan by elections made on or before December 15, 1996. Any election to

2 defer pursuant to this Section 3 shall be effective only when timely filed with Extra Compensation Services on the form utilized for such purpose. Notwithstanding the above, the required notice period for elections made in respect of amounts to be deferred under (iv) above shall be governed by the notice and election provisions applicable to any such Stock Option Plan. A participant shall designate, in multiples of 1% of the Deferred Award, the portion to be allocated to each investment option available under this Plan. A participant may change the investment options for Deferred Awards not yet credited to his/her Income Deferred Account not more than once each month, such change to be effective as of the first day of the month following the month in which a participant's request to change such allocation is received by Extra Compensation Services. Any elections to defer dividend equivalents under the Company's CEC Plan will be applied such that elections will apply to the CEC contracts in the reverse order of their issuance. Deferred Awards shall be held in one account regardless of the form of compensation or plan under which they were earned. Upon ceasing to be an employee of the Company, each participant (or in the event of a participant's death, the named beneficiary or his/her estate) shall be entitled to receive in cash in lump sum the value of his/her Income Deferral Account as of the date of such termination, unless such participant has elected, pursuant to the provisions of Section 7 below, to further defer payment of his/her Income Deferral Account beyond retirement.

2 defer pursuant to this Section 3 shall be effective only when timely filed with Extra Compensation Services on the form utilized for such purpose. Notwithstanding the above, the required notice period for elections made in respect of amounts to be deferred under (iv) above shall be governed by the notice and election provisions applicable to any such Stock Option Plan. A participant shall designate, in multiples of 1% of the Deferred Award, the portion to be allocated to each investment option available under this Plan. A participant may change the investment options for Deferred Awards not yet credited to his/her Income Deferred Account not more than once each month, such change to be effective as of the first day of the month following the month in which a participant's request to change such allocation is received by Extra Compensation Services. Any elections to defer dividend equivalents under the Company's CEC Plan will be applied such that elections will apply to the CEC contracts in the reverse order of their issuance. Deferred Awards shall be held in one account regardless of the form of compensation or plan under which they were earned. Upon ceasing to be an employee of the Company, each participant (or in the event of a participant's death, the named beneficiary or his/her estate) shall be entitled to receive in cash in lump sum the value of his/her Income Deferral Account as of the date of such termination, unless such participant has elected, pursuant to the provisions of Section 7 below, to further defer payment of his/her Income Deferral Account beyond retirement. Notwithstanding the above, if a participant is in any fiscal year a "named executive officer" for proxy statement reporting purposes by reason of his/her being the chief executive officer of the Company or one of the four highest compensated officers (other than the chief executive officer), any payment from an Income Deferral Account otherwise due to be made in such year shall be postponed to a date which is on or about the 15th day of January of the following fiscal year. 4. INVESTMENT OF INCOME DEFERRAL ACCOUNTS. At the election of each participant, amounts in an Income Deferral Account may be invested utilizing the options set forth below. Amounts to be deferred in any month (including any stock award) will be valued and credited to a participant's Income Deferral Account on the last day of each month. (a) Common Stock Equivalent Units. All amounts elected to be deferred under this option shall be converted into equivalent units of the Company's Common Stock ("Common Stock") as if the compensation deferred had been invested in Common Stock ("Common Stock Equivalent Units"). The number of Common Stock Equivalent Units shall be determined by dividing the amount of compensation or dividend equivalents to be deferred by the average of the high and low prices of the Common Stock as reported in the Wall Street Journal for the last trading day of each month. The Company shall credit the participant's Income Deferral Account with the number of full and partial shares of the Company's Common Stock so determined. However, at no time shall any shares be purchased or earmarked for such Account and

3 the participant shall not have any of the rights of a shareholder with respect to shares credited to his/her Income Deferral Account. The number of Common Stock Equivalent Units included in a participant's Account shall be adjusted to reflect dividends and increases or decreases in market value which would have resulted had funds equal to such deferred amount been invested in Common Stock. In the event of a reorganization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering or any other change in the corporate structure or shares of the Company the Committee shall make such adjustment, if any, as it may deem appropriate in the number and kind of shares of the Company's Common Stock credited to participants' Income Deferral Accounts. (b) Balanced Fund. All amounts elected to be deferred under this option shall be deemed to be invested in and credited with the investment rate of return earned under the Balanced Fund option under the Company's Savings Plan or any such successor fund. However, no Balanced Fund shares shall be purchased or earmarked for a participant's Account. (c) One Year Treasury Bill Rate. All amounts elected to be deferred under this option shall be deemed to be invested in an interest bearing account which bears interest at the One Year Treasury Bill Rate, compounded

3 the participant shall not have any of the rights of a shareholder with respect to shares credited to his/her Income Deferral Account. The number of Common Stock Equivalent Units included in a participant's Account shall be adjusted to reflect dividends and increases or decreases in market value which would have resulted had funds equal to such deferred amount been invested in Common Stock. In the event of a reorganization, stock split, stock dividend, combination of shares, merger, consolidation, rights offering or any other change in the corporate structure or shares of the Company the Committee shall make such adjustment, if any, as it may deem appropriate in the number and kind of shares of the Company's Common Stock credited to participants' Income Deferral Accounts. (b) Balanced Fund. All amounts elected to be deferred under this option shall be deemed to be invested in and credited with the investment rate of return earned under the Balanced Fund option under the Company's Savings Plan or any such successor fund. However, no Balanced Fund shares shall be purchased or earmarked for a participant's Account. (c) One Year Treasury Bill Rate. All amounts elected to be deferred under this option shall be deemed to be invested in an interest bearing account which bears interest at the One Year Treasury Bill Rate, compounded monthly. For purposes of the Plan, the One Year Treasury Bill Rate shall be the interest rate for One Year Treasury Bills quoted in the Wall Street Journal on the last trading day of the preceding calendar year. Such rate shall be adjusted annually. No Treasury Bills will be actually purchased or earmarked for a participant's Account. 5. REDESIGNATION OF INVESTMENT OPTIONS WITHIN AN INCOME DEFERRAL ACCOUNT. A participant may redesignate amounts previously credited to an Income Deferral Account among the investments available under this Plan. Participants who wish to redesignate out of a particular investment vehicle may not at the same time redesignate into such investment vehicle. No redesignation of investment may take place during the 30 days prior to a scheduled distribution under this Plan. The following additional rules shall apply with respect to redesignations of previously credited amounts: (a) Permitted Frequency--Redesignation by a participant may be made not more than once during any consecutive twelve month period. (b) Amount and Extent of Redesignation--Redesignation for any participant must be in 1% multiples of the investment from which redesignation is being made. (c) Timing--Redesignation shall take place as of the first day of the month following the month in which a participant's written redesignation is received by Extra Compensation Services. The value of the Company's Common Stock for purposes of investment redesignation shall be the average of the high and low prices of the

4 Common Stock as reported in the Wall Street Journal for the last trading day of the applicable month. (d) Special rules for Redesignation Into or Out of Common Stock Equivalent Units previously credited to an Income Deferred Account: (i) Material, Nonpublic Information--The Committee in its sole discretion and with advice of counsel at any time may rescind a redesignation into or out of Common Stock Equivalent Units if such redesignation was made by a participant who, a) at the time of the redesignation was in the possession of material, nonpublic information with respect to the Company; and b) in the Committee's estimation benefited from such information in the timing of his/her redesignation. The Committee's determination shall be final and binding. In the event of such rescission, the participant's Income Deferral Account shall be returned to a status as though such redesignation had not occurred. Notwithstanding the above, the Committee shall not rescind a redesignation if the facts were reviewed by the participant with the General Counsel of the Company or a designee prior to the redesignation and if the General Counsel or designee had concluded that such participant was not in possession of material, nonpublic information.

4 Common Stock as reported in the Wall Street Journal for the last trading day of the applicable month. (d) Special rules for Redesignation Into or Out of Common Stock Equivalent Units previously credited to an Income Deferred Account: (i) Material, Nonpublic Information--The Committee in its sole discretion and with advice of counsel at any time may rescind a redesignation into or out of Common Stock Equivalent Units if such redesignation was made by a participant who, a) at the time of the redesignation was in the possession of material, nonpublic information with respect to the Company; and b) in the Committee's estimation benefited from such information in the timing of his/her redesignation. The Committee's determination shall be final and binding. In the event of such rescission, the participant's Income Deferral Account shall be returned to a status as though such redesignation had not occurred. Notwithstanding the above, the Committee shall not rescind a redesignation if the facts were reviewed by the participant with the General Counsel of the Company or a designee prior to the redesignation and if the General Counsel or designee had concluded that such participant was not in possession of material, nonpublic information. (ii) A participant subject to Section 16(b) of the Securities Exchange Act of 1934 may redesignate into or out of Common Stock Equivalent Units only during the applicable "window period" with respect to the release of any quarterly or annual statements of sales and earnings by the Company. (iii) A redesignation into or out of Common Stock Equivalent Units may not be made within 6 months of a discretionary "opposite way transaction" into or out of Common Stock held by the participant in the Company's Savings Plan. 6. DISTRIBUTION OF INCOME DEFERRAL ACCOUNTS. If a participant's employment is terminated for any reason (including death or disability), and such participant is not eligible to retire from active service under the Company's pension plan, then his/her Income Deferral Account will be automatically paid in a lump sum as soon as administratively feasible in the month following his/her termination of employment. Distributions in cash of the value of equivalent shares of the Company's Common Stock will be valued at the average of high and low market prices of the Common Stock as reported in the Wall Street Journal on the last trading day of the month of his/her termination of employment. 7. POST RETIREMENT DEFERRALS. At the further election of each participant, to be made as provided for below, the payment of any sum otherwise due to a participant upon his/her retirement may be further deferred and paid in either a single lump sum or in installments. A lump sum payment may be deferred for up to ten taxable years following

5 the participant's retirement date. If installment payments are elected, the first installment payment may be made immediately upon retirement or be deferred for up to ten taxable years. Installment payments will be made annually (in the manner described below) and in approximately equal installment amounts (i.e., the value of the balance of the Income Deferral Account, plus accrued interest, divided by the number of remaining installments). The minimum number of annual installments is two (2) and the maximum number is fifteen (15). An participant may elect to defer up to 100% of the value of his/her total Income Deferral Account at retirement; or, any percentage increment less than that. The payment of any amounts from an Income Deferral Account pursuant to this Section 7 shall be subject to the provisions of the last sentence of Section 3 above. The following additional rules shall apply with respect to all payments: a) Immediate Lump Sum Payment - The participant will receive the full value of his/her Income Deferral Account in the calendar month of his/her retirement effective date. b) Deferred Lump Sum Payment - The participant will receive the full value of his/her Income Deferral Account, plus any accrued interest, on or about January 15 of the year he/she elects to receive payment in.

5 the participant's retirement date. If installment payments are elected, the first installment payment may be made immediately upon retirement or be deferred for up to ten taxable years. Installment payments will be made annually (in the manner described below) and in approximately equal installment amounts (i.e., the value of the balance of the Income Deferral Account, plus accrued interest, divided by the number of remaining installments). The minimum number of annual installments is two (2) and the maximum number is fifteen (15). An participant may elect to defer up to 100% of the value of his/her total Income Deferral Account at retirement; or, any percentage increment less than that. The payment of any amounts from an Income Deferral Account pursuant to this Section 7 shall be subject to the provisions of the last sentence of Section 3 above. The following additional rules shall apply with respect to all payments: a) Immediate Lump Sum Payment - The participant will receive the full value of his/her Income Deferral Account in the calendar month of his/her retirement effective date. b) Deferred Lump Sum Payment - The participant will receive the full value of his/her Income Deferral Account, plus any accrued interest, on or about January 15 of the year he/she elects to receive payment in. c) Immediate Commencement of Installments - The participant will receive the first installment in the calendar month of his/her retirement effective date, subject to the provisions of the last sentence of Section 3 above. All subsequent installments, plus any accrued interest, will be paid on or about January 15 of each year. d) Deferred Commencement of Installments - The participant will receive the first and all subsequent installments, plus any accrued interest, on or about January 15 of each year. With respect to any amounts which are deferred and/or paid in installments, interest shall be paid by the Employer from the effective date of retirement to the date of any such payment. The interest rate for all deferred and/or installment payments to a participant shall be fixed at the date of retirement and shall be the rate (rounded to 1 decimal place) offered, as reported in the Wall Street Journal on the effective retirement date, on a United States Treasury Instrument for the period comparable to the length of the period of the deferral and/or installment payments. The interest shall be compounded semi-annually on the last calendar day of June and December of each year. If more than one instrument is quoted, the average of such rates shall be utilized. By way of example, if an election is made to receive installments over eight (8) years, the comparable eight (8) year U.S. Treasury Rate shall be utilized; if an election is made to defer the commencement of installments for two (2) years with installments paid out over ten (10) years, the comparable twelve (12) year U.S. Treasury Rate shall be utilized. Once established, the interest rate shall remain fixed for the period of the deferral and/or installments. In the event of death of a participant following retirement, the Employer will make payment in full of the balance of his/her Income Deferral Account, plus any accrued

6 interest, as soon as administratively practical in a single lump sum payment to the designated beneficiary, subject to the provisions of the last sentence of Section 3 above. In the event no deferral or installment election is made under this Section 7, the total amount of the Income Deferral Account will be paid in accordance with the provisions of Section 3 in a lump sum payment as soon as practical following an participant's retirement effective date. An election by a participant to defer payment or elect installments of all or a part of his/her Account beyond his/her effective retirement date must be made a minimum of twelve (12) months prior to the date of such retirement date. Any such election may be revised or revoked up to twelve (12) months prior to such retirement date. For the twelve month period prior to such retirement date, any election is irrevocable and thus may not be revoked or otherwise revised. Notwithstanding the above, at the Plan's inception, an exception has been made for participants who have a retirement effective date between January 1, 1997 and December 31, 1997. For participants having a retirement

6 interest, as soon as administratively practical in a single lump sum payment to the designated beneficiary, subject to the provisions of the last sentence of Section 3 above. In the event no deferral or installment election is made under this Section 7, the total amount of the Income Deferral Account will be paid in accordance with the provisions of Section 3 in a lump sum payment as soon as practical following an participant's retirement effective date. An election by a participant to defer payment or elect installments of all or a part of his/her Account beyond his/her effective retirement date must be made a minimum of twelve (12) months prior to the date of such retirement date. Any such election may be revised or revoked up to twelve (12) months prior to such retirement date. For the twelve month period prior to such retirement date, any election is irrevocable and thus may not be revoked or otherwise revised. Notwithstanding the above, at the Plan's inception, an exception has been made for participants who have a retirement effective date between January 1, 1997 and December 31, 1997. For participants having a retirement effective date prior to June 30, 1997, the deferral and/or installment election must be made a minimum of three (3) months and in the calendar year prior to the retirement date. For such participants having a retirement date between July 1, 1997 and December 31, 1997, such election must be made at least six (6) months prior to the retirement date. For example, a participant who retires on April 1, 1997, must make the deferral and/or installment election no later than December 31, 1996; if the retirement date is August 1, 1997, such election must be made not later than January 31, 1997. Any such election to defer and/or receive installment payments may only be revised or revoked prior to the last permissible date for making such election. After such time the election may not be revoked or otherwise revised. An election to defer payment and/or be paid in installments is effective only when timely filed with Extra Compensation Services on the form utilized for such purpose. Any election made after the required deadline shall be disregarded. 8. DEDUCTIONS FROM DISTRIBUTIONS. The Company will deduct from each distribution amounts required to be withheld for income, Social Security and other tax purposes. The Company may also deduct any amounts the participant owes the Company for any reason. 9. BENEFICIARY DESIGNATIONS. A participant may designate one or more beneficiaries to receive the value of his/her Income Deferral Account upon death. Should a beneficiary predecease the participant, or should a beneficiary not be named, the amount designated for such beneficiary or the participant's balance, as the case may be, will be distributed to the participant's Estate. Beneficiary designations may be made or revised at any time by submitting a Beneficiary Designation Form to Extra Compensation Services.

7 10. AMENDMENTS. The Committee may amend this Plan at any time. However, such amendment shall not without the consent of a participant, materially adversely affect any right or obligation with respect to any Deferred Award made theretofore. 11. MISCELLANEOUS. The Employer does not fund the obligations created by the participant's participation in the Plan. Rather, the Employer makes an unsecured promise to pay these obligations out of general corporate assets. This applies to obligations for both active and retired participants. In the first quarter of each calendar year, statements will be sent to active participants participating in this Plan as well as to retirees with Deferral Accounts. The statement will also include previously made deferral elections and beneficiary designations. The report for retirees will provide the deferred payout balance plus interest, as well as the deferred and/or installment election and beneficiary designations. This Plan is administered by the Extra Compensation Services Department at the Corporate Headquarters of Employer. Questions in regard to the administration of the Plan should be addressed to it.

7 10. AMENDMENTS. The Committee may amend this Plan at any time. However, such amendment shall not without the consent of a participant, materially adversely affect any right or obligation with respect to any Deferred Award made theretofore. 11. MISCELLANEOUS. The Employer does not fund the obligations created by the participant's participation in the Plan. Rather, the Employer makes an unsecured promise to pay these obligations out of general corporate assets. This applies to obligations for both active and retired participants. In the first quarter of each calendar year, statements will be sent to active participants participating in this Plan as well as to retirees with Deferral Accounts. The statement will also include previously made deferral elections and beneficiary designations. The report for retirees will provide the deferred payout balance plus interest, as well as the deferred and/or installment election and beneficiary designations. This Plan is administered by the Extra Compensation Services Department at the Corporate Headquarters of Employer. Questions in regard to the administration of the Plan should be addressed to it. AN ELECTION TO DEFER AND/OR BE PAID IN INSTALLMENTS SHOULD ONLY BE MADE IN CONSULTATION WITH AN PARTICIPANT'S TAX AND/OR FINANCIAL ADVISOR.

EXHIBIT 11 JOHNSON & JOHNSON AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE(A) (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE FIGURES)
FISCAL YEAR ENDED ---------------------------------------------------------------DECEMBER 28, DECEMBER 29, DECEMBER 31, JANUARY 1, JANUAR 1997 1996 1995 1995 199 -----------------------------------------------$ 3,303 2,887 2,403 2,006 1, ---------------------------------

1. Net Earnings........................

2. Average number of shares outstanding during the year -- basic............

1,336.0 --------

1,332.6 --------

1,291.9 --------

1,286.1 --------

1,30 -----

3. Earnings per share based upon average outstanding shares (1 / 2)..................................

$ 2.47 ========

2.17 ========

1.86 ========

1.56 ========

1 =====

4. Diluted earnings per share: a. Average number of shares outstanding during the year -- basic.................. b. Shares issuable under stock compensation agreements at year-end....................... c. Shares reserved under the stock option plans for which the average market price during the period exceeds the option price.......................... d. Aggregate proceeds to the Company from the exercise of options in 4c.................. e. Average market price of the Company's common stock during the period..................... f. Shares which could be repurchased under the treasury stock method (4d / 4e).........

1,336.0

1,332.6

1,291.9

1,286.1

1,30

--

--

--

--

68.1

71.6

62.8

50.7

5

2,024

2,154

1,273

919

59.19

48.08

34.14

23.21

21

34.2

44.8

37.3

39.6

4

EXHIBIT 11 JOHNSON & JOHNSON AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE(A) (DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE FIGURES)
FISCAL YEAR ENDED ---------------------------------------------------------------DECEMBER 28, DECEMBER 29, DECEMBER 31, JANUARY 1, JANUAR 1997 1996 1995 1995 199 -----------------------------------------------$ 3,303 2,887 2,403 2,006 1, ---------------------------------

1. Net Earnings........................

2. Average number of shares outstanding during the year -- basic............

1,336.0 --------

1,332.6 --------

1,291.9 --------

1,286.1 --------

1,30 -----

3. Earnings per share based upon average outstanding shares (1 / 2)..................................

$ 2.47 ========

2.17 ========

1.86 ========

1.56 ========

1 =====

4. Diluted earnings per share: a. Average number of shares outstanding during the year -- basic.................. b. Shares issuable under stock compensation agreements at year-end....................... c. Shares reserved under the stock option plans for which the average market price during the period exceeds the option price.......................... d. Aggregate proceeds to the Company from the exercise of options in 4c.................. e. Average market price of the Company's common stock during the period..................... f. Shares which could be repurchased under the treasury stock method (4d / 4e)......... g. Addition to average outstanding shares (4b + 4c - 4f).......... h. Shares for diluted earnings per share calculation (4a + 4g).... i. Diluted earnings per share (1 / 4h)............................

1,336.0

1,332.6

1,291.9

1,286.1

1,30

--

--

--

--

68.1

71.6

62.8

50.7

5

2,024

2,154

1,273

919

59.19

48.08

34.14

23.21

21

34.2 33.9 1,369.9 ======== $ 2.41 ========

44.8 26.8 1,359.4 ======== 2.12 ========

37.3 25.5 1,317.4 ======== 1.82 ========

39.6 11.1 1,297.2 ======== 1.55 ========

4 1 1,31 ===== 1 =====

(A) Prior periods have been restated to reflect the Statement of Financial Accounting Standards No. 128. All share and per share amounts have also been restated to reflect prior year stock splits. 16

EXHIBIT 12 JOHNSON & JOHNSON AND SUBSIDIARIES STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(1) (DOLLARS IN MILLIONS)
FISCAL YEAR ENDED

EXHIBIT 12 JOHNSON & JOHNSON AND SUBSIDIARIES STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(1) (DOLLARS IN MILLIONS)
FISCAL YEAR ENDED ---------------------------------------------------------------------DECEMBER 28, DECEMBER 29, DECEMBER 31, JANUARY 1, JANUARY 2 1997 1996 1995 1995 1994 --------------------------------------------------Determination of Earnings: Earnings Before Provision for Taxes on Income............. Fixed Charges.................. Total Earnings as Defined.............. Fixed Charges and Other: Rents.......................... Interests...................... Fixed Charges.......... Capitalized Interest........... Total Fixed Charges.... Ratio of Earnings to Fixed Charges........................

$4,576 198 -----$4,774 ====== 78 120 -----198 40 -----$ 238 ====== 20.06 ======

4,033 204 -----4,237 ====== 79 125 -----204 55 -----259 ====== 16.36 ======

3,317 219 ----3,536 ===== 76 143 ----219 70 ----289 ===== 12.24 =====

2,681 234 ----2,915 ===== 92 142 ----234 44 ----278 ===== 10.49 =====

2,332 211 ----2,543 ===== 85 126 ----211 48 ----259 ===== 9.82 =====

(1) The ratio of earnings to fixed charges represents the historical ratio of the Company and is calculated on a total enterprise basis. The ratio is computed by dividing the sum of earnings before provision for taxes and fixed charges (excluding capitalized interest) by fixed charges. Fixed charges represent interest (including capitalized interest) and amortization of debt discount and expense and the interest factor of all rentals, consisting of an appropriate interest factor on operating leases. 17

Contents 26 Management's Discussion and Analysis of Results 32 Consolidated Financial Statements 35 Notes to Consolidated Financial Statements 43 Report of Management 43 Independent Auditor's Report 44 Segments of Business and Geographic Areas 45 Summary of Operations and Statistical Data 1987-1997

Contents 26 Management's Discussion and Analysis of Results 32 Consolidated Financial Statements 35 Notes to Consolidated Financial Statements 43 Report of Management 43 Independent Auditor's Report 44 Segments of Business and Geographic Areas 45 Summary of Operations and Statistical Data 1987-1997 Financials 25

Management's Discussion and Analysis of Results of Operations and Financial Condition Overview Record sales of $22.63 billion reinforced the Company's position as the world's most comprehensive and broadly-based manufacturer of health care products. Sales increased by 4.7% over 1996, despite the impact of the stronger dollar which depressed sales growth by 4.0%. This marked the sixty-fifth consecutive year of positive sales growth. The Company also achieved record profitability as earnings grew to $3.3 billion, up 14.4% over 1996 and posted a record net income margin for 1997 of 14.6%. The solid performance of new products introduced over the past few years as well as cost efficiencies have enabled the Company to attain these record sales and profitability levels. The Company's investment in research and development continues to drive the growth in new products. During 1997, the Company invested $2.14 billion, or 9.5% of sales, in research and development, the highest level in the Company's history. This spending emphasizes the Company's commitment to achieving significant advances in health care through the discovery and development of innovative, knowledge based, cost effective products that prolong and enhance the quality of life. During 1997, the Company continued initiatives to streamline its businesses worldwide and to make the organization more cost efficient. The 1997 gross profit margin improved from 67.5% to 68.4%, while selling, marketing and administrative expenses as a percent to sales continued to fall from 38.8% to 38.5%. Over the past two years, the improvement in gross margins and reduced operating expenses has resulted in cost savings of nearly $600 million on an annual basis. Earnings in 1997 generated $4.34 billion in cash from operations. When combined with $3.89 billion in cash generated from operations in 1996, this total of $8.23 billion in cash financed capital investments and all of the Company's cash requirements during the past two years. This enabled the Company to reduce net debt by $2.12 billion to a net cash position (cash and current marketable securities net of debt) of $1.06 billion. The worldwide health care market continues to be transformed as customers have become more knowledgeable and demand even greater value. Simultaneously, the market place has become increasingly more competitive. The Company believes that it is well positioned to meet these challenges by providing innovative and unique products through its commitment to research and development. Additionally, our organizational structure of decentralized

Management's Discussion and Analysis of Results of Operations and Financial Condition Overview Record sales of $22.63 billion reinforced the Company's position as the world's most comprehensive and broadly-based manufacturer of health care products. Sales increased by 4.7% over 1996, despite the impact of the stronger dollar which depressed sales growth by 4.0%. This marked the sixty-fifth consecutive year of positive sales growth. The Company also achieved record profitability as earnings grew to $3.3 billion, up 14.4% over 1996 and posted a record net income margin for 1997 of 14.6%. The solid performance of new products introduced over the past few years as well as cost efficiencies have enabled the Company to attain these record sales and profitability levels. The Company's investment in research and development continues to drive the growth in new products. During 1997, the Company invested $2.14 billion, or 9.5% of sales, in research and development, the highest level in the Company's history. This spending emphasizes the Company's commitment to achieving significant advances in health care through the discovery and development of innovative, knowledge based, cost effective products that prolong and enhance the quality of life. During 1997, the Company continued initiatives to streamline its businesses worldwide and to make the organization more cost efficient. The 1997 gross profit margin improved from 67.5% to 68.4%, while selling, marketing and administrative expenses as a percent to sales continued to fall from 38.8% to 38.5%. Over the past two years, the improvement in gross margins and reduced operating expenses has resulted in cost savings of nearly $600 million on an annual basis. Earnings in 1997 generated $4.34 billion in cash from operations. When combined with $3.89 billion in cash generated from operations in 1996, this total of $8.23 billion in cash financed capital investments and all of the Company's cash requirements during the past two years. This enabled the Company to reduce net debt by $2.12 billion to a net cash position (cash and current marketable securities net of debt) of $1.06 billion. The worldwide health care market continues to be transformed as customers have become more knowledgeable and demand even greater value. Simultaneously, the market place has become increasingly more competitive. The Company believes that it is well positioned to meet these challenges by providing innovative and unique products through its commitment to research and development. Additionally, our organizational structure of decentralized management and dedicated employees along with our strong Credo values will enable us to provide our customers with innovative products and services that create value. Sales and Earnings In 1997, worldwide sales increased 4.7% to $22.63 billion compared to increases of 14.7% and 19.8% in 1996 and 1995, respectively. Excluding the impact of foreign currencies, worldwide sales increased 8.7%, 16.5%, and 16.7% in 1997, 1996 and 1995, respectively. Sales to Customers Millions of Dollars [Graphic Omitted] Worldwide net earnings for 1997 were $3.3 billion, reflecting a 14.4% increase over 1996. Worldwide basic net earnings per share for 1997 equaled $2.47, compared with $2.17 for 1996, adjusted to reflect the 1996 twofor-one stock split, an increase of 13.8%. Worldwide diluted net earnings per share were $2.41, compared with 1996 diluted net earnings per share of $2.12, adjusted to reflect the 1996 two-for-one stock split, an increase of 13.7%. The net income margin for 1997 was 14.6%, the highest in the Company's history. Worldwide net earnings for 1996 were $2.89 billion, or basic net earnings per share of $2.17 on a split-adjusted basis, representing increases over 1995 of 20.1% and 16.7%, respectively. Diluted net earnings per share were $2.12 for 1996 representing an increase of 16.5% over 1995. In 1995, worldwide net earnings were $2.4 billion, or basic net earnings per share of $1.86 on a split-adjusted basis, representing increases over 1994 of

19.8% and 19.2%, respectively. Diluted net earnings per share were $1.82 for 1995 representing an increase of 18.2% over 1994. Average shares of common stock outstanding in 1997 were 1.34 billion compared with 1.33 billion and 1.29 billion in 1996 and 1995, respectively, on a split-adjusted basis. Net Earnings Millions of Dollars [Graphic Omitted] Sales by domestic companies were $11.76, $10.9 and $9.19 billion in 1997, 1996 and 1995, representing increases of 7.9%, 18.6% and 17.6%, respectively. The increase in domestic sales in 1997 was driven by the strong performance of products introduced in the past few years and the continued expansion of base businesses. Sales by international companies were $10.87, $10.72 and $9.65 billion in 1997, 1996 and 1995, representing increases of 1.4%, 11.1% and 21.8%, respectively. Excluding the impact of the relative strength or weakness of the dollar over the past three years compared to international currencies, international company sales increased 9.5%, 14.6% and 15.6% in 1997, 1996 and 1995, respectively. 26

All geographic areas throughout the world posted strong operational gains during 1997. Excluding the effect of the stronger U.S. dollar on foreign currencies, sales increased 6.8% in Europe, 7.2% in the Western Hemisphere (excluding the U.S.) and 17.6% in the Asia-Pacific, Africa regions. The Company achieved an annual compound growth rate of 10.9% for worldwide sales for the ten-year period since 1987 with domestic and international sales growing at rates of 10.9% and 11.0%, respectively. For the same ten-year period, worldwide net earnings achieved an annual growth rate of 14.8%, while basic earnings per share grew at a rate of 15.2%. For the last five years, excluding the cumulative effects of accounting changes in 1992, annual compound growth rates for sales, net earnings and basic earnings per share were 10.5%, 15.2% and 14.9%, respectively. Common Stock Market Prices The Company's common stock is listed on the New York Stock Exchange under the symbol JNJ. The approximate number of shareowners of record at year-end 1997 was 156,800. The composite market price ranges for Johnson & Johnson common stock during 1997 and 1996, adjusted to reflect the 1996 two-for-one stock split, were:
1997 1996 -----------------------------------------------------High Low High Low -------------------------------------------------------------------------------First quarter $62 3/4 48 5/8 50 1/4 41 5/8 Second quarter 66 7/8 51 1/8 50 3/4 42 7/8 Third quarter 65 7/8 55 1/8 53 3/8 44 1/8 Fourth quarter 67 5/16 52 5/8 54 47 1/8 Year-end close 64 7/8 50 1/2

Cash Dividends Paid The Company increased its dividends in 1997 for the thirty-fifth consecutive year. Cash dividends paid were $.85 per share in 1997 compared with split-adjusted dividends of $.735 and $.64 per share in 1996 and 1995, respectively. The dividends were distributed as follows:
1997 1996 1995 --------------------------------------------------------------------------------

All geographic areas throughout the world posted strong operational gains during 1997. Excluding the effect of the stronger U.S. dollar on foreign currencies, sales increased 6.8% in Europe, 7.2% in the Western Hemisphere (excluding the U.S.) and 17.6% in the Asia-Pacific, Africa regions. The Company achieved an annual compound growth rate of 10.9% for worldwide sales for the ten-year period since 1987 with domestic and international sales growing at rates of 10.9% and 11.0%, respectively. For the same ten-year period, worldwide net earnings achieved an annual growth rate of 14.8%, while basic earnings per share grew at a rate of 15.2%. For the last five years, excluding the cumulative effects of accounting changes in 1992, annual compound growth rates for sales, net earnings and basic earnings per share were 10.5%, 15.2% and 14.9%, respectively. Common Stock Market Prices The Company's common stock is listed on the New York Stock Exchange under the symbol JNJ. The approximate number of shareowners of record at year-end 1997 was 156,800. The composite market price ranges for Johnson & Johnson common stock during 1997 and 1996, adjusted to reflect the 1996 two-for-one stock split, were:
1997 1996 -----------------------------------------------------High Low High Low -------------------------------------------------------------------------------First quarter $62 3/4 48 5/8 50 1/4 41 5/8 Second quarter 66 7/8 51 1/8 50 3/4 42 7/8 Third quarter 65 7/8 55 1/8 53 3/8 44 1/8 Fourth quarter 67 5/16 52 5/8 54 47 1/8 Year-end close 64 7/8 50 1/2

Cash Dividends Paid The Company increased its dividends in 1997 for the thirty-fifth consecutive year. Cash dividends paid were $.85 per share in 1997 compared with split-adjusted dividends of $.735 and $.64 per share in 1996 and 1995, respectively. The dividends were distributed as follows:
1997 1996 1995 -------------------------------------------------------------------------------First quarter $.19 .165 .145 Second quarter .22 .19 .165 Third quarter .22 .19 .165 Fourth quarter .22 .19 .165 -----------------------------------------Total $.85 .735 .64 ==========================================

On January 2, 1998, the Board of Directors declared a regular cash dividend of $.22 per share, paid on March 10, 1998 to shareowners of record on February 17, 1998. The Company expects to continue the practice of paying regular cash dividends. Costs and Expenses 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 were as follows:
(Millions of Dollars) 1997 1996 1995 -------------------------------------------------------------------------------Research expense $2,140 1,905 1,634 Percent increase over

prior year Percent of sales

12.3% 9.5

16.6% 8.8

27.9% 8.7

Research expense as a percent of sales for the Pharmaceutical segment was 16.7%, 15.2% and 15.3% in 1997, 1996 and 1995, respectively, while averaging 5.5%, 5.6% and 5.4% in the other two segments. Research Expense Millions of Dollars [Graphic Omitted] Advertising expenses worldwide, which are comprised of television, radio and print media, were $1.26 billion in 1997, $1.26 billion in 1996 and $1.03 billion in 1995. Additionally, significant expenditures were incurred for promotional activities such as couponing and performance allowances. The Company believes that its operations comply in all material respects with applicable environmental laws and regulations. The Company or its subsidiaries are parties to a number of proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund, and comparable state laws, in which the primary relief sought is the cost of past and future remediation. While it is not feasible to predict or determine the outcome of these proceedings, in the opinion of the Company, such proceedings would not have a material adverse effect on the results of operations, cash flows or financial position of the Company. Statement of Position No. 96-1, "Environmental Remediation Liabilities," requires that environmental remediation liabilities be accrued when the criteria of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies," are met. The new standard that was adopted in 1997 has not had a material effect on the Company's results of operations, cash flows or financial position. Worldwide sales do not reflect any significant degree of seasonality; however, spending has been heavier in the fourth quarter of each year than in other quarters. This reflects increased spending decisions, principally for advertising and research grants. The worldwide effective income tax rate was 27.8% in 1997, 28.4% in 1996 and 27.6% in 1995. The decrease in the 1997 worldwide effective tax rate was primarily due to a greater proportion of taxable income derived from lower tax rate countries. See page 37 for additional information. A summary of operations and related statistical data for the years 1987-1997 can be found on page 45. 27

Distribution of Sales Revenues The distribution of sales revenues for 1997, 1996 and 1995 were:
1997 1996 1995 -------------------------------------------------------------------------------Employment costs 23.8% 24.4% 25.0% Cost of materials and services 50.8 51.8 52.3 Depreciation and amortization of property and intangibles 4.7 4.6 4.5 Taxes other than payroll 6.1 5.8 5.4 Earnings reinvested in business 9.6 8.9 8.4 Cash dividends paid 5.0 4.5 4.4

Liquidity and Capital Resources

Distribution of Sales Revenues The distribution of sales revenues for 1997, 1996 and 1995 were:
1997 1996 1995 -------------------------------------------------------------------------------Employment costs 23.8% 24.4% 25.0% Cost of materials and services 50.8 51.8 52.3 Depreciation and amortization of property and intangibles 4.7 4.6 4.5 Taxes other than payroll 6.1 5.8 5.4 Earnings reinvested in business 9.6 8.9 8.4 Cash dividends paid 5.0 4.5 4.4

Liquidity and Capital Resources Cash generated from operations and selected borrowings provide the major sources of funds for the growth of the business, including working capital, additions to property, plant and equipment and acquisitions. Cash and current marketable securities totaled $2.9 billion at the end of 1997 as compared with $2.14 billion at the end of 1996. Total unused credit available to the Company approximates $3.2 billion, including $1.2 billion of credit commitments with various worldwide banks, $800 million of which expires on October 2, 1998 and $400 million on October 6, 2002. The Company issued no medium term notes or public long-term debt during 1997. At December 28, 1997, the Company had $2.29 billion remaining on its shelf registration of $2.59 billion. A summary of borrowings can be found on page 36. Total borrowings at the end of 1997 and 1996 were $1.84 billion and $2.28 billion, respectively. In 1997 net cash (cash and current marketable securities net of debt) was $1.06 billion. In 1996 net debt (debt net of cash and current marketable securities) was $146 million. Total debt represented 13.0% and 17.4% of total capital (shareowners' equity and total debt) in 1997 and 1996, respectively. Shareowners' equity per share at the end of 1997 was $9.19 compared with $8.13 at year-end 1996, an increase of 13.0%. Financial Instruments The Company uses financial instruments to manage the impact of interest rate and foreign exchange rate changes on earnings and cash flows. Accordingly, the Company enters into forward foreign exchange contracts to protect the value of existing foreign currency assets and liabilities and to hedge future foreign currency product costs. Gains or losses on these contracts are offset by the gain or loss on the underlying transaction. A 10% appreciation of the U.S. Dollar from December 28, 1997 market rates would increase the unrealized value of the Company's forward contracts by $178 million. Conversely, a 10% depreciation of the U.S. Dollar from December 28, 1997 market rates would decrease the unrealized value of the Company's forward contracts by $216 million. In either scenario, the gain or loss on the forward contract is offset by the gain or loss on the underlying transaction and therefore has no impact on future earnings and cash flows. The Company also enters into interest rate and currency swap contracts to manage the Company's exposure to interest rate changes and hedge foreign currency denominated debt. The impact of a 1% change in interest rates on the Company's interest rate sensitive financial instruments is immaterial. The Company does not enter into financial instruments for trading or speculative purposes. Further, the Company has a policy of only entering into contracts with parties that have at least an "A" (or equivalent) credit rating. The counterparties to these contracts are major financial institutions and the Company does not have significant exposure to any one counterparty. Management believes the risk of loss is remote and in any event would be immaterial. See pages 36, 40 and 41 for additional information.

Changing Prices and Inflation Johnson & Johnson is aware that its products are used in a setting where, for more than a decade, policymakers, consumers, and businesses have expressed concern about the rising cost of health care. In response to these concerns, Johnson & Johnson has a long standing policy of pricing products responsibly. For the period 19801996, 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) for the period. This was true again in 1997. Inflation rates, even though moderate in many parts of the world during 1997, 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. Year 2000 The Company has reviewed its critical information systems for YEAR 2000 compliance and has initiated plans to remedy any deficiencies in a timely manner. As a result of the review and action plan, the Company believes the cost of such reme-dial corrective actions are not material to the Company's financial position, results of operations or cash flows. New Accounting Pronouncements In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" that establishes standards for reporting and display of an alternative income measurement and its components in a full set of general-purpose financial statements. This statement is effective for fiscal years beginning after December 15, 1997. The Company will adopt SFAS 130 in 1998. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131 "Disclosures about Segments of an Enterprise and Related Information" that establishes standards for the reporting of 28

information about operating segments in annual financial statements. Additionally, it requires that enterprises report selected information about operating segments in interim financial reports issued to shareowners. This statement is effective for periods beginning after December 15, 1997 and the Company will adopt SFAS 131 for fiscal year 1998. Segments of Business Financial information for the Company's three worldwide business segments is summarized below. Refer to page 44 for additional information on segments of business. Sales by Segment of Business Millions of Dollars [Graphic Omitted] [The following information was represented as a bar graph in the printed material.]
1995 30.9% 33.3 35.8 $18,842 1996 29.4% 33.3 37.3 $21,620 1997 28.7% 34.0 37.3 $22,629

Consumer Pharmaceutical Professional

information about operating segments in annual financial statements. Additionally, it requires that enterprises report selected information about operating segments in interim financial reports issued to shareowners. This statement is effective for periods beginning after December 15, 1997 and the Company will adopt SFAS 131 for fiscal year 1998. Segments of Business Financial information for the Company's three worldwide business segments is summarized below. Refer to page 44 for additional information on segments of business. Sales by Segment of Business Millions of Dollars [Graphic Omitted] [The following information was represented as a bar graph in the printed material.]
1995 30.9% 33.3 35.8 $18,842 1996 29.4% 33.3 37.3 $21,620 1997 28.7% 34.0 37.3 $22,629

Consumer Pharmaceutical Professional

Sales

Increase -----------------(Millions of Dollars) 1997 1996 Amount Percent -------------------------------------------------------------------------------Consumer $ 6,498 6,364 134 2.1% Pharmaceutical 7,696 7,188 508 7.1 Professional 8,435 8,068 367 4.5 ------------------------------Worldwide total $22,629 21,620 1,009 4.7% ===============================

Operating Profit by Segment of Business Millions of Dollars [Graphic Omitted] [The following information was represented as a bar graph in the printed material.]
1995 8.3% 58.0 33.7 $3,574 1996 8.5% 58.2 33.3 $4,254 1997 11.7% 55.9 32.4 $4,777

Consumer Pharmaceutical Professional

Operating Profit

Percent of Sales ---------------(Millions of Dollars) 1997 1996 1997 1996 -------------------------------------------------------------------------------Consumer $ 558 361 8.6% 5.7% Pharmaceutical 2,669 2,477 34.7 34.5 Professional 1,550 1,416 18.4 17.6 ------------------Worldwide total 4,777 4,254 21.1 19.7 Expenses not

allocated to segments Earnings before taxes on income

(201) (221) ------------------$ 4,576 4,033 ===================

(.9)

(1.0)

20.2%

18.7%

Consumer The Consumer segment's principal products are personal care and hygienic products, including oral and baby care products, first aid products, nonprescription drugs, sanitary protection products and adult skin and hair care products. Major brands include ACT Fluoride Rinse; BAND-AID Brand Adhesive Bandages; CAREFREE Panty Shields; JOHNSON'S CLEAN & CLEAR skin care products; IMODIUM A-D, an antidiarrheal; JOHNSON'S Baby line of products; JOHNSON's pH 5.5 skin and hair care products; MONISTAT, a remedy for vaginal yeast infections; MYLANTA gastrointestinal products and PEPCID AC Acid Controller from the Johnson & Johnson o Merck Consumer Pharmaceuticals Co.; NEUTROGENA skin and hair care products; NICOTROL smoking cessation products; o.b. Tampons; PENATEN and NATUSAN baby care products; PIZ BUIN and SUNDOWN sun care products; REACH toothbrushes; RoC skin care products; SHOWER TO SHOWER personal care products; STAYFREE and SURE & NATURAL sanitary protection products; and the broad family of TYLENOL acetaminophen products. These products are marketed principally to the general public and distributed both to wholesalers and directly to independent and chain retail outlets. Consumer segment sales in 1997 were $6.5 billion, an increase of 2.1% over 1996. Sales by domestic companies accounted for 49.9% of the total segment, while international companies accounted for 50.1%. This growth was led by strong performance in the NEUTROGENA, RoC and CLEAN & CLEAR skin care franchises as well as adult and children's MOTRIN, IMODIUM Advanced Formula and LACTAID. During the year, the Company announced a licensing agreement with Raisio Group of Finland for the North American marketing rights (as well as a letter of intent for the worldwide marketing rights) to a dietary ingredient, stanol ester, which is patented for use in reducing cholesterol. The Company also established an alliance with Takeda Chemical Industries in Japan for the sale and distribution of OTC products beginning with several forms of TYLENOL. Consumer segment sales in 1996 were $6.36 billion, an increase of 9.1% over 1995. Sales by domestic companies accounted for 49.7% of the total segment, while international companies accounted for 50.3%. The sales growth was led by the strong performance of the OTC pharmaceutical business. PEPCID AC, a product of the Johnson & Johnson o Merck Consumer Pharmaceuticals Co., and TYLENOL, despite heavy competition, remain the dominant brands in their respective categories. A strong performance by the adult skin and hair care franchise, which includes the Neutrogena and RoC businesses, also contributed to the growth in sales. Consumer segment sales in 1995 were $5.83 billion, an increase of 11% over 1994. Sales by domestic companies accounted for 49% of the total segment, while international companies accounted for 51%. Growth was led by the addition of the Neutrogena line of high quality skin and hair care products, which was acquired in the third quarter of 1994; the U.S. launch of PEPCID AC Acid Controller, by Johnson & Johnson o Merck Consumer Pharmaceuticals Co., and continued growth in international markets, most notably Brazil. In addition to PEPCID AC, Children's MOTRIN, a nonprescription children's fever and pain reliever that lasts up to eight hours, was introduced as an over-the-counter product. Acquisitions and divestitures during 1997 and 1996 are described in more detail on page 41. Pharmaceutical The Pharmaceutical segment represents over 50% of the Company's operating profit for all segments. This segment's principal worldwide franchises are in the allergy, antibacterial, antifungal, antianemia, central nervous system, contraceptive, dermatology, gastrointestinal, and pain management 29

fields. These products are distributed both directly and through wholesalers for use by health care professionals

fields. These products are distributed both directly and through wholesalers for use by health care professionals and the general public. Prescription drugs include DURAGESIC, a transdermal patch for chronic pain; EPREX (sold in the U.S. as PROCRIT), a biotechnology derived version of the human hormone erythropoietin, which stimulates red blood cell production; ERGAMISOL, a colon cancer drug; FLOXIN and LEVAQUIN, both antibacterials; HISMANAL, the once-a-day less sedating antihistamine; IMODIUM, an antidiarrheal; LEUSTATIN, for hairy cell leukemia; MOTILIUM, a gastrointestinal mobilizer; NIZORAL, SPORANOX and TERAZOL, antifungals; ORTHOCLONE OKT-3, for reversing the rejection of kidney, heart and liver transplants, ORTHO-NOVUM group of oral contraceptives; PREPULSID (sold in the U.S. as PROPULSID), a gastrointestinal prokinetic; RETIN-A, a dermatological cream for acne; RENOVA, a dermatological cream for photo aging; RISPERDAL, an antipsychotic drug; and ULTRAM, a centrally acting prescription analgesic for moderate to moderately severe pain. Johnson & Johnson markets more than 90 prescription drugs around the world, with 50% of the sales generated outside the United States. Twenty-six drugs sold by the Company had 1997 sales in excess of $50 million, with 17 of them in excess of $100 million. Pharmaceutical segment sales in 1997 were $7.7 billion, an increase of 7.1% over 1996. This growth reflects the strong performance of RISPERDAL, PROCRIT, PROPULSID, ULTRAM, DURAGESIC, and LEVAQUIN, a new anti-infective launched in 1997. At year-end 1997, the Company received approval from the FDA for REGRANEX (becaplermin), the first biologic treatment proven to increase the incidence of healing in diabetic foot ulcers. This wound healing agent utilizes a genetically-engineered human platelet-derived growth factor to actively stimulate the body to grow new tissue. In the fourth quarter, the Company announced a licensing agreement for the rights to a novel class of compounds for the treatment of pain and inflammation. These compounds include selective Cox-2 inhibitors and offer advantages over currently available drugs that have gastrointestinal side effects. Pharmaceutical segment sales in 1996 were $7.19 billion, an increase of 14.6% over 1995. Domestic sales advanced 24.4%, while international sales advanced 7.2%. The worldwide growth was attributable to the outstanding performances of PROCRIT, RISPERDAL, SPORANOX, PROPULSID, ULTRAM, and DURAGESIC. Pharmaceutical segment sales in 1995 were $6.27 billion, an increase of 21.6% over 1994. Domestic sales advanced 25.9%, while international sales rose 18.6%. The worldwide sales growth reflected the outstanding performances of RISPERDAL, PROPULSID, SPORANOX, DURAGESIC and PROCRIT. Additionally, ULTRAM, launched in late March, was also an important contributor to sales growth. Significant research activities continued in the Pharma-ceutical segment, increasing to $1.28 billion in 1997, or $186 million over 1996. This represents 16.7% of 1997 Pharmaceutical sales and a compound annual growth rate of approximately 15.0% for the five-year period since 1992. Pharmaceutical research is led by two worldwide organizations, Janssen Research Foundation, headquartered in Belgium and the R.W. Johnson Pharmaceutical Research Institute, headquartered in the United States. Additional research is conducted through a collaboration with the James Black Foundation in London, England. Professional The Professional segment includes suture and mechanical wound closure products, minimally invasive surgical instruments, diagnostic products, cardiology products, medical equipment and devices, disposable contact lenses, surgical instruments, joint replacements and products for wound management and infection prevention. These products are used principally in professional fields by physicians, nurses, therapists, hospitals, diagnostic laboratories and clinics. Distribution to these markets is done both directly and through surgical supply and other dealers.

Worldwide sales of $8.4 billion in the Professional segment represented an increase of 4.5% over 1996. Sales growth continued to be fueled by the excellent performance of Ethicon Endo-Surgery's minimally invasive surgical instruments, Johnson & Johnson Professional's orthopaedic business, Vistakon's disposable contact lenses and LifeScan's blood glucose monitoring systems. The interventional cardiology market experienced growth in 1997 due in part to its widely accepted use in the medical community as a standard of care. This growth has attracted a number of new entrants to the market making it much more challenging and competitive. The Asia-Pacific and Central Europe regions contributed significantly to the overall increase in the Professional segment. Of the 1997 Professional segment sales, domestic and international companies accounted for 55% and 45% of the total, respectively. There were several business combinations in the Professional segment during 1997. These included Biopsys Medical, Inc., a maker of products for the diagnosis and management of breast cancer; Biosense, Inc., a leader in medical sensor technology for use in diagnostic and therapeutic interventional procedures; Gynecare, Inc., a maker of minimally invasive medical devices for the treatment of uterine disorders, and Innotech, Inc., a manufacturer of equipment for high quality prescription eyeglass lenses. At year-end 1997, three new products were approved for marketing by the FDA. The Palmaz-Schatz Crown Stent, mounted on the PowerGrip Stent Delivery System, was approved for use in treating plaque build-up and blockages in coronary arteries. It offers significant flexibility in reaching difficult lesions while retaining exceptional radial strength. Gynecare's ThermaChoice Uterine Balloon Therapy System was approved for the treatment of excessive menstrual bleeding in women. This eight-minute, minimally invasive, outpatient procedure is a safe and effective alternative to hysterectomies and eliminates the need for general anesthesia. In addition, Indigo's LaserOptic Treatment System was approved for the treatment of symptoms of enlarged prostate in men, otherwise known as benign prostatic hyperplasia. The system is a portable unit that combines fiber 30

optics with diode laser technology and allows the surgeon to quickly destroy a precise area of the prostate. In 1996, Professional segment sales increased 19.8% over 1995, to $8.07 billion. The sales growth includes the full year impact of the merger with Cordis Corporation in early 1996, and the continued growth of the interventional cardiology business. Strong growth in the Asia-Pacific region also contributed to the increase in the Professional segment, as did excellent performances by LifeScan's blood glucose monitors, Vistakon's disposable contact lenses, Ethicon Endo-Surgery's minimally invasive surgical instruments and Johnson & Johnson Professional's orthopaedic business. Of the 1996 Professional segment sales, domestic and international companies accounted for 54.3% and 45.7% of the total, respectively. In 1995, Professional segment sales increased 26.5% over 1994, to $6.74 billion. Sales growth was fueled by the rapid market acceptance of the PALMAZ-SCHATZ Coronary Stent due to its efficacy in reducing restenosis, the recurring blockage of arteries following balloon angioplasty. LifeScan's blood glucose monitoring systems, Vistakon's disposable contact lenses, Ethicon Endo-Surgery's minimally invasive surgical instruments and Johnson & Johnson Clinical Diagnostics, the diagnostic business acquired from Eastman Kodak in November 1994. Acquisitions and divestitures during 1997 and 1996 are described in more detail on page 41. Geographic Areas The Company further categorizes its sales and operating profit by major geographic area as presented for the years 1997 and 1996:
Increase -------------------(Millions of Dollars) 1997 1996 Amount Percent -------------------------------------------------------------------------------United States $11,757 10,899 858 7.9% Europe 5,942 6,151 (209) (3.4) Western Hemisphere excluding U.S. 2,034 1,914 120 6.3 Asia-Pacific, Africa 2,896 2,656 240 9.0 Sales

optics with diode laser technology and allows the surgeon to quickly destroy a precise area of the prostate. In 1996, Professional segment sales increased 19.8% over 1995, to $8.07 billion. The sales growth includes the full year impact of the merger with Cordis Corporation in early 1996, and the continued growth of the interventional cardiology business. Strong growth in the Asia-Pacific region also contributed to the increase in the Professional segment, as did excellent performances by LifeScan's blood glucose monitors, Vistakon's disposable contact lenses, Ethicon Endo-Surgery's minimally invasive surgical instruments and Johnson & Johnson Professional's orthopaedic business. Of the 1996 Professional segment sales, domestic and international companies accounted for 54.3% and 45.7% of the total, respectively. In 1995, Professional segment sales increased 26.5% over 1994, to $6.74 billion. Sales growth was fueled by the rapid market acceptance of the PALMAZ-SCHATZ Coronary Stent due to its efficacy in reducing restenosis, the recurring blockage of arteries following balloon angioplasty. LifeScan's blood glucose monitoring systems, Vistakon's disposable contact lenses, Ethicon Endo-Surgery's minimally invasive surgical instruments and Johnson & Johnson Clinical Diagnostics, the diagnostic business acquired from Eastman Kodak in November 1994. Acquisitions and divestitures during 1997 and 1996 are described in more detail on page 41. Geographic Areas The Company further categorizes its sales and operating profit by major geographic area as presented for the years 1997 and 1996:
Increase -------------------(Millions of Dollars) 1997 1996 Amount Percent -------------------------------------------------------------------------------United States $11,757 10,899 858 7.9% Europe 5,942 6,151 (209) (3.4) Western Hemisphere excluding U.S. 2,034 1,914 120 6.3 Asia-Pacific, Africa 2,896 2,656 240 9.0 ------------------------------Worldwide total $22,629 21,620 1,009 4.7% =============================== Sales

Operating Profit

Percent of Sales ---------------(Millions of Dollars) 1997 1996 1997 1996 -------------------------------------------------------------------------------United States $2,952 2,405 25.1% 22.1% Europe 1,314 1,382 22.1 22.5 Western Hemisphere excluding U.S. 248 228 12.2 11.9 Asia-Pacific, Africa 263 239 9.1 9.0 -----------------------------Worldwide total $4,777 4,254 21.1% 19.7% ==============================

Operating profit reported above is before deduction of taxes on income and certain income and expense items not allocated to segments, such as interest expense, minority interests and general corporate income and expense. See page 44 for additional information on geographic areas. Sales by Geographic Area of Business Millions of Dollars [Graphic Omitted]

[The following information was represented as a bar graph in the printed material.]
1995 48.8% 29.6 9.2 12.4 $18,842 1996 50.4% 28.4 8.9 12.3 $21,620 1997 51.9% 26.3 9.0 12.8 $22,629

United States Europe Western Hemisphere excluding U.S. Asia-Pacific, Africa

Operating Profit by Geographic Area of Business Millions of Dollars [Graphic Omitted] [The following information was represented as a bar graph in the printed material.]
1995 52.4% 35.4 5.5 6.7 $3,574 1996 56.5% 32.5 5.4 5.6 $4,254 1997 61.8% 27.5 5.2 5.5 $4,777

United States Europe Western Hemisphere excluding U.S. Asia-Pacific, Africa

Description of Business The Company, which employees 90,500 employees worldwide, is engaged in the manufacture and sale of a broad range of products in the health care field in virtually all countries of the world. The Company's primary interest, both historically and currently, has been in products related to health and well-being. The Company is organized on the principle of decentralized management. The Executive Committee of Johnson & Johnson is the principal management group responsible for the operations of the Company. In addition, three Executive Committee members are Chairmen of Group Operating Committees, which are comprised of managers who represent key operations within the group, as well as management expertise in other specialized functions. These Committees oversee and coordinate the activities of domestic and international companies related to each of the Consumer, Pharmaceutical and Professional businesses. Operating management of each company is headed by a Chairman, President, General Manager or Managing Director who reports directly or indirectly through a Company Group Chairman. In line with this policy of decentralization, each international subsidiary is, with some exceptions, managed by citizens of the country where it is located. The Company's international business is conducted by subsidiaries manufacturing in 35 countries outside the United States and selling in over 175 countries throughout the world. In all its product lines, the Company competes with companies both large and small, located in the U.S. and abroad. Competition is strong in all lines without regard to the number and size of the competing companies involved. Competition in research, involving the development of new products and processes and the improvement of existing products and processes, is particularly significant and results from time to time in product and process obsolescence. The development of new and improved products is important to the Company's success in all areas of its business. This competitive environment requires substantial investments in continuing research and in multiple sales forces. In addition, the winning and retention of customer acceptance of the Company's consumer products involves heavy expenditures for advertising, promotion, and selling. 31

Consolidated Balance Sheet Johnson & Johnson and Subsidiaries
At December 28, 1997 and December 29, 1996 (Dollars in Millions) (Note 1) 1997 1996

Consolidated Balance Sheet Johnson & Johnson and Subsidiaries
At December 28, 1997 and December 29, 1996 (Dollars in Millions) (Note 1) 1997 1996 ------------------------------------------------------------------------------------------Assets ------------------------------------------------------------------------------------------Current assets Cash and cash equivalents (Notes 1 and 16) $ 2,753 2,011 Marketable securities at cost (Note 16) 146 125 Accounts receivable trade, less allowances $358 (1996, $309) 3,329 3,251 Inventories (Notes 1 and 2) 2,516 2,498 Deferred taxes on income (Note 6) 831 711 Prepaid expenses and other receivables 988 774 ---------------Total current assets 10,563 9,370 ================ Marketable securities, non-current (Note 16) Property, plant and equipment, net (Notes 1 and 3) Intangible assets, net (Notes 1 and 5) Deferred taxes on income (Note 6) Other assets Total assets 385 351 5,810 5,651 3,261 3,107 332 287 1,102 1,244 ---------------$21,453 20,010 ================

Liabilities and Shareowners' Equity ------------------------------------------------------------------------------------------Current liabilities Loans and notes payable (Note 4) $ 714 872 Accounts payable 1,753 1,743 Accrued liabilities 2,258 2,010 Accrued salaries, wages and commissions 332 322 Taxes on income 226 237 ---------------Total current liabilities 5,283 5,184 ================ Long-term debt (Note 4) 1,126 1,410 Deferred tax liability (Note 6) 175 170 Certificates of extra compensation (Note 11) 126 108 Other liabilities 2,384 2,302 Shareowners' equity Preferred stock-without par value (authorized and unissued 2,000,000 shares) Common stock-par value $1.00 per share (authorized 2,160,000,000 shares; issued 1,534,824,000 shares) Note receivable from employee stock ownership plan (Note 14) Cumulative currency translation adjustments (Note 7) Retained earnings

--

--

1,535 1,535 (51) (57) (411) (122) 12,694 11,012 ---------------13,767 12,368 1,408 1,532 ---------------12,359 10,836 ================ $21,453 20,010 ================

Less common stock held in treasury, at cost (189,687,000 and 202,340,000 shares) Total shareowners' equity Total liabilities and shareowners' equity

See Notes to Consolidated Financial Statements 32

Consolidated Statement of Earnings Johnson & Johnson and Subsidiaries
(Dollars in Millions Except Per Share Figures) (Note 1) 1997 1996 1995 ----------------------------------------------------------------------------------

Consolidated Statement of Earnings Johnson & Johnson and Subsidiaries
(Dollars in Millions Except Per Share Figures) (Note 1) 1997 1996 1995 ---------------------------------------------------------------------------------Sales to customers $22,629 21,620 18,842 ========================= Cost of products sold 7,152 7,018 6,235 Selling, marketing and administrative expenses 8,715 8,394 7,462 Research expense 2,140 1,905 1,634 Interest income (203) (139) (115) Interest expense, net of portion capitalized (Note 3) 120 125 143 Other expense, net 129 284 166 ------------------------18,053 17,587 15,525 ------------------------Earnings before provision for taxes on income 4,576 4,033 3,317 Provision for taxes on income (Note 6) 1,273 1,146 914 ------------------------Net earnings $ 3,303 2,887 2,403 ========================= Basic net earnings per share (Note 1 and 19) $ 2.47 2.17 1.86 ========================= Diluted net earnings per share (Note 1 and 19) $ 2.41 2.12 1.82 =========================

Consolidated Statement of Common Stock, Retained Earnings and Treasury Stock
Common Stock Issued Treasury Stock (Dollars in Millions; Shares in Thousands) ------------------- Retained ---------------(Notes 1, 10 and 17) Shares Amount Earnings Shares Amount ---------------------------------------------------------------------------------------------Balance, January 1, 1995 1,534,784 $1,535 $8,198 248,764 $2,503 ================================================ Net earnings --2,403 --Cash dividends paid (per share: $0.64) --(827) --Employee compensation and stock option plans --(35) (9,152) (309) Repurchase of common stock ---9,164 322 Business combinations ---(9,312) (199) Other 40 -4 -------------------------------------------------Balance, December 31, 1995 1,534,824 1,535 9,743 239,464 2,317 ================================================ Net earnings --2,887 --Cash dividends paid (per share: $0.735) --(974) --Employee compensation and stock option plans --(185) (8,510) (389) Repurchase of common stock ---8,745 412 Business combinations --(490) (37,359) (808) Other --31 -------------------------------------------------Balance, December 29, 1996 1,534,824 1,535 11,012 202,340 1,532 ================================================ Net earnings --3,303 --Cash dividends paid (per share: $0.85) --(1,137) --Employee compensation and stock option plans --(333) (11,175) (623) Repurchase of common stock ---10,520 628 Business combinations --(112) (11,998) (129) Other --(39) -------------------------------------------------Balance, December 28, 1997 1,534,824 $1,535 $12,694 189,687 $1,408 ================================================

See Notes to Consolidated Financial Statements 33

Consolidated Statement of Cash Flows Johnson & Johnson and Subsidiaries

Consolidated Statement of Cash Flows Johnson & Johnson and Subsidiaries
(Dollars in Millions)(Note 1) 1997 1996 1995 ------------------------------------------------------------------------------------------------------Cash flows from operating activities Net earnings $ 3,303 2,887 2,403 Adjustments to reconcile net earnings to cash flows: Depreciation and amortization of property and intangibles 1,067 1,009 857 Deferred taxes (121) (3) (63) Changes in assets and liabilities, net of effects from acquisition of businesses: Increase in accounts receivable, less allowances (318) (306) (265) Increase in inventories (175) (242) (9) Increase in accounts payable and accrued liabilities 460 245 617 (Increase) decrease in other current and non-current assets 10 (40) (294) Increase in other current and non-current liabilities 117 341 136 ------------------------Net cash flows from operating activities 4,343 3,891 3,382 ========================= Cash flows from investing activities Additions to property, plant and equipment (1,391) (1,373) (1,256) Proceeds from the disposal of assets 69 37 465 Acquisition of businesses, net of cash acquired (Note 17) (180) (233) (154) Other, principally intangible assets (112) (123) (151) ------------------------Net cash used by investing activities (1,614) (1,692) (1,096) ========================= Cash flows from financing activities Dividends to shareowners Repurchase of common stock Proceeds from short-term debt Retirement of short-term debt Proceeds from long-term debt Retirement of long-term debt Proceeds from the exercise of stock options Net cash used by financing activities Effect of exchange rate changes on cash and cash equivalents Increase in cash and cash equivalents Cash and cash equivalents, beginning of year (Note 1) Cash and cash equivalents, end of year (Note 1)

(1,137) (974) (827) (628) (412) (322) 300 282 197 (182) (128) (634) 7 126 (504) (411) (260) 225 149 112 ------------------------(1,919) (1,368) (1,734) ========================= (68) (21) 13 ------------------------742 810 565 2,011 1,201 636 ------------------------$ 2,753 2,011 1,201 =========================

------------------------------------------------------------------------------------------------------Supplemental cash flow data Cash paid during the year for: Interest, net of portion capitalized $ 91 113 137 Income taxes 1,431 1,210 1,071 Supplemental schedule of noncash investing and financing activities Treasury stock issued for employee compensation and stock option plans, net of cash proceeds Acquisitions of businesses Fair value of assets acquired Fair value of liabilities assumed

$

425

252

212

$

184 237 493 (4) (4) (37) ------------------------180 233 456

Treasury stock issued Net cash payments

--(302) ========================= $ 180 233 154 =========================

See Notes to Consolidated Financial Statements

34

Notes to Consolidated Financial Statements Johnson & Johnson and Subsidiaries 1 Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Johnson & Johnson and subsidiaries. Intercompany accounts and transactions are eliminated. Cash Equivalents The Company considers securities with maturities of three months or less, when purchased, to be cash equivalents. Revenue Recognition The Company recognizes revenue from product sales when the goods are shipped and title passes to the customer. Inventories Inventories are stated at the lower of cost (determined principally by the first-in, first-out method) or market. Depreciation of Property The Company utilizes the straight-line method of depreciation for financial statement purposes for all additions to property, plant and equipment placed in service after January 1, 1989. Property, plant and equipment placed in service prior to January 1, 1989 is generally depreciated using an accelerated method. Intangible Assets The excess of the cost over the fair value of net assets of purchased businesses is recorded as goodwill and is amortized on a straight-line basis over periods of 40 years or less. The cost of other acquired intangibles is amortized on a straight-line basis over their estimated useful lives. The Company continually evaluates the carrying value of goodwill and other intangible assets. Any impairments would be recognized when the expected future operating cash flows derived from such intangible assets is less than their carrying value. Long-Lived Assets Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset in question may not be recoverable. This standard, adopted in 1996, did not have a material effect on the Com-pany's results of operations, cash flows or financial position. Financial Instruments Gains and losses on foreign currency hedges of existing assets or liabilities, or hedges of firm commitments, are deferred and recognized in income as part of the related transaction. Unrealized gains and losses on currency swaps which hedge third party debt are classified in the balance sheet as other assets or liabilities. Interest expense under these agreements, and the respective debt instruments that they hedge, are recorded at the net effective interest rate of the hedged transaction. In the event of early termination of a currency swap contract that hedges third party debt, the gain or loss on the swap contract is amortized over the remaining life of the related transaction. If the underlying transaction

Notes to Consolidated Financial Statements Johnson & Johnson and Subsidiaries 1 Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Johnson & Johnson and subsidiaries. Intercompany accounts and transactions are eliminated. Cash Equivalents The Company considers securities with maturities of three months or less, when purchased, to be cash equivalents. Revenue Recognition The Company recognizes revenue from product sales when the goods are shipped and title passes to the customer. Inventories Inventories are stated at the lower of cost (determined principally by the first-in, first-out method) or market. Depreciation of Property The Company utilizes the straight-line method of depreciation for financial statement purposes for all additions to property, plant and equipment placed in service after January 1, 1989. Property, plant and equipment placed in service prior to January 1, 1989 is generally depreciated using an accelerated method. Intangible Assets The excess of the cost over the fair value of net assets of purchased businesses is recorded as goodwill and is amortized on a straight-line basis over periods of 40 years or less. The cost of other acquired intangibles is amortized on a straight-line basis over their estimated useful lives. The Company continually evaluates the carrying value of goodwill and other intangible assets. Any impairments would be recognized when the expected future operating cash flows derived from such intangible assets is less than their carrying value. Long-Lived Assets Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset in question may not be recoverable. This standard, adopted in 1996, did not have a material effect on the Com-pany's results of operations, cash flows or financial position. Financial Instruments Gains and losses on foreign currency hedges of existing assets or liabilities, or hedges of firm commitments, are deferred and recognized in income as part of the related transaction. Unrealized gains and losses on currency swaps which hedge third party debt are classified in the balance sheet as other assets or liabilities. Interest expense under these agreements, and the respective debt instruments that they hedge, are recorded at the net effective interest rate of the hedged transaction. In the event of early termination of a currency swap contract that hedges third party debt, the gain or loss on the swap contract is amortized over the remaining life of the related transaction. If the underlying transaction associated with a swap, or other derivative contract, is accounted for as a hedge and is terminated early, the related derivative contract is terminated simultaneously and any gains or losses would be included in income

immediately. Advertising Costs associated with advertising are expensed in the year in- curred. Advertising expenses worldwide, which are comprised of television, radio and print media, were $1.26 billion, $1.26 billion and $1.03 billion in 1997, 1996 and 1995, respectively. Income Taxes The Company intends to continue to reinvest its undistributed international earnings to expand its international operations; therefore, no tax has been provided to cover the repatriation of such undistributed earnings. At December 28, 1997 and December 29, 1996 the cumulative amount of undistributed international earnings was approximately $5.9 billion and $5.5 billion, respectively. Net Earnings Per Share At year-end 1997, the Company adopted Statement of Financial Accounting Standards No. 128 that requires the reporting of both basic and diluted earnings per share. Basic earnings per share is computed by dividing net income available to common shareowners by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Prior periods have been restated to reflect the new standard. All share and per share amounts have also been restated to reflect prior year stock splits. Risks and Uncertainties The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results are not expected to differ materially from those estimates. Annual Closing Date The Company follows the concept of a fiscal year which ends on the Sunday nearest to the end of the month of December. Normally each fiscal year consists of 52 weeks, but every five or six years, as will be the case in 1998, the fiscal year consists of 53 weeks. Reclassification Certain prior year amounts have been reclassified to conform with current year presentation. 2 Inventories At the end of 1997 and 1996, inventories were comprised of:
(Dollars in Millions) 1997 1996 -------------------------------------------------------------------------------Raw materials and supplies $ 655 687 Goods in process 417 390 Finished goods 1,444 1,421 -----------------$2,516 2,498 ==================

35

3 Property, Plant and Equipment At the end of 1997 and 1996, property, plant and equipment at cost and accumulated depreciation consisted of:

3 Property, Plant and Equipment At the end of 1997 and 1996, property, plant and equipment at cost and accumulated depreciation consisted of:
(Dollars in Millions) 1997 1996 -------------------------------------------------------------------------------Land and land improvements $ 407 339 Buildings and building equipment 2,895 2,892 Machinery and equipment 5,224 4,875 Construction in progress 918 917 -----------------9,444 9,023 -----------------Less accumulated depreciation 3,634 3,372 -----------------$5,810 5,651 ==================

The Company capitalizes interest expense as part of the cost of construction of facilities and equipment. Interest expense capitalized in 1997, 1996 and 1995 was $40, $55 and $70 million, respectively. Upon retirement or other disposal of fixed assets, the cost and related amount of accumulated depreciation or amortization are eliminated from the asset and reserve accounts, respectively. The difference, if any, between the net asset value and the proceeds is adjusted to income. 4 Borrowings The components of long-term debt are as follows:
Eff. Eff. (Dollars in Millions) 1997 Rate 1996 Rate -------------------------------------------------------------------------------8.72% Debentures due 2024 $ 300 8.72% 300 8.72% 6.73% Debentures due 2023 250 6.73 250 6.73 7 3/8% Eurodollar Notes due 1997 --200 7.43 7 3/8% Notes due 2002 199 7.49 199 7.49 8.25% Eurodollar Notes due 2004 199 8.37 199 8.37 9% European Currency Unit Notes due 1997(1) --186 6.84 11 1/4% Italian Lire Notes due 1998(1) 115 4.88 132 4.84 5% Deutsche Mark Notes due 2001(3) 101 1.98 114 1.98 5 3/8% Swiss Franc Notes due 1997(1) --112 4.64 4 1/2% Currency Indexed Notes due 1998(1) 72 5.26 67 5.12 8.18% to 8.25% Medium Term Notes due 1998 65 8.23 65 8.23 Industrial Revenue Bonds 57 5.77 61 5.62 Other, principally international 36 -32 ----------1,394 6.96(2) 1,917 6.80(2) Less current portion 268 507 ---------$1,126 1,410 ====== =====

(1) The principal amounts of these debt issues include the effect of foreign currency movements. Such debt was converted to fixed or floating rate U.S. dollar liabilities via interest rate and currency swaps. Unrealized currency gains (losses) on currency swaps are not included in the basis of the related debt transactions and are classified in the balance sheet as other assets (liabilities).

(2) Weighted average effective rate. (3) Represents 5% Deutsche Mark notes due 2001 issued by a Japanese subsidiary and converted to a 1.98% fixed rate yen note via an interest rate and currency swap. The Company has access to substantial sources of funds at numerous banks worldwide. Total unused credit available to the Company approximates $3.2 billion, including $1.2 billion of credit commitments with various worldwide banks, $800 million of which will expire on October 2, 1998 and $400 million on October 6, 2002. Borrowings under the credit line agreements will bear interest based on either bids provided by the banks, the prime rate or London Interbank Offered Rates (LIBOR), plus applicable margins. Commitment fees under the agreements are not material. The Company's shelf registration filed with the Securities and Exchange Commission enables the Company to issue up to $2.59 billion of unsecured debt securities, and warrants to purchase debt securities, under its medium term note (MTN) program. No MTN's were issued during 1997. At December 28, 1997, the Company had $2.29 billion remaining on its shelf registration. The Company did not issue any long-term public debt in 1997. Short-term borrowings and current portion of long-term debt amounted to $714 million at the end of 1997. These borrowings are composed of $115 million equivalent of 11.25% Italian Lire notes, $72 million 4.5% currency indexed notes, $65 million MTN's and $462 million of local borrowings, principally by international subsidiaries. Aggregate maturities of long-term obligations for each of the next five years commencing in 1998 are:
After (Dollars in Millions) 1998 1999 2000 2001 2002 2002 -------------------------------------------------------------------------------$268 18 6 105 203 794

5 Intangible Assets At the end of 1997 and 1996, the gross and net amounts of intangible assets, consisting primarily of patents, trademarks and goodwill, were:
(Dollars in Millions) 1997 1996 -------------------------------------------------------------------------------Intangible assets $3,885 3,616 Less accumulated amortization 624 509 -----------------$3,261 3,107 ==================

6 Income Taxes The provision for taxes on income consists of:
(Dollars in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Currently payable: U.S. taxes $ 939 662 509 International taxes 455 487 468 -----------------------------1,394 1,149 977 -----------------------------Deferred: U.S. taxes (115) 28 (42) International taxes (6) (31) (21) -----------------------------(121) (3) (63) -----------------------------$1,273 1,146 914 ==============================

Deferred income taxes are recognized for tax consequences of "temporary differences" by applying enacted statutory tax rates, applicable to future years, to differences between the financial reporting and the tax basis of existing assets and liabilities. 36

Temporary differences and carryforwards for 1997 are as follows:
Deferred Tax (Dollars in Millions) Asset Liability -------------------------------------------------------------------------------Postretirement benefits $ 284 -Postemployment benefits 108 -Employee benefit plans 135 -Depreciation -268 Non-deductible intangibles -149 International R&D capitalized for tax 124 -Reserves & liabilities 427 -Income reported for tax purposes 197 -Miscellaneous international 36 122 Miscellaneous U.S. 186 43 ------------------Total deferred income taxes $ 1,497 582 ===================

A comparison of income tax expense at the federal statutory rate of 35% in 1997, 1996 and 1995, to the Company's effective tax rate is as follows:
(Dollars in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Earnings before taxes on income $4,576 4,033 3,317 -----------------------------Statutory taxes $1,602 1,412 1,161 Tax rates: Statutory 35.0% 35.0% 35.0% Puerto Rico & Ireland operations (5.7) (6.3) (7.3) Research tax credits (0.3) (0.3) (0.2) Domestic state and local 1.0 1.6 1.2 International subsidiaries excluding Ireland (2.7) (2.0) (1.7) All other 0.5 0.4 0.6 -----------------------------Effective tax rate 27.8% 28.4% 27.6% ==============================

The reduction in the 1997 worldwide effective tax rate was primarily due to a greater proportion of taxable income derived from lower tax rate countries. During 1997, the Company had subsidiaries operating in Puerto Rico under a grant for tax relief expiring December 31, 2007. The Omnibus Budget Reconciliation Act of 1993 includes a change in the tax code which will reduce the benefit the Company receives from its operations in Puerto Rico by 60% gradually over a fiveyear period. The Small Business Job Protection Act of 1996 repealed the Puerto Rico tax credit; however, the Company, as an existing credit claimant, may claim the credit for an additional 10 year period. In addi-tion, the Company has subsidiaries manufacturing in Ireland under an incentive tax rate expiring on December 31, 2010. 7 International Currency Translation For translation of its international currencies, the Company has determined that the local currencies of its international subsidiaries are the functional currencies except those in highly inflationary economies, which are defined as those which have had compound cumulative rates of inflation of 100% or more during the past three

Temporary differences and carryforwards for 1997 are as follows:
Deferred Tax (Dollars in Millions) Asset Liability -------------------------------------------------------------------------------Postretirement benefits $ 284 -Postemployment benefits 108 -Employee benefit plans 135 -Depreciation -268 Non-deductible intangibles -149 International R&D capitalized for tax 124 -Reserves & liabilities 427 -Income reported for tax purposes 197 -Miscellaneous international 36 122 Miscellaneous U.S. 186 43 ------------------Total deferred income taxes $ 1,497 582 ===================

A comparison of income tax expense at the federal statutory rate of 35% in 1997, 1996 and 1995, to the Company's effective tax rate is as follows:
(Dollars in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Earnings before taxes on income $4,576 4,033 3,317 -----------------------------Statutory taxes $1,602 1,412 1,161 Tax rates: Statutory 35.0% 35.0% 35.0% Puerto Rico & Ireland operations (5.7) (6.3) (7.3) Research tax credits (0.3) (0.3) (0.2) Domestic state and local 1.0 1.6 1.2 International subsidiaries excluding Ireland (2.7) (2.0) (1.7) All other 0.5 0.4 0.6 -----------------------------Effective tax rate 27.8% 28.4% 27.6% ==============================

The reduction in the 1997 worldwide effective tax rate was primarily due to a greater proportion of taxable income derived from lower tax rate countries. During 1997, the Company had subsidiaries operating in Puerto Rico under a grant for tax relief expiring December 31, 2007. The Omnibus Budget Reconciliation Act of 1993 includes a change in the tax code which will reduce the benefit the Company receives from its operations in Puerto Rico by 60% gradually over a fiveyear period. The Small Business Job Protection Act of 1996 repealed the Puerto Rico tax credit; however, the Company, as an existing credit claimant, may claim the credit for an additional 10 year period. In addi-tion, the Company has subsidiaries manufacturing in Ireland under an incentive tax rate expiring on December 31, 2010. 7 International Currency Translation For translation of its international currencies, the Company has determined that the local currencies of its international subsidiaries are the functional currencies except those in highly inflationary economies, which are defined as those which have had compound cumulative rates of inflation of 100% or more during the past three years. In consolidating international subsidiaries, balance sheet currency effects are recorded as a separate component of shareowners' equity. This equity account includes the results of translating all balance sheet assets and liabilities at current exchange rates, except for those located in highly inflationary economies, principally Latin America, which are reflected in operating results. An analysis of the changes during 1997 and 1996 in the separate component of shareowners' equity for

cumulative currency translation adjustments follows:
(Dollars in Millions) 1997 1996 -------------------------------------------------------------------------------Beginning of year $(122) 148 Translation adjustments (289) (270) ----------------End of year $(411) (122) =================

Net currency transaction and translation gains and losses included in other expense were after-tax losses of $27 million in 1997, after-tax gains of $2 million in 1996, and after-tax losses of $14 million in 1995. 8 International Subsidiaries The following amounts are included in the consolidated financial statements for international subsidiaries:
(Dollars in Millions) 1997 1996 -------------------------------------------------------------------------------Current assets $5,800 5,218 Current liabilities 2,479 2,470 Net property, plant and equipment 2,500 2,569 Parent company equity in net assets 6,491 6,103 Excess of parent company equity over investments 5,828 5,460

International sales to customers were $10,872, $10,721, and $9,652 million for 1997, 1996 and 1995, respectively. 9 Rental Expense and Lease Commitments Rentals of space, vehicles, manufacturing equipment and office and data processing equipment under operating leases amounted to approximately $235 million in 1997, $237 million in 1996 and $227 million in 1995. The approximate minimum rental payments required under operating leases that have initial or remaining noncancellable lease terms in excess of one year at December 28, 1997 are:
After (Dollars in Millions) 1998 1999 2000 2001 2002 2002 Total -------------------------------------------------------------------------------$82 69 54 40 33 69 347

Commitments under capital leases are not significant. 37

10 Common Stock, Stock Option Plans and Stock Compensation Agreements At December 28, 1997, the Company had stock option plans that may grant options to employees and nonemployee directors. Under the 1995 Employee Stock Option Plan and the 1997 Non-Employee Directors' Plan, the Company may grant up to 56 million shares of common stock to its employees. The shares outstanding are from the Company's 1986, 1991 and 1995 Employee Stock Option Plans, the 1997 Non-Employee Directors' Plan and the Mitek, Cordis, Biosense and Gynecare Stock Option Plans. Stock options expire in ten years from the date granted and vest over service periods that range from two to six years. Shares available for future grants amounted to 22.7 million, 32.9 million and 40.1 million in 1997, 1996 and 1995, respectively.

10 Common Stock, Stock Option Plans and Stock Compensation Agreements At December 28, 1997, the Company had stock option plans that may grant options to employees and nonemployee directors. Under the 1995 Employee Stock Option Plan and the 1997 Non-Employee Directors' Plan, the Company may grant up to 56 million shares of common stock to its employees. The shares outstanding are from the Company's 1986, 1991 and 1995 Employee Stock Option Plans, the 1997 Non-Employee Directors' Plan and the Mitek, Cordis, Biosense and Gynecare Stock Option Plans. Stock options expire in ten years from the date granted and vest over service periods that range from two to six years. Shares available for future grants amounted to 22.7 million, 32.9 million and 40.1 million in 1997, 1996 and 1995, respectively. A summary of the status of the Company's stock option plans as of December 28, 1997, December 29, 1996 and December 31, 1995 and changes during the years ending on those dates is presented below:
Options Weighted Average (Shares in Thousands) Outstanding* Exercise Price -------------------------------------------------------------------------------Balance at January 1, 1995 72,544 $19.50 Options granted 16,902 41.76 Options exercised (8,184) 12.43 Options cancelled/forfeited (2,638) 23.46 ------------------------------Balance at December 31, 1995 78,624 24.89 Options granted 10,120 43.81 Options exercised (7,442) 16.13 Options cancelled/forfeited (2,231) 29.27 ------------------------------Balance at December 29, 1996 79,071 28.01 Options granted 12,564 60.62 Options exercised (10,597) 16.80 Options cancelled/forfeited (2,193) 36.36 ------------------------------Balance at December 28, 1997 78,845 $34.48 ===============================

* Adjusted to reflect the 1996 two-for-one stock split. In January 1996, the Company adopted the provisions of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," that calls for companies to measure employee stock compensation expense based on the fair value method of accounting. However, as allowed by the Statement, the Company elected the continued use of Accounting Principle Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," with pro forma disclosure of net income and earnings per share determined as if the fair value method had been applied in measuring compensation cost. Had the fair value method been applied, net income would have been reduced by $30 million or $.02 basic earnings per share in 1997 and $16 million or $.01 basic earnings per share in 1996. In 1995, net income would have been reduced by $2 million with no change to basic earnings per share. These calculations only take into account the options issued since January 1, 1995. The average fair value of options granted during 1997, 1996 and 1995 was $17.50, $13.37 and $10.96, respectively. The fair value was estimated using the Black-Scholes option pricing model based on the weighted average assumptions of: risk-free interest rate of 5.89% for 1997, 6.11% for 1996 and 5.65% for 1995; volatility of 21.5% for 1997, 18.2% for 1996 and 17.8% for 1995; expected life of 5.3 years for 1997, 7 years for 1996 and 1995; and dividend yield of 1.43% for 1997, 1.48% for 1996 and 1.90% for 1995. The following table summarizes stock options outstanding and exercisable at December 28, 1997:
(Shares in Thousands) Outstanding Exercisable ---------------------------------------------------------------------Average Average Exercise Average Exercise Exercise Price Range Options Life(a) Price Options Price -------------------------------------------------------------------------$8.00-$17.86 12,341 2.2 $13.83 12,340 $13.83 $18.28-$36.85 33,156 5.7 24.23 18,906 23.97

$18.28-$36.85 $37.70-$52.00 $52.13-$65.59 $8.00-$65.59

33,156 5.7 24.23 18,906 23.97 21,833 8.2 46.02 3,499 42.94 11,515 9.9 64.28 3 65.70 ---------------------------------------------78,845 6.5 $34.48 34,748 $22.28 ==============================================

(a) Average contractual life remaining in years 11 Certificates of Extra Compensation The Company has a deferred compensation program for senior management and other key personnel. The value of units awarded under the program is related to the net asset value of the Company and historical earning power of its common stock. Amounts earned under the program are payable only after employment with the Company has ended. 12 Segments of Business and Geographic Areas See page 44 for information on segments of business and geographic areas. 13 Retirement and Pension Plans The Company sponsors various retirement and pension plans, including defined benefit, defined contribution and termination indemnity plans, which cover most employees worldwide. Plan benefits are primarily based on the employee's compensation during the last three to five years before retirement and the number of years of service. The Company's objective in funding its domestic plans is to accumulate funds sufficient to provide for all accrued benefits. International subsidiaries have plans under which funds are deposited with trustees, annuities are purchased under group contracts, or reserves are provided. In certain countries other than the United States, the funding of pension plans is not a common practice as funding provides no economic benefit. Consequently, the Company has several pension plans which are not funded. 38

Net pension expense for the Company's defined benefit plans for 1997, 1996 and 1995 included the following components:
(Dollars in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Service cost for benefits earned during period $166 159 121 Interest cost on projected benefit obligations 239 230 207 Actual return on plan assets (576) (403) (555) Net amortization and deferral 304 175 310 Curtailment and settlement losses (gains) 1 -25 ---------------------------Net periodic pension cost $134 161 108 ============================

The net periodic pension cost attributable to domestic plans and included above was $50 million in 1997, $84 million in 1996 and $43 million in 1995. The following tables provide the domestic assumptions and the range of international assumptions, which are based on the economic environment of each applicable country, used to develop net periodic pension cost and the actuarial present value of projected benefit obligations:
Domestic Pension Plans 1997 1996 1995

Net pension expense for the Company's defined benefit plans for 1997, 1996 and 1995 included the following components:
(Dollars in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Service cost for benefits earned during period $166 159 121 Interest cost on projected benefit obligations 239 230 207 Actual return on plan assets (576) (403) (555) Net amortization and deferral 304 175 310 Curtailment and settlement losses (gains) 1 -25 ---------------------------Net periodic pension cost $134 161 108 ============================

The net periodic pension cost attributable to domestic plans and included above was $50 million in 1997, $84 million in 1996 and $43 million in 1995. The following tables provide the domestic assumptions and the range of international assumptions, which are based on the economic environment of each applicable country, used to develop net periodic pension cost and the actuarial present value of projected benefit obligations:
Domestic Pension Plans 1997 1996 1995 -------------------------------------------------------------------------------Expected long-term rate of return on plan assets 9.0% 9.0% 9.0% Weighted average discount rate 7.25 7.75 7.25 Rate of increase in compensation levels 5.0 5.5 5.5 International Pension Plans -------------------------------------------------------------------------------Expected long-term rate of return on plan assets 5.0-9.5% 5.0-10.0% 5.0-10.0% Weighted average discount rates 4.0-8.0 4.0-8.5 4.25-9.5 Rate of increase in compensation levels 3.0-5.5 3.0-6.5 3.0-7.0

The following table sets forth the actuarial present value of benefit obligations and funded status at year-end 1997 and 1996 for the Company's defined benefit plans:
Year-end 1997 Year-end 199 -------------------------------------------Domestic International Domestic Interna -------- -----------------------------OverUnderOver(Dollars in Millions) funded funded funded --------------------------------------------------------------------------------------------------------Plan assets at fair value, primarily stocks and bonds $2,454 1,127 113 2,195 1,043 Book reserves (prepaids) 322 (58) 253 284 (82) -----------------------------------------------Total assets and reserves 2,776 1,069 366 2,479 961 -----------------------------------------------Actuarial present value of benefit obligations: Vested benefits 1,971 703 252 1,723 666 Nonvested benefits 55 25 59 52 26 -----------------------------------------------Accumulated benefit obligation 2,026 728 311 1,775 692 Effect of projected future salary increases 346 218 75 338 224 -----------------------------------------------Projected benefit obligation 2,372 946 386 2,113 916 Assets and reserves in excess of (less than) projected benefit obligation $ 404 123 (20) 366 45 ================================================ Components of assets and reserves in excess of

(less than) projected benefit obligation: Unrecognized prior service cost Unrecognized net gain (loss) Unamortized net transition assets (liabilities) Additional minimum liability Total Assets and reserves in excess of accumulated benefit obligation

$ (51) (35) (16) (45) (34) 438 99 6 387 10 10 59 (18) 16 69 7 8 8 -----------------------------------------------$ 404 123 (20) 366 45 ================================================ $ 750 341 55 704 269 ================================================

39

14 Savings Plan The Company has voluntary 401(k) savings plans designed to enhance the existing retirement programs covering eligible employees. The Company matches a percentage of each employee's contributions consistent with the provisions of the plan for which he/she is eligible. In the U.S. salaried plan, one-third of the Company match is paid in Company stock under an employee stock ownership plan (ESOP). In 1990, to establish the ESOP, the Company loaned $100 million to the ESOP Trust to purchase shares of Company stock on the open market. In exchange, the Company received a note, the balance of which is recorded as a reduction of shareowners' equity. Total Company contributions to the plans were $58 million in 1997, $50 million in 1996 and $45 million in 1995. 15 Other Postretirement Benefits The Company provides postretirement benefits, primarily health care, to all domestic retired employees and their dependents. Most international employees are covered by government-sponsored programs and the cost to the Company is not significant. The Company does not fund retiree health care benefits in advance and has the right to modify these plans in the future. The net periodic postretirement benefit costs included the following components:
(Dollars in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Service cost-benefits earned during the current year $17 16 12 Interest cost on accumulated postretirement benefit obligation 46 46 44 Actual return on plan assets (7) (6) (3) Net amortization and deferral (1) 3 (7) --------------------------Net periodic postretirement benefit cost $55 59 46 ===========================

The plans' status as of year-end 1997 and 1996 was as follows:
Year-end (Dollars in Millions) 1997 1996 -------------------------------------------------------------------------------Accumulated postretirement benefit obligation: Retirees $448 387 Fully eligible active participants 61 62 Other active participants 182 142 ---------------Accumulated postretirement benefit obligation 691 591 Life insurance plan assets at

14 Savings Plan The Company has voluntary 401(k) savings plans designed to enhance the existing retirement programs covering eligible employees. The Company matches a percentage of each employee's contributions consistent with the provisions of the plan for which he/she is eligible. In the U.S. salaried plan, one-third of the Company match is paid in Company stock under an employee stock ownership plan (ESOP). In 1990, to establish the ESOP, the Company loaned $100 million to the ESOP Trust to purchase shares of Company stock on the open market. In exchange, the Company received a note, the balance of which is recorded as a reduction of shareowners' equity. Total Company contributions to the plans were $58 million in 1997, $50 million in 1996 and $45 million in 1995. 15 Other Postretirement Benefits The Company provides postretirement benefits, primarily health care, to all domestic retired employees and their dependents. Most international employees are covered by government-sponsored programs and the cost to the Company is not significant. The Company does not fund retiree health care benefits in advance and has the right to modify these plans in the future. The net periodic postretirement benefit costs included the following components:
(Dollars in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Service cost-benefits earned during the current year $17 16 12 Interest cost on accumulated postretirement benefit obligation 46 46 44 Actual return on plan assets (7) (6) (3) Net amortization and deferral (1) 3 (7) --------------------------Net periodic postretirement benefit cost $55 59 46 ===========================

The plans' status as of year-end 1997 and 1996 was as follows:
Year-end (Dollars in Millions) 1997 1996 -------------------------------------------------------------------------------Accumulated postretirement benefit obligation: Retirees $448 387 Fully eligible active participants 61 62 Other active participants 182 142 ---------------Accumulated postretirement benefit obligation 691 591 Life insurance plan assets at fair value 46 41 ---------------Accumulated postretirement benefit obligation in excess of plans' assets 645 550 ---------------Unrecognized net gain 107 172 Unrecognized prior service gain 9 8 ---------------Accrued postretirement benefit cost $761 730 ================

The postretirement benefit obligation was determined by application of the terms of the various plans, together with relevant actuarial assumptions. Health care cost trends are projected at annual rates grading from 10% for

employees under age 65 and 7% for employees over age 65 down to 5% for both groups by the year 2008 and beyond. The effect of a 1% annual increase in these assumed cost trend rates would increase the accumulated postretirement benefit obligation at year-end by $85 million and the service and interest cost components of the net periodic postretirement benefit cost for 1997 by a total of $9 million. Assumptions used to develop net periodic postretirement benefit cost and the actuarial present value of projected postretirement benefit obligations were as follows:
1997 1996 1995 -------------------------------------------------------------------------------Expected long-term rate of return on plan assets 9.0% 9.0% 9.0% Weighted average discount rate 7.25 7.75 7.25 Rate of increase in compensation levels 5.0 5.5 5.5

The Company also provides postemployment benefits to qualified former or inactive employees. The Company does not fund these benefits and has the right to modify these plans in the future. 16 Financial Instruments Derivative Financial Instrument Risk The Company uses derivative financial instruments to manage the impact of interest rate and foreign exchange rate changes on earnings and cash flows. The Company does not enter into financial instruments for trading or speculative purposes. The Company has a policy of only entering into contracts with parties that have at least an "A" (or equivalent) credit rating. The counterparties to these contracts are major financial institutions and the Company does not have significant exposure to any one counterparty. Management believes the risk of loss is remote and in any event would be immaterial. Interest Rate and Foreign Exchange Risk Management The Company uses interest rate and currency swaps to manage interest rate and currency risk primarily related to borrowings. Interest rate and currency swap agreements that hedge third party debt mature with these borrowings and are described in Note 4. The Company enters into forward foreign exchange contracts maturing within five years to protect the value of existing foreign currency assets and liabilities and to hedge future foreign currency product costs. The Company has forward exchange contracts outstanding at year-end in various currencies, principally in U.S. Dollars, Belgian Francs and Swiss Francs. In addition, the Company has currency swaps outstanding, principally in U.S. Dollars, Belgian Francs 40

and French Francs. Unrealized gains and losses, based on dealer quoted market prices, from hedging firm commitments are presented in the following table:
1997 -------------------------------------Notional (Dollars in Millions) Amounts Gains Losses -------------------------------------------------------------------------------Forwards $4,830 177 37 Currency swaps 2,773 109 25

Fair Value of Financial Instruments

and French Francs. Unrealized gains and losses, based on dealer quoted market prices, from hedging firm commitments are presented in the following table:
1997 -------------------------------------Notional (Dollars in Millions) Amounts Gains Losses -------------------------------------------------------------------------------Forwards $4,830 177 37 Currency swaps 2,773 109 25

Fair Value of Financial Instruments The carrying amount of cash and cash equivalents and current and non-current marketable securities approximates fair value of these instruments. In addition the carrying amount of long-term investments, long-term debt, interest rate and currency swaps (used to hedge third party debt) approximates fair value of these instruments for 1997 and 1996. The fair value of current and non-current marketable securities, long-term debt and interest rate and currency swap agreements were estimated based on quotes obtained from brokers for those or similar instruments. The fair value of long-term investments were estimated based on quoted market prices at year-end. Concentration of Credit Risk The Company invests its excess cash in both deposits with major banks throughout the world and other high quality short-term liquid money market instruments (commercial paper, government and government agency notes and bills, etc.). The Company has a policy of making investments only with commercial institutions that have at least an "A" (or equivalent) credit rating. These investments generally mature within six months and the Company has not incurred any related losses. The Company sells a broad range of products in the health care field in most countries of the world. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company's customer base. Ongoing credit evaluations of customers' financial condition are performed and, generally, no collateral is required. The Company maintains reserves for potential credit losses and such losses, in the aggregate, have not exceeded management's expectations. 17 Mergers, Acquisitions and Divestitures During 1997, certain businesses were merged with Johnson & Johnson at a value, net of cash, of $737 million. The mergers have been accounted for as poolings of interests; prior period financial statements have not been restated since the effect of these mergers would not materially effect previously issued financial statements. The 1997 mergers included Biopsys Medical, Inc., Biosense, Inc. and Gynecare, Inc. Biopsys Medical, Inc. is an innovator and marketer of the MAMMOTOME Breast Biopsy System. The MAMMOTOME System is a minimally invasive procedure for breast cancer diagnosis, which requires only local anesthetic and is performed on an outpatient basis. Biosense, Inc. is a leader in developing medical sensor technology and is developing several applications that will facilitate a variety of diagnostic and therapeutic interventional and cardiovascular procedures. Gynecare, Inc. is the developer and marketer of innovative, minimally invasive medical devices utilized in the treatment of uterine disorders. Certain businesses were acquired for $180 million during 1997 and the purchase method of accounting was employed. The most significant 1997 acquisition was Innotech, Inc., a developer and marketer of eyeglass lens products, desktop lens casting systems and related consumables that enable eye care professionals and optical retailers to custom fabricate high quality prescription eyeglass lenses at the point of sale. The excess of purchase price over the estimated fair value of 1997 acquisitions amounted to $157 million. This amount has been allocated to identifiable intangibles and goodwill. Pro forma information is not provided for 1997 since the impact of the acquisitions does not have a material effect on the Company's results of operations, cash flows or financial position.

Divestitures in 1997 did not have a material effect on the Company's results of operations, cash flows or financial position. On February 23, 1996, Johnson & Johnson and Cordis Corporation completed the merger between the two companies. Cordis is a leader in angiography and angioplasty (balloon catheters). The merger has been accounted for as a pooling of interests; however, prior period financial statements have not been restated as the effect of reflecting data relating to this merger would not materially effect previously issued financial statements. Johnson & Johnson issued 2.2584 shares of stock, on a split-adjusted basis, for each share of Cordis stock. The exchange ratio resulted from dividing $109 (exchange value of Cordis shares) by the average of the closing prices for Johnson & Johnson shares for the 10 days prior to the merger. At the time of the merger, Cordis had approximately 17.6 million shares outstanding on a fully diluted basis, resulting in a total value, net of cash, of approximately $1.8 billion. During 1996 certain business were acquired for $233 million. The 1996 acquisitions include Indigo Medical, Inc., a pioneer in the use of advanced, low cost diode lasers for interstitial thermotherapy and the exercise of our option to purchase the trademarks of Lactaid, Inc., producer of the natural dairy digestive supplement LACTAID. The excess of purchase price over the estimated fair value of 1996 acquisitions amounted to $205 million. This amount has been allocated to identifiable intangibles and goodwill. Pro forma information is not provided for 1996 as the impact of the acquisitions does not have a material effect on the Company's results of operations, cash flows or financial position. Divestitures in 1996 did not have a material effect on the Company's results of operations, cash flows or financial position. 41

18 Pending Legal Proceedings The Company is involved in numerous product liability cases in the United States, many of which concern adverse reactions to drugs and medical devices. The damages claimed are substantial, and while the Company is confident of the adequacy of the warnings which accompany such products, it is not feasible to predict the ultimate outcome of litigation. However, the Company believes that if any liability results from such cases, it will be substantially covered by reserves established under its self-insurance program and by commercially available excess liability insurance. Additionally, the Company, along with numerous other pharmaceutical manufacturers and distributors, is a defendant in a large number of individual and class actions brought by retail pharmacies in state and federal courts under the antitrust laws. These cases assert price discrimination and price-fixing violations resulting from an alleged industry-wide agreement to deny retail pharmacists price discounts on sales of brand name prescription drugs. The Company believes the claims against the Company in these actions are without merit and is defending them vigorously. Further, the Company, together with another contact lens manufacturer, a trade association and various individual defendants, is a defendant in several consumer class actions and an action brought by multiple State Attorneys General on behalf of consumers alleging violations of federal and state antitrust laws. These cases assert that enforcement of the Company's long-standing policy of selling contact lenses only to licensed eye care professionals is a result of an unlawful conspiracy to eliminate alternative distribution channels from the disposable contact lens market. The Company believes that these actions are without merit and is defending them vigorously. The Company is also involved in a number of patent, trademark and other lawsuits incidental to its business. The Company believes that the above proceedings in the aggregate would not have a material adverse effect on its results of operations, cash flows or financial position. 19 Earnings Per Share

18 Pending Legal Proceedings The Company is involved in numerous product liability cases in the United States, many of which concern adverse reactions to drugs and medical devices. The damages claimed are substantial, and while the Company is confident of the adequacy of the warnings which accompany such products, it is not feasible to predict the ultimate outcome of litigation. However, the Company believes that if any liability results from such cases, it will be substantially covered by reserves established under its self-insurance program and by commercially available excess liability insurance. Additionally, the Company, along with numerous other pharmaceutical manufacturers and distributors, is a defendant in a large number of individual and class actions brought by retail pharmacies in state and federal courts under the antitrust laws. These cases assert price discrimination and price-fixing violations resulting from an alleged industry-wide agreement to deny retail pharmacists price discounts on sales of brand name prescription drugs. The Company believes the claims against the Company in these actions are without merit and is defending them vigorously. Further, the Company, together with another contact lens manufacturer, a trade association and various individual defendants, is a defendant in several consumer class actions and an action brought by multiple State Attorneys General on behalf of consumers alleging violations of federal and state antitrust laws. These cases assert that enforcement of the Company's long-standing policy of selling contact lenses only to licensed eye care professionals is a result of an unlawful conspiracy to eliminate alternative distribution channels from the disposable contact lens market. The Company believes that these actions are without merit and is defending them vigorously. The Company is also involved in a number of patent, trademark and other lawsuits incidental to its business. The Company believes that the above proceedings in the aggregate would not have a material adverse effect on its results of operations, cash flows or financial position. 19 Earnings Per Share The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the years ended December 28, 1997, December 29, 1996 and December 31, 1995:
(Shares in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Basic net earnings per share $ 2.47 2.17 1.86 Average shares outstanding - basic 1,336.0 1,332.6 1,291.9 Potential shares exercisable under stock option plans 68.1 71.6 62.8 Less: shares repurchased under treasury stock method (34.2) (44.8) (37.3) -------------------------------Adjusted average shares outstanding - diluted 1,369.9 1,359.4 1,317.4 Diluted earnings per share $ 2.41 2.12 1.82 ================================

20 Selected Quarterly Financial Data (Unaudited) Selected unaudited quarterly financial data for the years 1997 and 1996 is summarized below:
1997 1996 (Dollars in Millions First Second Third Fourth First Second Third F Except Per Share Figures) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Qu --------------------------------------------------------------------------------------------------------Segment sales to customers Consumer $1,683 1,612 1,585 1,618 1,619 1,544 1,583 Pharmaceutical 1,944 1,934 1,918 1,900 1,762 1,808 1,817 Professional 2,088 2,152 2,083 2,112 1,953 2,030 2,002 ------------------------------------------------------------------Total sales 5,715 5,698 5,586 5,630 5,334 5,382 5,402 ===================================================================

Gross margin Earnings before provision for taxes on income Net earnings Basic net earnings per share* Diluted net earnings per share*

3,943 1,302

3,949 1,294

3,836 1,197

3,749 783

3,615 1,124

3,650 1,119

3,687 1,059

909 909 855 630 790 791 750 =================================================================== $ .68 .68 .64 .47 .59 .60 .56 =================================================================== $ .66 .67 .63 .45 .58 .58 .55 ===================================================================

*Adjusted to reflect the 1996 two-for-one stock split 42

Report of Management The management of Johnson & Johnson is responsible for the integrity and objectivity of the accompanying financial statements and related information. The statements have been prepared in conformity with generally accepted accounting principles, and include amounts that are based on our best judgements with due consideration given to materiality. Management maintains a system of internal accounting controls monitored by a corporate staff of professionally trained internal auditors who travel worldwide. This system is designed to provide reasonable assurance, at reasonable cost, that assets are safeguarded and that transactions and events are recorded properly. While the Company is organized on the principles of decentralized management, appropriate control measures are also evidenced by well-defined organizational responsibilities, management selection, development and evaluation processes, communicative techniques, financial planning and reporting systems and formalized procedures. It has always been the policy and practice of the Company to conduct its affairs ethically and in a socially responsible manner. This responsibility is characterized and reflected in the Company's Credo and Policy on Business Conduct that are distributed throughout the Company. Management maintains a systematic program to ensure compliance with these policies. Coopers & Lybrand L.L.P., independent auditors, is engaged to audit our financial statements. Coopers & Lybrand L.L.P. obtains and maintains an understanding of our internal controls and conducts such tests and other auditing procedures considered necessary in the circumstances to express their opinion in the report that follows. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with the independent auditors, management and internal auditors to review their work and confirm that they are properly discharging their responsibilities. In addition, the independent auditors, the General Counsel and the Vice President, Internal Audit are free to meet with the Audit Committee without the presence of management to discuss the results of their work and observations on the adequacy of internal financial controls, the quality of financial reporting and other relevant matters.
/s/ Ralph S. Larsen Ralph S. Larsen Chairman, Board of Directors and Chief Executive Officer /s/ Robert J. Darretta Robert J. Darretta Vice President, Finance and Chief Financial Officer

Independent Auditor's Report To the Shareowners and Board of Directors of Johnson & Johnson: We have audited the accompanying consolidated balance sheet of Johnson & Johnson and subsidiaries as of December 28, 1997 and December 29, 1996, and the related consolidated statement of earnings, consolidated statement of common stock, retained earnings and treasury stock, and consolidated statement of cash flows for each of the three years in the period ended December 28, 1997. These financial statements are the responsibility

Report of Management The management of Johnson & Johnson is responsible for the integrity and objectivity of the accompanying financial statements and related information. The statements have been prepared in conformity with generally accepted accounting principles, and include amounts that are based on our best judgements with due consideration given to materiality. Management maintains a system of internal accounting controls monitored by a corporate staff of professionally trained internal auditors who travel worldwide. This system is designed to provide reasonable assurance, at reasonable cost, that assets are safeguarded and that transactions and events are recorded properly. While the Company is organized on the principles of decentralized management, appropriate control measures are also evidenced by well-defined organizational responsibilities, management selection, development and evaluation processes, communicative techniques, financial planning and reporting systems and formalized procedures. It has always been the policy and practice of the Company to conduct its affairs ethically and in a socially responsible manner. This responsibility is characterized and reflected in the Company's Credo and Policy on Business Conduct that are distributed throughout the Company. Management maintains a systematic program to ensure compliance with these policies. Coopers & Lybrand L.L.P., independent auditors, is engaged to audit our financial statements. Coopers & Lybrand L.L.P. obtains and maintains an understanding of our internal controls and conducts such tests and other auditing procedures considered necessary in the circumstances to express their opinion in the report that follows. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with the independent auditors, management and internal auditors to review their work and confirm that they are properly discharging their responsibilities. In addition, the independent auditors, the General Counsel and the Vice President, Internal Audit are free to meet with the Audit Committee without the presence of management to discuss the results of their work and observations on the adequacy of internal financial controls, the quality of financial reporting and other relevant matters.
/s/ Ralph S. Larsen Ralph S. Larsen Chairman, Board of Directors and Chief Executive Officer /s/ Robert J. Darretta Robert J. Darretta Vice President, Finance and Chief Financial Officer

Independent Auditor's Report To the Shareowners and Board of Directors of Johnson & Johnson: We have audited the accompanying consolidated balance sheet of Johnson & Johnson and subsidiaries as of December 28, 1997 and December 29, 1996, and the related consolidated statement of earnings, consolidated statement of common stock, retained earnings and treasury stock, and consolidated statement of cash flows for each of the three years in the period ended December 28, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Johnson & Johnson and subsidiaries as of December 28, 1997 and December 29, 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 1997, in conformity with generally accepted accounting principles.

1997, in conformity with generally accepted accounting principles.
/s/ Cooper & Lybrand L.L.P. New York, New York January 19, 1998

43

Segments of Business(1) Johnson & Johnson and Subsidiaries
Sales to Customers(2) ----------------------------------(Dollars in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Consumer-Domestic $ 3,240 3,166 2,858 International 3,258 3,198 2,973 ----------------------------------Total 6,498 6,364 5,831 ----------------------------------Pharmaceutical-Domestic 3,877 3,355 2,697 International 3,819 3,833 3,577 ----------------------------------Total 7,696 7,188 6,274 ----------------------------------Professional-Domestic 4,640 4,378 3,635 International 3,795 3,690 3,102 ----------------------------------Total 8,435 8,068 6,737 ----------------------------------Worldwide total $22,629 21,620 18,842 ===================================

Operating Profit Identifiable Assets ------------------------------------------(Dollars in Millions) 1997 1996 1995 1997 1996 1995 ------------------------------------------------------------------------------------------Consumer $ 558 361 298 4,749 4,877 4,858 Pharmaceutical 2,669 2,477 2,073 7,029 6,036 5,137 Professional 1,550 1,416 1,203 7,778 7,509 6,688 ---------------------------------------------------Segments total 4,777 4,254 3,574 19,556 18,422 16,683 Expenses not allocated to segments(3) (201) (221) (257) General corporate 1,897 1,588 1,190 ---------------------------------------------------Worldwide total $4,576 4,033 3,317 21,453 20,010 17,873 ====================================================

Additions to Property, Depreciation and Plant & Equipment Amortization -------------------------------------(Dollars in Millions) 1997 1996 1995 1997 1996 1995 -------------------------------------------------------------------------------Consumer $ 267 294 279 265 257 264 Pharmaceutical 460 445 451 267 265 229 Professional 573 594 501 495 446 335 -------------------------------------------------Segments total 1,300 1,333 1,231 1,027 968 828 General corporate 91 40 25 40 41 29 -------------------------------------------------Worldwide total $1,391 1,373 1,256 1,067 1,009 857 ==================================================

Geographic Areas

Segments of Business(1) Johnson & Johnson and Subsidiaries
Sales to Customers(2) ----------------------------------(Dollars in Millions) 1997 1996 1995 -------------------------------------------------------------------------------Consumer-Domestic $ 3,240 3,166 2,858 International 3,258 3,198 2,973 ----------------------------------Total 6,498 6,364 5,831 ----------------------------------Pharmaceutical-Domestic 3,877 3,355 2,697 International 3,819 3,833 3,577 ----------------------------------Total 7,696 7,188 6,274 ----------------------------------Professional-Domestic 4,640 4,378 3,635 International 3,795 3,690 3,102 ----------------------------------Total 8,435 8,068 6,737 ----------------------------------Worldwide total $22,629 21,620 18,842 ===================================

Operating Profit Identifiable Assets ------------------------------------------(Dollars in Millions) 1997 1996 1995 1997 1996 1995 ------------------------------------------------------------------------------------------Consumer $ 558 361 298 4,749 4,877 4,858 Pharmaceutical 2,669 2,477 2,073 7,029 6,036 5,137 Professional 1,550 1,416 1,203 7,778 7,509 6,688 ---------------------------------------------------Segments total 4,777 4,254 3,574 19,556 18,422 16,683 Expenses not allocated to segments(3) (201) (221) (257) General corporate 1,897 1,588 1,190 ---------------------------------------------------Worldwide total $4,576 4,033 3,317 21,453 20,010 17,873 ====================================================

Additions to Property, Depreciation and Plant & Equipment Amortization -------------------------------------(Dollars in Millions) 1997 1996 1995 1997 1996 1995 -------------------------------------------------------------------------------Consumer $ 267 294 279 265 257 264 Pharmaceutical 460 445 451 267 265 229 Professional 573 594 501 495 446 335 -------------------------------------------------Segments total 1,300 1,333 1,231 1,027 968 828 General corporate 91 40 25 40 41 29 -------------------------------------------------Worldwide total $1,391 1,373 1,256 1,067 1,009 857 ==================================================

Geographic Areas
Sales to Customers(2) Operating Profit Identifiable Asse (Dollars in Millions) 1997 1996 1995 1997 1996 1995 1997 1996 1 --------------------------------------------------------------------------------------------------------United States $11,757 10,899 9,190 2,952 2,405 1,872 10,014 9,267 8, Europe 5,942 6,151 5,573 1,314 1,382 1,267 6,788 6,452 5, Western Hemisphere excluding U.S. 2,034 1,914 1,731 248 228 195 1,193 1,133 1, Asia-Pacific, Africa 2,896 2,656 2,348 263 239 240 1,561 1,570 1, ---------------------------------------------------------------------Segments total 22,629 21,620 18,842 4,777 4,254 3,574 19,556 18,422 16, Expenses not allocated to segments(3) (201) (221) (257)

General corporate Worldwide total

1,897 1,588 1, ---------------------------------------------------------------------$22,629 21,620 18,842 4,576 4,033 3,317 21,453 20,010 17, ======================================================================

(1) See Management's Discussion and Analysis, pages 29 to 31, for a description of the segments in which the Company does business. (2) Export sales and intersegment sales are not significant. No single customer represents 10% or more of total sales. (3) Expenses not allocated to segments include interest expense, minority interests and general corporate income and expense. 44

Summary of Operations and Statistical Data 1987-1997 Johnson & Johnson and Subsidiaries
(Dollars in Millions Except Per Share Figures) 1997 1996 1995 1994 1993 --------------------------------------------------------------------------------------------------------Sales to customers-Domestic $ 11,757 10,899 9,190 7,812 7,203 Sales to customers-International 10,872 10,721 9,652 7,922 6,935 -----------------------------------------------Total sales 22,629 21,620 18,842 15,734 14,138 ================================================ Cost of products sold 7,152 7,018 6,235 5,299 4,791 Selling, marketing and administrative expenses 8,715 8,394 7,462 6,350 5,771 Research expense 2,140 1,905 1,634 1,278 1,182 Interest income (203) (139) (115) (60) (80 Interest expense, net of portion capitalized 120 125 143 142 126 Other expense (income), net 129 284 166 44 16 -----------------------------------------------18,053 17,587 15,525 13,053 11,806 -----------------------------------------------Earnings before provision for taxes on income 4,576 4,033 3,317 2,681 2,332 Provision for taxes on income 1,273 1,146 914 675 545 -----------------------------------------------Earnings before cumulative effect of accounting changes 3,303 2,887 2,403 2,006 1,787 Cumulative effect of accounting changes (net of tax) ----------------------------------------------------Net earnings $ 3,303 2,887 2,403 2,006 1,787 ================================================ Percent of sales to customers 14.6 13.4 12.8 12.7 12.6 Basic net earnings per share of common stock* $ 2.47 2.17 1.86 1.56 1.37 ================================================ Diluted net earnings per share of common stock* $ 2.41 2.12 1.82 1.55 1.36 ================================================ Percent return on average shareowners' equity 28.5 29.0 29.7 31.6 33.3 ================================================ Percent increase (decrease) over previous year: Sales to customers 4.7 14.7 19.8 11.3 2.8 Basic net earnings per share 13.8 16.7 19.2 13.9 75.6 ================================================ Diluted net earnings per share 13.7 16.5 17.4 14.0 76.6 ================================================ Supplementary expense data: Cost of materials and services(5) $ 11,484 11,204 9,852 7,952 7,033 Total employment costs 5,387 5,275 4,707 4,282 4,066 Depreciation and amortization 1,067 1,009 857 724 617 Maintenance and repairs(6) 265 281 252 217 202 Total tax expense(7) 1,843 1,699 1,433 1,142 968 Total tax expense per share(7)* 1.38 1.27 1.11 .89 .74 ================================================ Supplementary balance sheet data: Property, plant and equipment, net $ 5,810 5,651 5,196 4,910 4,406 Additions to property, plant and equipment 1,391 1,373 1,256 937 975 Total assets 21,453 20,010 17,873 15,668 12,242 Long-term debt 1,126 1,410 2,107 2,199 1,493 ================================================ Common stock information:* Dividends paid per share $ .85 .735 .64 .565 .505 Shareowners' equity per share $ 9.19 8.13 6.98 5.54 4.33

Summary of Operations and Statistical Data 1987-1997 Johnson & Johnson and Subsidiaries
(Dollars in Millions Except Per Share Figures) 1997 1996 1995 1994 1993 --------------------------------------------------------------------------------------------------------Sales to customers-Domestic $ 11,757 10,899 9,190 7,812 7,203 Sales to customers-International 10,872 10,721 9,652 7,922 6,935 -----------------------------------------------Total sales 22,629 21,620 18,842 15,734 14,138 ================================================ Cost of products sold 7,152 7,018 6,235 5,299 4,791 Selling, marketing and administrative expenses 8,715 8,394 7,462 6,350 5,771 Research expense 2,140 1,905 1,634 1,278 1,182 Interest income (203) (139) (115) (60) (80 Interest expense, net of portion capitalized 120 125 143 142 126 Other expense (income), net 129 284 166 44 16 -----------------------------------------------18,053 17,587 15,525 13,053 11,806 -----------------------------------------------Earnings before provision for taxes on income 4,576 4,033 3,317 2,681 2,332 Provision for taxes on income 1,273 1,146 914 675 545 -----------------------------------------------Earnings before cumulative effect of accounting changes 3,303 2,887 2,403 2,006 1,787 Cumulative effect of accounting changes (net of tax) ----------------------------------------------------Net earnings $ 3,303 2,887 2,403 2,006 1,787 ================================================ Percent of sales to customers 14.6 13.4 12.8 12.7 12.6 Basic net earnings per share of common stock* $ 2.47 2.17 1.86 1.56 1.37 ================================================ Diluted net earnings per share of common stock* $ 2.41 2.12 1.82 1.55 1.36 ================================================ Percent return on average shareowners' equity 28.5 29.0 29.7 31.6 33.3 ================================================ Percent increase (decrease) over previous year: Sales to customers 4.7 14.7 19.8 11.3 2.8 Basic net earnings per share 13.8 16.7 19.2 13.9 75.6 ================================================ Diluted net earnings per share 13.7 16.5 17.4 14.0 76.6 ================================================ Supplementary expense data: Cost of materials and services(5) $ 11,484 11,204 9,852 7,952 7,033 Total employment costs 5,387 5,275 4,707 4,282 4,066 Depreciation and amortization 1,067 1,009 857 724 617 Maintenance and repairs(6) 265 281 252 217 202 Total tax expense(7) 1,843 1,699 1,433 1,142 968 Total tax expense per share(7)* 1.38 1.27 1.11 .89 .74 ================================================ Supplementary balance sheet data: Property, plant and equipment, net $ 5,810 5,651 5,196 4,910 4,406 Additions to property, plant and equipment 1,391 1,373 1,256 937 975 Total assets 21,453 20,010 17,873 15,668 12,242 Long-term debt 1,126 1,410 2,107 2,199 1,493 ================================================ Common stock information:* Dividends paid per share $ .85 .735 .64 .565 .505 Shareowners' equity per share $ 9.19 8.13 6.98 5.54 4.33 Market price per share (year-end close) $ 64 7/8 50 1/2 42 3/4 27 3/8 22 3/8 Average shares outstanding (millions) - basic 1,336.0 1,332.6 1,291.9 1,286.1 1,303.5 - diluted 1,369.9 1,359.4 1,317.4 1,297.2 1,315.1 Shareowners of record (thousands) 156.8 138.5 113.5 104.7 96.1 ================================================ Employees (thousands) 90.5 89.3 82.3 81.5 81.6 ================================================ (Dollars in Millions Except Per Share Figures) 1991 1990 1989 1988 1 --------------------------------------------------------------------------------------------------------Sales to customers-Domestic 6,248 5,427 4,881 4,576 4, Sales to customers-International 6,199 5,805 4,876 4,424 3, -----------------------------------------------Total sales 12,447 11,232 9,757 9,000 8, ================================================ Cost of products sold 4,204 3,937 3,480 3,292 2, Selling, marketing and administrative expenses 5,099 4,469 3,897 3,630 3, Research expense 980 834 719 674 Interest income (88) (98) (87) (72) Interest expense, net of portion capitalized 129 201(4) 141 104 Other expense (income), net 85 266(4) 93 (24) ------------------------------------------------

Earnings before provision for taxes on income Provision for taxes on income Earnings before cumulative effect of accounting changes Cumulative effect of accounting changes (net of tax) Net earnings Percent of sales to customers Basic net earnings per share of common stock* Diluted net earnings per share of common stock* Percent return on average shareowners' equity Percent increase (decrease) over previous year: Sales to customers Basic net earnings per share Diluted net earnings per share Supplementary expense data: Cost of materials and services(5) Total employment costs Depreciation and amortization Maintenance and repairs(6) Total tax expense(7) Total tax expense per share(7)* Supplementary balance sheet data: Property, plant and equipment, net Additions to property, plant and equipment Total assets Long-term debt Common stock information:* Dividends paid per share Shareowners' equity per share Market price per share (year-end close) Average shares outstanding (millions) - basic - diluted Shareowners of record (thousands) Employees (thousands)

10,409 9,609 8,243 7,604 6, -----------------------------------------------2,038 1,623 1,514 1,396 1, 577 480 432 422 -----------------------------------------------1,461 1,143 1,082 974 ---------------------------------------------------1,461 1,143 1,082 974 ================================================ 11.7 10.2(2) 11.1 10.8 1 1.10 .86 .81 .71 ================================================ 1.08 .85 .80 .70 ================================================ 27.8 25.3(2) 28.3 27.9 2 ================================================ 10.8 15.1 8.4 12.3 1 27.9(2) 6.2(2) 14.1 18.2 ================================================ 27.1(2) 6.3(2) 14.3 18.6 ================================================ 6,329 5,728 4,908 4,528 4, 3,507 3,195 2,871 2,639 2, 493 474 414 391 203 185 193 191 966 825 708 678 .73 .62 .53 .50 ================================================ 3,667 3,247 2,846 2,493 2, 987 830 750 664 10,513 9,506 7,919 7,119 6, 1,301 1,316 1,170 1,166 ================================================ .385 .33 .28 .24 4.22 3.68 3.11 2.63 2 28 5/8 17 7/8 14 7/8 10 5/8 9 1,332.3 1,332.2 1,332.5 1,362.4 1,38 1,353.2 1,349.7 1,350.8 1,379.6 1,40 69.9 64.6 60.5 54.5 5 ================================================ 82.7 82.2 83.1 81.3 7 ================================================

* Adjusted to reflect the 1996 two-for-one stock split (1) Excluding the cumulative effect of accounting changes of $595 million. -1992 earnings percent of sales to customers before accounting changes is 11.8%. -1992 earnings percent return on average shareowners' equity before accounting changes is 28.5%. -1993 basic net earnings per share percent increase over prior year before accounting change is 11.4%; 1992 is 12.3%. (2) Excluding Latin America non-recurring charges of $125 million. -1990 net earnings percent of sales to customers before non-recurring charges is 11.3%. -1990 percent return on average shareowners' equity before non-recurring charges is 27.6%. -1991 basic net earnings per share percent increase over prior year before nonrecurring charges is 15.3%; 1990 is 17.3%. (3) Excluding one-time charges of $380 million in 1986, 1987 basic net earnings per share percent increase over prior year before one-time charges is 22.2%. (4) Includes Latin America non-recurring charge of $36 million for the liquidation of Argentine debt and $104 million writedown in other expenses for permanent impairment of certain assets and operations in Latin America. (5) Net of interest and other income. (6) Also included in cost of materials and services category. (7) Includes taxes on income, payroll, property and other business taxes. 45

EXHIBIT 21

EXHIBIT 21 SUBSIDIARIES Johnson & Johnson, a New Jersey corporation, has the domestic and international subsidiaries shown below. Certain domestic subsidiaries and international subsidiaries are not named because they are not significant in the aggregate. Johnson & Johnson has no parent.
JURISDICTION OF ORGANIZATION --------------Delaware Delaware Florida California Ohio New Jersey Delaware Delaware Delaware Pennsylvania Delaware New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey Florida Delaware Delaware California New Jersey Delaware Delaware California Georgia Delaware New Jersey New York Delaware New Jersey Florida

NAME OF SUBSIDIARY -----------------Domestic Subsidiaries: Biopsys Medical, Inc. .................................... Biosense, Inc............................................. Cordis Corporation........................................ Cordis Webster, Inc. ..................................... Ethicon Endo-Surgery, Inc. ............................... Ethicon, Inc. ............................................ GynoPharma Inc. .......................................... Indigo Medical, Inc. ..................................... Innotech, Inc. ........................................... Janssen Pharmaceutica Inc. ............................... Janssen Products, Inc. ................................... Johnson & Johnson Consumer Companies, Inc. ............... Johnson & Johnson (CR), Inc. ............................. Johnson & Johnson Development Corporation................. Johnson & Johnson Finance Corporation..................... Johnson & Johnson Health Care Systems Inc. ............... Johnson & Johnson International........................... Johnson & Johnson Japan Inc. ............................. Johnson & Johnson - Merck Consumer Pharmaceuticals Co. ... Johnson & Johnson (Middle East) Inc. ..................... Johnson & Johnson Professional, Inc. ..................... Johnson & Johnson (Russia), Inc. ......................... Johnson & Johnson Services, Inc. ......................... Johnson & Johnson Slovakia, Ltd. ......................... Johnson & Johnson Vision Products, Inc. .................. Joint Medical Products Corporation........................ JJHC, Inc. ............................................... LifeScan, Inc. ........................................... McNEIL-PPC, Inc. ......................................... NDC Investment Corporation................................ Neutrogena Corporation.................................... Nitinol Development Corporation........................... Noramco, Inc. ............................................ OMJ Pharmaceuticals, Inc. ................................ Ortho Biotech Inc. ....................................... Ortho-Clinical Diagnostics, Inc. ......................... Ortho-McNeil Pharmaceutical, Inc. ........................ Raritan Advertising, Inc. ................................ Therakos, Inc. ...........................................

18
JURISDICTION OF ORGANIZATION --------------United Kingdom Switzerland Switzerland Mexico Brazil Switzerland Sweden Netherlands Germany Belgium France

NAME OF SUBSIDIARY -----------------International Subsidiaries: Centra Healthcare......................................... Cilag AG.................................................. Cilag AG International.................................... Cilag de Mexico, S.A. de C.V. ............................ Cilag Farmaceutica Ltda. ................................. Cilag Holding AG.......................................... Cordis A.B. .............................................. Cordis Europa N.V. ....................................... Cordis Med. App. GmbH .................................... Cordis S.A. .............................................. Cordis S.A. ..............................................

NAME OF SUBSIDIARY -----------------International Subsidiaries: Centra Healthcare......................................... Cilag AG.................................................. Cilag AG International.................................... Cilag de Mexico, S.A. de C.V. ............................ Cilag Farmaceutica Ltda. ................................. Cilag Holding AG.......................................... Cordis A.B. .............................................. Cordis Europa N.V. ....................................... Cordis Med. App. GmbH .................................... Cordis S.A. .............................................. Cordis S.A. .............................................. Cordis Sp. zoo............................................ Ethicon Endo-Surgery (Europe) GmbH ....................... Ethicon GmbH & Co. KG..................................... Ethicon Limited........................................... Ethicon S.p.A. ........................................... Ethnor (Proprietary) Limited.............................. Ethnor S.A. .............................................. Greiter AG................................................ Greiter Distribution AG................................... Greiter (International) AG................................ Instrumentos Medico-Cirurgico Cordis S.A. ................ Janssen Animal Health BVBA................................ Janssen Biotech N.V. ..................................... Janssen-Cilag A/S......................................... Janssen-Cilag AB.......................................... Janssen-Cilag AG.......................................... Janssen-Cilag A/S......................................... Janssen-Cilag B.V. ....................................... Janssen-Cilag Egypt Ltd. ................................. Janssen-Cilag C.A. ....................................... Janssen-Cilag Farmaceutica, Ltda. ........................ Janssen-Cilag International N.V. ......................... Janssen-Cilag K.K. ....................................... Janssen-Cilag Limited..................................... Janssen-Cilag Limited..................................... Janssen-Cilag Medizinische Information GmbH............... Janssen-Cilag N.V. ....................................... Janssen-Cilag OY.......................................... Janssen-Cilag Pharmaceutical S.A.C.I. .................... Janssen-Cilag Pharma Vertrieb GmbH........................ Janssen-Cilag Pty. Limited................................ Janssen-Cilag S.A. ....................................... Janssen-Cilag S.A. ....................................... Janssen-Cilag S.p.A. ..................................... Janssen Farmaceutica Ltda.................................

JURISDICTION OF ORGANIZATION --------------United Kingdom Switzerland Switzerland Mexico Brazil Switzerland Sweden Netherlands Germany Belgium France Poland Germany Germany Scotland Italy South Africa France Switzerland Switzerland Switzerland Portugal Belgium Belgium Norway Sweden Switzerland Denmark Netherlands Egypt Venezuela Portugal Belgium Japan United Kingdom South Africa Austria Belgium Finland Greece Austria Australia Spain France Italy Brazil

19
JURISDICTION OF ORGANIZATION --------------Mexico Germany Belgium Korea Japan Canada Thailand Belgium Ireland Israel Netherlands Ireland Sweden Switzerland Denmark Mexico

NAME OF SUBSIDIARY -----------------Janssen Farmaceutica, S.A. de C.V. ....................... Janssen-Cilag GmbH........................................ Janssen Internationaal C.V. .............................. Janssen Korea, Ltd. ...................................... Janssen-Kyowa Co., Ltd. .................................. Janssen Ortho Inc. ....................................... Janssen Pharmaceutica Limited............................. Janssen Pharmaceutica N.V. ............................... Janssen Pharmaceutical Limited............................ J-C Healthcare Ltd. ...................................... JHC Nederland B.V. ....................................... JHC Ltd. ................................................. Johnson & Johnson AB...................................... Johnson & Johnson AG...................................... Johnson & Johnson A/S..................................... Johnson & Johnson S.A. de C.V. ...........................

NAME OF SUBSIDIARY -----------------Janssen Farmaceutica, S.A. de C.V. ....................... Janssen-Cilag GmbH........................................ Janssen Internationaal C.V. .............................. Janssen Korea, Ltd. ...................................... Janssen-Kyowa Co., Ltd. .................................. Janssen Ortho Inc. ....................................... Janssen Pharmaceutica Limited............................. Janssen Pharmaceutica N.V. ............................... Janssen Pharmaceutical Limited............................ J-C Healthcare Ltd. ...................................... JHC Nederland B.V. ....................................... JHC Ltd. ................................................. Johnson & Johnson AB...................................... Johnson & Johnson AG...................................... Johnson & Johnson A/S..................................... Johnson & Johnson S.A. de C.V. ........................... Johnson & Johnson de Argentina, S.A.C.e I. ............... Johnson & Johnson China, Ltd. ............................ Johnson & Johnson Consumer N.V./S.A....................... Johnson & Johnson de Colombia S.A. ....................... Johnson & Johnson del Ecuador S.A. ....................... Johnson & Johnson Finance Limited......................... Johnson & Johnson/Gaba B.V. .............................. Johnson & Johnson GmbH.................................... Johnson & Johnson Gesellschaft m.b.H...................... Johnson & Johnson Hellas S.A. ............................ Johnson & Johnson Holding GmbH............................ Johnson & Johnson (Hong Kong) Limited..................... Johnson & Johnson Inc. ................................... Johnson & Johnson Industria e Comercio Ltda............... Johnson & Johnson International S.A. ..................... Johnson & Johnson (Ireland) Limited....................... Johnson & Johnson (Kenya) Limited......................... Johnson & Johnson Korea Ltd. ............................. Johnson & Johnson Kft. ................................... Johnson & Johnson K.K. ................................... Johnson & Johnson Leasing GmbH............................ Johnson & Johnson Lda..................................... Johnson & Johnson Limited................................. Johnson & Johnson Ltd. ................................... Johnson & Johnson Ltd. ................................... Johnson & Johnson Management Ltd. ........................ Johnson & Johnson Medical B.V. ........................... Johnson & Johnson Medical (China) Ltd. ................... Johnson & Johnson Medical G.m.b.H. ....................... Johnson & Johnson Medical GmbH............................ Johnson & Johnson Medical K.K. ...........................

JURISDICTION OF ORGANIZATION --------------Mexico Germany Belgium Korea Japan Canada Thailand Belgium Ireland Israel Netherlands Ireland Sweden Switzerland Denmark Mexico Argentina China Belgium Colombia Ecuador United Kingdom Netherlands Germany Austria Greece Germany Hong Kong Canada Brazil France Ireland Kenya Korea Hungary Japan Germany Portugal United Kingdom India Russia United Kingdom Netherlands China Austria Germany Japan

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JURISDICTION OF ORGANIZATION --------------Korea United Kingdom Malaysia Belgium Australia Argentina France Morocco New Zealand Australia Pakistan Philippines Poland Zimbabwe Canada Brazil

Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson

& & & & & & & & & & & & & & & &

Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson Johnson

NAME OF SUBSIDIARY -----------------Medical Korea Limited................... Medical Ltd. ........................... Medical Mfg. SDN. BHD. ................. Medical NV/SA........................... Medical Pty. Ltd. ...................... Medical S.A. ........................... Medical S.A. ........................... Morocco S.A. ........................... (New Zealand) Limited................... Pacific Pty. Ltd. ...................... Pakistan (Private) Limited.............. (Philippines), Inc. .................... Poland, Inc. Sp. z o.o. ................ (Private) Limited....................... Products Inc. .......................... Produtos Profissionais Ltda.............

NAME OF SUBSIDIARY -----------------Johnson & Johnson Medical Korea Limited................... Johnson & Johnson Medical Ltd. ........................... Johnson & Johnson Medical Mfg. SDN. BHD. ................. Johnson & Johnson Medical NV/SA........................... Johnson & Johnson Medical Pty. Ltd. ...................... Johnson & Johnson Medical S.A. ........................... Johnson & Johnson Medical S.A. ........................... Johnson & Johnson Morocco S.A. ........................... Johnson & Johnson (New Zealand) Limited................... Johnson & Johnson Pacific Pty. Ltd. ...................... Johnson & Johnson Pakistan (Private) Limited.............. Johnson & Johnson (Philippines), Inc. .................... Johnson & Johnson Poland, Inc. Sp. z o.o. ................ Johnson & Johnson (Private) Limited....................... Johnson & Johnson Products Inc. .......................... Johnson & Johnson Produtos Profissionais Ltda............. Johnson & Johnson Professional Products (Pty.) Ltd. ...... Johnson & Johnson (Proprietary) Limited................... Johnson & Johnson Pte. Ltd. .............................. Johnson & Johnson Pty. Limited............................ Johnson & Johnson Research Pty. Limited................... Johnson & Johnson, S.A. de C.V. .......................... Johnson & Johnson S.A. ................................... Johnson & Johnson S.A. ................................... Johnson & Johnson SDN. BHD. .............................. Johnson & Johnson S.p.A. ................................. Johnson & Johnson, Spol.s.r.o. ........................... Johnson & Johnson Taiwan Ltd. ............................ Johnson & Johnson Vision Products AB...................... Johnson & Johnson Vision Products (Ireland) Limited....... Johnson & Johnson (Zambia) Limited........................ Laboratoires Polive S.N.C. ............................... Lifescan Canada Ltd. ..................................... Medos S.A. ............................................... Neutrogena Corp. S.A.R.L. ................................ Neutrogena Provence S.A.R.L............................... Ortho-Clinical Diagnostics GmbH........................... Ortho-Clinical Diagnostics K.K. .......................... Ortho-Clinical Diagnostics Limited........................ Ortho-Clinical Diagnostics S.A. .......................... Ortho-Clinical Diagnostic N.V. ........................... Ortho-Clinical Diagnostic S.A. ........................... Ortho-Clinical Diagnostic S.p.A. ......................... Ortho-McNeil Inc. ........................................ Pharma Argentina S.A. .................................... Princeps S.A.R.L.......................................... P.T. Johnson & Johnson Indonesia..........................

JURISDICTION OF ORGANIZATION --------------Korea United Kingdom Malaysia Belgium Australia Argentina France Morocco New Zealand Australia Pakistan Philippines Poland Zimbabwe Canada Brazil South Africa South Africa Singapore Australia Australia Mexico France Spain Malaysia Italy Czech Republic Taiwan Sweden Ireland Zambia France Canada Switzerland France France Germany Japan England Spain Belgium France Italy Canada Argentina France Indonesia

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JURISDICTION OF ORGANIZATION --------------Luxembourg France Switzerland China China Mexico Australia Netherlands Germany China

NAME OF SUBSIDIARY -----------------RoC International S.A.R.L. ............................... RoC S.A. ................................................. The R.W. Johnson Pharmaceutical Research Institute........ Shanghai Johnson & Johnson Pharmaceuticals Limited........ Shanghai Johnson & Johnson Ltd. .......................... Surgikos, S.A. de C.V. ................................... Tasmanian Alkaloids Pty. Ltd. ............................ Taxandria Pharmaceutica B.V. ............................. Woelm Pharma GmbH & Co.................................... Xian-Janssen Pharmaceutical Limited.......................

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NAME OF SUBSIDIARY -----------------RoC International S.A.R.L. ............................... RoC S.A. ................................................. The R.W. Johnson Pharmaceutical Research Institute........ Shanghai Johnson & Johnson Pharmaceuticals Limited........ Shanghai Johnson & Johnson Ltd. .......................... Surgikos, S.A. de C.V. ................................... Tasmanian Alkaloids Pty. Ltd. ............................ Taxandria Pharmaceutica B.V. ............................. Woelm Pharma GmbH & Co.................................... Xian-Janssen Pharmaceutical Limited.......................

JURISDICTION OF ORGANIZATION --------------Luxembourg France Switzerland China China Mexico Australia Netherlands Germany China

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ARTICLE 5

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

YEAR DEC 28 1997 DEC 28 1997 2,753 146 3,687 358 2,516 10,563 9,444 3,634 21,453 5,283 1,394 0 0 1,535 10,824 21,453 22,629 22,629 7,152 7,152 2,140 49 120 4,576 1,273 3,303 0 0 0 3,303 2.47 2.41

EXHIBIT 99(b) CAUTIONARY STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 -- "SAFE HARBOR" FOR FORWARD-LOOKING STATEMENTS The Company may from time to time make certain forward-looking statements in publicly-released materials, both written and oral. Forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like "plans," "expects," "will," "anticipates," "estimates" and other words of similar meaning. Such statements may address, among other things, the Company's strategy for growth, product development, regulatory approvals, market position, expenditures, and financial results.

ARTICLE 5

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

YEAR DEC 28 1997 DEC 28 1997 2,753 146 3,687 358 2,516 10,563 9,444 3,634 21,453 5,283 1,394 0 0 1,535 10,824 21,453 22,629 22,629 7,152 7,152 2,140 49 120 4,576 1,273 3,303 0 0 0 3,303 2.47 2.41

EXHIBIT 99(b) CAUTIONARY STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 -- "SAFE HARBOR" FOR FORWARD-LOOKING STATEMENTS The Company may from time to time make certain forward-looking statements in publicly-released materials, both written and oral. Forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like "plans," "expects," "will," "anticipates," "estimates" and other words of similar meaning. Such statements may address, among other things, the Company's strategy for growth, product development, regulatory approvals, market position, expenditures, and financial results. Forward-looking statements are based on current expectations of future events. The Company cannot guarantee that expectations expressed in forward-looking statements will be realized. Some important factors that could cause the Company's actual results to differ materially from those projected in any such forward-looking statements are as follows: Economic factors, including inflation and fluctuations in interest rates and foreign currency exchange rates and the potential effect of such fluctuations on revenues, expenses and resulting margins. Competitive factors, including technological advances achieved and patents attained by competitors and generic competition as patents on the Company's products expire. Domestic and foreign healthcare reforms resulting in pricing pressures, including the continued consolidation among healthcare providers, trends toward managed care and healthcare cost containment and government laws and regulations relating to pharmaceutical reimbursement and pricing generally.

EXHIBIT 99(b) CAUTIONARY STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 -- "SAFE HARBOR" FOR FORWARD-LOOKING STATEMENTS The Company may from time to time make certain forward-looking statements in publicly-released materials, both written and oral. Forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like "plans," "expects," "will," "anticipates," "estimates" and other words of similar meaning. Such statements may address, among other things, the Company's strategy for growth, product development, regulatory approvals, market position, expenditures, and financial results. Forward-looking statements are based on current expectations of future events. The Company cannot guarantee that expectations expressed in forward-looking statements will be realized. Some important factors that could cause the Company's actual results to differ materially from those projected in any such forward-looking statements are as follows: Economic factors, including inflation and fluctuations in interest rates and foreign currency exchange rates and the potential effect of such fluctuations on revenues, expenses and resulting margins. Competitive factors, including technological advances achieved and patents attained by competitors and generic competition as patents on the Company's products expire. Domestic and foreign healthcare reforms resulting in pricing pressures, including the continued consolidation among healthcare providers, trends toward managed care and healthcare cost containment and government laws and regulations relating to pharmaceutical reimbursement and pricing generally. Government laws and regulations, affecting domestic and foreign operations, including those relating to trade, monetary and fiscal policies, taxes, price controls, regulatory approval of new products and licensing. Difficulties inherent in product development, including the potential inability to successfully continue technological innovation, complete clinical trials, obtain regulatory approvals in the United States and abroad, gain and maintain market approval of products and the possibility of encountering infringement claims by competitors with respect to patent or other intellectual property rights which can prelude or delay commercialization of a product. Significant litigation adverse to the Company including product liability claims, patent infringement claims, and antitrust claims. Product efficacy or safety concerns resulting in product recalls or declining sales. The impact of business combinations, including acquisitions and divestitures, and organizational restructuring consistent with evolving business strategies. Issuance of new or revised accounting standards by the American Institute of Certified Public Accountants, the Financial Accounting Standards Board or the Securities and Exchange Commission. This list sets forth many, but not all, of the factors that could impact upon the Company's ability to achieve results described in any forward-looking statements. Investors are cautioned not to place undue reliance on such statements which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statements as a result of future events or developments. 24