1. Johnson & Johnson Justin Quaglia Analyst, Non-Cyclical Sector Madison Investment Fund

2. Objective A stable and strong company that meets all the needs of a stock an investor should have going into a recession A stable and strong company that meets all the needs of a stock an investor should have going into a recession DIVERSIFICATION-not only produces medication, but also medical equipment, and human staple goods DIVERSIFICATION-not only produces medication, but also medical equipment, and human staple goods Unlike many other pharmaceutical companies, they are not in big trouble with patents Unlike many other pharmaceutical companies, they are not in big trouble with patents Proven successful during the recent recessions Proven successful during the recent recessions

3. Pharmaceutical Plague 2007-2010: Disappointing, dissipating, and decaying time for many pharmaceutical companies around the world 2007-2010: Disappointing, dissipating, and decaying time for many pharmaceutical companies around the world Key drugs that provide profit and revenue will be losing their patent protection Key drugs that provide profit and revenue will be losing their patent protection Allows these medications to go generic which will provide the consumer with the same medication at a cheaper and more reasonable price Allows these medications to go generic which will provide the consumer with the same medication at a cheaper and more reasonable price

4. Pharmaceutical Plague Many companies are not showing any positive signs in R&D Many companies are not showing any positive signs in R&D Blockbuster drugs are lacking Blockbuster drugs are lacking Even if they do break through, they are being shut down by the FDA for undesired and dangerous side effects Even if they do break through, they are being shut down by the FDA for undesired and dangerous side effects

5. Company Overview The world's largest healthcare group The world's largest healthcare group R&D, manufacture, and sale of a range of products in the healthcare field R&D, manufacture, and sale of a range of products in the healthcare field Operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics Operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics Not only produce pharmaceuticals but human staple goods as well Not only produce pharmaceuticals but human staple goods as well They have more than 250 operating companies They have more than 250 operating companies Sell products in 57 countries throughout the world Sell products in 57 countries throughout the world

6. Key Stats Market Cap: 177.86B 52 Week High: 68.85 52 Week Low: 59.72 Average Volume: 13.63M P/E: 17.12 F P/F: 14.94 Beta: 0.12 EPS: 3.63 Dividend: 0.41 Yield: 2.67% Shares: 2.86B Price: 62.15

7. Product Categories Allergies Baby Care Dental Care Diabetes Care Feminine Hygiene Gastrointestinal Nutritional Orthopedics Prescription Drugs Vision Care Wound Care Colds and Flu Cardiology Denture Care Family Planning First Aid Medial Devices/Diagnostics Oncology Pain Reliever Skin and Hair Care Women’s Health

8. New Release Intelence- HIV drug for patients with resistance to other therapies (NNRTIs) Intelence- HIV drug for patients with resistance to other therapies (NNRTIs) Patients need new options because HIV can mutate to resist existing treatments Patients need new options because HIV can mutate to resist existing treatments Tens of thousands of patients worldwide have resistance to NNRTIs and could be candidates for Intelence Tens of thousands of patients worldwide have resistance to NNRTIs and could be candidates for Intelence FDA approved Intelence for use with other AIDS drugs FDA approved Intelence for use with other AIDS drugs Close to 40 million people are infected with HIV Close to 40 million people are infected with HIV

9. Medications (Top Sellers) RISPERDAL CONSTA (June) and INVEGA, both antipsychotic medications RISPERDAL CONSTA (June) and INVEGA, both antipsychotic medications TOPAMAX, an antiepileptic and a treatment for the prevention of migraine headaches (March 2009) TOPAMAX, an antiepileptic and a treatment for the prevention of migraine headaches (March 2009) REMICADE, for the treatment of a number of immune mediated inflammatory diseases REMICADE, for the treatment of a number of immune mediated inflammatory diseases VELCADE, a treatment for multiple myeloma VELCADE, a treatment for multiple myeloma CONCERTA, a treatment for attention deficit hyperactivity disorder CONCERTA, a treatment for attention deficit hyperactivity disorder LEVAQUIN, an anti-infective LEVAQUIN, an anti-infective

10. Newly Acquired Introduced 600 products and line extensions under its consumer business just this year Introduced 600 products and line extensions under its consumer business just this year Rolaids, Rogaine, Sudafed, Visine, Neosporin, Listermint, Listerine, Bengay, and Benadril just to name a few Rolaids, Rogaine, Sudafed, Visine, Neosporin, Listermint, Listerine, Bengay, and Benadril just to name a few Always evaluating licensing and acquisitions Always evaluating licensing and acquisitions Highly respected for making business deals/buying/selling operating companies Highly respected for making business deals/buying/selling operating companies

11. In the Pipeline 8 drugs in early FDA approval stages 8 drugs in early FDA approval stages 20 drugs in Phase III of FDA approval 20 drugs in Phase III of FDA approval Could be as soon as 12 months before release Could be as soon as 12 months before release 4 drugs have received FDA approval for releases in 2008 4 drugs have received FDA approval for releases in 2008

12. Competitors StatisticsJNJMRKNVS Market Cap179.65b101.62b113.68b Employees119,00060,00098,200 Quarterly Rev Growth 16.60%12.30%N/A Revenues61.10b24b38.95b Gross Margin70.94%76.10%72.50% EBITDA17.75b8.08b10.16b Operating Margins24.90%25.22%20.37% Net Income10.58b5.38b6.62b EPS3.632.465.13 P/E17.1218.989.79 PEG1.581.49.94 P/S2.984.352.93 Source: Yahoo Finance

13. 1 Year Chart A B C

14. JNJ vs. S&P 500 Over 2007

15. Performance in 2001 Recession Had a 2:1 stock split during the recession

16. Management Weldon Williams- (1971) CEO Weldon Williams- (1971) CEO Joined the Company in 1971 Joined the Company in 1971 Served in several sales, marketing and international management positions Served in several sales, marketing and international management positions Dominic Caruso - (1999) CFO & Vice President of Finance Dominic Caruso - (1999) CFO & Vice President of Finance Previously VP of the Finance for the Medical Devices and Diagnostics Previously VP of the Finance for the Medical Devices and Diagnostics KPMG KPMG Joined in October of 1999 through the acquisition of Centocor (has been with that company since 1985) Joined in October of 1999 through the acquisition of Centocor (has been with that company since 1985) Christine Poon - (2000) Vice Chairman of the Board Christine Poon - (2000) Vice Chairman of the Board Served in various management positions at Bristol-Myers Squibb Company for 15 years, most recently as President of International Medicines before coming to JNJ Served in various management positions at Bristol-Myers Squibb Company for 15 years, most recently as President of International Medicines before coming to JNJ Strong sense of seniority

17. Track Record of Performance Exceptionally consistent performance Exceptionally consistent performance 75 consecutive years of sales increases 75 consecutive years of sales increases 24 consecutive years of earnings increases 24 consecutive years of earnings increases 45 consecutive years of dividend increases 45 consecutive years of dividend increases Few, if any companies, can claim this Few, if any companies, can claim this

18. Q4 and Fiscal 2007 Earnings Announced record sales of $16.0 billion for Q4 2007, an increase of 16.6% YoY Announced record sales of $16.0 billion for Q4 2007, an increase of 16.6% YoY Operational growth was up 11.9% Operational growth was up 11.9% Domestic sales were up 9.1%, while international sales increased 25.8% in 2007 Domestic sales were up 9.1%, while international sales increased 25.8% in 2007 Worldwide sales for the year 2007 were $61.1 billion, an increase of 14.6% over 2006 Worldwide sales for the year 2007 were $61.1 billion, an increase of 14.6% over 2006 Pharmaceutical sales- $25 billion, and increase of 7% Pharmaceutical sales- $25 billion, and increase of 7% MD&D sales- $21.7 billion, increase of 7.2% MD&D sales- $21.7 billion, increase of 7.2% Consumer segment- $14.5 billion, increase of 48% Consumer segment- $14.5 billion, increase of 48%

19. Q4 and Fiscal 2007 Earnings Net earnings and diluted earnings for Q4 2007 were $2.4 billion and $.82 respectively, representing increases of 9.5% and 10.8% Net earnings and diluted earnings for Q4 2007 were $2.4 billion and $.82 respectively, representing increases of 9.5% and 10.8% Sales results reflect the strong performance of LISTERINE and the launch of whitening products; Baby and Kids Care products; the skin care lines of AVEENO, CLEAN & CLEAR, and NEUTROGENA; SPLENDA sweetener; ROGAINE hair regrowth treatment; and IMODIUM A-D Sales results reflect the strong performance of LISTERINE and the launch of whitening products; Baby and Kids Care products; the skin care lines of AVEENO, CLEAN & CLEAR, and NEUTROGENA; SPLENDA sweetener; ROGAINE hair regrowth treatment; and IMODIUM A-D Significant progress in their pipeline Significant progress in their pipeline Successful integration of Pfizer Consumer Healthcare Successful integration of Pfizer Consumer Healthcare Increased profits 48% Increased profits 48%

20. Financial Highlights

21. Balance Sheet (in millions) 20072006200520042003 Dates12/31 Cash and Short Term Investments$4,083$16,055$9,203$5,377$2,894 Trade Accounts Receivable, Gross$8,872$7,174$7,034$6,766$5,590 Total Receivables- Net$8,712$7,010$6,831$6,574$5,399 Total Inventory$4,889$3,959$3,744$3,588$3,303 Other Curr. Assets, Total$2,094$1,931$1,737$1,526$1,419 Total Current Assets$22,975$31,480$27,320$22,995$19,266 Buildings$7,347$5,875$5,907$5,242$4,364 Machinery/Equipment$13,108$10,835$10,455$9,638$7,869 Property/Plant/ Equipment-Net$13,044$10,830$10,436$9,846$8,710 Total Assets$70,556$58,864$53,317$48,263$40,556 Accounts Payable$5,691$4,315$5,227$4,966$3,621 Total Current Liabilities$19,161$12,635$13,927$13,448$11,449 Total Long Term Debt$2,014$2,017$2,565$2,955$2,022 Total Debt$6,593$2,685$2,845$4,094$4,139 Total Liabilities$31,238$20,154$21,504$21,384$17,859 Total Equity$39,318$38,710$31,813$26,869$22,697 Total Liabilities & Shareholders' Equity$70,556$58,864$53,317$48,263$40,556

22. Income Statement (in millions) 20072006200520042003 Dates12/31 Total Revenue$61,095$53,324$50,514$47,348$41,862 Research & Development$7,680$7,125$6,462$5,344$4,684 Purchased R&D Written-Off$807$559$362$18$918 Restructuring Charge$745$0--- Unusual Expense (Income)$1,552$559$362$18$918 Total Operating Expense$47,812$38,737$37,398$35,017$31,554 Operating Income$13,283$14,587$13,116$12,331$10,308 Net Income$12,088$11,053$10,060$8,180$7,197

23. Cash Flow (in millions) 20072006200520042003 Dates12/31 Net Income12, 08811,05310,0608,1807,197 Purchased R&D55936218918189 Inventories2103961139109 Total Cash from Operations14,88011,79911,08910,5958,176 Capital Expenditures2,6662,6322,1752,2622,099 Acquisition of Business18,0239875802,812478 Sale of Fixed Assets511154237335156 Sale/Maturity of Investments4269,18712,0618,0627,353 Total Cash from Investing20,2912792,3474,5262,197 Total Cash Dividends Paid4,2673,7933,2512,7462,381 Short Term Debt, Net3,7524837771,0721,799 Long Term Debt, Net7190378827223 Total Cash from Financing6,1094,4435,1063,8636,953 Foreign Exchange Effects180225190277110 Net Change in Cash11,9726,8523,8262,486864

24. Accelerating Growth in 2008 “Back Up Products” “Back Up Products” Patients getting used to certain drugs, especially antipsychotic Patients getting used to certain drugs, especially antipsychotic RISPERDAL CONSTA and TOPAMAX RISPERDAL CONSTA and TOPAMAX Prevents generics from taking over Prevents generics from taking over Make their own generics Make their own generics Will continue to pull in a strong profit from loss of patent protection Will continue to pull in a strong profit from loss of patent protection

25. 2008 Forecast Expects earnings per share for 2008 to total $4.39 to $4.44 Expects earnings per share for 2008 to total $4.39 to $4.44 Analysts have been looking for earnings of $4.42 a share for 2008 Analysts have been looking for earnings of $4.42 a share for 2008 Benefit from the relatively weak US dollar Benefit from the relatively weak US dollar Expects at least 60% of its predicted 4-5% sales growth this year to come from foreign exchange gains Expects at least 60% of its predicted 4-5% sales growth this year to come from foreign exchange gains

26. Investment Rationale Diversity Diversity Stability (low Beta) Stability (low Beta) Profiting acquisition Profiting acquisition Determination for consistent improvement Determination for consistent improvement Strong pipeline Strong pipeline

27. “Safe Haven” “A safe haven away from volatility” “A safe haven away from volatility” Goldman Sachs Goldman Sachs ``JNJ certainly could be a haven in a bear market because of its diversity'' ``JNJ certainly could be a haven in a bear market because of its diversity'' Raymond James & Associates Raymond James & Associates Recommendation: BUY Recommendation: BUY