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Good morning and welcome; I am Louise Mehrotra, Vice President of Investor Relations for Johnson & Johnson. And it is my pleasure to be with you this morning to review the fourth quarter 2005 results. With me on the podium are our host for today's meeting, Bill Weldon, Chairman of the Board of Directors and Chief Executive Officer of Johnson & Johnson. Christine Poon, Vice Chairman and Worldwide Chairman Medicines and Nutritionals, and Bob Darretta, Vice Chairman and Chief Financial Officer.

A few logistics before we get into the details. The audio and visuals from this presentation are being made available to a broader audience via a webcast, accessible through the Investor Relations section of the Johnson & Johnson website. I will begin by briefly reviewing highlights of the fourth quarter and full year results for the Corporation and fourth quarter highlights for our three business segments. Following my remarks, Bill Weldon will briefly comment on the full year results and his views on the outlook for the Corporation. At the completion of Bill's remarks Bob Darretta will provide some additional commentary on the quarter as well as the guidance for 2006. We will then open the floor to your questions. Bill Weldon is our host today so I encourage you to address your questions to him on more strategic issues.

We will conclude our formal presentation at approximately 9:30 and following Q&A with some final remarks by Bill, we will conclude the meeting at 10 AM. Distributed with a copy of the press release that you just received is a schedule with actual revenues for major products and/or business franchises. For the listening audience these are available on the Johnson & Johnson website as of the copy of the press release.

Before I get into the results, let me remind you that some of the statements made during this meeting may be considered forward-looking statements. The 10-K for the fiscal year 2004 identifies certain factors that could cause the Company's actual results to differ materially from those projected in any forward-looking statements made during this meeting. The 10-K and subsequent filings are available through the Company or online. Last item, during the meeting non-GAAP financial measures may be used to provide information pertinent to ongoing business performance. These measures are reconciled to GAAP measures and are available on the Johnson & Johnson website.

Now here are the results for the fourth quarter of 2005. If you would refer to your copy of the press release let's begin with the schedule titled "Supplementary Sales Data." Worldwide sales to customers were $12.6 billion for the fourth quarter of 2005, down 1.1% as compared to the fourth quarter of 2004. Our operational growth was 0.7% and currency had a negative impact of 1.8 points. As we pointed out last year, our 2004 results benefited from the inclusion of a 53rd week. To remind you, the Johnson & Johnson fiscal calendar is based on four, 13-week quarters resulting in an extra week every five or six years. We estimate the 2004 quarter growth rate was enhanced by approximately 2 to 3% and the year by less than 1%. The 2005 fourth quarter operational revenue growth would have been approximately 3% adjusting for the impact of the 53rd week.

If you'll now turn to the schedule showing sales by geographic area you can see that the U.S. was down 4.2%. In regions outside the U.S. our operational growth was 7.5% while the effect of currency exchange rates negatively impacted our reported results by 4.4 points. On an operational basis, all markets outside the U.S. delivered solid growth with especially strong growth of nearly 13% in Asia-Pacific, Africa regions.

If you'll now turn to the consolidated statement of earnings fourth quarter our net earnings on a GAAP basis for the fourth quarter of 2005 were $2.2 billion and earnings per share were $0.73. Increases of 79% and 78% respectively.

Please direct your attention to the box section of the schedule where we have provided pro forma earnings information that more appropriately reflects the results achieved in the quarter. This schedule restates the year-to-year comparisons to exclude special or onetime item. In the fourth quarter of 2005 it excludes $6 million in IP R&D. In the fourth quarter of 2004 it excludes the tax expense associated with the funds repatriated under the Jobs Creation Act of 2004. Adjusting for these items net earnings and earnings per share would have been $2.2 billion and $0.73 respectively representing increases of 9.1% and 9% as compared to the fourth quarter of 2004.

Some comments relative to earnings before we move to the segment highlights. Cost of goods sold at 28.7% is a 40 basis point improvement as compared to the same period in 2004. This improvement primarily reflects gains in our medical devices and diagnostic segments related to positive mix as well as ongoing cost containment activity. Selling, marketing and administrative expenses at 36.2% of sales represent an improvement of 30 basis points as compared to the same period in 2004. This is due primarily to cost containment activities in the pharmaceutical segment, partially offset by investment spending in the Medical Devices and Diagnostics segments.

The rate of spending in R&D was 15.7% of sales for the fourth quarter of 2005, 220 basis points higher than the same period in 2004. Our investment in research and development reflects a significant number of projects in late stage development that we discussed with you earlier this year, and our commitment to aggressively bringing these and future products to the market in a timely fashion. Interest income and expense of $169 million was an increase of $157 million from the fourth quarter of 2004, primarily due to a combination of higher interest rates and a higher cash balance.

If I can again draw your attention to the box segment of the schedule, the performance in the quarter benefited from a lower tax rate of 17.3% versus 23.6% in the fourth quarter of 2004. Bob Darretta will provide comments during his remarks.

Shifting to full-year results, worldwide consolidated sales to customers for 2005 were $50.5 billion, an increase of 6.7% over sales of $47.3 billion in 2004. Operational growth was 6% with an additional 0.7 points contributed by currency. In 2005, on a reported basis we achieved record earnings of $10.4 billion or $3.46 per share compared with $8.5 billion and $2.84 per share in 2004.

Let me again direct your attention to the box section of the consolidated statement of year-to-date earnings. Excluding charges for in-process research and development associated primarily with the acquisition of Peninsula Pharmaceuticals, TransForm Pharmaceuticals and Closure Medical as well as the adjustment to the tax reserve related to the technical correction associated with the American Jobs Creation Act of 2004, net earnings for 2005 were $10.5 billion or $3.50 per share. Up 13.3% and 12.9% respectively as compared to the same period in 2004.

Turning now to the business segment highlights for the fourth quarter. Let's begin with the consumer segment. Worldwide consumer segment sales grew 2% in the fourth quarter of 2005 with operational growth of 2.8% partially offset by the negative effect of currency movements. U.S. sales declined 0.9% while international sales grew 6.5% operationally. As we have mentioned in our prior meetings, in 2005 the responsibility for marketing a group of over-the-counter products outside the U.S. has been shifted from the pharmaceutical group to the McNeil OTC business. This shift contributed approximately 150 basis points to the growth in the consumer segment and more specifically about 400 basis points to the McNeil OTC's and nutritionals results. This reduced the pharmaceutical segment growth by about 50 basis points.

Our adult skin and haircare business continued to show solid growth with operational sales up 8% in the fourth quarter of 2005. In the U.S. solid performance from Neutrogena complemented by very strong results from Aveeno were the major contributors to the growth. New products launched throughout 2005 continue to drive the growth in our skincare franchise. Outside the U.S. major drivers of growth were Johnson's adult products and RoC. Baby and kid's care products grew on an operational basis by 3% in the fourth quarter with similar rates of growth both in and outside the U.S. The strongest contributors of growth outside the U.S. were lotions and creams primarily due to the successful launch of soft lotion in Japan and the continued strength of milk lotions in China.

In the U.S. positive results were achieved with cleansers and babycenter.com. In December the Johnson's soothing naturals line was launched. The McNeil OTC and nutritionals franchise sales were flat for the fourth quarter. Adjusting for the shift in responsibility for selected OTC products that I mentioned earlier sales declined by approximately 4%. The decline was primarily the result of the state and retail restrictions on sale of products containing pseudoephedrine. Splenda, our no-calorie sweeter continued to achieve strong growth with tabletop shares in the U.S. of 59% in the fourth quarter, up 6 points from the same period last year.

Our women's health franchise which consists primarily of internal and external sanitary protection and the KY and Monistat lines achieved operational growth of 2% when compared to the fourth quarter of 2004. Growth in the U.S. of 2% was the result of new products in the KY line partially offset by modest declines in the internal sanitary protection line. Outside the U.S. operational sales growth of approximately 3% was due to continued growth of the external sanitary protection line.

That concludes the segment review for the consumer group. Next I will review the pharmaceutical segment results. Worldwide net sales for the fourth quarter of $5.5 billion were down 4.5% on an operational basis as compared to the same period in 2004. Negative currency reduced sales 1.6 points resulting in a reported decline of 6.1%. Sales in the U.S. declined 10.2% while sales outside the U.S. increased on an operational basis by 7.6%. Generic competition significantly impacted year-to-year comparisons for Duragesic, oral contraceptive, Ultracet and Sporanox. The combined effect on the sales results for these four products was an approximately 6 point reduction to the fourth quarter 2005 worldwide pharmaceutical sales and approximately 8 point reduction to the U.S. sales.

Procrit Eprex had combined operational decline of 4% with Procrit down 7% and Eprex operational sales essentially flat. The approval of the once-weekly administration for Eprex in Europe contributed to stabilizing Eprex sales. Procrit share was approximately 47% in the fourth quarter of 2005 as compared to 55% share in the fourth quarter of 2004. Procrit sales in the oncology clinics continue to be negatively impacted by our competitors' contracting strategy.

Let me now move on to discuss some of the growth drivers. Risperdal, our agent for psychotic disorders, had operational growth of 9% compared to the same period a year ago driven by strong operational growth outside the U.S. of 20%. Sales in the U.S. were flat. Sales in all markets benefited from the continued success with Risperdal Consta, our long-acting injectable formulation achieving fourth quarter sales of approximately $170 million, up over 60% on an operational basis. Risperdal Consta is now approved in more than 70 countries around the world. Continued country approvals outside the U.S. for the use of Risperdal in bipolar mania as well as disruptive behavioral disturbances in both the elderly and children have also been a key factor in product growth.

Remicade, a biologic approved for the treatment of a number of immune mediated inflammatory diseases grew by 16% when compared to the fourth quarter of 2004. Growth in the U.S. was 8% while sales to our partners for markets outside the U.S. grew by 50% due in part to an inventory build. Strong market growth in the anti-TMF category continues to be fueled by new uses such as psoriasis, psoriatic arthritis and ulcerative colitis. Remicade currently has approval for ten indications. In the fourth quarter the European Commission granted approval of Remicade for the treatment of moderate to severe plaque psoriasis. On October 11th Centocor filed a supplemental, biologic application with the FDA for the use of Remicade in structural damage in psoriatic arthritis, and on November 22nd for pediatric Crohn's disease.

Topamax achieved operational growth of 9% with similar rates of growth both in and outside the U.S. Topamax is approved for the use in treatment of epilepsy and migraine prophylaxis. The migraine prevention indication continues to be a key growth driver in all markets. Topamax is now approved for migraine prevention and over 40 countries worldwide. Anti-infectives grew 7% operationally during the fourth quarter with growth in the U.S. of 9%. In the U.S. Levaquin benefited from strong market growth as well as an additional FDA approval in August for short-course treatment of acute bacterial sinusitis. In December, a paragraph four patent challenge against Levaquin was defeated and the Levaquin patent was upheld. That completes the highlights for the pharmaceutical segment. I will now move on to the Medical Devices and Diagnostics.

Worldwide, Medical Devices and Diagnostics segment sales to customers were $4.8 billion, representing operational growth of 6.3% in the fourth quarter of 2005. Currency negatively impacted sales growth by 2.6 points to bring reported growth to 3.7%. Sales in the U.S. grew by 4.8% while sales outside the U.S. increased on an operational basis by 7.8%.

Let me start with a review of the results of our Cordes business which was a major contributor to the overall segment growth. Cordes achieved operational growth of 13% as compared to the same period last year. In the U.S. sales grew by 4% while sales outside the U.S. achieved operational growth of 23%. Cyper, our Sirolimus-eluting stent. the leader in the drug-eluting stent market with a worldwide market share of 51% was the major driver. Cypher sales in the U.S. were $340 million representing an estimated 46% of the U.S. drug-eluting stent market. This represents a substantial increase from the fourth quarter of 2004 when our U.S. share was at 38%. Strong clinical evidence supporting the benefit of Cypher has been the major driver behind Cypher's continued success.

Cypher sales outside the U.S. were approximately $330 million representing an estimated 58% share of the international drug-eluting stent market. Our Cypher sales in Japan where we are alone in the drug-eluting stent market were approximately $130 million, while our sales in the other markets outside the U.S. were $200 million. Our share of the drug-eluting stent market outside the U.S. excluding Japan is approximately 46%, down slightly from the third quarter. In the third quarter a new competitor entered the drug-eluting stent market. We estimate that it has captured approximately 7% of the international market excluding Japan.

In addition, the Biosense Webster business had an excellent quarter with 20% operational growth led by strong results with navigational catheter products. During the quarter Biosense Webster received approval for the use of the Celsius RNT diagnostic ablation steerable tip catheter in radio frequency ablation. When used with a Niobe magnetic navigation system the physician can record the intracardiac electrograms of the heart and ablate targeted areas that require treatment.

Moving on to our DePuy franchise, DePuy had operational growth of 5% when compared to the same period in 2004 with the U.S. growing 3% and the businesses outside the U.S. growing operationally by 7%. Operational growth of nearly 6% in joint reconstruction was a result of knees growing operationally 6% and hips grew by 5%.

Mitek sports medicine products had strong operational growth of 11% with solid results in tissue management, anchors and knees systems complemented by sales of Orthovisc which was transferred to Depuy in mid 2005.

Ethicon achieved worldwide operational growth of 5% in the fourth quarter as compared to the same period in 2004. This was paced by U.S. sales growth of 12%. A key contributor to the U.S. growth in the quarter was continued penetration with several suture and mesh products including MicroPlus, our antibacterial coated suture, Proceed tissue separating mesh and the multipass needle.

Thermobond sales in the quarter grew more than 20%. Thermobond is now being copromoted by our pharmaceutical hospital sales force. Also contributing to the fourth quarter results were hemostasis products in our wound management business unit which showed very strong growth over the same period in 2004. Ethicon Endosurgery achieved operational growth of 5% in the fourth quarter of 2005 as compared to the same period in 2004. U.S. growth was 1% with operational growth of 8% outside the U.S. Growth was driven by strong performances of the endocutter, a key product in performing bariatric procedures and the Sterrad systems product line from advanced sterilization products.

Lifescan achieved operational growth of 5% in the fourth quarter of 2005 as compared to the same period in 2004. It is paced by growth in the U.S. market of 8%. OneTouch Ultra has been a major driver of growth both in and outside the U.S. LifeScan holds U.S. market leadership with strip share of 34.9% as of the third quarter of 2005. Growth outside the U.S. was negatively impacted by a sharp reduction in retail trade inventory.

Ortho clinical diagnostics achieved operational growth of 2% in the fourth quarter of 2005 led by U.S. growth of 6%. International sales declined 1% on an operational basis. The Vitro's suite of products in the immunodiagnostics franchise achieved strong results in the fourth quarter. Our vision care franchise achieved a fourth quarter operational sales increase of 7% with U.S. growing by 5% and the international markets growing by 8%. U.S. results were driven by strong growth of Advance with Hydraclar, the third quarter launch of Acuvue Oasys with Hydraclear Plus and continued success with Acuvue Advance for astigmatism. Outside the U.S. the key driver was continued strong growth in Japan and other markets in Asia-Pacific with one-day Acuvue Define as well as the September launch of Acuvue Moist in Japan.

That concludes the review of the results for the Medical Devices and Diagnostic segment and concludes the segment highlights for Johnson & Johnson's fourth quarter of 2005. It is my pleasure to now introduce Bill Weldon, Chairman and Chief Executive Officer of Johnson & Johnson.

Thanks, Louise. Good morning everyone. We are here with you today to review Johnson & Johnson's full year for 2005 and provide context for 2006 and beyond. Louisa has reviewed with you our results for the fourth quarter of 2005 and you have our full year results as reported in the press release. For my discussion this morning I want to assure you that not only have we achieved excellent full year earnings growth for 2005, but more importantly we are hard at work and have been making the investments required to keep our businesses strong through some challenging times ahead.

As you have seen our overall results in 2005 were solid. Sales grew to a record $50.5 billion, a growth rate of nearly 7% with operational growth of 6%. On a pro forma basis our earnings of $10.5 billion grew by over 13% and our earnings per share of $3.50 grew by nearly 13%. An improvement in mix towards higher margin products, productivity increases driven by cost containment efforts and an assist from interest and other income all helped drive impressive earnings growth in a year when sales growth was below historical levels.

Even more impressive perhaps in a year of slower top line growth was our ability to invest aggressively for the future while still achieving healthy growth in earnings. Across our business segments we invested $6.3 billion in R&D, a $1.1 billion increase or more than 21% above our investment in 2004. Our cash flow from operations in 2005 continued to be strong at $11.9 billion. Free cash flow, cash flow left after making necessary capital investments was a healthy $9.2 billion. Even as we increased our dividend to shareholders by nearly 16% we were able to end the year with a very strong net cash position of $13.5 billion, giving us the capability to continue important business building investments.

I would like to take this opportunity to compliment the men and women of Johnson & Johnson for facing into our business challenges directly and contributing to our strong business performance over the past year. The creativity and resolve that our employees have consistently shown will continue to be the engine that propels us forward. A solid performance in 2005 does not mask the fact that it was a year filled with significant challenges, many of which are endemic to our industry. Patent expirations are a reality for all innovative companies. This past year we lost patent protection for Duragesic, our treatment for chronic pain. We are seeing increasing risk aversion among regulators influenced by growing legal and political sentiment that medical treatments should somehow be risk-free. Our outlook for 2006 and beyond has been adversely impacted by regulatory outcomes in 2005 associated with Zarnestra, Oros Hydromorphone and more recently dapoxetine. In 2005, two of our products were adversely impacted under the pressure of the siren song for risk-free medicines. These were Natrecor, the only medicine approved in the United States for symptoms of acutely decompensated heart failure and Ortho Evra, , our contraceptive patch.

But we're gaining experience in learning how to address these sound byte public attacks, our most potent weapon remains clinical data and outcomes, still the proper basis we believe for the resolution of medical disputes. We remain committed to making complete information available to patients and their physicians to assist their medical decisionmaking.

On the purely competitive front we have not as yet succeeded in returning Procrit to growth; however we remain committed to the product category and we are working to expand the market and to expand our label to include critical care patience. Affordability of medical care continues to be a challenge for patients, payors, employers and manufacturers alike. During 2005 reimbursement challenges slowed the rate of adoption of two important medical innovations. Our Charite artificial disc and long-acting Risperdal Consta. Once again we believe the key to addressing the issue lies in developing and communicating strong clinical evidence.

Finally, the intellectual property arena remains a source of challenge and uncertainty. In this area during 2005 we lost exclusivity on Ultracet years in advance of patent expiration. IP remains an ongoing challenge not only for us but also for all companies focused on innovation in health care. We remain committed to a system that rigorously protects intellectual property rights which are the essential fuel for health innovation in the private sector.

Despite these challenges in the year just past we have achieved a number of important successes. Our earnings growth and free cash flow were healthy. We achieved this growth while aggressively investing in the future and I would like to highlight some of these investments later this morning. Building on a strong base we established a number of additional strategic partnerships and concluded a number of targeted acquisitions. We built and continued to build a number of next-generation products across all our business segments. And on another front we have made considerable progress in improving the balance of our operating profits across our business segments.

You can see on this slide to change in profit contribution by our three business segments. You will note that from 2000 to 2005 operating profits have more than doubled. And even more noteworthy, the profit contribution from Medical Devices and Diagnostics has increased more than threefold. And let me now spend a few minutes touching on 2005 highlights for each of our business segments. I will then turn to an overview of the drivers of future growth in each of the segments.

Our Medical Device and Diagnostic segment performed exceptionally well this past year achieving operational sales growth of over 12%. Perhaps even more impressive was the broad-based strength achieved across the segment with five of the seven MD&D franchises growing sales at double-digit rates. We are particularly pleased that our Cypher Sirolimus-eluting stent has regained worldwide market leadership based on the strength of a half decade of positive clinical results. A total of 1.7 million patients around the world have now benefited from treatment with Cypher.

We also announced a number of key business building acquisitions, notably our purchase of Closure Medical Corporation in the medical adhesives area and our pending acquisition of Animas Corporation which will broaden our reach in the diabetes management market. In our pharmaceuticals businesses we have continued aggressive work in building for future growth. Core products in our portfolio set the stage by growing strongly on the basis of new indications and increasing market penetration. Notably Risperdal Consta, Remicade, Topamax, Concerta and Levaquin. We also received approval for expanded indications in the United States for Remicade for the use of treatment of ulcerative colitis and psoriatic arthritis; Levaquin for short course treatment in sinusitis and Topamax for uses in monotherapy treatment and epilepsy.

In 2005 we completed a number of regulatory filings including several in the United States. Paliperidone ER for the treatment of schizophrenia, P&C 114 a protease inhibitor for treatment of HIV AIDS; Ionsys for use in the treatment of postoperative pain as well as two new indications for Remicade. We have continued to develop our pharmaceutical R&D pipeline and we now have a total of 75 products in full development including 18 NME's.

An important part of our strategy continues to involve acquisitions, licensing and partnerships. In 2005 we acquired Peninsula and Transform Pharmaceuticals. In addition we entered into licensing and partnership agreements with a number of companies including Bayer, Biovail, Basilea and Cephalon. And I'll highlight some of these when I discuss growth platforms for the pharmaceutical segment.

Building on a portfolio of well-known global brands, our consumer businesses continued to grow at a solid rate. Operational sales growth for 2005 was nearly 8% and growth was strong once again across all our major consumer franchises. Over the past year consumer product introductions continued at an intense rate with approximately 250 significant new product launches globally. We strengthened our portfolio advanced consumer products in 2005 most notably with the acquisition of the Rembrandt brand of oral care products. Looking across these segments I would like to point out the extent to which our broad base helps drive consistent performance. When one area of the business is challenged another area is likely to be growing vigorously. Our performance this past year provides a clear demonstration of the greater consistency afforded by our broad-based business model. Our breadth also allows us to pursue growth opportunities wherever they exist by working closely with our customers to address unmet needs in their businesses or therapeutic areas.

As you know, Johnson & Johnson's growth is not limited to any single business segment or to any single medical specialty, therapeutic area or health care economy. Whether the opportunities exist in cutting-edge biologics, in surgical specialties or areas like obesity, nutrition, or colon cancer we pursue the best opportunities for significant sustainable growth. Conceptually our approach to developing our business portfolio is simple. Our companies start by first defining areas of significant unmet need in their respective markets. These areas of unmet needs are often characterized by high demand for innovative solutions and thus high growth areas. Our companies seek leadership positions in these markets through the application of superior science and technology, coupled with strong evidence of clinical and economic benefits.

As you can see here, we have successfully built leadership positions in many significant high-growth markets across all three of our business segments. We built these leadership positions starting with strong internal R&D capabilities. We pair internal R&D with an aggressive program of strategic alliances that allow us to access early stage medical technologies and compounds from our business partners throughout the world. We complement these efforts with selective acquisitions of companies that typically bring important technical, scientific or medical platforms that help drive superior long-term growth. If this sounds simple it really is conceptually. But the capacity to execute this strategy with leaders across hundreds of operating units is what makes Johnson & Johnson uniquely qualified to grow in this way. Our ability to generate exceptional returns from our business portfolio depends on the platforms of growth that we have built into each of our business segments.

At this point I would like to highlight how each of our business segments brings their platforms to life. Let's start with the medical device and diagnostic segment. Before I begin to review our Company's performance let me remind you that we are planning a full day in-depth review of our Medical Device and Diagnostic segment for September of this year. Our medical and devices companies aspire to a simple and compelling vision. Restoring the joys of life. Our strategic focus is on developing life extending and life enhancing technologies. We talked about the importance of a portfolio of growth.

In MD&D we are building a portfolio of differentiated products that deliver clinical and economic value in medical categories with significant unmet medical needs. In MD&D is driving global growth through innovation and market creation. Aggressively pursuing white space opportunities, addressing the needs of emerging markets and, pursuing organic growth through R&D and enhanced growth through licensing and acquisitions. The evidence of this strategy is the changing composition of the portfolio. Over the last decade MD&D has moved away from businesses that are peripheral to therapy and toward those in which we can achieve leadership as a diagnostic or therapeutic standard of care.

As you can see, over the past decade we have moved from a more commodity like hospital supplies business to a proprietary medical specialties focus. Today, we have an excellent portfolio of large and growing businesses and they are well positioned for the future. And let's look at some of these growth platforms for MD&D. DePuy, the world's leader in joint reconstruction and other important orthopedic areas is focused on less invasive more durable and more motion saving solutions. The kinds of orthopedic treatments that will see higher growth in the coming years. Platforms like I Orthopedics support this positioning by affording greater precision and improved outcomes in minimally invasive procedures.

In a unique way DePuy has also tapped the vast experience and resources of Johnson & Johnson in developing responsible direct-to-patient education initiatives to raise awareness of the benefits of joint reconstruction. These innovations build on DePuy's comprehensive portfolio across the orthopedic space. Cordis, our cardiovascular disease franchise created the stent market in 1990s and then reinvented it in 2002, with the introduction of the first drug-eluting stent CYPHER. CYPHER provides a foundation for the franchise's growth through new indications and geographic expansion. Built on the world's most credible library of clinical evidence on outcomes and safety.

Just this week the FDA updated labeling of CYPHER to indicate that there is no increased risk of heart attacks in the use of overlapping CYPHER stents in comparison with bare metal stents and CYPHER is the only drug-eluting stent with this new label. Cordis will also work to move the cardiovascular market towards earlier and better diagnosis in treatment of stenosis. In the peripheral vascular market Cordis expects to define a new standard of care by shifting treatment from surgery to intervention with stents and stent-graphed repair. Strategic acquisitions like Glumend (ph) announced this year will add devices to our portfolio that treat peripheral vascular disease like total chronic occlusion. Ethicon, , long the world's indisputable leader in wound closure is focused on developing advanced tissue repair solutions for underserved medical conditions as well as discrete surgical specialties. Towards this end the franchise has added considerable breadth to its comprehensive portfolio with recent innovations in surgical sealants, hemostats and meshes.

The recent acquisition of Closure Medical Corporation brought with it dermabond topical skin adhesive and a technology platform for future growth in surgical sealants. Ethicon Endosurgery, a business built primarily through internal development is the world leader for procedure-enabling, minimally invasive technologies. It is sharpening its focus on conditions of the digestive, respiratory and reproductive systems. New products are creating new markets and establishing new standards of care for important minimally invasive procedures. For instance the Echelon endocutter 60 facilitates minimally invasive surgical treatment for morbidly obese patients. The contour curved cutter enables surgical procedures deeper in the pelvis for surgical oncology. In the area of natural orifice surgery products like PillCam ESO and our flexible endoscopy products are also leading the way.

The increasing prevalence worldwide of diabetes is alarming and LifeScan, our franchise addressing this global pandemic has broadened its focus from episodic measurement of disease indicators to broad management of the entire diabetes spectrum. New extensions of the one touch brand are bringing affordable blood glucose testing to new geographies. Going forward LifeScan will continue to invest in its core episodic monitoring platform and at the same time establish strong positions in the continuous monitoring and insulin delivery categories. As recently announced acquisition of Onimus Corporation, an insulin delivery company is an important building block of this strategy.

The Ortho clinical diagnostics franchise is succeeding by strengthening its base business. In in-vitro diagnostics products and services and by extending its diagnostic capabilities in early disease identification. For example CellSearch assays identify, enumerate, and characterize circulating tumor cells directly from whole blood. This is the first product on a platform of molecular genetic technologies to improve the diagnosis, staging and therapeutic management of cancer patients.

Other teams in the franchise are focused on new tests in fast-growing patient populations like pre-diabetes metabolic syndrome. Vistakon created the contact lens market and is sustaining its leadership through product line breadth, meaningful innovation and geographic expansion to underpenetrated markets. Future growth will continue fundamental innovation like the HYDRACLEAR wetting technology used in ACUVUE ADVANCE and focus geographic expansion with products like ACUVUE Moist in Japan.

Moving on to our pharmaceutical segment. Our pharmaceutical businesses are focused on bringing superior medicines to market that address important unmet medical needs of patients throughout the world. We are leaders in a broad range of traditional medicines as well as a leader in the important area of biologicals and we have developed leading edge capabilities in drug delivery that support the strength of both of these important areas. As we have grown our pharmaceutical business we have broadened our areas of focus to meeting the needs of people in critical, fast-growing therapeutic areas such as cancer, infectious disease, and HIV AIDS. Solving unmet medical needs requires exactly those capabilities we have been focused on developing. Discovering novel drug targets and novel mechanisms of action; developing and manufacturing bio medicines, innovative drug delivery, combination therapies, outcomes focused research and development, R&D productivity, a clear focus on solutions for patients in developing as well as developed markets.

Over the past several years, through strategic licensing and acquisitions, we have further enhanced our offerings in existing therapeutic categories, as well as established new growth engines for our pharmaceutical business. We have a total of eight therapeutic growth engines in our pharmaceutical segment. We have sustainable leadership positions in four markets that continue to be characterized by high levels of unmet medical need, CNS, pain management, immune mediated inflammatory diseases and anemia. We also have four new global growth engines, each represents an area of high unmet medical need. They are virology, oncology, antibacterials, and cardiovascular disease. And now I would like to take a minute to touch on a few of these areas.

Our CNS franchise is a particularly important therapeutic area with continued growth potential. In this category we are focused on developing new compounds, indications and formulations that will sustain our leadership position. For instance we continue to develop new indications for Risperdal Consta and to expand penetration in markets throughout the world. We have recently filed a new drug application for Paliperidone ER, an extended release formulation of our next-generation antipsychotic. In addition we are in late-stage development of a further improvement in long-acting injectable technology through Paliperidone. In our core portfolio we anticipate that Topamax will continue to be a strong growth driver into 2009 when its patent expires.

We are also excited about a new first-in-class anticonvulsant in full development that has potential for treatment of epilepsy and migraine prophylaxis. We have long been a leader in pain management and we continue to develop a diverse array of future products to meet the pressing medical needs in this area. Our future growth platforms in pain management include Ionsys, a novel drug device combination currently under regulatory review, Ultram ER and Ultram ODT for the treatment of moderate to moderately severe pain. Oros Hydromorphone for 24-hour relief of severe chronic pain and a new centrally acting opiod in full development. Since we acquired Centocor, the world leader in monoclonal antibody technology in 1999, we have also become a leader in unmet. This is a huge area of unmet medical need that spans rheumatoid arthritis to ulcerative colitis and is one of our investment priorities as biologics become even more important in the field of medicine.

Our strategy in this market focuses on expanding indications and developing new compounds to address this growing therapeutic category. We have two important future growth platforms in unmet, one is a fully human, highly potent anti-T&F with terrific pharmacokinetics that will allow for monthly subcutaneous dosing and will also be available as an IV infusion. Our other key development project is a first-in-class, fully human anti IL 12-23 (ph) which is being studied in psoriasis and Crohn's disease.

Virology is a new therapeutic area for us. Here we are focused on developing three highly potent best-in-class HIV compounds. All of them with high genetic barrier to the development of resistant strains of HIV and all three are in full development. We are very excited about TMC114 which represents a best in class protease inhibitor and was filed with the FDA and the EMEA at the end of last year. We are already working on expanded applications for TMC 114 and have three Phase III trials underway in HIV infected patients. TMC 125 our second anti-HIV compound is a best-in-class NN RTI for resistant HIV-1 patients. TMC 278 is in a dose-ranging trial in treatment-naive patients. TMC 278 also is in an NN RTI and possesses broad spectrum antiviral activity with interesting pharmacokinetics.

Oncology is another of our new areas of therapeutic focus. Here our growth drivers involve commercializing Velcade outside of the United States and completing late-stage development for two novel therapeutics. With regard to Velcade we continue to collaborate with Millenium Pharmaceuticals on several promising new indications. Several Phase III studies are already underway.

Our two novel cancer therapeutics in late-stage development are for indications where patients have few or no treatment options. One of these is Yondelis, a marine-derived anticancer agent obtained from Caribbean Sea squirts. We are codeveloping Yondelis with our partners at PharmaMar. We are also continuing to enroll patients in Phase III trials for Zarnestra. 2005 saw exciting progress in the development of our antibacterial business as a true global franchise. Our acquisition of Peninsula Pharmaceuticals brought us U.S. and European licenses for doripenem, a Phase III antibiotic that addresses serious hospital-based infections. Through a development and marketing agreement with Basilea Pharmaceutica AG we also obtained rights to ceftobiprole, a novel first-in-class broad spectrum antibiotic in Phase III development for a range of infectious conditions.

Cardiovascular disease is the world's largest killer and is an emerging franchise for Johnson & Johnson. Moving forward we are particularly excited about the addition of a new compound to our cardiology pipeline. Through our agreement with Bayer Healthcare we are jointly developing and marketing a late-stage oral factor 10A inhibitor for BTE prophylaxis and treatment and for the prevention of stroke in patients with atrial fibrillation. Through aggressive investment in research and development we have made considerable progress in improving both the quantity and the quality of our pipeline. Perhaps the best indication of this is that we now have late-stage projects spread broadly across several promising therapeutic categories with significant unmet medical need. We have realigned our investments over the past years into these areas of higher potential growth. For instance therapeutic oncology is an area in which we had virtually no presence in 2001. Now it represents 26% of our late-stage pipeline. The same is true for infectious disease where our presence has been limited to one product in one region. Now we have multiple global products anticipated in the near-term in both virology and antibacterials.

Now I would like to move to the consumer segment. Throughout our consumer businesses you will see a focus on science in the service of consumers. Both our core heritage brands and our emerging the brands bring scientific advancements to benefit consumers in every corner of the world. Our overall strategy is based on a product portfolio built of scientifically based professionally endorsed globally available brands. This approach is helping to drive growth in our skin, baby, oral care and OTC categories around the world. In the near-term we are particularly focused on extending our product availability and business development efforts in high-growth emerging markets.

Internal development conducted across the entire Johnson & Johnson R&D environment allows us to build a deeper scientific base into our consumer product platforms. As a result we have an excellent portfolio of large and growing businesses. Our largest franchises have all been solid growers relative to their categories. The growth platforms of our consumer group are built around two powerful engines building strong often iconic brands and driving deeper penetration into global markets. And let's look at a few of the specific growth platforms of our consumer segment.

Adult skincare is an engine of growth for our consumer area. Strong brand equity combined with high levels of professional recommendation and regular product innovations will continue to drive growth in this franchise. By way of example, Neutrogena has become one of the most highly recommended brands by dermatologists and it now generates over $1 billion of sales annually. Examples of Neutrogena's innovations are the advanced solutions microdermabrasion system and the addition of advanced ingredient formulations like copper and retinols. Aveeno, with its base in clinically proven natural ingredients, is making further inroads in adult skincare with products like its new ultra-calming line with Feverfew. Successful entry into new markets especially China will continue to propel strong growth for brands like Neutrogena and Clean and Clear.

Johnson's Baby, now 115 years young and still growing continues to grow -- continued growth will come from further product innovations and expansion into new geographic areas. New market entrants like Johnson's soft line and Johnson's soothing naturals demonstrates the innovative use of advanced natural ingredients like vitamin E, olive leaf extract and essential minerals. Excellent demographics for baby care products have led us to expanded presence in a number of overseas markets.

Growth for Ortho-McNeil franchise will be driven by the introduction of innovative product formulations and geographical expansion in nutritionals and OTC markets. Splenda is the cornerstone of our growing nutritionals category that also includes products such as Viactiv and Benecol. Splenda provides an important alternative for consumers struggling with difficult diseases like diabetes and obesity which may be related to sugar intake. Tylenol, one of our most venerated brands has kept itself young with offerings like Tylenol rapid release gels, an innovative fast-acting formulation of our proven product. We anticipate it to be the first in a series of innovative product launches in this category.

I trust that this overview has provided you a clearer picture of our growth strategies as well as given you an idea of some of the major platforms for growth in our three business segments. Our individual businesses are each very well positioned for growth in their respective markets. As I have said we are mindful that patent expirations and industrywide pressures we will face over the balance of the decade will make it a very challenging period. We are fortunate that the men and women leading the individual businesses of Johnson & Johnson have both a well-established track record for driving growth as well as for improving the financial health of their businesses. For example, over the past decade we have improved SG&A by some 400 basis points and expanded our gross margins by well over 600 basis points. This marked improvement is in part a reflection of the progress we have made in betting organizational skills such as design excellence, lean thinking and Six Sigma throughout our businesses. A great deal has already been achieved through the use of these tools; still considerable opportunity remains to apply them more broadly and more deeply to both enhance growth and achieve higher levels of operating efficiency.

In recent years our people have also made substantial progress in working more effectively across our own organizational boundaries, sharing expertise, improving performance of current businesses and expanding opportunities for growth. Once again, while we have made great progress there is much more that we can do to achieve our goals. Our people are also hard at work replacing locally developed legacy information systems with enterprise-wide systems. Systems that will facilitate further collaboration across our businesses driving both efficiencies and effectiveness. We are currently applying this approach in the areas ranging from human resources to finance to procurement. The gains we make in these and other areas will be important contributors to our performance over the balance of the decade. From all we have discussed this morning you will be surprised to hear that I'm confident our growth will not be limited by our ability to bring innovative products to the marketplace nor will it be constrained by lack of demand for our products. On the contrary, my concern is that over time demand for such innovations may be so great that payors, public and private, may feel compelled to respond to these pressures by rationing or otherwise limiting access to our innovations. Clearly this is an outcome that would not be in the best interest of our industry or more importantly in the best interest of individual patients or society as a whole.

Our perspectives on health policy are straightforward. We are champions of a health care system that provides incentives for innovation, that permits public and private health care systems to coexist, that is characterized by strong well-respected regulatory authorities, that is centered around the best interest of patients and consumers, that provides for physician and patient choice and that allows these choices to be made on the basis of broadly available, well founded, clinical and economic evidence. We have a responsibility to work with our leaders from government, industry and other constituencies to foster good public health policy. I see clear alignment between good policy and the long-term best interest of Johnson & Johnson. As long as economic incentives remain for private enterprise in the health care system human health remains an exceptional business space.

I hope I have given you some idea of how looking across our segments Johnson & Johnson is in a position with its flexible portfolio to capitalize on the high and growing demand for products that meet serious unmet medical and personal needs. Our consumer businesses are building on heritage brands and launching a steady stream of innovative science-based products and fast-growing personal care categories around the world.

Our medical device and diagnostics businesses have developed technology-based platforms for growth that continue to establish new standards of care in each of their respective high-growth therapeutic areas. Our pharmaceutical businesses have established important new development projects in biotechnology and promising small molecule areas. Our focus on important unmet medical needs has triggered growth engines for us in both new and existing therapeutic areas. Across all of our businesses the leaders of Johnson & Johnson are looking into the future with a clear understanding of the challenges and yet tremendous excitement about the extraordinary opportunities that exist for building businesses that improve the quality of peoples lives around the world.

I would like to thank everyone for coming and I would now like to turn the microphone over to Bob Darretta to make some additional comments.

I'll make a couple of quick comments. As you have already seen in the fourth quarter we enjoyed interest income of $169 million and as Louise has commented that year-to-year gain is attributable to both the higher interest rates being earned on our cash holdings as well as the continued growth in our cash balances. You saw on Bill's slides that we ended the year with 13.4, $13.5 billion of net cash. For your further information that is 16.1 billion of cash and 2.7 billion of debt, up 3.5 billion from the end of last year. For your purposes of your models assuming for the moment no major acquisitions or general share repurchase programs, I would suggest that you model '06 net interest income in the range of $700 million.

Turning to other income and expense -- and by way of reminder this is the account where we record our royalty income that is approximately $300 million per year as well as onetime gains and losses such as litigation settlements, gains and losses at our developing corporation, the effects of asset sales, etc. This quarter we recorded a net gain of $30 million as compared to a $50 million loss in the fourth quarter of last year. We had no individual charges of a material nature in the current period and the favorable year-to-year comparison is due primarily to the write-off of assets and losses incurred in the disposal of assets in the prior year. This account by its very nature is difficult to forecast but basis and analysis of the last three or four years, I would recommend that you model a net gain for '06 of in the 75 to $125 million range.

A word on taxes. As you have seen we ended the year with a tax rate of 24.8%, a very solid improvement from the prior year levels of 27.6%. That occurred thanks to favorable product mix and that was both lower sales of higher tax rate products such as Duragesic, and increased sales of lower tax rate products such as Cypher. It was also a reflection of various tax planning initiatives that were successfully completed during the past year. We would suggest that for now you base your '06 models on a tax rate in the range of 26%, and as always we will continue to pursue opportunities to further improve upon this rate as the year unfolds.

A word on '06 sales guidance. And starting with operational rates of growth, we would suggest that you model full year sales growth of between 6 and 8%. We would also recommend that you model substantially lower growth in the first quarter than for the average of the year in light of the tougher comparisons created by the timing of patent expirations, generic entrants and other events that occurred during 2005. Operational growth rates in the 3 to 4% range would probably be appropriate for the first quarter.

A word on currency and the effect of currency and obviously we can't predict which way currency will move. We are not providing a forecast on currency, but rather giving you a sense for if currency were to remain where it is today, what impact it would have on our '06 business. And at today's rates it would reduce full year operational growth that I have already commented on; it would offset it by approximately 1% for the full year. And it will detract from the first quarter ops growth rate by approximately 2.5%. So a much more pronounced effect in the first quarter, and relatively modest over the remaining nine months, about 3/10 of 1% adverse effect in the back nine months.

A word on earnings guidance and starting with the full year, when I last looked the mean analyst estimate for 2006 earnings excluding option expensing, was $3.79 a share, a little over an 8% rate of growth over 2005. We are comfortable with this estimate and we would suggest that you consider estimates in the $3.78 to $3.85 per share range. That equates to increases in the 8% to 10% range, but we'd strongly suggest that at this early stage in the year you plan towards the bottom of this range.

I would also suggest that in light of the slower operational sales growth rate that we expect in the first quarter, as well as the greater negative impact that we will have from currency in the first quarter that you model considerably more modest rates of earnings growth in the first quarter. Estimates of between $1 and $1.02 per share which would provide growth in the 3% to 5% range for the first quarter would seem appropriate.

Finally, by way of reminder starting in the first quarter of this year we will be recording option expense using a Black-Scholes methodology. We will also be restating prior year results to reflect option expense. In fact, '05 EPS will be adjusted by $0.12 per share, and we estimate that option expense in 2006 will be $0.13 per share and we would encourage you to adjust your models accordingly. That concludes my comments. Let me turn the microphone back to Louise.

Thank you Bob. One item before we open the Q&A session. In light of the current status of the Guidant transaction we will not be commenting or answering any questions related to Guidant or the CRM market in general. We will now open the floor to your questions. Again as Bill is the host for today's meeting I would encourage you to address your questions to him on more strategic items. And let me remind you to please wait for the microphone to get to you as this is being broadcast as a webcast.

Katherine Martinelli with Merrill Lynch. Just a couple questions on the Guidant transaction. Just kidding. I wanted to see if you could comment a little bit about the fourth quarter, back in Q3 you were looking for operational growth of 3%, came in below that less than 1%. What were the areas that were the most strategically challenging? How do we think about those for '06 in terms of being able to have the confidence in the outlook you have for the top line growth this year? Thanks.

I will respond to some of it and then I'll let Bob and Chris. Obviously one of the things was the third week. the 53rd week of the year, which we felt probably, affected 2 to 3%. I think we mentioned at the end of last year that it would be that. And then we had many of the issues that have been impacting us in the pharmaceutical business that have come -- obviously the Duragesic the Ultracet.. I think Natrecor has been an issue that we are addressing and moving forward with. So I think there has been a lot of things we had not initially anticipated. Some we had anticipated and then of course the 53rd week is a big number there. I don't know if Bob or Chris --.

Yes, maybe I'll make one comment. It did come in a little bit softer, Catherine, then we had anticipated. I think it could be a couple of things. I think in part the 53rd week might have been a slightly bigger impact than we had anticipated. I also know that our business leaders understand just how challenging '06 is going to be and I think although it is very difficult to quantify, once people have reached current year goals perhaps they push a little less vigorously at the end of the year knowing that they have a challenging objective in front of them. Because the softness wasn't in any one area, I think it probably is more related to those type of broader possible causes.

Two questions, one for Bill, one for Bob. With respect to the quarter, maybe you can highlight the businesses that you think were most impacted by the extra week in 2004. That's a Bob question. Bill, I guess more important question, I'm going to be careful the way I word this, if you look at consensus expectations for top line over the next several years, most analysts are modeling for mid to upper single digit growth for the Company, which is below the historical double-digit averages that you have always targeted and achieved. Are there certain therapeutic areas you think that our sleepers where the street has it wrong or is this pretty consistent with your long-range planning?

I'll take the second one first Glenn. I think when you look forward, I am not sure if the Street has it wrong but I think we will be able to move forward. And if you look at 2005 as an investment year, I mean like I said we invested $6.3 billion in our R&D activities and there are areas like the unmet area, where I think there are extraordinary opportunities, you look at the new products coming into that area. The whole area of virology, with the TMC compounds, when you look at the pharmaceutical group. You also have the whole area of moving into the antibacterials in that area which I think those are really exciting places.

I also think then you have Paliperidone and some of those (indiscernible) sales, I also think there are some sleepers in our productline as we have it today. And can you look at Remicade and the continuing ongoing growth in that area. I think Risperdal Consta is another one where we have some issues that we are dealing with on reimbursement that will take us ahead there. But I think our pharmaceutical business has been a real year of investment. And I think that you will say that there will be a lot of very exciting things coming as we go forward.

I also think in the area of medical devices, I think CYPHER has really been able this year to establish itself as the product. And I think that has been true as I said throughout my presentations to the clinical work that has been done that showed the rate of restenosis, and endo so much superior in our stent than the others. So we think that is an area that has a lot of opportunities for us. I also go to DePuy, and I think that as you look at the demographics of the aging population and you start looking at joints -- you look at backs -- you look at all of these types of things. I think the advances that we're making in those areas are really going to be able to move us forward. And then I think people don't pay enough attention to our consumer business. Where we have some real innovative things going on, not just here in the United States but when you look around the world. We have made huge inroads in China and we are just starting to tap those opportunities.

So I think that when you look at the investments we're making, the opportunities we have coming out as well as further enhancing what we have, I think we will be able to get ourselves back in the future to exactly where want to be. We are very excited about the future. You know we don't disclose that. But just if you look at the investments and knowing that we have had these challenges and the challenges aren't going to go away, they are going to stay there. But we think we are well positioned to be able to deal with those and to bring real innovation into the marketplace in any one of our business segments. So we are excited about the opportunities for growth and we recognize we have to do things better than have ever been done before. We realize we have to get better clinical results to the regulators. We have to do all these things and we think we will get back there in the future.

I will just make a brief comment. The question was can I be more specific as to which businesses were more affected in terms of the 53rd week phenomenon. And it is true that there are differing effects depending upon the nature of the business. We don't have a precise way of quantifying it. I can give you one example of the type of business that was most affected would be Vistakon. And Vistakon because they ship the same day they receive orders and so in the prior year they had pretty much a five-day effect from the 53rd week and it made it a very onerous comparison for them. In some of our medical businesses there may not have been that much surgical activity in that 53rd week a year ago because it is during a holiday period, so it would be less than a full week effect.

Larry Biegelsen from Prudential Equity Group. One question. Do you believe that your people agreement with Amgen would allow you to sublicense Amgen's patents to Roche so Roche could market Sera (ph) in the U.S. and if so would you consider being a partner?

I have absolutely no response for that. I really can't respond. But maybe we can go over to Mike here.

Mike Weinstein JPMorgan. Bill I want to push a little bit on Glenn's question and the Street is modeling J&J after the backend of the decade is roughly right now about 8 to 9% earnings grower, which is obviously well below the historical profile of the company. Growth range decelerated with what has played out in the U.S. pharmaceutical business in particular; is the Street being way too conservative? What is the street missing and how should we think about the growth profile of J&J going forward? And then as a follow up to your commentary Bob just on the tax rate, you are saying start with a 26% tax rate for the year which is an increase from where we were in 2005, and so I guess I would ask the question why would it increase? And isn't it the same thing we do every year where we start with the highest possible tax rate and we always end up a couple hundred basis points below that.

I'll maybe elaborate a little bit, if you look at the therapeutic areas that we're in as well as the ones that we have product opportunities in, I think they are the growers for the future. You can look at oncology, you can look at virology and we have some, as we have given you all, we think that there will be a significant number of these that will be applied for registration before the end of '07. And I think that those are areas that will really bring us into to reaccelerate let's say our pharmaceutical growth. I think the consumer businesses are going to continue to be strong and I think they are going to continue to broaden themselves into many areas that we've never gone into before especially in geographical areas. And build on the science that we're able to move over. And then I think medical devices are just a very interesting area where we have demographics playing in our favor.

So I think topline growth you are going to see, we all have to deal with the patent expirations and these challenges but I think we're well positioned to be able to pick up as some of these go off patent and others come on that we will be in a very strong position. I think in the area of in the income area I think our organization is very much focused on the ability to continue to improve in SG&A and our margins. We have actually recently announced a procurement officer where we think we will be able to get significant leverage across our businesses. So it is not looking at it in any one way. I think our revenue growth will accelerate and will accelerate much before you all have us modeled.

I think our cost containment and our ability to look at the areas and again Mike, I would like to say that if you reflect back on the investments we made last year, we are not going to be looking to try and save money in areas that would be detrimental to the organization. We're looking to invest in the organization save money in the right places and reinvest that; especially in our R&D organizations and looking both internally and externally for opportunities. And then in procurement we have lots of opportunities. And again if you look at our operations area I think we have huge opportunities to improve our margins. So I think we are coming at it from a myriad of ways, all of which will accelerate both top line and bottom line growth.

Do your view is you could characterize 2005 as an investment year and you're characterizing the profile of 2006 is a year in which first quarter understandably is the low point, low water mark for the year and that growth accelerates. And so as we think out beyond 2006 the accelerating growth profile carries out beyond 2006 without getting --.

I think if you look out beyond 2006 many of the opportunities that I addressed that we've been investing in we will be able to accelerate the growth going out beyond that. Absolutely.

I think on taxes the guidance of 26% is above where we ended '05, but markedly down from where we were in both '03 and '04 which were at 27.5%. So I think clearly we have made progress and we're saying that you can plan on it. Also remember that the R&D tax credit currently is legislation has not been passed renewing the R&D tax credit. So it doesn't -- that adversely impacts us in '06 versus '05.

(inaudible) assumption of 26% is that it is not renewed?

That assumption is that it is not renewed for the full year.

Matt Dodds, Citigroup, first for Bob. It sounds like pharma is the laggard in '06 in terms of the growth based on device comments and consumer comments. Can you give us an idea on what you expect pharma to grow? Can you break that one piece out? And then for Bill I haven't seen you talk much about health care policy before like that in an open audience. It sounds like you're more concerned then you have been; is this affecting the way you are looking at acquisitions, alliances, R&D in terms of the economic value add for products?

I'll deal with the -- my answer is simple. We don't provide guidance regarding the growth rates of individual products, businesses or segments Matt. So I have no further comment on the general guidance for '06.

And my comments were really to make sure that everyone understands that as you said we haven't talked about them that we haven't put our heads in the sand and think this is something we don't need to be concerned about. We are very involved in helping to formulate policy. We are very involved in what we can do internally as well as externally in working with our own organization to make sure we're doing the clinical work that is necessary. But also externally to make sure that some of these -- that we're able to ensure that the policies and procedures allow the industry to be able to bring advances to patients in the way that would benefit them. We have gone into a time, I've talked about a very risk averseness and it is a lot of that is due because of what has gone out in the environment.

But I think we have to see the pendulum come back to a more of a realistic state in my mind. Do we take that into consideration when we assess things? Absolutely. I mean you have to look at the trade-offs that you have in which you are dealing with going forward. So I think the reason I spoke to it more today is because we are acutely aware of the issues we have to deal with; the people who run our companies are very involved in helping to ensure that they are actively involved in working in those areas and understanding the challenges. But I have said this before, we have to understand the rules. We have to play by those rules and we have to win by those rules.

Rick Wise, Bear Stearns. First couple of things, perhaps Bob could update us on the FDA issues at Cordis and where we stand, and Bill again going back to the growth issue, perhaps you can talk to us a little bit about the role you have just in general in the next three to five years expect acquisitions to play in contributing to the top line growth, I think would be like to 1% historically. Is that the right way to think about it going forward on average? And perhaps you can just expand on two other (indiscernible) rate, the cost-cutting initiatives, can you quantify how much is left and the R&D at 2 billion this quarter, is that sustained higher level of rate if the company is going to come up with the sort of evidence based method you think you need to drive growth? Thank you.

I'll deal with the first fairly clearly Rick. The warning letter with Cordis is still in place. We are pleased that the FDA noted the progress that had been made in addressing the issues in the warning letter. We anticipate that the FDA will reinspect the Cordis facilities in '06. We don't have a specific schedule but we are looking for second quarter possibly drifting depending upon FDA availability into the early third quarter would be our best estimate.

In the area of L&A you know I think we have continued to say this every year and that is all the best ideas in the world don't come out of J&J. We have a very effective and a very good business development group that looks at opportunities around the world will continue to do that. Will it play a role? Absolutely. Whether it is on early stage products or whether it is on tools for our R&D organizations, or whether it is on possibly products that are much nearer term or in the market, we will continue to look at all the opportunities. And as we've always said we assess them on whether they bring shareholder value and whether they are the right investment to ensure not only current growth but sustainable growth for the future and that is the way we will continue to look at our investments.

As far the cost-cutting initiatives or all these areas you know we internally quantify it. I think we have some very aggressive goals for ourselves but we are looking at that in a myriad of ways to try and make sure that we're looking at all of the areas. There's lots of room for opportunities to improve in the organization and will continue to look at those and as I mentioned earlier we have put a chief procurement officer in place who will help us look at a broader base of how we can leverage the breadth of Johnson & Johnson in that area. And the R&D level it was a 21% increase, we increased $6.3 billion this year and we have a lot of new products. We have a lot of products that have gone into Phase III which is where your major expenses, about 80% of your R&D expenses are going to be in Phase III. So as we bring these products through we will see a more normal probably percent to sales of our R&D expenditures but we expect that there will be a higher demand for all companies to invest more to make sure that they are showing both the clinical and economic benefits that come from the products.

Bob Hopkins from Lehman Brothers. Two quick questions. First for Bob, could you talk about potential for a buyback and just how you think about buyback as a criteria upon which you think one makes sense or doesn't make sense. And is (indiscernible) on the current table currently? And then for Bill you singled out DePuy. I was wondering if you could comment on that especially in light of the article on the front page of the New York Times this morning about Medtronic and the spine case that is going on there and the changing regulatory environment. As regards to spine and orthopedic products potentially, and I understand you're bullish long-term but maybe a comment on the here and now and that the DePuy growth rate this quarter was I think a little bit below what most people were looking for. Thanks very much.

With regard to the buyback, obviously, our cash levels are way above what would be a normal level for Johnson & Johnson. Our the primary use to which we try to put our cash would be in business building and investment. So that is the first priority. When we don't have current business building investment opportunities for uses for the cash then we consider buybacks. So we will just have to wait and see how things play out on the acquisition front and then we will think through the merits of a possible buyback if there is any cash remaining.

My enthusiasm for Depuy is based on a couple of things, one is demographics. We are able now to identify people younger who need joint replacements and we have the demographics of the aging population and you almost talk to anybody and somebody needs replacements. So I think demographics really play in the favor of orthopedics today. I think the I orthopedics are advances that are going on. I look at the advances we're having in our platforms for our joints which are very exciting. I think the whole back area and the spine area is an important area. We still have challenges in getting reimbursement for Charite but we are making progress in those areas. And I just think that these are -- that the whole orthopedic business is an extraordinary business that has great opportunities for growth as we go forward. And it is going to be tied to as I said to the demographics and innovation and innovation in the products that are going to improve things. So I happen to be very bullish in that area and I think we have a great company out there with great innovation and great opportunities going forward.

With respect to everyone's time we will have time for one more question.

Sara Michelmore at Cowen. I know you don't want to comment specifically on products but I did want to ask you a question about Procrit and Eprex.. And at this meeting Mark, two years you had expressed some optimism that you would be able to stabilize and potentially grow that franchise. And I am just wondering if the performance in 2005 was in fact below your hopes and expectations, and if so how should we think about the franchise just in general terms going forward and your investment in that franchise?

Sure. I think lets separate both Eprex and Procrit. I think on the Eprex line, we are encouraged by both the new once-a-week labeling that has allowed us in Europe we believe to stabilize sales there. And we are hoping that this year will bring an ability for us to have a label change that would get us back to sub Q. (ph) And if that is true I think we're pretty optimistic about what we can still do with Eprex in Europe.

On Procrit I think you know that in a third of the marketplace at the oncology clinics that we are in litigation now with Amgen regarding what we believe is an illegal bundling of Neulasta and Aranesp. And at least for that a piece of the business its going to be tough going; a lot of pressure on pricing. And we will just have to see how that plays out. On the rest of the business, in two-thirds of the business in both hospital and retail we think we are competitive and we continue to believe we can hold share there.

I might just add one more comment on that which I made when we were talking but when you look at the movement into critical care, I think there are real advantages that Procrit has that Aranesp would not have as we move into that area that will offer us a significant platform for growth.

I would like to thank everybody for coming. I appreciate all of your questions and we look forward to seeing you. I want to remind you about the MD&D day in September but I hope you have an idea of how we're going to grow our business. Thank you very much.