Johnson and Johnson 2005 Annual Report Download - page 29

JOHNSON & JOHNSON 2005 ANNUAL REPORT PAGE 27
CORPORATE GOVERNANCE AND MANAGEMENT’SRESPONSIBILITY
TABLE OF CONTENTS
Management’s Discussion and Analysis
28 Organization and Business Segments
28 Results of Operations
29 Analysis of Sales by Business Segments
32 Analysis of Consolidated Earnings Before Provision for Taxes on Income
34 Liquidity and Capital Resources
36 Other Information
38 Cautionary Factors That MayAffect Future Results
Audited Consolidated Financial Statements
39 Consolidated Balance Sheets
40 Consolidated Statements of Earnings
41 Consolidated Statements of Equity
42 Consolidated Statements of Cash Flows
43 Notes to Consolidated Financial Statements
64 Management’s Report on Internal Control over Financial Reporting
65 Report of Independent Registered Public Accounting Firm
66 Summary of Operations and Statistical Data 1995–2005
67 Reconciliation of Non-GAAP Measures
Johnson & Johnson is governed by the values set forth in Our
Credo, created by General Robert Wood Johnson in 1943.
These principles have guided us over the years and continue to
set the tone of integrity for the entire Company. At all levels, the
employees of Johnson & Johnson are committed to the ethical
principles embodied in Our Credo and these principles have
been woven into the fabric of the Company.
The Credo values extend to our accounting and financial
reporting responsibilities that we have to our shareholders and
investors. We, the management of Johnson & Johnson, are
responsible for the integrity and objectivity of the accompany-
ing financial statements and related information. We are also
responsible for ensuring that financial data are reported accu-
rately and in a manner that facilitates the understanding of
this data.
As evidence of our commitment to this responsibility, we
maintain a well-designed system of internal accounting con-
trols, encourage strong and effective corporate governance from
our Board of Directors, continuously review our business results
and strategic choices and focus on financial stewardship.
Our corporate staff of professionally trained internal audi-
tors, who travel worldwide, monitor our system of internal
accounting controls designed to provide reasonable assurance
that assets are safeguarded and that transactions and events
are recorded properly. Our internal controls include self-
assessments and internal reviews of our operating companies.
While most of the groundwork surrounding compliance
with Section 404 of the Sarbanes-Oxley Act of 2002 was firmly
in place, the Company continued to invest significant time and
resources in 2005 to ensure continued compliance. Based on
the work performed, we have concluded that our internal con-
trol over financial reporting was effective as of January 1, 2006.
We refer you to Management’s Report on Internal Control over
Financial Reporting on page 64.
We also require the management teams of our operating
companies to certify their compliance with our Policy on Busi-
ness Conduct and we have a systematic program to ensure
compliance with these policies at all employee levels.
PricewaterhouseCoopers LLP, an independent registered
public accounting firm, is engaged to perform an integrated
audit of our consolidated financial statements and internal
control over financial reporting. Their Report of Independent
Registered Public Accounting Firm is on page 65.
Our Audit Committee of the Board of Directors is composed
solely of independent directors with the financial knowledge
and experience to provide appropriate oversight. We review
internal control matters and key accounting and financial
reporting issues with the Audit Committee on a regular basis.
In addition, the independent auditors, the General Counsel and
the Vice President of Internal Audit regularly meet in private
sessions with our Audit Committee to discuss the results of
their work including observations on the adequacy of internal
financial controls, the quality of financial reporting and confir-
mation that they are properly discharging their responsibilities
and other relevant matters.
Our Executive Committee is continuously involved in
the review of financial results as well as developing and under-
standing strategies and key initiatives for long-term growth.
Our intent is to ensure that we maintain objectivity in our busi-
ness assessments, constructively challenge the approach to
business opportunities and issues and monitor our business
results and the related controls.
Our consolidated financial statements and financial data
that follow have been prepared in conformity with accounting
principles generally accepted in the United States of America
and include amounts that are based upon our best judgments.
We are committed to present and discuss results of operations
in a clear and transparent manner in order to provide timely,
accurate and understandable information to our shareholders.
William C. Weldon Robert J. Darretta
Chairman, Board of Vice Chairman, Board of
Directors, and Chief Directors, and Chief
Executive Officer Financial Officer