Johnson and Johnson 2005 Annual Report Download - page 40

The Company also operates in an environment which has
become increasingly hostile to intellectual property rights.
Generic drug firms have filed Abbreviated New Drug Applica-
tions seeking to market generic forms of most of the Company’s
key pharmaceutical products, prior to expiration of the applica-
ble patents covering those products. In the event the Company
is not successful in defending the patent claims challenged in
Abbreviated New Drug Application filings, the generic firms
will then introduce generic versions of the product at issue,
resulting in the potential for substantial market share and
revenue losses for that product. For further information see
the discussion on “Litigation Against Filers of Abbreviated
New Drug Applications” in Note 18.
Legal Proceedings
The Company is involved in numerous product liability cases
in the U.S., many of which concern adverse reactions to drugs
and medical devices. The damages claimed are substantial,
and while the Company is confident of the adequacy of
the warnings and instructions for use which accompany such
products, it is not feasible to predict the ultimate outcome of
litigation. However, the Company believes that if any liability
results from such cases, it will be substantially covered by exist-
ing amounts accrued in the Company’s balance sheet, and
where available by third-party product liability insurance.
The Company is also involved in a number of patent, trade-
mark and other lawsuits incidental to its business. The ultimate
legal and financial liability of the Company in respect to all
claims, lawsuits and proceedings referred to above cannot be
estimated with any certainty. However, in the Company’s opin-
ion, based on its examination of these matters, its experience
to date and discussions with counsel, the ultimate outcome
of legal proceedings, net of liabilities already accrued in the
Company’s balance sheet, is not expected to have a material
adverse effect on the Company’s financial position, although
the resolution in any reporting period of one or more of these
matters could have a significant impact on the Company’s
results of operations and cash flows for that period.
See Note 18 for further information regarding legal
proceedings.
Common Stock Market Prices
The Company’s common stock is listed on the New York Stock
Exchange under the symbol JNJ. The composite market price
ranges for Johnson & Johnson common stock during 2005 and
2004 were:
2005 2004
High LowHigh Low
First quarter $68.68 61.20 54.90 49.25
Second quarter 69.99 64.43 57.28 49.90
Third quarter 65.35 61.65 58.80 54.37
Fourth quarter 64.60 59.76 64.25 54.81
Year-end close $60.10 63.42
Cautionary Factors That May Affect Future Results
This Annual Report contains forward-looking statements.
Forward-looking statements do not relate strictly to historical
or current facts and anticipate results based on management’s
plans that are subject to uncertainty. Forward-looking state-
ments may be identified by the use of words like “plans,”
“expects,” “will,” “anticipates,” “estimates” and other words of
similar meaning in conjunction with, among other things, dis-
cussions of future operations, financial performance, the Com-
pany’s strategy for growth, product development, regulatory
approval, market position and expenditures.
Forward-looking statements are based on current expecta-
tions of future events. The Company cannot guarantee that any
forward-looking statement will be accurate, although the Com-
pany believes that it has been reasonable in its expectations
and assumptions. Investors should realize that if underlying
assumptions prove inaccurate or that unknown risks or uncer-
tainties materialize, actual results could vary materially from
the Company’s expectations and projections. Investors are
therefore cautioned not to place undue reliance on any for-
ward-looking statements. The Company assumes no obligation
to update any forward-looking statements as a result of new
information or future events or developments.
Risks and uncertainties include general industry conditions
and competition; economic conditions, such as interest rate
and currency exchange rate fluctuations; technological
advances, new products and patents attained by competitors;
challenges inherent in new product development, including
obtaining regulatory approvals; challenges to patents; U.S. and
foreign health care reforms and governmental laws and regula-
tions; trends toward health care cost containment; increased
scrutiny of the health care industry by government agencies;
product efficacy or safety concerns resulting in product recalls
or regulatory action.
The Company’s report on Form 10-K for the year ended Jan-
uary 1, 2006 includes Exhibit 99(b), a discussion of additional
factors that could cause actual results to differ from expecta-
tions. The Company notes these factors as permitted by the
Private Securities Litigation Reform Act of 1995.
PAGE 38 JOHNSON & JOHNSON 2005 ANNUAL REPORT