Jae Jun

Author mail questions or comments to: jjun0366@gmail.com

www.oldschoolvalue.com

Disclaimer
Nothing on Old School Value, related pages, emails, or other communications by the author, either written or oral, are intended to be a
recommendation to either buy, hold, or sell any specific security or group of securities. Likewise, nothing herein should be construed as an
endorsement of any financial adviser, investment manager, commercial information provider, transaction service, or brokerage firm.

The findings from this spreadsheet is merely a start to a means of further research and uncovering a great business and investment. Old
School Value holds no responsibility for any investment whatsoever.
Company Name ticker

JOHNSON & JOHNSON JNJ

2/18/2009 all figures in $Mil
Financial Data
JNJ 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 TTM

Income Statement
Revenue $ 23,657.0 $ 27,471.0 $ 29,139.0 $ 33,004.0 $ 36,298.0 $ 41,862.0 $ 47,348.0 $ 50,514.0 $ 53,324.0 $ 61,095.0 $ 64,522.0
COGS $ 7,496.0 $ 8,442.0 $ 8,861.0 $ 9,536.0 $ 10,447.0 $ 12,176.0 $ 13,422.0 $ 13,954.0 $ 15,057.0 $ 17,751.0 $ 18,873.0
COGS (%) 31.7% 30.7% 30.4% 28.9% 28.8% 29.1% 28.3% 27.6% 28.2% 29.1% 29.3%

Gross Profit $ 16,161.0 $ 19,029.0 $ 20,278.0 $ 23,468.0 $ 25,851.0 $ 29,686.0 $ 33,926.0 $ 36,560.0 $ 38,267.0 $ 43,344.0 $ 45,649.0

Gross Profit (%) 68.3% 69.3% 69.6% 71.1% 71.2% 70.9% 71.7% 72.4% 71.8% 70.9% 70.7%

Operating Expenses
SG&A $ 8,907.0 $ 10,503.0 $ 10,875.0 $ 11,992.0 $ 12,216.0 $ 14,131.0 $ 15,860.0 $ 16,877.0 $ 17,433.0 $ 20,451.0 $ 21,546.0
SG&A (%) 37.7% 38.2% 37.3% 36.3% 33.7% 33.8% 33.5% 33.4% 32.7% 33.5% 33.4%
R&D $ 2,433.0 $ 2,600.0 $ 2,980.0 $ 3,696.0 $ 4,146.0 $ 5,602.0 $ 5,221.0 $ 6,674.0 $ 7,684.0 $ 8,487.0 $ 7,837.0
R&D (%) 10.3% 9.5% 10.2% 11.2% 11.4% 13.4% 11.0% 13.2% 14.4% 13.9% 12.1%
Other $ 704.0 $ 222.0 $ 34.0 $ 185.0 $ 294.0 $ (385.0) $ 15.0 $ (214.0) $ (671.0) $ 1,279.0 $ 534.0
Other (%) 3.0% 0.8% 0.1% 0.6% 0.8% -0.9% 0.0% -0.4% -1.3% 2.1% 0.8%

Operating Income $ 4,117.0 $ 5,704.0 $ 6,389.0 $ 7,595.0 $ 9,195.0 $ 10,338.0 $ 12,830.0 $ 13,223.0 $ 13,821.0 $ 13,127.0 $ 15,732.0

Operating Income (%) 17.4% 20.8% 21.9% 23.0% 25.3% 24.7% 27.1% 26.2% 25.9% 21.5% 24.4%

Other Income and Expense

Net Int Inc & Other $ 152.0 $ 49.0 $ 233.0 $ 303.0 $ 96.0 $ (30.0) $ 8.0 $ 433.0 $ 766.0 $ 156.0 $ 300.0
Earnings Before Taxes $ 4,269.0 $ 5,753.0 $ 6,622.0 $ 7,898.0 $ 9,291.0 $ 10,308.0 $ 12,838.0 $ 13,656.0 $ 14,587.0 $ 13,283.0 $ 15,744.0
Income Taxes $ 1,210.0 $ 1,586.0 $ 1,822.0 $ 2,230.0 $ 2,694.0 $ 3,111.0 $ 4,329.0 $ 3,245.0 $ 3,534.0 $ 2,707.0 $ 3,135.0
Earnings After Taxes $ 3,059.0 $ 4,167.0 $ 4,800.0 $ 5,668.0 $ 6,597.0 $ 7,197.0 $ 8,509.0 $ 10,411.0 $ 11,053.0 $ 10,576.0 $ 12,609.0
Acctg Changes $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Disc Operations $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Ext Items $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Net Income $ 3,059.0 $ 4,167.0 $ 4,800.0 $ 5,668.0 $ 6,597.0 $ 7,197.0 $ 8,509.0 $ 10,411.0 $ 11,053.0 $ 10,576.0 $ 12,609.0

Net Income (%) 12.9% 15.2% 16.5% 17.2% 18.2% 17.2% 18.0% 20.6% 20.7% 17.3% 19.5%
Diluted EPS, Cont Ops$ $ - $ 1.5 $ 1.7 $ 1.8 $ 2.2 $ 2.4 $ 2.8 $ 3.5 $ 3.7 $ 3.6 $ 4.4
Diluted EPS$ $ - $ 1.5 $ 1.7 $ 1.8 $ 2.2 $ 2.4 $ 2.8 $ 3.5 $ 3.7 $ 3.6 $ 4.4
Shares 0 2834 2823 3080 3054 2998 2996 3008 2963 2913 2859

Balance Sheet

Assets
Cash and Equiv $ 1,927.0 $ 2,363.0 $ 3,411.0 $ 3,758.0 $ 2,894.0 $ 5,377.0 $ 9,203.0 $ 16,055.0 $ 4,083.0 $ 7,770.0 $ 14,018.0
Short-Term Investments $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Accts Rec $ 3,661.0 $ 4,233.0 $ 4,464.0 $ 4,630.0 $ 5,399.0 $ 6,574.0 $ 6,831.0 $ 7,010.0 $ 8,712.0 $ 9,444.0 $ 10,156.0
Inventory $ 2,853.0 $ 3,095.0 $ 2,842.0 $ 2,992.0 $ 3,303.0 $ 3,588.0 $ 3,744.0 $ 3,959.0 $ 4,889.0 $ 5,110.0 $ 5,473.0
Other Current Assets $ 2,691.0 $ 3,509.0 $ 4,733.0 $ 7,093.0 $ 7,670.0 $ 7,456.0 $ 7,542.0 $ 4,370.0 $ 5,291.0 $ 7,621.0 $ 6,943.0

Total Current Assets $ 11,132.0 $ 13,200.0 $ 15,450.0 $ 18,473.0 $ 19,266.0 $ 22,995.0 $ 27,320.0 $ 31,394.0 $ 22,975.0 $ 29,945.0 $ 36,590.0
Net PP&E $ 6,240.0 $ 6,719.0 $ 6,971.0 $ 7,719.0 $ 8,710.0 $ 9,846.0 $ 10,436.0 $ 10,830.0 $ 13,044.0 $ 14,185.0 $ 14,355.0
Intangibles $ 7,209.0 $ 7,571.0 $ 7,256.0 $ 9,077.0 $ 9,246.0 $ 11,539.0 $ 11,842.0 $ 12,175.0 $ 28,688.0 $ 28,763.0 $ 28,571.0
Other Long-Term Assets $ 1,630.0 $ 1,673.0 $ 1,644.0 $ 3,219.0 $ 3,334.0 $ 3,883.0 $ 3,719.0 $ 3,626.0 $ 5,849.0 $ 8,061.0 $ 8,208.0

Total Assets $ 26,211.0 $ 29,163.0 $ 31,321.0 $ 38,488.0 $ 40,556.0 $ 48,263.0 $ 53,317.0 $ 58,025.0 $ 70,556.0 $ 80,954.0 $ 87,724.0

Liabilities & Stockholders' Equity

Accts Payable $ 1,861.0 $ 2,003.0 $ 2,083.0 $ 2,838.0 $ 3,621.0 $ 4,966.0 $ 5,227.0 $ 4,315.0 $ 5,691.0 $ 6,909.0 $ 6,384.0
Short-Term Debt $ 2,747.0 $ 1,806.0 $ 1,479.0 $ 565.0 $ 2,117.0 $ 1,139.0 $ 280.0 $ 668.0 $ 4,579.0 $ 2,463.0 $ 6,245.0
Taxes Payable $ 206.0 $ 206.0 $ 314.0 $ 537.0 $ 710.0 $ 944.0 $ 1,506.0 $ 940.0 $ 724.0 $ 223.0 $ 458.0
Accrued Liabilities $ 3,348.0 $ 3,439.0 $ 3,264.0 $ 4,104.0 $ 5,001.0 $ 6,399.0 $ 6,914.0 $ 6,712.0 $ 8,167.0 $ 10,242.0 $ 9,643.0
Other Short-Term
Liabilities $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Total Current Liabilities $ 8,162.0 $ 7,454.0 $ 7,140.0 $ 8,044.0 $ 11,449.0 $ 13,448.0 $ 13,927.0 $ 12,635.0 $ 19,161.0 $ 19,837.0 $ 22,730.0
Long-Term Debt $ 1,269.0 $ 2,450.0 $ 2,037.0 $ 2,217.0 $ 2,022.0 $ 2,955.0 $ 2,565.0 $ 2,017.0 $ 2,014.0 $ 7,074.0 $ 8,395.0
Other Long-Term
Liabilities $ 3,190.0 $ 3,046.0 $ 3,336.0 $ 3,994.0 $ 4,388.0 $ 4,991.0 $ 5,012.0 $ 5,502.0 $ 10,063.0 $ 10,724.0 $ 10,865.0

Total Liabilities $ 12,621.0 $ 12,950.0 $ 12,513.0 $ 14,255.0 $ 17,859.0 $ 21,394.0 $ 21,504.0 $ 20,154.0 $ 31,238.0 $ 37,635.0 $ 41,990.0
Total Equity $ 13,590.0 $ 16,213.0 $ 18,808.0 $ 24,233.0 $ 22,697.0 $ 26,869.0 $ 31,813.0 $ 37,871.0 $ 39,318.0 $ 43,319.0 $ 45,734.0

Total Liabilities & Equity $ 26,211.0 $ 29,163.0 $ 31,321.0 $ 38,488.0 $ 40,556.0 $ 48,263.0 $ 53,317.0 $ 58,025.0 $ 70,556.0 $ 80,954.0 $ 87,724.0
Cash Flows Statement

Cash Flows From Operating Activities

Net Income $ 3,059.0 $ 4,167.0 $ 4,800.0 $ 5,668.0 $ 6,597.0 $ 7,197.0 $ 8,509.0 $ 10,411.0 $ 11,053.0 $ 10,576.0 $ 12,609.0
Depr & Amort $ 1,246.0 $ 1,444.0 $ 1,515.0 $ 1,605.0 $ 1,662.0 $ 1,869.0 $ 2,124.0 $ 2,093.0 $ 2,177.0 $ 2,777.0 $ 2,992.0
Deferred Taxes $ (239.0) $ (7.0) $ (167.0) $ (106.0) $ (74.0) $ (720.0) $ (498.0) $ (46.0) $ (1,168.0) $ (1,762.0) $ (1,216.0)
Other $ 820.0 $ 73.0 $ 415.0 $ 1,697.0 $ (9.0) $ 2,249.0 $ 996.0 $ (581.0) $ 2,186.0 $ 3,658.0 $ 910.0

Cash from Operations $ 4,886.0 $ 5,677.0 $ 6,563.0 $ 8,864.0 $ 8,176.0 $ 10,595.0 $ 11,131.0 $ 11,877.0 $ 14,248.0 $ 15,249.0 $ 15,295.0

Cash Flows From Investing Activities

Cap Ex $ (1,460.0) $ (1,728.0) $ (1,646.0) $ (1,731.0) $ (2,099.0) $ (2,262.0) $ (2,175.0) $ (2,632.0) $ (2,666.0) $ (2,942.0) $ (3,176.0)
Purchase of Business $ (3,481.0) $ (271.0) $ (68.0) $ (225.0) $ (478.0) $ (2,812.0) $ (580.0) $ (987.0) $ (18,023.0) $ (1,388.0) $ (410.0)
Other $ (698.0) $ (943.0) $ (654.0) $ (2,137.0) $ 380.0 $ 548.0 $ 408.0 $ 3,340.0 $ 398.0 $ (1,809.0) $ 512.0

Cash from Investing $ (5,639.0) $ (2,942.0) $ (2,368.0) $ (4,093.0) $ (2,197.0) $ (4,526.0) $ (2,347.0) $ (279.0) $ (20,291.0) $ (6,139.0) $ (3,074.0)

Cash Flows From Financing Activities

Net Issuance of Stock $ (661.0) $ (577.0) $ (681.0) $ (2,056.0) $ (6,148.0) $ (872.0) $ (742.0) $ (1,021.0) $ (5,587.0) $ (4,045.0) $ (7,237.0)
Net Issuance of Debt $ 2,510.0 $ 10,654.0 $ 818.0 $ 352.0 $ 2,381.0 $ 4,085.0 $ 531.0 $ 1,221.0 $ 6,391.0 $ 24,726.0 $ 8,831.0
Dividends $ (1,305.0) $ (1,479.0) $ (1,724.0) $ (2,047.0) $ (2,381.0) $ (2,746.0) $ (3,251.0) $ (3,793.0) $ (4,267.0) $ (4,670.0) $ (4,934.0)
Other $ (642.0) $ (10,892.0) $ (1,513.0) $ (1,500.0) $ (805.0) $ (4,330.0) $ (1,686.0) $ (928.0) $ (2,646.0) $ (21,709.0) $ (1,502.0)

Cash from Financing $ (98.0) $ (2,294.0) $ (3,100.0) $ (5,251.0) $ (6,953.0) $ (3,863.0) $ (5,148.0) $ (4,521.0) $ (6,109.0) $ (5,698.0) $ (4,842.0)
Currency Adj $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Change in Cash $ (826.0) $ 369.0 $ 1,048.0 $ (520.0) $ (864.0) $ 2,483.0 $ 3,826.0 $ 6,852.0 $ (11,972.0) $ 3,687.0 $ 7,378.0

Free Cash Flow

Cash from Operations $ 4,886.0 $ 5,677.0 $ 6,563.0 $ 8,864.0 $ 8,176.0 $ 10,595.0 $ 11,131.0 $ 11,877.0 $ 14,248.0 $ 15,249.0 $ 15,295.0
Cap Ex $ (1,460.0) $ (1,728.0) $ (1,646.0) $ (1,731.0) $ (2,099.0) $ (2,262.0) $ (2,175.0) $ (2,632.0) $ (2,666.0) $ (2,942.0) $ (3,176.0)

Free Cash Flow $ 2,845.0 $ 3,883.0 $ 4,669.0 $ 5,542.0 $ 5,994.0 $ 6,804.0 $ 8,458.0 $ 8,618.0 $ 10,564.0 $ 10,411.0 $ 11,813.0
Book Value Per Share #DIV/0! $ 5.72 $ 6.66 $ 7.87 $ 7.43 $ 8.96 $ 10.62 $ 12.59 $ 13.27 $ 14.87 $ 16.00
Company Name ticker
JOHNSON & JOHNSON JNJ
2/18/2009 User Growth all figures in $Mil
12.00%
Desired MOS Growth Discount % Price Share Value Buy under Actual D/C % 52Wk High 52Wk Low
User Input Params
50% 12.0% 9.0% $ 55.83 $ 71.67 $ 35.84 22% $72.76 $52.06
Financial Data
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Income Sheet Data
Revenue $ 23,657.0 $ 27,471.0 $ 29,139.0 $ 33,004.0 $ 36,298.0 $ 41,862.0 $ 47,348.0 $ 50,514.0 $ 53,324.0 $ 61,095.0
Gross Profit $ 16,161.0 $ 19,029.0 $ 20,278.0 $ 23,468.0 $ 25,851.0 $ 29,686.0 $ 33,926.0 $ 36,560.0 $ 38,267.0 $ 43,344.0
Operating Income $ 4,117.0 $ 5,704.0 $ 6,389.0 $ 7,595.0 $ 9,195.0 $ 10,338.0 $ 12,830.0 $ 13,223.0 $ 13,821.0 $ 13,127.0
Net Income $ 3,059.0 $ 4,167.0 $ 4,800.0 $ 5,668.0 $ 6,597.0 $ 7,197.0 $ 8,509.0 $ 10,411.0 $ 11,053.0 $ 10,576.0
Diluted EPS $ - $ 1.5 $ 1.7 $ 1.8 $ 2.2 $ 2.4 $ 2.8 $ 3.5 $ 3.7 $ 3.6

Cash Flow Data

Cash from Operations $ 4,886.0 $ 5,677.0 $ 6,563.0 $ 8,864.0 $ 8,176.0 $ 10,595.0 $ 11,131.0 $ 11,877.0 $ 14,248.0 $ 15,249.0
Free Cash Flow $ 2,845.0 $ 3,883.0 $ 4,669.0 $ 5,542.0 $ 5,994.0 $ 6,804.0 $ 8,458.0 $ 8,618.0 $ 10,564.0 $ 10,411.0

Balance Sheet Data

Current Assets $ 11,132.0 $ 13,200.0 $ 15,450.0 $ 18,473.0 $ 19,266.0 $ 22,995.0 $ 27,320.0 $ 31,394.0 $ 22,975.0 $ 29,945.0
Current Liabilities $ 8,162.0 $ 7,454.0 $ 7,140.0 $ 8,044.0 $ 11,449.0 $ 13,448.0 $ 13,927.0 $ 12,635.0 $ 19,161.0 $ 19,837.0
Total Liabilities $ 12,621.0 $ 12,950.0 $ 12,513.0 $ 14,255.0 $ 17,859.0 $ 21,394.0 $ 21,504.0 $ 20,154.0 $ 31,238.0 $ 37,635.0
Tangible Shareholder Equity $ 6,381.0 $ 8,642.0 $ 11,552.0 $ 15,156.0 $ 13,451.0 $ 15,330.0 $ 19,971.0 $ 25,696.0 $ 10,630.0 $ 14,556.0

Margins
Gross Margin 68.3% 69.3% 69.6% 71.1% 71.2% 70.9% 71.7% 72.4% 71.8% 70.9%
Operating Margin 17.4% 20.8% 21.9% 23.0% 25.3% 24.7% 27.1% 26.2% 25.9% 21.5%
Net Margin 12.9% 15.2% 16.5% 17.2% 18.2% 17.2% 18.0% 20.6% 20.7% 17.3%
Current Assets>1.5 times 136.4% 177.1% 216.4% 229.6% 168.3% 171.0% 196.2% 248.5% 119.9% 151.0%

Efficiency & Profitability

CROIC 26.2% 27.5% 27.6% 25.9% 30.2% 29.2% 30.7% 25.9% 46.5% 32.2%
FCF/Sales 12.0% 14.1% 16.0% 16.8% 16.5% 16.3% 17.9% 17.1% 19.8% 17.0%
Inventory Turnover 262.7% 272.8% 311.8% 318.7% 316.3% 339.4% 358.5% 352.5% 308.0% 347.4%
Return On Assets (ROA) 0.0% 15.1% 15.9% 16.2% 16.7% 16.2% 16.8% 18.7% 17.2% 14.0%
Retun On Equity (ROE) 0.0% 28.0% 27.4% 26.3% 28.1% 29.0% 29.0% 29.9% 28.6% 25.6%

Debt Related
Debt to Equity 92.9% 79.9% 66.5% 58.8% 78.7% 79.6% 67.6% 53.2% 79.4% 86.9%
Capitalization Ratio 8.5% 13.1% 9.8% 8.4% 8.2% 9.9% 7.5% 5.1% 4.9% 14.0%
FCF to Debt 22.5% 30.0% 37.3% 38.9% 33.6% 31.8% 39.3% 42.8% 33.8% 27.7%

Multi-Year Performance
1998-2005 1999-2006 2000-2007 1998-2003 1999-2004 2000-2005 2001-2006 2002-2007 Median
Shareholder Equity 22.0% 3.0% 3.4% 19.2% 18.2% 17.3% -6.8% 1.6% 10.3%
Free Cash Flow 17.2% 15.4% 12.1% 19.1% 16.8% 13.0% 13.8% 11.7% 14.6%
CROIC 27.5% 28.4% 29.7% 27.5% 28.4% 28.4% 29.7% 30.4% 28.4%
FCF/Sales 16.4% 16.7% 16.9% 16.1% 16.4% 16.7% 16.9% 17.1% 16.7%
ROA 16.2% 16.5% 16.5% 16.0% 16.2% 16.5% 16.7% 16.7% 16.5%
ROE 28.0% 28.4% 28.4% 27.7% 28.0% 28.6% 28.8% 28.8% 28.4%
Revenue Growth 11.4% 9.9% 11.2% 12.1% 11.5% 11.6% 10.1% 11.0% 11.3%
Gross Margin 71.0% 71.2% 71.2% 70.3% 71.0% 71.2% 71.4% 71.4% 71.2%
Operating Margin 23.9% 25.0% 25.0% 22.5% 23.9% 25.0% 25.6% 25.6% 25.0%
Net Margin 17.2% 17.6% 17.6% 16.8% 17.2% 17.6% 18.1% 18.1% 17.6%
Earnings Growth 0.0% 14.2% 11.4% 0.0% 14.1% 15.3% 15.2% 10.9% 12.8%
Cash from Ops Growth 13.5% 14.0% 12.8% 16.7% 14.4% 12.6% 10.0% 13.3% 13.4%
 Projection of future Free Cash Flow
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Growing at 12.0% $ 11,660 $ 13,060 $ 14,627 $15,691.03 $17,385.66 $19,263.31 $21,343.75 $21,866.48 $23,991.90 $26,323.91
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Growing at 3% $ 27,114 $ 27,927 $ 28,765 $ 29,628 $ 30,517 $ 31,432 $ 32,375 $ 33,346 $ 34,347 $ 35,377

Company Valuation Free Cash Flow and Tangible Shareholder Equity Trend
Total Value $ 208,780 $30,000.0
$25,696.0
Shares Outstanding 2913 FCF Shareholder Equity
$25,000.0
Per Share Value $ 71.67 $19,971.0
Margin of Safety 50% $20,000.0
$15,156.0 $15,330.0 $14,556.0
Purchase Price $ 35.84 $13,451.0
$15,000.0 $11,552.0
Current Price $ 55.83 $10,630.0
$10,564.0$10,411.0
$8,642.0 $8,458.0 $8,618.0
Actual Discount 22% $10,000.0 $6,381.0 $5,994.0 $6,804.0
$4,669.0 $5,542.0
$5,000.0 $2,845.0 $3,883.0

$-
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Margin Percentages
80.0% 72.4%
69.6% 71.1% 71.2% 70.9% 71.7% 71.8% 70.9%
68.3% 69.3%
70.0%

60.0%
Gross Margin

50.0% Operating Margin

Net Margin
40.0%

25.3% 27.1% 26.2% 25.9%

30.0% 23.0% 24.7%
20.8% 21.9% 20.6% 20.7% 21.5%
17.4% 16.5% 17.2% 18.2% 17.2% 18.0% 17.3%
20.0% 15.2%
12.9%

10.0%

0.0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Efficiency & Profitability Debt

50.0%
CROIC FCF/Sales ROA ROE 100.0% Debt to Equity Capitalization Ratio FCF to Debt
45.0% 90.0%
40.0% 80.0%
35.0% 70.0%
30.0% 60.0%
25.0% 50.0%
20.0% 40.0%
15.0% 30.0%
10.0% 20.0%
5.0% 10.0%
0.0% 0.0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Company Name ticker
JOHNSON & JOHNSON JNJ
2/18/2009 all figures in $Mil
Desired MOS Growth Discount % Price Share Value Buy under Actual D/C % 52Wk High 52Wk Low
50% 12.0% 9% $ 55.83 $ 71.67 $ 35.84 22% $ 72.76 $ 52.06

Historical Stock Price Vs Intrinsic Value Per Share

80

Historical Price Intrinsic Value Buy Price Linear (Historical Price)

70

60

50

40

30

20

10

0
3/2/1998 3/2/1999 3/2/2000 3/2/2001 3/2/2002 3/2/2003 3/2/2004 3/2/2005 3/2/2006 3/2/2007 3/2/2008
Company Name ticker
JOHNSON & JOHNSON JNJ
2/18/2009 all figures in $Mil

Desired MOS Growth Price Actual DC% Share Value Buy under P/B Ratio Net Net Working Capital
User Input Params
66% 12.0% $ 55.83 49% $ 108.47 $ 36.88 3.75 $ (6.05)

Earnings
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
$ - $ 1.47 $ 1.70 $ 1.84 $ 2.16 $ 2.40 $ 2.84 $ 3.46 $ 3.73 $ 3.63
Diluted EPS
2008 2009 2010 2011
$ 4.45 $ 4.78 $ 5.17 $ 5.74

Multi-Year Performance
1998-2003 1999-2004 2000-2005 2001-2006 2002-2007 1998-2001 1999-2002 2000-2003
Earnings Growth 0.0% 14.1% 15.3% 15.2% 10.9% 0.0% 13.7% 12.2%
EPS Weighted Average $ 1.60 $ 2.07 $ 2.40 $ 2.74 $ 3.04 $ 1.25 $ 1.79 $ 2.03
2001-2004 2002-2005 2003-2006 2004-2007 Median (1998-2007)
Earnings Growth 15.57% 17.01% 15.83% 8.52% 13.9%
EPS Weighted Average $ 2.31 $ 2.72 $ 3.11 $ 3.42 $2.36

Company Stats $6.00

Normal Earnings $ 4.09 EPS
Linear (EPS)
Expected 5 Year Growth 12.00% $5.00 $4.78
$4.45
20 yr AA Corp Bond Rate 5.86
Book Value Per Share 14.87 $4.00 $3.73 $3.63
$3.46
Price to Book Ratio 3.75
$2.84
Enterprise Value Per Share 66.08 $3.00
$2.40
$2.16
$1.70 $1.84
$2.00 $1.47
Company Valuation
Per Share Value $ 108.47 $1.00
Desired MOS 66.00%
$-
Purchase Price $ 36.88 $-
Current Price $ 55.83 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Actual Discount 49%
Company Name ticker
JOHNSON & JOHNSON JNJ
2/18/2009 Enter Competitor Tickers Into Boxes Below all figures in $Mil
JNJ ABT BMY PG BSX NVS Industry Ranking
Stock Price 55.83 54.2 20.92 50.95 8.46 41.9 NA NA
Market Cap (millions) 154,900 84,100 41,300 149,330 12,700 94,900 NA NA

Valuation Ratios
P/E Ratio (TTM) 12.27 17.77 13.37 13.6 0 11.74 3.38 4
Price to Sales (TTM) 2.44 2.83 2.04 1.76 1.59 2.22 0.89 2
Price to Book (MRQ) 0 0 0 2.4 0.98 1.88 1.69 4
Price to Tangible Book (MRQ) 0 0 0 0 0 3.21 4.24 2
Price to Cash Flow (TTM) 0 0 0 9.71 0 10.08 1.43 3
Price to Free Cash Flow (TTM) 0 0 0 23.65 0 12.52 116.88 3

Dividends
Dividend Yield 3.29 2.67 5.84 3.19 NA 4.12 0.14 3
Dividend Yield - 5 Year Avg. 2.29 2.48 4.61 2.05 0 1.95 1.57 3
Dividend 5 Year Growth Rate 14.18 8 2.06 12.08 0 15.96 20.57 2
Payout Ratio (TTM) 0 0 0 39.47 0 41.17 5.97 3

Growth Rates
Sales (MRQ) vs Qtr. 1 Yr. Ago -4.86 10.09 3.78 -3.18 -6.97 1.74 1.63 5
Sales (TTM) vs TTM 1 Yr. Ago 2.44 2.83 2.04 1.76 1.59 2.22 0.89 2
Sales - 5 Yr. Growth Rate 8.77 11.31 2 14 18.29 11.36 10.81 5
EPS (MRQ) vs Qtr. 1 Yr. Ago 17.7 15.4 723.8 -2.27 -426.78 61.46 -22.97 3
EPS (TTM) vs TTM 1 Yr. Ago 25.63 31.27 80.59 12.93 -315.8 27.59 0 4
EPS - 5 Yr. Growth Rate 13.75 13.74 -0.01 14.53 0 17.76 10.51 3
Capital Spending - 5 Yr. Growth Rate 0 0 0 15.5 0 8.46 1.79 3

Financial Strength
Quick Ratio (MRQ) 0 0 0 0.46 1.43 0.91 2.72 4
Current Ratio (MRQ) 0 0 0 0.69 1.7 1.27 3.15 4
LT Debt to Equity (MRQ) 0 0 0 31.75 51.32 4.33 11.28 4
Total Debt to Equity (MRQ) 0 0 0 66.9 51.34 14.64 16.02 4

Profitability
Gross Margin (TTM) 70.96 57.29 68.95 50.7 69.33 73.14 8.7 2
Gross Margin - 5 Yr. Avg. 71.45 55.5 68.38 51.38 73.17 73.01 66.37 3
EBITD Margin (TTM) 0 0 0 24.04 -9.55 23.94 0 3
EBITD - 5 Yr. Avg. 0 0 0 23.53 2.48 28.68 22.6 4
Operating Margin (TTM) 26.56 19.28 26.56 20.04 -19.08 21.05 0.62 1
Operating Margin - 5 Yr. Avg. 25.45 17.16 21.03 19.51 -5.42 20.51 19.39 1
Pre-Tax Margin (TTM) 26.56 19.83 26.56 18.96 -25.63 22.31 4.16 1
Pre-Tax Margin - 5 Yr. Avg. 25.45 17.8 21.03 18.46 -10.46 22.03 22.82 1
Net Profit Margin (TTM) 20.31 16.03 20.15 14.3 -25.74 19.17 3.57 1
Net Profit Margin - 5 Yr. Avg. 19.14 13.85 15.79 13.13 -12.33 18.87 13.54 1

Management Effectiveness
Return On Assets (TTM) 0 0 0 8.46 -7.11 10.62 0.78 3
Return On Assets - 5 Yr. Avg. 0 0 0 9.09 -4.7 10.32 7.64 3
Return On Investment (TTM) 0 0 0 11.18 -8 13.57 1.01 3
Return On Investment - 5 Yr Avg 0 0 0 12.05 -5.39 13.45 9.52 3
Return On Equity (TTM) 0 0 0 18.41 -14.68 16.33 1.43 3
Return On Equity - 5 Yr. Avg. 0 0 0 21.61 -9.54 16.47 10.49 3

Efficiency
Revenue/Employee (TTM) 0 0 0 606370 0 440281 2444586 NA
Net Income/Employee (TTM) 0 0 0 86688 0 84398 166242 NA
Receivable Turnover (TTM) 0 0 0 11.43 5.54 6.23 0.48 NA
Inventory Turnover (TTM) 0 0 0 5.13 3.13 2.03 0.24 NA
Asset Turnover (TTM) 0 0 0 0.59 0.28 0.55 0.08 4
Company Name ticker
JOHNSON & JOHNSON JNJ
2/18/2009

Net Profit Margin Cash Flow (Continuing Operations)

21% 21%
20% 15295 15249
17% 18% 17% 18% 17% 14248
16%
15% 11877
13% 11131 10595
8176 8864
6563
5677 4886

TTM 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12 TTM 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12
20% 17% 21% 21% 18% 17% 18% 17% 16% 15% 13% 15295 15249 14248 11877 11131 10595 8176 8864 6563 5677 4886
% Change -16.5% 0.6% 14.7% 4.5% -5.4% 5.8% 4.3% 8.6% 17.3% -- % Change 7.0% 20.0% 6.7% 5.1% 29.6% -7.8% 35.1% 15.6% 16.2% --

Magic Formula Investing -- Return on Capital Magic Formula Investing -- Earnings Yield
0.93 13.0%
0.77 0.77
0.66 0.66 0.70 0.70 10.1% 10.5%
0.64 0.63 9.8%
0.57 0.60 8.5% 8.9% 8.4%
7.6% 7.5%
6.3% 6.6%

Now 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12 Now 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12
0.66 0.77 0.93 0.57 0.64 0.66 0.70 0.60 0.63 0.70 0.77 13.0% 10.1% 8.5% 10.5% 8.9% 9.8% 8.4% 6.3% 7.6% 7.5% 6.6%
% Change -17.5% 61.7% -10.8% -2.3% -6.1% 15.8% -3.8% -9.6% -9.7% -- % Change 18.9% -18.6% 17.6% -9.4% 16.8% 32.8% -16.7% 1.0% 14.2% --

Return on Assets (ROA) Return on Equity (ROE)

18%
16% 16% 16%
15% 15% 15%
14% 14% 27.6% 28.1% 27.5% 29.1%
13% 26.7% 26.8% 25.5% 25.7%
12% 24.4% 23.4% 22.5%

2008/09 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12 2008/09 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12
14% 13% 16% 18% 16% 15% 16% 15% 15% 14% 12% 27.6% 24.4% 28.1% 27.5% 26.7% 26.8% 29.1% 23.4% 25.5% 25.7% 22.5%
% Change -16.6% -12.3% 11.9% 7.4% -8.6% 10.9% -3.9% 7.0% 22.2% -- % Change -13.2% 2.2% 3.0% -0.4% -7.9% 24.4% -8.2% -0.8% 14.2% --

Current Ratio Quick Ratio

2.5 2.2
2.3 2.2 1.9
1.7 1.8
2.0
1.7 1.7 1.8 1.4 1.4
1.6 1.5 1.4 1.4
1.4 1.3
1.2 0.9 1.0

2008/09 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12 2008/09 2007/12 2006/12 2005/12 2004/12 2003/12 2002/12 2001/12 2000/12 1999/12 1998/12
1.6 1.5 1.2 2.5 2.0 1.7 1.7 2.3 2.2 1.8 1.4 1.4 1.3 0.9 2.2 1.7 1.4 1.4 1.9 1.8 1.4 1.0
% Change 25.9% -51.7% 26.7% 14.7% 1.6% -26.7% 6.1% 22.2% 29.8% -- % Change 32.6% -56.5% 28.3% 17.3% 3.5% -27.6% 9.0% 30.3% 33.6% --
Company Name ticker
JOHNSON & JOHNSON JNJ
2/18/2009 all figures in $Mil

Company Assessment: Quantitative

Valuation Criteria over 10yrs Value Points User Points

> 25% or 50% depending on
DCF Valuation Discount 22% 1 1
moat
Graham Intrinsic Value Discount > 66% 49% 0

Margins, Profit and Growth Criteria over 10yrs Value Points User Points
Median Revenue growth 10% 11.3% 1
Median Gross Margin 30% 71.2% 1
Median Operating Margin 15% 25.0% 1
Median Net Margin 10% 17.6% 1
Median EPS growth 10% 13.9% 1

Business and Management Performance Criteria over 10yrs Value Points User Points
Cash growth from Operations 15% 13.4% 0
CROIC is postive and capable of paying off financing 13% 28.4% 2
Median FCF growth positive and consistent 10% 14.6% 1
Median FCF/Sales 7% 16.7% 2
Consistent ROE (manually check) Consistent over 10yrs N/A N/A
Consistent ROA (manually check) Consistent over 10yrs N/A N/A

Balance Sheet Criteria for TTM Value Points User Points

Current assets > 1.5 x current liabilities > 1.5 x current liabilities 1.5 1
Price to Book ratio < 2 N/A 3.75 N/A N/A
Debt to Equity < 100% 86.9% 1
FCF to Debt > 10% 27.7% 1
Capitalization Ratio < 30% 14% 1
Intangibles % of assets < 15% of assets 32.6% 0
 Company Assessment: Qualitative

Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the healthcare
field. Johnson & Johnson has more than 250 operating companies. The Company operates in three segments: Consumer,
Pharmaceutical, and Medical Devices and Diagnostics. Sales of the Company's two largest products, RISPERDAL and REMICADE,
accounted for approximately 6% and 5% of Johnson & Johnson�s total revenues, respectively, during the fiscal year ended
December 30, 2007 (fiscal 2007). During fiscal 2007, the Company acquired three companies: Conor Medsystems, Inc., which is a
cardiovascular device company, with new drug delivery technology; Robert Reid, Inc., which is a Japanese orthopedic product
distributor, and Maya�s Mom, Inc., which is a social media company. In October 2008, the Company acquired HealthMedia, Inc. In
December 2008, Johnson & Johnson acquired Omrix Biopharmaceuticals, Inc.

Competitive Advantage Comment User Points Max Points

Stable market share? 2 max 2
Dominant company in industry, segment? 2 max 2
Low barriers to entry and exit? 1 max 2
Experience goods (brand effect, trademarks) 1 max 2
High switching costs? 1 max 2
Network effect? E.g. eBay 0 max 2

Business Model Comment User Points Max Points

Growth due to:
a) No
a) existing product / existing market (yes/no)
b) Yes
b) existing product / new market (yes/no) 1 max 2
c) Yes
c) new product / existing market (yes/no)
d) Yes
d) new product / new market (yes/no)

Able to increase prices and retain customers? 1 max 1

Compete on price? (1 for no, 0 for yes) 1 max 1
Barriers of entry to the business? 0 max 1
Diverse customers? (1 for diverse, 0 for concentrated) 1 max 1
Involved in competition? Monopoly, duopoly, crowded 1 max 2
Company has a recurring revenue stream? 1 max 1
Capital intensive company? (1 for no, 0 for yes) 0 max 1

Management Comment User Points Max Points

High insider ownership? 1 max 1
Candid management on positives and negatives? 1 max 1
Management performance at previous jobs? 1 max 1
Compensation levels compared to sales? 1 max 1

Industry Comment User Points Max Points

Boring industry? (1 for slow, 0 for fast industry) 1 max 1
Can company adapt to changing industry environment? 1 max 1
Industry leader or lagger? (1 for leader, 0 for lagger) 0 max 1

Psychological Factors to Consider. Not Weighted. Comment

Recency bias? no
Hindsight bias? no
Framing issues correctly and in different manners? DCF, graham, compare to peers
Is there a data framing bias? maybe
Am I too overconfident on the situation? no
Performed probability analysis for -ve factors? no
Too much loss aversion? no
Sunk cost mentality? no
Slow in changing opinion? no
Psychological denial ? no
Bias from commitment and consistency tendency? no
Pavlovian association? no
Social proof bias? no
Status quo bias? no
False consensus bais? no
Category Total Points out of 5
Valuation 1.0
Margins, Profit and Growth 5.0
Business and Management Performance 2.5
Balance Sheet 4.0
Competitive Advantage 2.9
Business Model 3.0
Management 5.0

Low Risk High Growth Under Valued Well Managed Good Financial Health Strong Moat
4.0 2.0 3.0 4.0 4.0 4.0
4.0 2.0 3.0 4.0

JNJ Low Risk

5.0
4.0
3.0
Strong Moat High Growth
2.0
1.0
0.0

Good Financial Health Under Valued

Well Managed