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<div align="left" style="font-family: 'Times New Roman',Times,serif">   <div align="left"> </div> <div align="left" style="font-size: 10pt; margin-top: 0pt"> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">NOTE 1 — <div style="display: none">SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES </div> The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements of Johnson & Johnson and its Subsidiaries (the “Company”) and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2010. The unaudited interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the periods presented. </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Financial Accounting Standards Board (FASB) issued guidance and amendments to the criteria for separating consideration in multiple-deliverable revenue arrangements, which the Company adopted in the fiscal first quarter of 2010. The guidance also (a) provides principles and application guidance on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated; (b) requires an entity to allocate revenue in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price; and(c) eliminates the use of the residual method and requires an entity to allocate the revenue using the relative selling price method. The adoption did not have a material impact on the Company’s results of operations, cash flows or financial position however it will expand the disclosures for multiple-deliverable revenue arrangements. </div> </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal first quarter of 2010 the Company adopted the FASB standard related to variable interest entities. The adoption of this standard did not have an impact on the Company’s results of operations, cash flows or financial position. </div> </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal first quarter of 2010 the Company adopted the new accounting guidance on fair value measurements and disclosures. This guidance requires the Company to disclose the amount of significant transfers between Level 1 and Level 2 inputs and the reasons for these transfers as well as the reasons for any transfers in or out of Level 3 of the fair value hierarchy. In addition, the guidance clarifies certain existing disclosure requirements. The adoption of this standard did not have a significant impact on the Company’s results of operations, cash flows or financial position. </div> </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal second quarter of 2010 the FASB issued an accounting standard update related to revenue recognition under the milestone method. The objective of the accounting standard update is to provide guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. This update is effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The adoption of this standard is not expected to have a significant impact on the Company’s results of operations, cash flows or financial position. </div> </div> </div>

<div align="left" style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">NOTE 2 — INVENTORIES </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td>(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4, 2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">January 3, 2010</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Raw materials and supplies </div></td> <td> </td> <td align="right">$</td> <td align="right">1,072</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,144</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Goods in process </div></td> <td> </td> <td> </td> <td align="right">1,469</td> <td> </td> <td> </td> <td> </td> <td align="right">1,395</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Finished goods </div></td> <td> </td> <td> </td> <td align="right">2,530</td> <td> </td> <td> </td> <td> </td> <td align="right">2,641</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Inventories </div></td> <td> </td> <td align="right">$</td> <td align="right">5,071</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5,180</td> <td> </td> </tr>  </table> </div> </div> </div>

<div align="left" style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">NOTE 3 — INTANGIBLE ASSETS AND GOODWILL </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Intangible assets that have finite useful lives are amortized over their estimated useful lives. The latest impairment assessment of goodwill and indefinite lived intangible assets was completed in the fiscal fourth quarter of 2009. Future impairment tests for goodwill and indefinite lived intangible assets will be performed annually in the fiscal fourth quarter, or sooner if warranted. </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">January 3,</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Intangible assets with definite lives: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Patents and trademarks — gross </div></td> <td> </td> <td align="right">$</td> <td align="right">6,381</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5,697</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Less accumulated amortization </div></td> <td> </td> <td> </td> <td align="right">2,417</td> <td> </td> <td> </td> <td> </td> <td align="right">2,177</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Patents and trademarks – net </div></td> <td> </td> <td> </td> <td align="right">3,964</td> <td> </td> <td> </td> <td> </td> <td align="right">3,520</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other intangibles — gross </div></td> <td> </td> <td> </td> <td align="right">7,536</td> <td> </td> <td> </td> <td> </td> <td align="right">7,808</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less accumulated amortization </div></td> <td> </td> <td> </td> <td align="right">2,703</td> <td> </td> <td> </td> <td> </td> <td align="right">2,680</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other intangibles – net </div></td> <td> </td> <td> </td> <td align="right">4,833</td> <td> </td> <td> </td> <td> </td> <td align="right">5,128</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total intangible assets with definite lives — gross </div></td> <td> </td> <td> </td> <td align="right">13,917</td> <td> </td> <td> </td> <td> </td> <td align="right">13,505</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Less accumulated amortization </div></td> <td> </td> <td> </td> <td align="right">5,120</td> <td> </td> <td> </td> <td> </td> <td align="right">4,857</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total intangible assets with definite lives — net </div></td> <td> </td> <td> </td> <td align="right">8,797</td> <td> </td> <td> </td> <td> </td> <td align="right">8,648</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Intangible assets with indefinite lives: </div></td> <td> </td> <td> </td> <td align="right"> </td> <td> </td> <td> </td> <td> </td> <td align="right"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Trademarks </div></td> <td> </td> <td> </td> <td align="right">5,749</td> <td> </td> <td> </td> <td> </td> <td align="right">5,938</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Purchased in-process research and development* </div></td> <td> </td> <td> </td> <td align="right">1,913</td> <td> </td> <td> </td> <td> </td> <td align="right">1,737</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total intangible assets with indefinite lives </div></td> <td> </td> <td> </td> <td align="right">7,662</td> <td> </td> <td> </td> <td> </td> <td align="right">7,675</td> <td> </td> </tr> <tr style="font-size: 10pt"> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total intangible assets — net </div></td> <td> </td> <td align="right">$</td> <td align="right">16,459</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">16,323</td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td>Purchased in-process research and development is accounted for as an indefinite-lived intangible asset until the underlying project is completed or abandoned.</td> </tr> </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">Goodwill as of July 4, 2010 was allocated by segment of business as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Med Dev</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Consumer</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Pharm</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">& Diag</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Total</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Goodwill, net at January 3, 2010 </div></td> <td> </td> <td align="right">$</td> <td align="right">8,074</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,244</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5,544</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">14,862</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Acquisitions </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">233</td> <td> </td> <td> </td> <td> </td> <td align="right">233</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Currency translation/Other </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(400</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(34</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(33</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(467</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Goodwill, net as of July 4, 2010 </div></td> <td> </td> <td align="right">$</td> <td align="right">7,674</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,210</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5,744</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">14,628</td> <td> </td> </tr>  </table> </div> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The weighted average amortization periods for patents and trademarks and other intangible assets are 17 years and 28 years, respectively. The amortization expense of amortizable intangible assets for the fiscal six months ended July 4, 2010 was $353 million, and the estimated amortization expense for the five succeeding years approximates $700 million, per year. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">NOTE 4 – FAIR VALUE MEASUREMENTS </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company uses forward exchange contracts to manage its exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of future intercompany product and third- party purchases of raw materials denominated in foreign currency. The Company also uses cross currency interest rate swaps to manage currency risk primarily related to borrowings. Both types of derivatives are designated as cash flow hedges. The Company also uses forward exchange contracts to manage its exposure to the variability of cash flows for repatriation of foreign dividends. These contracts are designated as net investment hedges. Additionally, the Company uses forward exchange contracts to offset its exposure to certain foreign currency assets and liabilities. These forward exchange contracts are not designated as hedges and therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency assets and liabilities. The Company does not enter into derivative financial instruments for trading or speculative purposes, or contain credit risk related contingent features or requirements to post collateral. On an ongoing basis the Company monitors counterparty credit ratings. The Company considers credit non-performance risk to be low, because the Company enters into agreements with commercial institutions that have at least an A (or equivalent) credit rating. As of July 4, 2010, the Company had notional amounts outstanding for forward foreign exchange contracts and cross currency interest rate swaps of $23 billion and $3 billion, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">All derivative instruments are to be recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether the derivative is designated as part of a hedge transaction, and if so, the type of hedge transaction. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The designation as a cash flow hedge is made at the entrance date into the derivative contract. At inception, all derivatives are expected to be highly effective. Changes in the fair value of a derivative that is designated as a cash flow hedge and is highly effective are recorded in accumulated other comprehensive income until the underlying transaction affects earnings, and are then reclassified to earnings in the same account as the hedged transaction. Gains/losses on net investment hedges are accounted for through the currency translation account and are insignificant. On an ongoing basis, the Company assesses whether each derivative continues to be highly effective in offsetting changes in the cash flows of hedged items. If and when a derivative is no longer expected to be highly effective, hedge accounting is discontinued. Hedge ineffectiveness, if any, is included in current period earnings in other (income) and expense, net, and was not material for the fiscal quarters and fiscal six months ended July 4, 2010 and June 28, 2009. Refer to Note 7 for disclosures of movements in Accumulated Other Comprehensive Income. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">As of July 4, 2010, the balance of deferred net gains on derivatives included in accumulated other comprehensive income was $56 million after-tax. For additional information, see Note 7. The Company expects that substantially all of the amounts related to foreign exchange contracts will be reclassified into earnings over the next 12 months as a result of transactions that are expected to occur over that period. The maximum length of time over which the Company is hedging transaction exposure is 18 months excluding interest rate swaps. The amount ultimately realized in earnings will differ as foreign exchange rates change. Realized gains and losses are ultimately determined by actual exchange rates at maturity of the derivative. </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table is a summary of the activity related to designated derivatives for the fiscal second quarters:* </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>reclassified</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>recognized in</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>from</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>recognized in</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Accumulated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Accumulated OCI</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>other</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>OCI</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>into income</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>income/expense</b> <sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td>(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Cash Flow Hedges</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> <td style="border-bottom: 0px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(53</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(38</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(9</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(13</td> <td nowrap="nowrap">) <sub style="font-size: 85%; vertical-align: text-bottom">(A)</sub></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(20</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(2</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(102</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(117</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(76</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">15</td> <td nowrap="nowrap">    <sub style="font-size: 85%; vertical-align: text-bottom">(B)</sub></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(149</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">44</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">12</td> <td nowrap="nowrap">    <sub style="font-size: 85%; vertical-align: text-bottom">(C)</sub></td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cross currency interest rate swaps </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(82</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">84</td> <td> </td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)  <sub style="font-size: 85%; vertical-align: text-bottom">(D)</sub></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">35</td> <td> </td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">6</td> <td nowrap="nowrap">    <sub style="font-size: 85%; vertical-align: text-bottom">(E)</sub></td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(158</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(40</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(54</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">19</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(133</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td>All amounts shown in the table above are net of tax.</td> </tr> </table>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table is a summary of the activity related to designated derivatives for the first fiscal six months ended:* </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>reclassified</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>recognized in</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>from</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>recognized in</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Accumulated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Accumulated OCI</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>other</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>OCI</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>into income</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>income/expense</b> <sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td>(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Cash Flow Hedges</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> <td style="border-bottom: 0px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(84</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(46</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(29</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(8</td> <td nowrap="nowrap">) <sub style="font-size: 85%; vertical-align: text-bottom">(A)</sub></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(21</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(206</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(65</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(98</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">34</td> <td nowrap="nowrap">   <sub style="font-size: 85%; vertical-align: text-bottom">(B)</sub></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(154</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">73</td> <td> </td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">21</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">22</td> <td nowrap="nowrap">   <sub style="font-size: 85%; vertical-align: text-bottom">(C)</sub></td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cross currency interest rate swaps </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(49</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">193</td> <td> </td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(7</td> <td nowrap="nowrap">) <sub style="font-size: 85%; vertical-align: text-bottom">(D)</sub></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">81</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">3</td> <td nowrap="nowrap">   <sub style="font-size: 85%; vertical-align: text-bottom">(E)</sub></td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(185</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">131</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(96</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">44</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(139</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">5</td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td>All amounts shown in the table above are net of tax.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td> <td>Effective portion</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td> <td> </td> <td>Ineffective portion</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(A)</td> <td> </td> <td>Included in Sales to customer</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(B)</td> <td> </td> <td>Included in Cost of products sold</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(C)</td> <td> </td> <td>Included in Research expense</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(D)</td> <td> </td> <td>Included in Interest (income)/Interest expense, net</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(E)</td> <td> </td> <td>Included in Other (income)/expense, net</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For the fiscal second quarters ended July 4, 2010 and June 28, 2009, a loss of $21 million and a gain of $10 million, respectively, was recognized in Other (income)/expense, net, relating to foreign exchange contracts not designated as hedging instruments. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For the first fiscal six months ended July 4, 2010 and June 28, 2009, a loss of $69 million and a gain of $4 million, respectively, was recognized in Other (income)/expense, net, relating to foreign exchange contracts not designated as hedging instruments. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market- based measurement that should be determined using assumptions that market participants would use in pricing an asset or liability. The authoritative literature establishes a three-level hierarchy to prioritize the inputs used in measuring fair value. The levels within the hierarchy are described below with Level 1 having the highest priority and Level 3 having the lowest. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of a derivative financial instrument (i.e. forward exchange contract, currency swap) is the aggregation by currency of all future cash flows discounted to its present value at the prevailing market interest rates and subsequently converted to the U.S. dollar at the current spot foreign exchange rate. The Company does not believe that fair values of these derivative instruments materially differ from the amounts that could be realized upon settlement or maturity, or that the changes in fair value will have a material effect on the Company’s results of operations, cash flows or financial position. The Company also holds equity investments which are classified as Level 1 since they are traded in an active exchange market. The Company did not have any other significant financial assets or liabilities which would require revised valuations under this standard that are recognized at fair value. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following three levels of inputs are used to measure fair value: </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Level 1 — Quoted prices in active markets for identical assets and liabilities. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Level 2 — Significant other observable inputs. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Level 3 — Significant unobservable inputs. </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company’s significant financial assets and liabilities measured at fair value as of July 4, 2010 and January 3, 2010 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 0px solid #000000"><b>July 4, 2010</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>January 3, 2010</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 1</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 2</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 3</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Total</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Total</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Derivatives designated as hedging instruments :</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Assets:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">384</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">384</td> <td> </td> <td> </td> <td> </td> <td align="right">436</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cross currency interest rate swaps <sup style="font-size: 85%; vertical-align: text-top">(2)</sup> </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> <td> </td> <td> </td> <td align="right">126</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">417</td> <td> </td> <td> </td> <td> </td> <td align="right"></td> <td> </td> <td> </td> <td> </td> <td align="right">417</td> <td> </td> <td> </td> <td> </td> <td align="right">562</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Liabilities:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">557</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">557</td> <td> </td> <td> </td> <td> </td> <td align="right">608</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cross currency interest rate swaps <sup style="font-size: 85%; vertical-align: text-top">(3)</sup> </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">645</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">645</td> <td> </td> <td> </td> <td> </td> <td align="right">571</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">1,202</td> <td> </td> <td> </td> <td> </td> <td align="right"></td> <td> </td> <td> </td> <td> </td> <td align="right">1,202</td> <td> </td> <td> </td> <td> </td> <td align="right">1,179</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Derivatives not designated as hedging instruments:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Assets:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Liabilities:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">35</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">35</td> <td> </td> <td> </td> <td> </td> <td align="right">40</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Other Investments</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(4)</b></sup> </div></td> <td> </td> <td align="right">$</td> <td align="right">880</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">880</td> <td> </td> <td> </td> <td> </td> <td align="right">1,134</td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td> <td>As of January 3, 2010, these assets and liabilities are classified as Level 2 with the exception of other investments of $1,134 which are classified as Level 1.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td> <td> </td> <td>Includes $26 million and $119 million of non-current assets for July 4, 2010 and January 3, 2010, respectively.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(3)</td> <td> </td> <td>Includes $645 million and $517 million of non-current liabilities for July 4, 2010 and January 3, 2010, respectively.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(4)</td> <td> </td> <td>Classified as non-current other assets.</td> </tr> </table> </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">Financial Instruments not measured at Fair Value: </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following financial assets and liabilities are held at carrying amount on the consolidated balance sheet as of July 4, 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Carrying</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Estimated</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Amount</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fair Value</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Financial Assets</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Current Investments</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash </div></td> <td> </td> <td align="right">$</td> <td align="right">2,144</td> <td> </td> <td> </td> <td> </td> <td align="right">2,144</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Government securities and obligations </div></td> <td> </td> <td> </td> <td align="right">12,799</td> <td> </td> <td> </td> <td> </td> <td align="right">12,800</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Corporate debt securities </div></td> <td> </td> <td> </td> <td align="right">960</td> <td> </td> <td> </td> <td> </td> <td align="right">960</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Money market funds </div></td> <td> </td> <td> </td> <td align="right">2,173</td> <td> </td> <td> </td> <td> </td> <td align="right">2,173</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Time deposits </div></td> <td> </td> <td> </td> <td align="right">825</td> <td> </td> <td> </td> <td> </td> <td align="right">825</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total cash, cash equivalents and current marketable securities </div></td> <td> </td> <td align="right">$</td> <td align="right">18,901</td> <td> </td> <td> </td> <td> </td> <td align="right">18,902</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td colspan="9" align="left">Fair value of government securities and obligations and non-current marketable securities was estimated using quoted broker prices in active markets.</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Financial Liabilities</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Current Debt</b> </div></td> <td> </td> <td align="right">$</td> <td align="right">3,715</td> <td> </td> <td> </td> <td> </td> <td align="right">3,715</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Non-Current Debt</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">5.15% Debentures due 2012 </div></td> <td> </td> <td> </td> <td align="right">599</td> <td> </td> <td> </td> <td> </td> <td align="right">655</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">3.80% Debentures due 2013 </div></td> <td> </td> <td> </td> <td align="right">500</td> <td> </td> <td> </td> <td> </td> <td align="right">543</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">5.55% Debentures due 2017 </div></td> <td> </td> <td> </td> <td align="right">1,000</td> <td> </td> <td> </td> <td> </td> <td align="right">1,151</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">5.15% Debentures due 2018 </div></td> <td> </td> <td> </td> <td align="right">898</td> <td> </td> <td> </td> <td> </td> <td align="right">1,023</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">4.75% Notes due 2019 (1B Euro 1.2388) </div></td> <td> </td> <td> </td> <td align="right">1,230</td> <td> </td> <td> </td> <td> </td> <td align="right">1,409</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">3% Zero Coupon Convertible Subordinated Debentures due in 2020 </div></td> <td> </td> <td> </td> <td align="right">190</td> <td> </td> <td> </td> <td> </td> <td align="right">222</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">6.73% Debentures due 2023 </div></td> <td> </td> <td> </td> <td align="right">250</td> <td> </td> <td> </td> <td> </td> <td align="right">316</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">5.50% Notes due 2024 (500 GBP 1.5045) </div></td> <td> </td> <td> </td> <td align="right">746</td> <td> </td> <td> </td> <td> </td> <td align="right">807</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">6.95% Notes due 2029 </div></td> <td> </td> <td> </td> <td align="right">294</td> <td> </td> <td> </td> <td> </td> <td align="right">369</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">4.95% Debentures due 2033 </div></td> <td> </td> <td> </td> <td align="right">500</td> <td> </td> <td> </td> <td> </td> <td align="right">532</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">5.95% Notes due 2037 </div></td> <td> </td> <td> </td> <td align="right">995</td> <td> </td> <td> </td> <td> </td> <td align="right">1,168</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">5.86% Debentures due 2038 </div></td> <td> </td> <td> </td> <td align="right">700</td> <td> </td> <td> </td> <td> </td> <td align="right">816</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other (Includes Industrial Revenue Bonds) </div></td> <td> </td> <td> </td> <td align="right">35</td> <td> </td> <td> </td> <td> </td> <td align="right">35</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total Non-Current Debt </div></td> <td> </td> <td align="right">$</td> <td align="right">7,937</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">9,046</td> <td> </td> </tr>  </table> </div> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The weighted average effective rate on non-current debt is 5.43%. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Fair value of the non-current debt was estimated using market prices, which were corroborated by quoted broker prices in active markets. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">NOTE 5 — INCOME TAXES </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The worldwide effective income tax rates for the first fiscal six months of 2010 and 2009 were 24.0% and 24.6%, respectively. The lower effective tax rate was primarily due to a decline in taxable income in higher tax jurisdictions relative to taxable income in lower tax jurisdictions partially offset by the U.S. Research and Development tax credit which was not in effect for the first fiscal six months of 2010. In the second quarter of 2010 the Company received a favorable tax ruling related to a litigation settlement which reduced the tax rate previously recorded in the first quarter of 2010. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">NOTE 6 – PENSIONS AND OTHER POSTRETIREMENT BENEFITS </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">Components of Net Periodic Benefit Cost </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Net periodic benefit cost for the Company’s defined benefit retirement plans and other benefit plans for the fiscal second quarters of 2010 and 2009 include the following components: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000">Retirement Plans</td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000">Other Benefit Plans</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 0px solid #000000">Fiscal Quarters Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Service cost </div></td> <td> </td> <td align="right">$</td> <td align="right">121</td> <td> </td> <td> </td> <td> </td> <td align="right">116</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> <td> </td> <td> </td> <td align="right">36</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest cost </div></td> <td> </td> <td> </td> <td align="right">194</td> <td> </td> <td> </td> <td> </td> <td align="right">182</td> <td> </td> <td> </td> <td> </td> <td align="right">50</td> <td> </td> <td> </td> <td> </td> <td align="right">42</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected return on plan assets </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(248</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(227</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of prior service cost </div></td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of net transition asset </div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Recognized actuarial losses </div></td> <td> </td> <td> </td> <td align="right">59</td> <td> </td> <td> </td> <td> </td> <td align="right">41</td> <td> </td> <td> </td> <td> </td> <td align="right">13</td> <td> </td> <td> </td> <td> </td> <td align="right">14</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net periodic benefit cost </div></td> <td> </td> <td align="right">$</td> <td align="right">130</td> <td> </td> <td> </td> <td> </td> <td align="right">116</td> <td> </td> <td> </td> <td> </td> <td align="right">94</td> <td> </td> <td> </td> <td> </td> <td align="right">91</td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">Net periodic benefit cost for the Company’s defined benefit retirement plans and other benefit plans for the first fiscal six months of 2010 and 2009 include the following components: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="52%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000">Retirement Plans</td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000">Other Benefit Plans</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 0px solid #000000">Fiscal Six Months Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Service cost </div></td> <td> </td> <td align="right">$</td> <td align="right">247</td> <td> </td> <td> </td> <td> </td> <td align="right">234</td> <td> </td> <td> </td> <td> </td> <td align="right">67</td> <td> </td> <td> </td> <td> </td> <td align="right">70</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest cost </div></td> <td> </td> <td> </td> <td align="right">394</td> <td> </td> <td> </td> <td> </td> <td align="right">367</td> <td> </td> <td> </td> <td> </td> <td align="right">100</td> <td> </td> <td> </td> <td> </td> <td align="right">85</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expected return on plan assets </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(500</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(455</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of prior service cost </div></td> <td> </td> <td> </td> <td align="right">6</td> <td> </td> <td> </td> <td> </td> <td align="right">5</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Amortization of net transition asset </div></td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Recognized actuarial losses </div></td> <td> </td> <td> </td> <td align="right">117</td> <td> </td> <td> </td> <td> </td> <td align="right">82</td> <td> </td> <td> </td> <td> </td> <td align="right">25</td> <td> </td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net periodic benefit cost </div></td> <td> </td> <td align="right">$</td> <td align="right">265</td> <td> </td> <td> </td> <td> </td> <td align="right">234</td> <td> </td> <td> </td> <td> </td> <td align="right">189</td> <td> </td> <td> </td> <td> </td> <td align="right">180</td> <td> </td> </tr>  </table> </div> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt">Company Contributions </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For the fiscal six months ended July 4, 2010, the Company contributed $518 million and $11 million to its U.S. and international retirement plans, respectively. The Company plans to continue to fund its U.S. defined benefit plans to comply with the Pension Protection Act of 2006. International plans are funded in accordance with local regulations. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt">NOTE 7 — ACCUMULATED OTHER COMPREHENSIVE INCOME </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Total comprehensive income for the first fiscal six months ended July 4, 2010 was $5.3 billion, compared with $7.2 billion for the same period a year ago. Total comprehensive income for the fiscal second quarter ended July 4, 2010 was $1.6 billion, compared with $3.9 billion for the same period a year ago. Total comprehensive income included net earnings, net unrealized currency gains and losses on translation, adjustments related to Employee Benefit Plans, net unrealized gains and losses on securities available for sale and net gains and losses on derivative instruments qualifying and designated as cash flow hedges. The following table sets forth the components of accumulated other comprehensive income. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Total</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">For.</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Accum</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Cur.</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Gains/</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Employee</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Deriv.</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Other</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Trans.</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Losses)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Benefit</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">&</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Comp. Inc/</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Loss)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">on Sec.</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Plans</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Hedges</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Loss)</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">January 3, 2010 </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(508</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(30</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2,665</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">145</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3,058</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">2010 six months change </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Unrealized gain (loss) </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(121</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(185</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Net amount reclassed to net earnings </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(9</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">96 </td> <td nowrap="nowrap"> *</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net six months change </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2,502</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(130</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">74</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(89</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2,647</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">July 4, 2010 </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(3,010</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(160</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2,591</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">56</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(5,705</td> <td nowrap="nowrap">)</td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td>Substantially offset in net earnings by changes in value of the underlying transactions.</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Amounts in accumulated other comprehensive income are presented net of the related tax impact. Foreign currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in international subsidiaries. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt">NOTE 8 — EARNINGS PER SHARE </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal second quarters ended July 4, 2010 and June 28, 2009. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000">Fiscal Quarters Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Shares in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Basic net earnings per share </div></td> <td> </td> <td align="right">$</td> <td align="right">1.25</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1.16</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average shares outstanding – basic </div></td> <td> </td> <td> </td> <td align="right">2,756.6</td> <td> </td> <td> </td> <td> </td> <td align="right">2,756.2</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Potential shares exercisable under stock option plans </div></td> <td> </td> <td> </td> <td align="right">175.5</td> <td> </td> <td> </td> <td> </td> <td align="right">80.8</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less: shares which could be repurchased under treasury stock method </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(139.7</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(58.6</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Convertible debt shares </div></td> <td> </td> <td> </td> <td align="right">3.6</td> <td> </td> <td> </td> <td> </td> <td align="right">3.6</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average shares outstanding – diluted </div></td> <td> </td> <td> </td> <td align="right">2,796.0</td> <td> </td> <td> </td> <td> </td> <td align="right">2,782.0</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted earnings per share </div></td> <td> </td> <td align="right">$</td> <td align="right">1.23</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1.15</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The diluted earnings per share calculation for both fiscal second quarters ended July 4, 2010 and June 28, 2009 included the dilutive effect of convertible debt that was offset by the related reduction in interest expense. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The diluted earnings per share calculation for the fiscal second quarters ended July 4, 2010 and June 28, 2009 excluded 68 million and 178 million shares, respectively, related to stock options, as the exercise price of these options was greater than their average market value, which would result in an anti-dilutive effect on diluted earnings per share. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal six months ended July 4, 2010 and June 28, 2009. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000">Fiscal Six Months Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Shares in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Basic net earnings per share </div></td> <td> </td> <td align="right">$</td> <td align="right">2.89</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2.43</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average shares outstanding – basic </div></td> <td> </td> <td> </td> <td align="right">2,755.7</td> <td> </td> <td> </td> <td> </td> <td align="right">2,761.3</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Potential shares exercisable under stock option plans </div></td> <td> </td> <td> </td> <td align="right">175.4</td> <td> </td> <td> </td> <td> </td> <td align="right">108.4</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less: shares which could be repurchased under treasury stock method </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(138.6</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(87.8</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Convertible debt shares </div></td> <td> </td> <td> </td> <td align="right">3.6</td> <td> </td> <td> </td> <td> </td> <td align="right">3.6</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average shares outstanding – diluted </div></td> <td> </td> <td> </td> <td align="right">2,796.1</td> <td> </td> <td> </td> <td> </td> <td align="right">2,785.5</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted earnings per share </div></td> <td> </td> <td align="right">$</td> <td align="right">2.85</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2.41</td> <td> </td> </tr>  </table> </div> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The diluted earnings per share calculation for both the fiscal six months ended July 4, 2010 and June 28, 2009 included the dilutive effect of convertible debt that was offset by the related reduction in interest expense. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The diluted earnings per share calculation for the fiscal six months ended July 4, 2010 and June 28, 2009 excluded 68 million and 151 million shares related to stock options, as the exercise price of these options was greater than their average market value, which would result in an anti-dilutive effect on diluted earnings per share. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">NOTE 9 — SEGMENTS OF BUSINESS AND GEOGRAPHIC AREAS </div> <div align="left" style="font-size: 10pt; margin-top: 0pt">(Dollars in Millions) </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">SALES BY SEGMENT OF BUSINESS (1) </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Quarters Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Consumer </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td align="right">$</td> <td align="right">1,463</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,708</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(14.3</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">2,184</td> <td> </td> <td> </td> <td> </td> <td align="right">2,146</td> <td> </td> <td> </td> <td> </td> <td align="right">1.8</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">3,647</td> <td> </td> <td> </td> <td> </td> <td align="right">3,854</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(5.4</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Pharmaceutical </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">3,110</td> <td> </td> <td> </td> <td> </td> <td align="right">3,172</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.0</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">2,443</td> <td> </td> <td> </td> <td> </td> <td align="right">2,326</td> <td> </td> <td> </td> <td> </td> <td align="right">5.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">5,553</td> <td> </td> <td> </td> <td> </td> <td align="right">5,498</td> <td> </td> <td> </td> <td> </td> <td align="right">1.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Medical Devices & Diagnostics </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">2,865</td> <td> </td> <td> </td> <td> </td> <td align="right">2,776</td> <td> </td> <td> </td> <td> </td> <td align="right">3.2</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">3,265</td> <td> </td> <td> </td> <td> </td> <td align="right">3,111</td> <td> </td> <td> </td> <td> </td> <td align="right">5.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">6,130</td> <td> </td> <td> </td> <td> </td> <td align="right">5,887</td> <td> </td> <td> </td> <td> </td> <td align="right">4.1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Worldwide </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">7,438</td> <td> </td> <td> </td> <td> </td> <td align="right">7,656</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.8</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">7,892</td> <td> </td> <td> </td> <td> </td> <td align="right">7,583</td> <td> </td> <td> </td> <td> </td> <td align="right">4.1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td align="right">$</td> <td align="right">15,330</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">15,239</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.6</td> <td nowrap="nowrap">%</td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Six Months Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Consumer </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td align="right">$</td> <td align="right">3,023</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3,434</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(12.0</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">4,390</td> <td> </td> <td> </td> <td> </td> <td align="right">4,131</td> <td> </td> <td> </td> <td> </td> <td align="right">6.3</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">7,413</td> <td> </td> <td> </td> <td> </td> <td align="right">7,565</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.0</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Pharmaceutical </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">6,316</td> <td> </td> <td> </td> <td> </td> <td align="right">6,846</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(7.7</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">4,875</td> <td> </td> <td> </td> <td> </td> <td align="right">4,432</td> <td> </td> <td> </td> <td> </td> <td align="right">10.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">11,191</td> <td> </td> <td> </td> <td> </td> <td align="right">11,278</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(0.8</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Medical Devices & Diagnostics </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">5,751</td> <td> </td> <td> </td> <td> </td> <td align="right">5,428</td> <td> </td> <td> </td> <td> </td> <td align="right">6.0</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">6,606</td> <td> </td> <td> </td> <td> </td> <td align="right">5,994</td> <td> </td> <td> </td> <td> </td> <td align="right">10.2</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">12,357</td> <td> </td> <td> </td> <td> </td> <td align="right">11,422</td> <td> </td> <td> </td> <td> </td> <td align="right">8.2</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Worldwide </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">15,090</td> <td> </td> <td> </td> <td> </td> <td align="right">15,708</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.9</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">15,871</td> <td> </td> <td> </td> <td> </td> <td align="right">14,557</td> <td> </td> <td> </td> <td> </td> <td align="right">9.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td align="right">$</td> <td align="right">30,961</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">30,265</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">2.3</td> <td nowrap="nowrap">%</td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td> <td>Export sales are not significant.</td> </tr> </table> </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">OPERATING PROFIT BY SEGMENT OF BUSINESS </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Quarters Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Consumer </div></td> <td> </td> <td align="right">$</td> <td align="right">669</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">695</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.7</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Pharmaceutical (2) </div></td> <td> </td> <td> </td> <td align="right">1,833</td> <td> </td> <td> </td> <td> </td> <td align="right">1,701</td> <td> </td> <td> </td> <td> </td> <td align="right">7.8</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Medical Devices & Diagnostics (3) </div></td> <td> </td> <td> </td> <td align="right">1,876</td> <td> </td> <td> </td> <td> </td> <td align="right">2,088</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(10.2</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Segments total </div></td> <td> </td> <td> </td> <td align="right">4,378</td> <td> </td> <td> </td> <td> </td> <td align="right">4,484</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.4</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expense not allocated to segments (4) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(158</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(221</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Worldwide total </div></td> <td> </td> <td align="right">$</td> <td align="right">4,220</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">4,263</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1.0</td> <td nowrap="nowrap">)%</td> </tr>  </table> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Six Months Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Consumer </div></td> <td> </td> <td align="right">$</td> <td align="right">1,454</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,495</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.7</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Pharmaceutical (2) </div></td> <td> </td> <td> </td> <td align="right">3,803</td> <td> </td> <td> </td> <td> </td> <td align="right">3,958</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.9</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Medical Devices & Diagnostics (3) </div></td> <td> </td> <td> </td> <td align="right">5,578</td> <td> </td> <td> </td> <td> </td> <td align="right">3,875</td> <td> </td> <td> </td> <td> </td> <td align="right">43.9</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Segments total </div></td> <td> </td> <td> </td> <td align="right">10,835</td> <td> </td> <td> </td> <td> </td> <td align="right">9,328</td> <td> </td> <td> </td> <td> </td> <td align="right">16.2</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expense not allocated to segments (4) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(335</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(422</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Worldwide total </div></td> <td> </td> <td align="right">$</td> <td align="right">10,500</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">8,906</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">17.9</td> <td nowrap="nowrap">%</td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td> <td> </td> <td>Includes net litigation expense of $115 million and $202 million recorded in the fiscal second quarter and the first fiscal six months of 2010, respectively.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(3)</td> <td> </td> <td>Includes net litigation expense of $42 million and income of $1,542 million recorded in the fiscal second quarter and the first fiscal six months of 2010, respectively.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(4)</td> <td> </td> <td>Amounts not allocated to segments include interest income/(expense) , non-controlling interests and general corporate income/(expense).</td> </tr> </table> </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">SALES BY GEOGRAPHIC AREA<br /> (Dollars in Millions) </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Quarters Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td align="right">$</td> <td align="right">7,438</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7,656</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.8</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Europe </div></td> <td> </td> <td> </td> <td align="right">3,832</td> <td> </td> <td> </td> <td> </td> <td align="right">3,972</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.5</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Western Hemisphere, excluding U.S. </div></td> <td> </td> <td> </td> <td align="right">1,375</td> <td> </td> <td> </td> <td> </td> <td align="right">1,215</td> <td> </td> <td> </td> <td> </td> <td align="right">13.2</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Asia-Pacific, Africa </div></td> <td> </td> <td> </td> <td align="right">2,685</td> <td> </td> <td> </td> <td> </td> <td align="right">2,396</td> <td> </td> <td> </td> <td> </td> <td align="right">12.1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td align="right">$</td> <td align="right">15,330</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">15,239</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.6</td> <td nowrap="nowrap">%</td> </tr>  </table> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Six Months Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td align="right">$</td> <td align="right">15,090</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">15,708</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.9</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Europe </div></td> <td> </td> <td> </td> <td align="right">7,934</td> <td> </td> <td> </td> <td> </td> <td align="right">7,643</td> <td> </td> <td> </td> <td> </td> <td align="right">3.8</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Western Hemisphere, excluding U.S. </div></td> <td> </td> <td> </td> <td align="right">2,655</td> <td> </td> <td> </td> <td> </td> <td align="right">2,277</td> <td> </td> <td> </td> <td> </td> <td align="right">16.6</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Asia-Pacific, Africa </div></td> <td> </td> <td> </td> <td align="right">5,282</td> <td> </td> <td> </td> <td> </td> <td align="right">4,637</td> <td> </td> <td> </td> <td> </td> <td align="right">13.9</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td align="right">$</td> <td align="right">30,961</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">30,265</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">2.3</td> <td nowrap="nowrap">%</td> </tr>  </table> </div> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt">NOTE 10– BUSINESS COMBINATIONS AND DIVESTITURES </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal second quarter of 2010, the Company acquired RespiVert Ltd., a privately held<br /> drug discovery company focused on developing small-molecule, inhaled therapies for the treatment of<br /> pulmonary diseases. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal first quarter of 2010, the Company acquired Acclarent, Inc., a medical technology company dedicated to designing, developing and commercializing devices that address conditions affecting the ear, nose and throat, for a net purchase price of $0.8 billion. The purchase price for the acquisition was allocated primarily to amortizable intangible assets for $0.7 billion. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal first quarter of 2009, the Company acquired Mentor Corporation, a leading supplier of medical products for the global aesthetic market, for a net purchase price of $1.1 billion. The purchase price for the acquisition was allocated primarily to amortizable intangible assets for $0.9 billion and goodwill for $0.4 billion. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">NOTE 11 — LEGAL PROCEEDINGS </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b>PRODUCT LIABILITY</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company’s subsidiaries are involved in numerous product liability cases in the United States, many of which concern alleged 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 that accompany such products, it is not feasible to predict the ultimate outcome of litigation. However, the Company believes that if any product liability results from such cases, it will be substantially covered by existing amounts accrued in the Company’s balance sheet and, where available, by third-party product liability insurance. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Multiple products of Johnson & Johnson subsidiaries are subject to numerous product liability claims and lawsuits. There are a significant number of claimants who have pending lawsuits or claims regarding injuries allegedly due to ORTHO EVRA<sup style="font-size: 85%; vertical-align: text-top">®</sup>, RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup>, LEVAQUIN<sup style="font-size: 85%; vertical-align: text-top">®</sup>, DURAGESIC<sup style="font-size: 85%; vertical-align: text-top">®</sup>, the CHARITÉ™ Artificial Disc and CYPHER<sup style="font-size: 85%; vertical-align: text-top">®</sup> Stent. These claimants seek substantial compensatory and, where available, punitive damages. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     With respect to RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup>, the Attorneys General of multiple states and the Office of General Counsel of the Commonwealth of Pennsylvania have filed actions seeking reimbursement of Medicaid or other public funds for RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup> prescriptions written for off-label use, compensation for treating their citizens for alleged adverse reactions to RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup>, civil fines or penalties, damages for “overpayments” by the state and others, punitive damages, or other relief. The Attorney General of Texas has joined a qui tam action in that state seeking similar relief. Certain of these actions also seek injunctive relief relating to the promotion of RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup>. The Attorneys General of more than 40 other states have indicated a potential interest in pursuing similar litigation against the Company’s subsidiary, Janssen Pharmaceutica Inc. (Janssen) (now Ortho-McNeil-Janssen Pharmaceuticals Inc. (OMJPI)), and have obtained a tolling agreement staying the running of the statute of limitations while they inquire into the issues. In addition, there are six cases filed by union health plans seeking damages for alleged overpayments for RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup>, several of which seek certification as class actions. One of these has been dismissed on Summary Judgment. In the case brought by the Attorney General of West Virginia, based on claims for alleged consumer fraud as to DURAGESIC<sup style="font-size: 85%; vertical-align: text-top">®</sup> as well as RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup>, Janssen (now OMJPI) was found liable and damages were assessed at $4.5 million. OMJPI filed an appeal. The West Virginia Supreme Court has accepted Janssen’s appeal from that Judgment. It will be orally argued in September 2010. In the Commonwealth of Pennsylvania suit against Janssen, trial commenced in June 2010. The Judge dismissed the case after the close of the plaintiff’s evidence. The Commonwealth has filed post-trial motions and may appeal. Other cases scheduled for trial are in Louisiana and South Carolina, currently scheduled in September 2010, and Texas scheduled in January 2011. In addition, Attorneys General of many states have been involved in a coordinated civil investigation of OMJPI regarding potential consumer fraud actions in connection with the marketing of RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup>. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>PATENT LITIGATION</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The products of various Johnson & Johnson subsidiaries are the subject of various patent lawsuits, the outcomes of which could potentially adversely affect the ability of those subsidiaries to sell those products, or require the payment of past damages and future royalties. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On January 29, 2010, Cordis Corporation (Cordis) settled a patent infringement action against Boston Scientific Corporation (Boston Scientific) in Delaware Federal District Court accusing its Express2™, Taxus<sup style="font-size: 85%; vertical-align: text-top">®</sup> and Liberte<sup style="font-size: 85%; vertical-align: text-top">®</sup> stents of infringing the Palmaz and Gray patents. Under the terms of the settlement Boston Scientific dropped its lawsuit in which Cordis’ Cypher stent was found to have infringed their Jang patent and paid Cordis $1.0 billion on February 1, 2010. Boston Scientific also agreed to pay Cordis an additional $725 million plus interest by January 3, 2011. On August 2, 2010, Boston Scientific paid the full $725 million plus interest. The Company recorded the $1.7 billion in the fiscal first quarter of 2010. Cordis granted Boston Scientific a worldwide license under the Palmaz and Gray patents and Boston Scientific granted Cordis a worldwide license under the Jang patents for all stents sold by Cordis except the 2.25mm size Cypher. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Cordis has several pending lawsuits in the New Jersey and Delaware Federal District Court, against Guidant Corporation (Guidant), Abbott Laboratories, Inc. (Abbott), Boston Scientific and Medtronic Ave, Inc. (Medtronic) alleging that the Xience V™ (Abbott), Promus™ (Boston Scientific) and Endeavor<sup style="font-size: 85%; vertical-align: text-top">®</sup> (Medtronic) drug eluting stents infringe several patents owned by or licensed to Cordis. In one of the cases against Boston Scientific, alleging that sales of their Promus™ stent infringed Wright and Falotico patents, on January 20, 2010 the District Court in Delaware found the Wright/Falotico patent invalid for lack of written description and/or lack of enablement. Cordis has appealed this ruling. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In October 2004, Tyco Healthcare Group, LP, (Tyco) and U.S. Surgical Corporation sued Ethicon Endo-Surgery (EES) alleging that several features of EES’s harmonic scalpel infringed four Tyco patents. In October 2007, the court granted in part and denied in part cross-motions for summary judgment. As a result of the opinion, a number of claims have been found invalid and a number have been found infringed. No claim has been found valid and infringed. Trial commenced in December 2007, and the court dismissed the case without prejudice on grounds that Tyco did not own the patents in suit. The dismissal without prejudice was affirmed on appeal. In January 2010, Tyco filed another complaint in the District of Connecticut asserting three of the four patents from the previous suit and adding new products. The case is scheduled to be trial ready by June 2011. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In May 2008, Centocor, Inc. (Centocor) (now Centocor Ortho Biotech Inc. (COBI)) filed a lawsuit against Genentech, Inc. (Genentech) in U.S. District Court for the Central District of California seeking to invalidate the Cabilly II patent. Prior to filing suit, Centocor had a sublicense under this patent from Celltech (who was licensed by Genentech) for REMICADE<sup style="font-size: 85%; vertical-align: text-top">®</sup> and had been paying royalties to Celltech. Centocor has terminated that sublicense and stopped paying royalties. Genentech has filed a counterclaim alleging that REMICADE<sup style="font-size: 85%; vertical-align: text-top">®</sup> infringes its Cabilly II patents. Genentech has dropped all its other claims that the manufacture of REMICADE<sup style="font-size: 85%; vertical-align: text-top">®</sup>, STELARA™, SIMPONI™ and ReoPro<sup style="font-size: 85%; vertical-align: text-top">®</sup> also infringes one of its other patents relating to the purification of antibodies made through recombinant DNA techniques. The court has scheduled a hearing for Summary Judgment Motions in August 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In April 2009, a bench trial was held before the Federal District Court for the Middle District of Florida on the liability phase of CIBA VISION Corporation’s (CIBA) patent infringement lawsuit alleging that Johnson & Johnson Vision Care, Inc.’s (JJVC) ACUVUE<sup style="font-size: 85%; vertical-align: text-top">®</sup> OASYS™ lenses infringe three of their Nicholson patents. In August 2009, the District Court found two of these patents valid and infringed and entered judgment against JJVC. JJVC has appealed that judgment to the Court of Appeals for the Federal Circuit. On April 27, 2010 the District Court denied Ciba’s motion to permanently enjoin the infringing lenses. If the judgment is upheld on appeal the Court will schedule another trial to determine damages and willfulness. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In May 2009, Abbott Biotechnology Ltd. (Abbott) filed a patent infringement lawsuit against Centocor (now COBI) in the United States District Court for the District of Massachusetts. The suit alleges that Centocor’s SIMPONI™ product, a human anti-TNF alpha antibody, infringes Abbott’s ‘394 patent (the Salfeld patent). The case had been stayed pending the resolution of an arbitration filed by Centocor directed to its claim that it is licensed under the ‘394 patent. In June 2010, the Arbitrator ruled that Centocor did not have a license to the patents-in-suit. The matter will proceed before the District Court of Massachusetts on the issues of infringement and validity of the Abbott patents. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In August 2009, Abbott GmbH & Co. (Abbott GmbH) and Abbott Bioresearch Center filed a patent infringement lawsuit against Centocor (now COBI) in the United States District Court for the District of Massachusetts. The suit alleges that COBI’s STELARA™ product infringes two U.S. patents assigned to Abbott GmbH. In August 2009, COBI filed a complaint for a declaratory judgment of non-infringement and invalidity of the Abbott GmbH patents in the United States District Court for the District of Columbia. On the same date, also in the United States District Court for the District of Columbia, COBI filed a Complaint for Review of a Patent Interference Decision granting priority of invention on one of the two asserted patents to Abbott GmbH. In August 2009, Abbott GmbH and Abbott Laboratories Limited brought a patent infringement suit in Canada alleging that STELARA™ infringes Abbott GmbH’s Canadian patent. The cases filed by COBI in the District of Columbia have been transferred to the District of Massachusetts. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In August 2009, Bayer Healthcare LLC (Bayer) filed suit against COBI in Massachusetts District Court alleging infringement by COBI’s SIMPONI™ product of its patent relating to human anti-TNF antibodies. Bayer has also filed suit under its European counterpart to these patents in Germany and the Netherlands. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In June 2009, Centocor’s (now COBI) lawsuit alleging that Abbott’s HUMIRA<sup style="font-size: 85%; vertical-align: text-top">®</sup> anti-TNF alpha product infringes Centocor’s ‘775 patent went to trial in Federal District Court in the Eastern District of Texas. On June 28, 2009 a jury returned a verdict finding the patent valid and willfully infringed, and awarded Centocor damages of approximately $1.7 billion. A bench trial on Abbott’s defenses, of inequitable conduct and prosecution laches, was held in August 2009, and the District Court decided these issues in favor of Centocor. All of Abbott’s post trial motions have been denied except that the District Court granted Abbott’s motion to overturn the jury finding of willfulness. Judgment in the amount of $1.9 billion was entered in favor of Centocor in December 2009 and Abbott has filed an appeal to the Court of Appeals for the Federal Circuit therefore, the Company has not reflected any of the $1.9 billion in its consolidated financial statements. Centocor has also filed a new lawsuit in the Eastern District of Texas seeking damages for infringement of the ‘775 patent attributable to sales of HUMIRA<sup style="font-size: 85%; vertical-align: text-top">®</sup> subsequent to the jury verdict in June 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following chart summarizes various patent lawsuits concerning products of the Company’s subsidiaries that have yet to proceed to trial: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="21%"> </td> <td width="3%"> </td> <td width="13%"> </td> <td width="3%"> </td> <td width="8%"> </td> <td width="3%"> </td> <td width="22%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="3%"> </td> <td width="3%"> </td> <td width="11%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"><b>Plaintiff/ Patent</b></td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"><b>Trial</b></td> <td> </td> <td nowrap="nowrap" align="left"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><b>J&J Product</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Company</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Patents</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Holder</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Court</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Date**</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Date Filed</b></td> </tr>   <tr style="font-size: 1px"> <td valign="top"> </td> <td> </td> <td colspan="11" valign="top" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">CYPHER<sup style="font-size: 85%; vertical-align: text-top">®</sup> Stent </div></td> <td> </td> <td align="left" valign="top">Cordis </td> <td> </td> <td align="left" valign="top">Wall </td> <td> </td> <td align="left" valign="top">Wall </td> <td> </td> <td align="left" valign="top" nowrap="nowrap">E.D. TX </td> <td> </td> <td align="left" valign="top" nowrap="nowrap">Q2/11 </td> <td> </td> <td align="left" valign="top" nowrap="nowrap">11/07 </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">CYPHER<sup style="font-size: 85%; vertical-align: text-top">®</sup> Stent </div></td> <td> </td> <td align="left" valign="top">Cordis </td> <td> </td> <td align="left" valign="top">Saffran </td> <td> </td> <td align="left" valign="top">Saffran </td> <td> </td> <td align="left" valign="top">E.D. TX </td> <td> </td> <td align="left" valign="top">Q1/11 </td> <td> </td> <td align="left" valign="top">10/07 </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Blood Glucose Meters and Strips </div></td> <td> </td> <td align="left" valign="top">LifeScan </td> <td> </td> <td align="left" valign="top">Wilsey </td> <td> </td> <td align="left" valign="top">Roche Diagnostics </td> <td> </td> <td align="left" valign="top">D. DE </td> <td> </td> <td align="left" valign="top">* </td> <td> </td> <td align="left" valign="top">11/07 </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">REMICADE<sup style="font-size: 85%; vertical-align: text-top">®</sup>, ustekinumab, golimumab, ReoPro<sup style="font-size: 85%; vertical-align: text-top">®</sup> </div></td> <td> </td> <td align="left" valign="top" nowrap="nowrap">Centocor/COBI </td> <td> </td> <td align="left" valign="top" nowrap="nowrap">Cabilly II </td> <td> </td> <td align="left" valign="top" nowrap="nowrap">Genentech </td> <td> </td> <td align="left" valign="top" nowrap="nowrap">C.D. CA </td> <td> </td> <td align="left" valign="top" nowrap="nowrap">* </td> <td> </td> <td align="left" valign="top">05/08 </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">SIMPONI™ </div></td> <td> </td> <td align="left" valign="top">Centocor/COBI </td> <td> </td> <td align="left" valign="top">Salfeld </td> <td> </td> <td align="left" valign="top">Abbott Laboratories </td> <td> </td> <td align="left" valign="top">MA </td> <td> </td> <td align="left" valign="top">* </td> <td> </td> <td align="left" valign="top">05/09 </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">SIMPONI™ </div></td> <td> </td> <td align="left" valign="top">Centocor/COBI </td> <td> </td> <td align="left" valign="top">Boyle </td> <td> </td> <td align="left" valign="top">Bayer Healthcare </td> <td> </td> <td align="left" valign="top">MA </td> <td> </td> <td align="left" valign="top">* </td> <td> </td> <td align="left" valign="top">08/09 </td> </tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">STELARA™ </div></td> <td> </td> <td align="left" valign="top">Centocor/COBI </td> <td> </td> <td align="left" valign="top">Salfeld </td> <td> </td> <td align="left" valign="top">Abbott GmbH </td> <td> </td> <td align="left" valign="top">MA </td> <td> </td> <td align="left" valign="top">* </td> <td> </td> <td align="left" valign="top">08/09 </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left"><i>*</i></td> <td> </td> <td><i>Trial date to be scheduled.</i></td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left"><i>**</i></td> <td> </td> <td><i>Q reflects the Company’s fiscal quarter.</i></td> </tr> </table>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>LITIGATION AGAINST FILERS OF ABBREVIATED NEW DRUG APPLICATIONS (ANDAs)</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following chart indicates lawsuits pending against generic firms that filed Abbreviated New Drug Applications (ANDAs) seeking to market generic forms of products sold by various subsidiaries of the Company prior to expiration of the applicable patents covering those products. These ANDAs typically include allegations of non-infringement, invalidity and unenforceability of these patents. In the event the subsidiary of the Company involved is not successful in these actions, or the statutory 30-month stay expires before a ruling from the District Court is obtained, the firms involved will have the ability, upon FDA approval, to introduce generic versions of the product at issue resulting in very substantial market share and revenue losses for the product of the Company’s subsidiary. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     As noted in the following chart, 30-month stays expired during 2009, and will expire in 2010, 2011 and 2012 with respect to ANDA challenges regarding various products: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="25%"> </td> <td width="3%"> </td> <td width="26%"> </td> <td width="3%"> </td> <td width="7%"> </td> <td width="3%"> </td> <td width="12%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="4%"> </td> <td width="3%"> </td> <td width="4%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"><b>30-Month</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><b>Brand Name</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Patent/NDA</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Generic</b></td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="left"><b>Trial</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Date</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Stay</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left"><b>Product</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Holder</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Challenger</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Court</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Date**</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Filed</b></td> <td> </td> <td nowrap="nowrap" align="left"><b>Expiration</b></td> </tr>   <tr style="font-size: 1px; background: #cceeff"> <td> </td> <td> </td> <td colspan="11" valign="top" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">CONCERTA<sup style="font-size: 85%; vertical-align: text-top">®</sup> </div></td> <td> </td> <td align="left" valign="top">McNeil-PPC</td> <td> </td> <td align="left" valign="top">Andrx</td> <td> </td> <td align="left" valign="top">D. DE</td> <td> </td> <td align="left" valign="top">Q4/07</td> <td> </td> <td align="left" valign="top">09/05</td> <td> </td> <td align="left" valign="top">None</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">18, 27, 36 and 54 mg controlled </div></td> <td> </td> <td align="left" valign="top">ALZA</td> <td> </td> <td align="left" valign="top">KUDCO</td> <td> </td> <td align="left" valign="top">D. DE</td> <td> </td> <td align="left" valign="top">*</td> <td> </td> <td align="left" valign="top">01/10</td> <td> </td> <td align="left" valign="top">05/12</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">release tablet </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom" style="padding-top: 0em"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:0px; text-indent:-0px">LEVAQUIN<sup style="font-size: 85%; vertical-align: text-top">®</sup> 250, 500, 750 mg tablet </div></td> <td> </td> <td align="left" valign="top">Ortho-McNeil</td> <td> </td> <td align="left" valign="top">Lupin</td> <td> </td> <td align="left" valign="top">D. NJ</td> <td> </td> <td align="left" valign="top">*</td> <td> </td> <td align="left" valign="top">10/06</td> <td> </td> <td align="left" valign="top">03/09</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom" style="padding-top: 0em; background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">ORTHO TRI-CYCLEN<sup style="font-size: 85%; vertical-align: text-top">®</sup> LO </div></td> <td> </td> <td align="left" valign="top">Ortho-McNeil</td> <td> </td> <td align="left" valign="top">Watson</td> <td> </td> <td align="left" valign="top">D. NJ</td> <td> </td> <td align="left" valign="top">*</td> <td> </td> <td align="left" valign="top">10/08</td> <td> </td> <td align="left" valign="top">03/11</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">0.18 mg/0.025 mg, </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top">Sandoz</td> <td> </td> <td align="left" valign="top">D. NJ</td> <td> </td> <td align="left" valign="top">*</td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top">10/11</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">0.215 mg/0.025 mg </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top">Lupin</td> <td> </td> <td align="left" valign="top">D. NJ</td> <td> </td> <td align="left" valign="top">*</td> <td> </td> <td align="left" valign="top">01/10</td> <td> </td> <td align="left" valign="top">06/12</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">and 0.25 mg/0.025 mg </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom" style="padding-top: 0em"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:0px; text-indent:-0px">ULTRAM ER<sup style="font-size: 85%; vertical-align: text-top">®</sup> 100, 200, 300 mg tablet </div></td> <td> </td> <td align="left" valign="top">Ortho-McNeil/Biovail</td> <td> </td> <td align="left" valign="top">Par</td> <td> </td> <td align="left" valign="top">D. DE</td> <td> </td> <td align="left" valign="top">Q2/09</td> <td> </td> <td align="left" valign="top">05/07</td> <td> </td> <td align="left" valign="top">09/09</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom" style="padding-top: 0em; background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top">06/07</td> <td> </td> <td align="left" valign="top">11/09</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top">10/07</td> <td> </td> <td align="left" valign="top">03/10</td> </tr> <tr valign="bottom" style="padding-top: 0em"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:0px; text-indent:-0px">ULTRAM ER<sup style="font-size: 85%; vertical-align: text-top">®</sup> 100, 200, 300 mg tablet </div></td> <td> </td> <td align="left" valign="top">Ortho-McNeil/Biovail</td> <td> </td> <td align="left" valign="top">Impax</td> <td> </td> <td align="left" valign="top">D. DE</td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top">08/08</td> <td> </td> <td align="left" valign="top">01/11</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom" style="padding-top: 0em; background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top">11/08</td> <td> </td> <td align="left" valign="top">03/11</td> </tr> <tr valign="bottom" style="padding-top: 0em"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:0px; text-indent:-0px">ULTRAM ER<sup style="font-size: 85%; vertical-align: text-top">®</sup> 100, 200, 300 mg tablet </div></td> <td> </td> <td align="left" valign="top">Ortho-McNeil/Biovail</td> <td> </td> <td align="left" valign="top">Paddock</td> <td> </td> <td align="left" valign="top">D.DRD. Minn.</td> <td> </td> <td align="left" valign="top">*</td> <td> </td> <td align="left" valign="top">09/09</td> <td> </td> <td align="left" valign="top">01/12</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom" style="padding-top: 0em; background: #cceeff"> <td> <div style="margin-left:0px; text-indent:-0px">ULTRAM ER<sup style="font-size: 85%; vertical-align: text-top">®</sup> 100, 200, 300 mg tablet </div></td> <td> </td> <td align="left" valign="top">Ortho-McNeil/Biovail</td> <td> </td> <td align="left" valign="top">Cipher</td> <td> </td> <td align="left" valign="top">D. DE</td> <td> </td> <td align="left" valign="top">*</td> <td> </td> <td align="left" valign="top">10/09</td> <td> </td> <td align="left" valign="top">03/12</td> </tr> <tr valign="bottom" style="padding-top: 0em"> <td> <div style="margin-left:0px; text-indent:-0px">  </div></td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> <td> </td> <td align="left" valign="top"> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:0px; text-indent:-0px">ULTRAM ER<sup style="font-size: 85%; vertical-align: text-top">®</sup> 100, 200, 300 mg tablet </div></td> <td> </td> <td align="left" valign="top">Ortho-McNeil/Biovail</td> <td> </td> <td align="left" valign="top">Lupin</td> <td> </td> <td align="left" valign="top">D. DE</td> <td> </td> <td align="left" valign="top">*</td> <td> </td> <td align="left" valign="top">01/10</td> <td> </td> <td align="left" valign="top">06/12</td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left"><i>*</i></td> <td> </td> <td><i>Trial date to be scheduled.</i></td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left"><i>**</i></td> <td> </td> <td><i>Q reflects the Company’s fiscal quarter.</i></td> </tr> </table>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">In October 2008, the Company’s subsidiary Ortho-McNeil-Janssen Pharmaceuticals, Inc. (OMJPI) filed suit in Federal District Court in New Jersey against Watson Laboratories, Inc. (Watson) in response to Watson’s ANDA regarding ORTHO TRI-CYCLEN<sup style="font-size: 85%; vertical-align: text-top">®</sup> LO. In June 2009, OMJPI filed suit in Federal District Court in New Jersey against Sandoz Laboratories, Inc. (Sandoz) in response to Sandoz’s ANDA regarding ORTHO TRI-CYCLEN<sup style="font-size: 85%; vertical-align: text-top">®</sup> LO. The Sandoz and Watson cases have been consolidated. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In January 2010, the Company’s subsidiary OMJPI filed suit in Federal District Court in New Jersey against Lupin Ltd. and Lupin Pharmaceuticals, Inc. (collectively “Lupin”) in response to Lupin’s ANDA regarding ORTHO TRI-CYCLEN<sup style="font-size: 85%; vertical-align: text-top">®</sup> LO. The Lupin case has been consolidated with the Watson and Sandoz cases (discussed above). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In the action by McNEIL-PPC, Inc. (McNeil-PPC) and ALZA Corporation (ALZA) against Andrx Corporation (Andrx) with respect to its ANDA challenge to the CONCERTA<sup style="font-size: 85%; vertical-align: text-top">®</sup> patents, a five-day non-jury trial was held in the Federal District Court in Delaware in December 2007. In March 2009, the court ruled that one CONCERTA<sup style="font-size: 85%; vertical-align: text-top">®</sup> patent would not be infringed by Andrx’s proposed generic product and that the patent was invalid because it was not enabled. The court dismissed without prejudice Andrx’s declaratory judgment suit on a second patent for lack of jurisdiction. McNeil-PPC and ALZA filed an appeal in May 2009. The appeals court heard argument on February 3, 2010. On April 26, 2010, the court of appeals affirmed the judgment of the district court that the patent is invalid because it is not enabled. The court did not reach the issue of infringement. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     ALZA and OMJPI filed a second suit in Federal District Court in Delaware against Kremers-Urban, LLC and KUDCO Ireland, Ltd. (KUDCO) in January 2010 in response to KUDCO’s ANDA challenge regarding CONCERTA<sup style="font-size: 85%; vertical-align: text-top">®</sup> tablets. In its notice letter, KUDCO contends that two ALZA patents for CONCERTA<sup style="font-size: 85%; vertical-align: text-top">®</sup> are invalid and not infringed by a KUDCO generic. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In the action against Lupin Pharmaceuticals, Inc. (Lupin) regarding its ANDA concerning LEVAQUIN<sup style="font-size: 85%; vertical-align: text-top">®</sup>, Lupin contends that the U.S. Patent and Trademark Office improperly granted a patent term extension to the patent that Ortho-McNeil (now Ortho-McNeil-Janssen Pharmaceuticals, Inc. (OMJPI)) licenses from Daiichi Pharmaceuticals, Inc. (Daiichi). Lupin alleges that the active ingredient in LEVAQUIN<sup style="font-size: 85%; vertical-align: text-top">®</sup> was the subject of prior marketing, and therefore was not eligible for the patent term extension. Lupin concedes validity and that its product would violate the patent if marketed prior to the expiration of the original patent term. Summary judgment against Lupin was granted in May 2009 and Lupin appealed. Oral argument was held in September 2009. In May 2010, the Court of Appeals affirmed the judgment of the trial court in favor of Ortho-McNeil and Daiichi that the patent term extension covering LEVAQUIN<sup style="font-size: 85%; vertical-align: text-top">®</sup>(levofloxacin) is valid. Thereafter, Lupin requested rehearing en banc, which was denied. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In the ULTRAM<sup style="font-size: 85%; vertical-align: text-top">®</sup> ER actions, Ortho-McNeil Pharmaceutical, Inc. (Ortho-McNeil) (now OMJPI), filed lawsuits (each for different dosages) against Par Pharmaceuticals, Inc. and Par Pharmaceuticals Companies, Inc. (Par) in May, June and October 2007 on two Tramadol ER formulation patents owned by Purdue Pharma Products L.P. (Purdue) and Napp Pharmaceutical Group Ltd. (Napp). OMJPI also filed lawsuits (each for different dosages) against Impax Laboratories, Inc. (Impax) on a Tramadol ER formulation patent owned by Purdue and Napp in August and November 2008. Purdue, Napp and Biovail Laboratories International SRL (Biovail) (the NDA holder) joined as co-plaintiffs in the lawsuits against Par and Impax, but Biovail and OMJPI were subsequently dismissed for lack of standing. The trial against Par took place in April 2009. In August 2009, the Court issued a decision finding the patents-in-suit invalid. Purdue has appealed that decision. In November 2009, the case against Impax was stayed with the consent of all parties. In September and October 2009, respectively, Purdue filed suits against Paddock Laboratories, Inc. (Paddock) and Cipher Pharmaceuticals Inc. (Cipher) on its Tramadol ER formulation patents. In June 2010, the Federal Circuit Court affirmed the District Court’s decision in the Par case. The case against Cipher was dismissed based on the collateral estoppel effect of the par decision. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In January 2010, Purdue filed a suit against Lupin Ltd. (Lupin) on its Tramadol ER formulation patents. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>GENERAL LITIGATION</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In September 2004, plaintiffs in an employment discrimination litigation initiated against the Company in 2001 in Federal District Court in New Jersey moved to certify a class of all African American and Hispanic salaried employees of the Company and its affiliates in the U.S., who were employed at any time from November 1997 to the present. Plaintiffs seek monetary damages for the period 1997 through the present (including punitive damages) and equitable relief. The Court denied plaintiffs’ class certification motion in December 2006 and their motion for reconsideration in April 2007. Plaintiffs sought to appeal these decisions and, in April 2008, the Court of Appeals ruled that plaintiffs’ appeal of the denial of class certification was untimely. In July 2009, plaintiffs filed a motion for certification of a modified class, which the Company opposed. The district court heard oral argument on plaintiffs’ motion in July 2010. The court recently ruled by denying plaintiffs’ motion for certification of the modified class. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In September 2009, Centocor Ortho Biotech Products, L.P. (COBI) intervened in an inventorship dispute between Kansas University Center for Research (KUCR) involving certain U.S. government-owned VELCADE<sup style="font-size: 85%; vertical-align: text-top">®</sup> formulation patents. KUCR brought this action against the U.S. government in the District of Kansas seeking to add two Kansas University scientists to the patents. The U.S. government licensed the patents (and their foreign counterparts) to Millennium Pharmaceuticals, Inc., who in turn sublicensed the patents (and their foreign counterparts) to COBI for commercial marketing outside the U.S. If KUCR succeeds in its co-inventorship claim and establishes co-ownership in the U.S. VELCADE<sup style="font-size: 85%; vertical-align: text-top">®</sup> formulation patents, there is a potential for the same issue to arise with respect to the foreign counterparts of the patents. If KUCR is successful, this may adversely affect COBI’s license rights in those countries. In May 2010, the parties reached an agreement to resolve the disputes in this case and will submit the inventorship issue to arbitration, and the case has been stayed pending the arbitration. If KUCR wins the arbitration, the parties will request that the Court issue an order to correct inventorship on the relevant patents; if the U.S. Government, COBI, and MPI prevail, the case will be dismissed with prejudice. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In February 2009, Basilea Pharmaceutica AG (Basilea) brought an arbitration against the Company and various affiliates alleging that the Company breached the 2005 License Agreement for Cefto-biprole by, among other things, failing to secure FDA approval of the cSSSI (skin) indication and allegedly failing to properly develop the pneumonia indication. Basilea is seeking to recover significant damages and a declaration that the Company materially breached the agreement. The arbitration hearing has concluded, post hearing briefs are being submitted, and a decision by the panel is expected this fall. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In May 2009, COBI commenced an arbitration proceeding before the American Arbitration Association against Schering-Plough Corporation and its subsidiary Schering-Plough (Ireland) Company (collectively, Schering-Plough). COBI and Schering-Plough are parties to a series of agreements (the Distribution Agreements) that grant Schering-Plough the exclusive right to distribute the drugs REMICADE<sup style="font-size: 85%; vertical-align: text-top">®</sup> and SIMPONI™ worldwide, except within the United States, Japan, Taiwan, Indonesia, and the People’s Republic of China (including Hong Kong) (the “Territory”). COBI distributes REMICADE<sup style="font-size: 85%; vertical-align: text-top">®</sup> and SIMPONI™, the next generation treatment, within the United States. In the arbitration, COBI seeks a declaration that the agreement and merger between Merck & Co., Inc. (Merck) and Schering-Plough constitutes a change of control under the terms of the Distribution Agreements that permits COBI to terminate the Agreements. The termination of the Distribution Agreements would return to COBI the right to distribute REMICADE<sup style="font-size: 85%; vertical-align: text-top">®</sup> and SIMPONI™ within the Territory. Schering-Plough has filed a response to COBI’s arbitration demand that denies that it has undergone a change of control. The arbitrators have been selected and the matter will be proceeding to arbitration in late September 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In December 2009, the State of Israel (Sheba Medical Center) filed suit against the Company’s subsidiary, Omrix, and its affiliates. In the lawsuit, the State claims that an employee of a government-owned hospital was the inventor on several patents related to fibrin glue technology, that he developed while he was a government employee. The State claims that he had no right to transfer any intellectual property to Omrix because it belongs to the State. The State is seeking damages plus royalty on QUIXIL™ and EVICEL™ or, alternatively, transfer of the patents to the State. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">          Average Wholesale Price (AWP) Litigation — Johnson & Johnson and several of its pharmaceutical subsidiaries, along with numerous other pharmaceutical companies, are defendants in a series of lawsuits in state and federal courts involving allegations that the pricing and marketing of certain pharmaceutical products amounted to fraudulent and otherwise actionable conduct because, among other things, the companies allegedly reported an inflated Average Wholesale Price (AWP) for the drugs at issue. Many of these cases, both federal actions and state actions removed to federal court, have been consolidated for pre-trial purposes in a Multi-District Litigation (MDL) in Federal District Court in Boston, Massachusetts. The plaintiffs in these cases include classes of private persons or entities that paid for any portion of the purchase of the drugs at issue based on AWP, and state government entities that made Medicaid payments for the drugs at issue based on AWP. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">          The MDL Court identified classes of Massachusetts-only private insurers providing “Medi-gap” insurance coverage and private payers for physician-administered drugs where payments were based on AWP (“Class 2” and “Class 3”), and a national class of individuals who made co-payments for physician-administered drugs covered by Medicare (“Class 1”). A trial of the two Massachusetts-only class actions concluded before the MDL Court in December 2006. In June 2007, the MDL Court issued post-trial rulings, dismissing the Johnson & Johnson defendants from the case regarding all claims of Classes 2 and 3, and subsequently of Class 1 as well. Plaintiffs appealed the Class 1 judgment and, in September 2009, the Court of Appeals vacated the judgment and remanded for further proceedings in the District Court. AWP cases brought by various Attorneys General have proceeded to trial against other manufacturers. Three state cases against certain of the Company’s subsidiaries have been set for trial: Pennsylvania in October 2010, Hawaii in November 2010, Idaho in October 2011, and Kentucky in January 2012. Other state cases are likely to be set for trial in the coming year. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">          In April 2010, a lawsuit was filed in the United States District Court for the Northern District of California. The complaint alleges that the company, together with co-defendant Omnicare, Inc. and other unidentified companies or individuals, engaged in a conspiracy to restrain trade and in unlawful, unfair and fraudulent business acts or practices in violation of California Business and Professions Code. The Company filed a motion to dismiss. Plaintiffs then filed an amended complaint. The Company’s answer or other response to the amended complaint is due in September 2010. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">          Johnson & Johnson has been named the nominal defendant in six shareholder derivative lawsuits in the U.S. District Court for the District of New Jersey on behalf of Company shareholders against certain current and former directors and officers of the Company derivatively on behalf of the Company: Calamore v. Coleman et. al., filed April 21, 2010; Carpenters Pension Fund of West Virginia v. Weldon, et. al., filed May 5, 2010; Feldman v. Coleman, et. al., filed May 6, 2010; Hawaii Laborers Pension Fund v. Weldon, et. al., filed May 14, 2010; Ryan v. Weldon, et. al., filed June 18, 2010; and Minneapolis Firefighters’ Relief Association, NECA-IBEW Pension Trust Fund, and NECA-IBEW Welfare Trust Fund v. Weldon, et. al., filed June 24, 2010. Each of these shareholder derivative actions is similar in its claims in asserting a variety of alleged breaches of fiduciary duties, including, among other things, that the defendants allegedly engaged in, approved of, or failed to remedy or prevent improper pharmaceutical rebates, improper off-label marketing of pharmaceutical and medical device products, violations of current good manufacturing practice regulations that resulted in product recalls, and failed to disclose the aforementioned alleged misconduct in the Company’s filings under the Securities Exchange Act of 1934. Each complaint seeks a variety of relief, including monetary damages and corporate governance reforms. Motions to consolidate these shareholder derivative actions are pending. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">          In addition, on July 27, 2010, a complaint was filed by a shareholder of the Company in New Jersey Superior Court, Chancery Division, Middlesex County (Lipschutz v. Johnson & Johnson) seeking to compel inspection of Company books and records with respect to certain product recalls and various manufacturing plants. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>OTHER</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In July 2003, Centocor (now COBI), a Johnson & Johnson subsidiary, received a request that it voluntarily provide documents and information to the criminal division of the U.S. Attorney’s Office, District of New Jersey, in connection with its investigation into various Centocor marketing practices. Subsequent requests for documents have been received from the U.S. Attorney’s Office. Both the Company and Centocor have responded to these requests for documents and information. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In December 2003, Ortho-McNeil (now OMJPI) received a subpoena from the U.S. Attorney’s Office in Boston, Massachusetts seeking documents relating to the marketing, including alleged off-label marketing, of the drug TOPAMAX<sup style="font-size: 85%; vertical-align: text-top">®</sup> (topiramate). In the fiscal second quarter of 2010, OMJPI entered into a settlement agreement resolving the federal government’s investigation. The settlement includes total payments of $81.5 million plus interest, an amount previously reserved. As one part of the resolution, Ortho-McNeil Pharmaceutical, L.L.C., a subsidiary of OMJPI, has agreed to plead guilty to a single misdemeanor violation of the Food, Drug and Cosmetic Act and to pay a $6.1 million criminal fine. OMJPI denies it engaged in any wrongful conduct, beyond acknowledging the limited conduct of Ortho-McNeil Pharmaceutical, L.L.C. that is the basis of the misdemeanor plea. The balance of the total settlement amount is a civil payment, part of which was paid to the federal government and part of which was paid or set aside for payment to states for their Medicaid programs. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In January 2004, Janssen (now OMJPI) received a subpoena from the Office of the Inspector General of the U.S. Office of Personnel Management seeking documents concerning sales and marketing of, any and all payments to physicians in connection with sales and marketing of, and clinical trials for, RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup> (risperidone) from 1997 to 2002. Documents subsequent to 2002 have also been requested. An additional subpoena seeking information about marketing of and adverse reactions to RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup> was received from the U.S. Attorney’s Office for the Eastern District of Pennsylvania in November 2005. Subpoenas seeking testimony from various witnesses before a grand jury have also been received. Janssen is cooperating in responding to ongoing requests for documents and witnesses. The government is continuing to actively investigate this matter. In February 2010, the government served Civil Investigative Demands seeking additional information relating to sales and marketing of RISPERDAL<sup style="font-size: 85%; vertical-align: text-top">®</sup> and sales and marketing of INVEGA<sup style="font-size: 85%; vertical-align: text-top">®</sup>. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In September 2004, Ortho Biotech Inc. (Ortho Biotech) (now COBI), received a subpoena from the U.S. Office of Inspector General’s Denver, Colorado field office seeking documents directed to the sales and marketing of PROCRIT<sup style="font-size: 85%; vertical-align: text-top">®</sup> (Epoetin alfa) from 1997 to the present, as well as to dealings with U.S. Oncology Inc., a healthcare services network for oncologists. Ortho Biotech (now COBI) has responded to the subpoena. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In November 2007, the Attorney General of the Commonwealth of Massachusetts issued a Civil Investigative Demand to DePuy seeking information regarding financial relationships between a number of Massachusetts-based orthopedic surgeons and providers and DePuy. DePuy is responding to Massachusetts’ additional requests. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In July 2005, Scios Inc. (Scios), a Johnson & Johnson subsidiary, received a subpoena from the U.S. Attorney’s Office, District of Massachusetts, seeking documents related to the sales and marketing of NATRECOR<sup style="font-size: 85%; vertical-align: text-top">®</sup>. Scios responded to the subpoena. In early August 2005, Scios was advised that the investigation would be handled by the U.S. Attorney’s Office for the Northern District of California in San Francisco. Additional requests for documents have been received and responded to and former Scios employees have testified before a grand jury in San Francisco. The qui tam complaints were unsealed on February 19, 2009. The U.S. government has intervened in one of the qui tam actions, and filed a complaint against Scios and the Company in June 2009. Scios and Johnson & Johnson filed a motion to dismiss the qui tam complaint filed by the government, and that motion was denied. The criminal investigation is continuing and discussions are underway in an effort to settle this matter. Whether a settlement can be reached and on what terms is uncertain. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In September 2005, the Company received a subpoena from the U.S. Attorney’s Office, District of Massachusetts, seeking documents related to sales and marketing of eight drugs to Omnicare, Inc., (Omnicare) a manager of pharmaceutical benefits for long-term care facilities. The Company’s subsidiaries involved responded to the subpoena. Several employees of the Company’s pharmaceutical subsidiaries were subpoenaed to testify before a grand jury in connection with this investigation. In April 2009, the Company was served with the complaints in two civil qui tam cases related to marketing of prescription drugs to Omnicare, Inc. On January 15, 2010, the government filed a complaint intervening in the cases. The complaint asserts claims under the federal False Claims Act and a related state law claim in connection with the marketing of several drugs to Omnicare. The complaints allege that Johnson & Johnson provided Omnicare, Inc. with rebates and other alleged kickbacks, and in so doing, caused Omnicare to file false claims with Medicaid and other government programs. Subsequently, the Commonwealth of Massachusetts, Virginia, and Kentucky, and the States of California and Indiana intervened in the action. A motion to dismiss has been filed and is pending. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In February 2006, the Company received a subpoena from the U.S. Securities & Exchange Commission (SEC) requesting documents relating to the participation by several Johnson & Johnson subsidiaries in the United Nations Iraq Oil for Food Program. The subsidiaries are cooperating with the SEC and U.S. Department of Justice (DOJ) in producing responsive information. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In February 2007, the Company voluntarily disclosed to the DOJ and the SEC that subsidiaries outside the United States are believed to have made improper payments in connection with the sale of medical devices in two small-market countries, which payments may fall within the jurisdiction of the Foreign Corrupt Practices Act (FCPA). In the course of continuing dialogues with the agencies, other issues potentially rising to the level of FCPA violations in additional markets have been brought to the attention of the agencies by the Company. The Company has provided and will continue to provide additional information to the DOJ and SEC, and will cooperate with the agencies’ reviews of these matters. Law enforcement agencies of a number of other countries are also pursuing investigations of matters voluntarily disclosed by the Company to the DOJ and SEC. Discussions are underway in an effort to resolve these matters, and the Iraq Oil for Food matter referenced above, but whether agreement can be reached and on what terms is uncertain. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In May 2007, the New York State Attorney General issued a subpoena seeking information relating to the marketing and safety of PROCRIT<sup style="font-size: 85%; vertical-align: text-top">®</sup>. The Company is responding to these requests. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In April 2007, the Company received two subpoenas from the Office of the Attorney General of the State of Delaware. The subpoenas seek documents and information relating to nominal pricing agreements. For purposes of the subpoenas, nominal pricing agreements are defined as agreements under which the Company agreed to provide a pharmaceutical product for less than ten percent of the Average Manufacturer Price for the product. The Company responded to these requests. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In March 2008, the Company received a letter request from the Attorney General of the State of Michigan. The request seeks documents and information relating to nominal price transactions. The Company responded to the request and will cooperate with the inquiry. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In June 2008, the Company received a subpoena from the United States Attorney’s Office for the District of Massachusetts relating to the marketing of biliary stents by the Company’s Cordis subsidiary. Cordis is cooperating in responding to the subpoena. A False Claims Act complaint was filed in Dallas relating to similar issues. The U.S. Department of Justice and several states have declined to intervene at this time. A motion to dismiss the Texas qui tam case is pending. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In April 2009, the Company received a HIPPA subpoena from the U.S. Attorney’s Office for the District of Massachusetts (Boston) seeking information regarding the Company’s financial relationship with several psychiatrists. The Company is responding to this request. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In April 2009, Ortho-Clinical Diagnostics, Inc. (OCD) received a grand jury subpoena from the U.S. Department of Justice, Antitrust Division, requesting documents and information for the period beginning September 1, 2000 through the present, pertaining to an investigation of alleged violations of the antitrust laws in the blood reagents industry. The Company is in the process of complying with the subpoena. In the weeks following the public announcement that OCD had received a subpoena from the Antitrust Division, multiple class action complaints were filed. The various cases were consolidated for pre-trial purposes in the Eastern District of Pennsylvania. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In May 2009, the New Jersey Attorney General issued a subpoena to DePuy Orthopaedics, Inc., seeking information regarding the financial interest of clinical investigators who performed clinical studies for DePuy Orthopaedics, Inc. and DePuy Spine, Inc. DePuy Orthopaedics is responding to these requests. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In May 2010, the Company received a letter from the United States House of Representatives’ Committee on Oversight and Government Reform (“Committee”) requesting information and documents regarding the April 2010, recall of various infants’ and children’s liquid products by McNeil Consumer Healthcare. The Company produced documents and other information in response to these requests. In May 2010, the Committee conducted a public hearing. Thereafter, the Company received a letter from the Committee, requesting information and documents regarding the recall of certain Motrin products by McNeil Consumer Healthcare. The Company produced documents and other information in response to these requests. In addition, McNeil Consumer Healthcare, and certain affiliates including Johnson & Johnson (“the Companies”), received grand jury subpoenas from the United States Attorney’s Office for the Eastern District of Pennsylvania requesting documents broadly relating to recent recalls of various products of McNeil Consumer Healthcare, and the FDA inspections of the Fort Washington, Pennsylvania and Lancaster, Pennsylvania manufacturing facilities. The Companies are cooperating with the United States Attorney’s Office in responding to the subpoenas. Also, multiple complaints seeking class action certification related to the recalls have been filed. The Company has also received Civil Investigative Demands from multiple State Attorneys General Offices relating to the same issues. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In recent years the Company has received numerous requests from a variety of United States Congressional Committees to produce information relevant to ongoing congressional inquiries. It is the Company’s policy to cooperate with these inquiries by producing the requested information. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     With respect to all the above matters, the Company and its subsidiaries are vigorously contesting the allegations asserted against them and otherwise pursuing defenses to maximize the prospect of success. The Company and its subsidiaries involved in these matters continually evaluate their strategies in managing these matters and, where appropriate, pursue settlements and other resolutions where those are in the best interest of the Company. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Company is also involved in a number of patent, trademark 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 opinion, based on its examination of these matters, its experience to date and discussions with counsel, the ultimate outcome of legal proceedings, net of liabilities accrued in the Company’s balance sheet, is not expected to have a material adverse effect on the Company’s financial condition, although the resolution in any reporting period of one or more of these matters could have a material impact on the Company’s results of operations and cash flows for that period. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt">NOTE 12 – RESTRUCTURING </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In the fourth quarter of 2009, the Company announced global restructuring initiatives designed to strengthen the Company’s position as one of the world’s leading global health care companies. This program will allow the Company to invest in new growth platforms; ensure the successful launch of its many new products and continued growth of its core businesses; and provide flexibility to adjust to the changed and evolving global environment. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal fourth quarter of 2009, the Company recorded $1.2 billion in related pre-tax charges, of which approximately $830 million of the pre-tax restructuring charges are expected to require cash payments. The $1.2 billion of restructuring charges consists of severance costs of $748 million, asset write-offs of $362 million and $76 million related to leasehold and contract obligations. The $362 million of asset write-offs relate to inventory of $113 million (recorded in cost of products sold), property, plant and equipment of $107 million, intangible assets of $81 million and other assets of $61 million. The asset write-offs and leasehold and contract obligations have been substantially completed. Additionally, as part of this program the Company plans to eliminate approximately 7,500 positions of which approximately 3,400 have been eliminated since the restructuring was announced. </div> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the severance related reserves and the associated spending under this initiative through the fiscal second quarter of 2010: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="88%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Severance</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Reserve balance as of: </div></td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">January 3, 2010 </div></td> <td> </td> <td align="right">$</td> <td align="right">686</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Cash outlays </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(176</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">July 4, 2010* </div></td> <td> </td> <td align="right">$</td> <td align="right">510</td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td>Cash outlays for severance are expected to be paid out over the next 12 to 18 months in accordance with the Company’s plans and local laws.</td> </tr> </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt">NOTE 13 – SUBSEQUENT EVENT </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On July 12, 2010 the Company announced a definitive agreement to acquire Micrus Endovascular Corporation, a global developer and manufacturer of minimally invasive devices to address hemorrhagic and ischemic stroke for a net purchase price of approximately $0.5 billion. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On July 12, 2010 Ethicon Endo-Surgery, Inc., a Johnson & Johnson company, completed the divestiture of its Breast Care business to Devicor Medical Products, Inc. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On August 2, 2010, The Company received the full $725 million plus interest from Boston Scientific for the remainder of a settlement, an amount previously expected to be received in January 2011. </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Financial Accounting Standards Board (FASB) issued guidance and amendments to the criteria for separating consideration in multiple-deliverable revenue arrangements, which the Company adopted in the fiscal first quarter of 2010. The guidance also (a) provides principles and application guidance on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated; (b) requires an entity to allocate revenue in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price; and(c) eliminates the use of the residual method and requires an entity to allocate the revenue using the relative selling price method. The adoption did not have a material impact on the Company’s results of operations, cash flows or financial position however it will expand the disclosures for multiple-deliverable revenue arrangements. </div> </div>   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal first quarter of 2010 the Company adopted the FASB standard related to variable interest entities. The adoption of this standard did not have an impact on the Company’s results of operations, cash flows or financial position. </div> </div>   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal first quarter of 2010 the Company adopted the new accounting guidance on fair value measurements and disclosures. This guidance requires the Company to disclose the amount of significant transfers between Level 1 and Level 2 inputs and the reasons for these transfers as well as the reasons for any transfers in or out of Level 3 of the fair value hierarchy. In addition, the guidance clarifies certain existing disclosure requirements. The adoption of this standard did not have a significant impact on the Company’s results of operations, cash flows or financial position. </div> </div>   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">During the fiscal second quarter of 2010 the FASB issued an accounting standard update related to revenue recognition under the milestone method. The objective of the accounting standard update is to provide guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. This update is effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. The adoption of this standard is not expected to have a significant impact on the Company’s results of operations, cash flows or financial position. </div> </div>   <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td>(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4, 2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">January 3, 2010</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Raw materials and supplies </div></td> <td> </td> <td align="right">$</td> <td align="right">1,072</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,144</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Goods in process </div></td> <td> </td> <td> </td> <td align="right">1,469</td> <td> </td> <td> </td> <td> </td> <td align="right">1,395</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Finished goods </div></td> <td> </td> <td> </td> <td align="right">2,530</td> <td> </td> <td> </td> <td> </td> <td align="right">2,641</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Inventories </div></td> <td> </td> <td align="right">$</td> <td align="right">5,071</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">5,180</td> <td> </td> </tr>  </table> </div> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table is a summary of the activity related to designated derivatives for the fiscal second quarters:* </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="28%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>reclassified</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>recognized in</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>from</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>recognized in</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Accumulated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Accumulated OCI</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>other</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>OCI</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>into income</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>income/expense</b> <sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">second</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td>(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">quarter</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Cash Flow Hedges</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> <td style="border-bottom: 0px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(53</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(38</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(9</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(13</td> <td nowrap="nowrap">) <sub style="font-size: 85%; vertical-align: text-bottom">(A)</sub></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(20</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(2</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(102</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(117</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(76</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">15</td> <td nowrap="nowrap">    <sub style="font-size: 85%; vertical-align: text-bottom">(B)</sub></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(149</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">44</td> <td> </td> <td> </td> <td> </td> <td align="right">3</td> <td> </td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">12</td> <td nowrap="nowrap">    <sub style="font-size: 85%; vertical-align: text-bottom">(C)</sub></td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cross currency interest rate swaps </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(82</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">84</td> <td> </td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)  <sub style="font-size: 85%; vertical-align: text-bottom">(D)</sub></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">35</td> <td> </td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">6</td> <td nowrap="nowrap">    <sub style="font-size: 85%; vertical-align: text-bottom">(E)</sub></td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(158</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(40</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(54</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">19</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(133</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">1</td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td>All amounts shown in the table above are net of tax.</td> </tr> </table>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following table is a summary of the activity related to designated derivatives for the first fiscal six months ended:* </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>reclassified</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Gain/(Loss)</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>recognized in</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>from</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>recognized in</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Accumulated</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Accumulated OCI</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>other</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>OCI</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>into income</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000"><b>income/expense</b> <sup style="font-size: 85%; vertical-align: text-top">(2)</sup></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Fiscal</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">six</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td>(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">months</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Cash Flow Hedges</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> <td style="border-bottom: 0px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2010</td> <td style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(84</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(46</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(29</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(8</td> <td nowrap="nowrap">) <sub style="font-size: 85%; vertical-align: text-bottom">(A)</sub></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(21</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(4</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(206</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(65</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(98</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">34</td> <td nowrap="nowrap">   <sub style="font-size: 85%; vertical-align: text-bottom">(B)</sub></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(154</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">8</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">73</td> <td> </td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">21</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">22</td> <td nowrap="nowrap">   <sub style="font-size: 85%; vertical-align: text-bottom">(C)</sub></td> <td> </td> <td> </td> <td align="right">16</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cross currency interest rate swaps </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(49</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">193</td> <td> </td> <td> </td> <td> </td> <td align="right">11</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(7</td> <td nowrap="nowrap">) <sub style="font-size: 85%; vertical-align: text-bottom">(D)</sub></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">81</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">3</td> <td nowrap="nowrap">   <sub style="font-size: 85%; vertical-align: text-bottom">(E)</sub></td> <td> </td> <td> </td> <td align="right">20</td> <td> </td> <td> </td> <td> </td> <td align="right">1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(185</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">131</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(96</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">44</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(139</td> <td nowrap="nowrap">)</td> <td> </td> <td align="right">$</td> <td align="right">5</td> <td> </td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td>All amounts shown in the table above are net of tax.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td> <td>Effective portion</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td> <td> </td> <td>Ineffective portion</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(A)</td> <td> </td> <td>Included in Sales to customer</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(B)</td> <td> </td> <td>Included in Cost of products sold</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(C)</td> <td> </td> <td>Included in Research expense</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(D)</td> <td> </td> <td>Included in Interest (income)/Interest expense, net</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(E)</td> <td> </td> <td>Included in Other (income)/expense, net</td> </tr> </table> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The Company’s significant financial assets and liabilities measured at fair value as of July 4, 2010 and January 3, 2010 were as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="15" style="border-bottom: 0px solid #000000"><b>July 4, 2010</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>January 3, 2010</b></td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 1</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 2</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Level 3</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Total</b></td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Total</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Derivatives designated as hedging instruments :</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Assets:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">384</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">384</td> <td> </td> <td> </td> <td> </td> <td align="right">436</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cross currency interest rate swaps <sup style="font-size: 85%; vertical-align: text-top">(2)</sup> </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> <td> </td> <td> </td> <td align="right">126</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">417</td> <td> </td> <td> </td> <td> </td> <td align="right"></td> <td> </td> <td> </td> <td> </td> <td align="right">417</td> <td> </td> <td> </td> <td> </td> <td align="right">562</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Liabilities:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">557</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">557</td> <td> </td> <td> </td> <td> </td> <td align="right">608</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Cross currency interest rate swaps <sup style="font-size: 85%; vertical-align: text-top">(3)</sup> </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">645</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">645</td> <td> </td> <td> </td> <td> </td> <td align="right">571</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Total</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td align="right">1,202</td> <td> </td> <td> </td> <td> </td> <td align="right"></td> <td> </td> <td> </td> <td> </td> <td align="right">1,202</td> <td> </td> <td> </td> <td> </td> <td align="right">1,179</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Derivatives not designated as hedging instruments:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Assets:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">28</td> <td> </td> <td> </td> <td> </td> <td align="right">33</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Liabilities:</b> </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign exchange contracts </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">35</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">35</td> <td> </td> <td> </td> <td> </td> <td align="right">40</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px"><b>Other Investments</b> <sup style="font-size: 85%; vertical-align: text-top"><b>(4)</b></sup> </div></td> <td> </td> <td align="right">$</td> <td align="right">880</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td> </td> <td align="right">880</td> <td> </td> <td> </td> <td> </td> <td align="right">1,134</td> <td> </td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td> <td>As of January 3, 2010, these assets and liabilities are classified as Level 2 with the exception of other investments of $1,134 which are classified as Level 1.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td> <td> </td> <td>Includes $26 million and $119 million of non-current assets for July 4, 2010 and January 3, 2010, respectively.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(3)</td> <td> </td> <td>Includes $645 million and $517 million of non-current liabilities for July 4, 2010 and January 3, 2010, respectively.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(4)</td> <td> </td> <td>Classified as non-current other assets.</td> </tr> </table> </div>

<div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="40%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Total</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">For.</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Accum</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Cur.</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Gains/</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Employee</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Deriv.</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Other</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Trans.</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Losses)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Benefit</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">&</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Comp. Inc/</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Loss)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">on Sec.</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Plans</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Hedges</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Loss)</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">January 3, 2010 </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(508</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(30</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2,665</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">145</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3,058</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">2010 six months change </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Unrealized gain (loss) </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(121</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(185</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Net amount reclassed to net earnings </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(9</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">96 </td> <td nowrap="nowrap"> *</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net six months change </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2,502</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(130</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">74</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(89</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2,647</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">July 4, 2010 </div></td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(3,010</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(160</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2,591</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td align="right">56</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(5,705</td> <td nowrap="nowrap">)</td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">*</td> <td> </td> <td>Substantially offset in net earnings by changes in value of the underlying transactions.</td> </tr> </table> </div>   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal second quarters ended July 4, 2010 and June 28, 2009. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000">Fiscal Quarters Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Shares in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Basic net earnings per share </div></td> <td> </td> <td align="right">$</td> <td align="right">1.25</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1.16</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average shares outstanding – basic </div></td> <td> </td> <td> </td> <td align="right">2,756.6</td> <td> </td> <td> </td> <td> </td> <td align="right">2,756.2</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Potential shares exercisable under stock option plans </div></td> <td> </td> <td> </td> <td align="right">175.5</td> <td> </td> <td> </td> <td> </td> <td align="right">80.8</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less: shares which could be repurchased under treasury stock method </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(139.7</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(58.6</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Convertible debt shares </div></td> <td> </td> <td> </td> <td align="right">3.6</td> <td> </td> <td> </td> <td> </td> <td align="right">3.6</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average shares outstanding – diluted </div></td> <td> </td> <td> </td> <td align="right">2,796.0</td> <td> </td> <td> </td> <td> </td> <td align="right">2,782.0</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted earnings per share </div></td> <td> </td> <td align="right">$</td> <td align="right">1.23</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1.15</td> <td> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The diluted earnings per share calculation for both fiscal second quarters ended July 4, 2010 and June 28, 2009 included the dilutive effect of convertible debt that was offset by the related reduction in interest expense. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The diluted earnings per share calculation for the fiscal second quarters ended July 4, 2010 and June 28, 2009 excluded 68 million and 178 million shares, respectively, related to stock options, as the exercise price of these options was greater than their average market value, which would result in an anti-dilutive effect on diluted earnings per share. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal six months ended July 4, 2010 and June 28, 2009. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 0px solid #000000">Fiscal Six Months Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Shares in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Basic net earnings per share </div></td> <td> </td> <td align="right">$</td> <td align="right">2.89</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2.43</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average shares outstanding – basic </div></td> <td> </td> <td> </td> <td align="right">2,755.7</td> <td> </td> <td> </td> <td> </td> <td align="right">2,761.3</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Potential shares exercisable under stock option plans </div></td> <td> </td> <td> </td> <td align="right">175.4</td> <td> </td> <td> </td> <td> </td> <td align="right">108.4</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less: shares which could be repurchased under treasury stock method </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(138.6</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(87.8</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Convertible debt shares </div></td> <td> </td> <td> </td> <td align="right">3.6</td> <td> </td> <td> </td> <td> </td> <td align="right">3.6</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Average shares outstanding – diluted </div></td> <td> </td> <td> </td> <td align="right">2,796.1</td> <td> </td> <td> </td> <td> </td> <td align="right">2,785.5</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted earnings per share </div></td> <td> </td> <td align="right">$</td> <td align="right">2.85</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">2.41</td> <td> </td> </tr>  </table> </div> </div>   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">SALES BY SEGMENT OF BUSINESS (1) </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Quarters Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Consumer </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td align="right">$</td> <td align="right">1,463</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,708</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(14.3</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">2,184</td> <td> </td> <td> </td> <td> </td> <td align="right">2,146</td> <td> </td> <td> </td> <td> </td> <td align="right">1.8</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">3,647</td> <td> </td> <td> </td> <td> </td> <td align="right">3,854</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(5.4</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Pharmaceutical </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">3,110</td> <td> </td> <td> </td> <td> </td> <td align="right">3,172</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.0</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">2,443</td> <td> </td> <td> </td> <td> </td> <td align="right">2,326</td> <td> </td> <td> </td> <td> </td> <td align="right">5.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">5,553</td> <td> </td> <td> </td> <td> </td> <td align="right">5,498</td> <td> </td> <td> </td> <td> </td> <td align="right">1.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Medical Devices & Diagnostics </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">2,865</td> <td> </td> <td> </td> <td> </td> <td align="right">2,776</td> <td> </td> <td> </td> <td> </td> <td align="right">3.2</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">3,265</td> <td> </td> <td> </td> <td> </td> <td align="right">3,111</td> <td> </td> <td> </td> <td> </td> <td align="right">5.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">6,130</td> <td> </td> <td> </td> <td> </td> <td align="right">5,887</td> <td> </td> <td> </td> <td> </td> <td align="right">4.1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Worldwide </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">7,438</td> <td> </td> <td> </td> <td> </td> <td align="right">7,656</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.8</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">7,892</td> <td> </td> <td> </td> <td> </td> <td align="right">7,583</td> <td> </td> <td> </td> <td> </td> <td align="right">4.1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td align="right">$</td> <td align="right">15,330</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">15,239</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.6</td> <td nowrap="nowrap">%</td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Six Months Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Consumer </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td align="right">$</td> <td align="right">3,023</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">3,434</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(12.0</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">4,390</td> <td> </td> <td> </td> <td> </td> <td align="right">4,131</td> <td> </td> <td> </td> <td> </td> <td align="right">6.3</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">7,413</td> <td> </td> <td> </td> <td> </td> <td align="right">7,565</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.0</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Pharmaceutical </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">6,316</td> <td> </td> <td> </td> <td> </td> <td align="right">6,846</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(7.7</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">4,875</td> <td> </td> <td> </td> <td> </td> <td align="right">4,432</td> <td> </td> <td> </td> <td> </td> <td align="right">10.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">11,191</td> <td> </td> <td> </td> <td> </td> <td align="right">11,278</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(0.8</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Medical Devices & Diagnostics </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">5,751</td> <td> </td> <td> </td> <td> </td> <td align="right">5,428</td> <td> </td> <td> </td> <td> </td> <td align="right">6.0</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">6,606</td> <td> </td> <td> </td> <td> </td> <td align="right">5,994</td> <td> </td> <td> </td> <td> </td> <td align="right">10.2</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td> </td> <td align="right">12,357</td> <td> </td> <td> </td> <td> </td> <td align="right">11,422</td> <td> </td> <td> </td> <td> </td> <td align="right">8.2</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Worldwide </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td> </td> <td align="right">15,090</td> <td> </td> <td> </td> <td> </td> <td align="right">15,708</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.9</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">International </div></td> <td> </td> <td> </td> <td align="right">15,871</td> <td> </td> <td> </td> <td> </td> <td align="right">14,557</td> <td> </td> <td> </td> <td> </td> <td align="right">9.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td align="right">$</td> <td align="right">30,961</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">30,265</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">2.3</td> <td nowrap="nowrap">%</td> </tr>  </table> </div> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td> <td>Export sales are not significant.</td> </tr> </table> </div>   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">OPERATING PROFIT BY SEGMENT OF BUSINESS </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Quarters Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Consumer </div></td> <td> </td> <td align="right">$</td> <td align="right">669</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">695</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.7</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Pharmaceutical (2) </div></td> <td> </td> <td> </td> <td align="right">1,833</td> <td> </td> <td> </td> <td> </td> <td align="right">1,701</td> <td> </td> <td> </td> <td> </td> <td align="right">7.8</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Medical Devices & Diagnostics (3) </div></td> <td> </td> <td> </td> <td align="right">1,876</td> <td> </td> <td> </td> <td> </td> <td align="right">2,088</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(10.2</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Segments total </div></td> <td> </td> <td> </td> <td align="right">4,378</td> <td> </td> <td> </td> <td> </td> <td align="right">4,484</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.4</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expense not allocated to segments (4) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(158</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(221</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Worldwide total </div></td> <td> </td> <td align="right">$</td> <td align="right">4,220</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">4,263</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1.0</td> <td nowrap="nowrap">)%</td> </tr>  </table> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Six Months Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Consumer </div></td> <td> </td> <td align="right">$</td> <td align="right">1,454</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">1,495</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.7</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Pharmaceutical (2) </div></td> <td> </td> <td> </td> <td align="right">3,803</td> <td> </td> <td> </td> <td> </td> <td align="right">3,958</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.9</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Medical Devices & Diagnostics (3) </div></td> <td> </td> <td> </td> <td align="right">5,578</td> <td> </td> <td> </td> <td> </td> <td align="right">3,875</td> <td> </td> <td> </td> <td> </td> <td align="right">43.9</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Segments total </div></td> <td> </td> <td> </td> <td align="right">10,835</td> <td> </td> <td> </td> <td> </td> <td align="right">9,328</td> <td> </td> <td> </td> <td> </td> <td align="right">16.2</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Expense not allocated to segments (4) </div></td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(335</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(422</td> <td nowrap="nowrap">)</td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Worldwide total </div></td> <td> </td> <td align="right">$</td> <td align="right">10,500</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">8,906</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">17.9</td> <td nowrap="nowrap">%</td> </tr>  </table> </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">  </div> </div> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td width="3%"></td> <td width="1%"></td> <td width="96"></td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td> <td> </td> <td>Includes net litigation expense of $115 million and $202 million recorded in the fiscal second quarter and the first fiscal six months of 2010, respectively.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(3)</td> <td> </td> <td>Includes net litigation expense of $42 million and income of $1,542 million recorded in the fiscal second quarter and the first fiscal six months of 2010, respectively.</td> </tr> <tr style="font-size: 3pt"> <td> </td> </tr> <tr valign="top"> <td nowrap="nowrap" align="left">(4)</td> <td> </td> <td>Amounts not allocated to segments include interest income/(expense) , non-controlling interests and general corporate income/(expense).</td> </tr> </table> </div>   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">SALES BY GEOGRAPHIC AREA<br /> (Dollars in Millions) </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Quarters Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td align="right">$</td> <td align="right">7,438</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">7,656</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(2.8</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Europe </div></td> <td> </td> <td> </td> <td align="right">3,832</td> <td> </td> <td> </td> <td> </td> <td align="right">3,972</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.5</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Western Hemisphere, excluding U.S. </div></td> <td> </td> <td> </td> <td align="right">1,375</td> <td> </td> <td> </td> <td> </td> <td align="right">1,215</td> <td> </td> <td> </td> <td> </td> <td align="right">13.2</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Asia-Pacific, Africa </div></td> <td> </td> <td> </td> <td align="right">2,685</td> <td> </td> <td> </td> <td> </td> <td align="right">2,396</td> <td> </td> <td> </td> <td> </td> <td align="right">12.1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total </div></td> <td> </td> <td align="right">$</td> <td align="right">15,330</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">15,239</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">0.6</td> <td nowrap="nowrap">%</td> </tr>  </table> </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="11" style="border-bottom: 0px solid #000000">Fiscal Six Months Ended</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">July 4,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">June 28,</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Percent</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(Dollars in Millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2010</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">2009</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Change</td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. </div></td> <td> </td> <td align="right">$</td> <td align="right">15,090</td> <td> </td> <td> </td> <td align="right">$</td> <td align="right">15,708</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(3.9</td> <td nowrap="nowrap">)%</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Europe </div></td> <td> </td> <td> </td> <td align="right">7,934</td> <td> </td> <td> </td> <td> </td> <td align="right">7,643</td> <td> </td> <td> </td> <td> </td> <td align="right">3.8</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Western Hemisphere, excluding U.S. </div></td> <td> </td> <td> </td> <td align="right">2,655</td> <td> </td> <td> </td> <td> </td> <td align="right">2,277</td> <td> </td> <td> </td> <td> </td> <td align="right">16.6</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Asia-Pacific, Africa </div></td> <td> </td> <td> </td> <td align="right">5,282</td> <td> </td> <td> </td> <td> </td> <td align="right">4,637</td> <td> </td> <td> </td> <td> </td> <td align="right">13.9</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; 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(4.)Amounts not allocated to segments include interest income/(expense) , non-controlling interests and general corporate income/(expense). (2) Includes net litigation expense of $115 million and $202 million recorded in the fiscal second quarter and the fiscal six months of 2010, respectively. (3) Includes net litigation expense of $42 million and income of $1,542 million recorded in the fiscal second quarter and the fiscal six months of 2010, respectively. Export sales are not significant. Effective portion As of January 3, 2010, these assets and liabilities are classified as Level 2 with the exception of other investments of $1,134 which are classified as Level 1. Includes $26 million and $119 million of non-current assets for July 4, 2010 and January 3, 2010, respectively. Includes $645 million and $517 million of non-current liabilities for July 4, 2010 and January 3, 2010, respectively. Ineffective portion Substantially offset in net earnings by changes in value of the underlying transactions. Classified as non-current assets. Purchased in-process research and development will be accounted for as an indefinite-lived intangible asset until the underlying project is completed or abandoned. Cash outlays for severance expected to be paid out over the next 12 to 18 months in accordance with the Company's plans and local laws.