JNJ | Q3 2007

Analysts : Larry Biegelsen – Wachovia Rob Hopkins – Lehman Brothers Catherine Arnold- Credit Suisse Celine Brown – AllianceBernstein Glenn Novarro - Banc of America

Louise Mehrotra: Good morning and welcome. I am Louise Mehrotra, VicePresident of Investor Relations for Johnson & Johnson. It is my pleasurethis morning to review our business results for the third quarter of 2007. Joining me on the podium today are Nick Valeriani -Worldwide Chairman, Medical Devices and Diagnostics; and Dominic Caruso - VicePresident, Finance and CFO. A few logistics before we get into the details. The audioand visuals from this presentation are being made available to a broaderaudience via a webcast, accessible through the investor relations section ofthe Johnson & Johnson website. I will begin by briefly reviewing highlights of the thirdquarter for the corporation and highlights for our three business segments.Following my remarks, Dominic will provide additional commentary on the resultsfor the quarter and guidance for the year. Nick will then provide an update onour Medical Devices and Diagnostics business. We will then open the floor toyour questions. We will conclude our formal presentation at approximately 9

Dominic Caruso: Thank you, Louise and good morning, everyone. While we arepleased with our solid financial results for the third quarter as Louisehighlighted for you, during the third quarter, our sales results were slightlyabove the mean of the analyst models published by First Call. Our solidearnings performance for the quarter demonstrates our ability to continuemanaging our costs and improving our margin, even in the face of salespressures in certain markets while continuing to invest in the future. In fact, if you were to look at the impact of adding thePfizer Consumer Healthcare business to our base business for 2006, as we filedin an 8-K earlier this year, you would see that our pro forma operating marginfor 2006 was negatively impacted by 1.2 points. However, when you look at ouroperating margin for the first nine months of this year, now including the PCHbusiness, you will see an operating margin of 26.7%, or only 0.5% negativeimpact versus the 2006 period, thus indicating leverage in the base business ofapproximately 0.7%. As you know, we recently announced a $10 billion sharerepurchase program, the largest in our history. We began purchasing shares inAugust and through the end of the third quarter we purchased $2 billion of ourstock. This share repurchase program, along with our dividends, demonstratesour strategy of returning value to our shareholders while allowing us theflexibility to continue to invest in business-building activities. In July, we announced cost restructure improvements thatwill help us manage through some near-term challenges in our pharmaceuticalbusiness and Cordis franchise. As yousaw, our third quarter results reflect the restructuring charge ofapproximately $745 million on a pre-tax basis, consistent with the guidancethat I provided during our conference call when we announced the restructuringactivities and our estimates at that time of restructuring charges of between$550 million and $750 million. Our plans are being executed by our operating companies andthe majority of the announcements have been made and actions have been taken,or are in the process of being implemented. I can tell you that these actionsare consistent with the guidance I have provided, namely reductions ofapproximately 3% to 4% of our global workforce in accordance with local workcouncils and labor laws, and we are on track to achieve annual cost savings for2008 of approximately $1.3 billion to $1.6 billion. Leaders in our operating companies have been spending thelast few months talking with employees about adjustments in their respectivebusiness models and I am proud to say that our leaders are executing againstthese plans to reduce our cost infrastructure while maintaining the properbalance of investing in the future. Ourgoal remains to build on the strengths of our business, reduce our overall costbase and become better positioned for continued profitable growth in the yearsahead. That said, I would like to provide some comments for you toconsider as you refine your models for 2007. Let's start with a discussion ofcash and related interest income and expense. During the third quarter of 2007,the company continued to generate strong cash flows. At the end of the third quarter, we had approximately $400 millionof net cash. This is approximately $8.3 billion of cash and investments and$7.9 billion of debt. This is animprovement of $2.9 billion in our overall net cash position from year end2006. We achieved this improvement while completing the $1.4 billionacquisition of Conor Medsystems during the first half of this year and alsoutilizing $2 billion to repurchase shares as we began our share repurchaseprogram this past quarter. Turning to interest income, we had net interest income of$52 million during the quarter. For purposes of your models and considering theimpact from the share repurchase program but assuming not major additionalacquisitions, I suggest you consider net interest income in the range of $125million to $175 million for the full year 2007, slightly lower than our priorguidance, to reflect the impact of the share repurchase program which is nowunderway. Turning to other income and expense, as a reminder of thenature of this account, this is the account where we record royalty income, aswell as one-time gains and losses arising from such items as litigation, gainsor losses from investments by our development corporation, or asset sales. Thisis also the account where we recorded the gain on the divestitures of certainbrands in connection with the PCH acquisition in the first quarter, as well asthe integration costs associated with the PCH acquisition. This account is difficult to forecast, but assuming no othermajor one-time gains or losses, I would recommend that you consider modelingother income and expense for 2007 as a net gain ranging from approximately $250million to $300 million. This is higherthan our prior guidance, reflecting additional royalty income and gains in ourdevelopment portfolio. Now a word on taxes. For the first nine months year-to-date in 2007the company's effective tax rate, excluding special charges, was 23.7% ascompared to 23.9% in the prior year period. We suggest you model our effectivetax rate for 2007 inthe range of 23.5% to 24%, consistent with our prior guidance. As always, wewill continue to pursue opportunities in this area to further improve upon thisrate as we approach the end of the year and we finalize implementation of someof our plans. Turning to sales and starting with operational sales growth,we would be comfortable with your models reflecting operational sales growthfor the full year of between 11.5% and 12%, consistent with the guidance I haveprovided during our conference call with you at the end of the second quarter. Regarding currency, we cannot predict the impact thatmovements in currency will have on our sales growth and we are not providing aforecast on currency. But to give you asense of possible currency impacts, if currency were to remain where it istoday, currency would have a positive impact to our full-year sales growth ofapproximately 3 points. When I last checked the First Call mean estimate for our EPSfor full year 2007, it was $4.06 per share and this included the dilutiveeffect of PCH as well as the Conor acquisition, but not including anyin-process research and development charges or other special items such asrestructuring charges. Given the strength of our earnings performance for the thirdquarter and considering the fact that restructuring actions will result inapproximately $0.02 to $0.03 per share of additional costs that will bereflected in our ongoing operations this year, we suggest that you considerfull year 2007 EPS estimates, excluding the impact of in-process R&D charges,restructuring charges or other special items, of between $4.10 and $4.13 pershare. This enhanced earnings performance is a reflection of the fine work ofthe people of Johnson & Johnson who continue to integrate acquisitions andmake appropriate changes to our cost structure, all the while continuing tomove our promising new growth opportunities forward and make important advancesin human healthcare. In fact, at this level of earnings per share, we are able toabsorb the dilutive effect of the PCH and the Conor acquisition, as well asenhance our earnings performance, despite some of the pressures we face in themarkets for drug-eluting stents and erythropoietin-stimulating agents. This is a true testament of the value of ourbroad-based business model. That concludes my comments on our operating performance andI look forward to updating you at our meeting in January to discuss our full year2007 results. Let's move on to the next portion of our program today. At our analyst meeting in June, we presentedthe growth plans for our pharmaceutical and consumer businesses and we havemade a good deal of progress since then that I would like to mention. Our consumer group is well into theintegration of Pfizer Consumer Healthcare and continues on track to meet orexceed our target of $500 million to $600 million in cost synergies by 2009. In January, we said weexpected this transaction to be breakeven or modestly accretive by 2009 -- afull year ahead of the original schedule -- and we continue to be on track toachieve this. The consumer group continues to generate new platforms forgrowth through new products and geographic expansion. Listerine just released its new,quick-dissolving whitening strips in the U.S.,an exciting new market building on the strength of our oral care. New skincareproducts with the unsurpassed protection of Helioplex sunscreen are rolling outworldwide, and we are preparing to launch an OTC version of Zyrtec anti-allergymedication in the U.S.,shortly after Zyrtec moves from prescription to OTC status. In June, we also spoke to you about our pharmaceuticalsegment, highlighting the many promising medicines we have in late-stagedevelopment. Looking at our late-stagepipeline of new medicines, we received FDA approval last week for Doribax,doripenem for injection for the treatment of complicated urinary tractinfections and intra-abdominal infections. At APAC we presented data showingthat Doribax is as effective as commonly-used therapies in treating nosocomialpneumonia. In June of this year, Doribaxwas filed in the U.S.and Europe for treatment of nosocomial pneumonia and in Europefor complicated urinary tract infections and complicated intra-abdominalinfections. New data for Ceftobiprole also presented at APAC showed itwas as effective as combination therapy in treating patients with complicatedskin infections, including MRSA, a growing public health threat. Ceftobiprole is currently in registration inthe US and theEU for complicated skin and skin structure infections. Our HIV medicine, TMC-125, was granted priority review bythe FDA last month and also has been filed for approval in Europe. In two studies published in the Lancet andpresented at the IAS meeting in Sydney,TMC-125 became the first medicine in the NNRTI class to show significantefficacy in HIV patients who are resistant to all other currently approvedNNRTIs. We remain on track to file three additional medicines forapproval by the end of this year

Nick Valeriani: Thank you, Dominic and good morning, everyone. Thank you for the opportunity to talk to youtoday about the Johnson & Johnson medical device and diagnosticssegment. This is an exciting time forour businesses. We are workingcomprehensively across our franchises to address some of the most pervasivediseases. We are committed to a vision of restoring the joys of life forpatients around the world, and there can be no doubt that our technologies makea difference. More than 3 million patients live more active lives thanksto our Cypher stent. More than 100,000 people are dealing better with morbidobesity with our adjustable gastric band. More than 1 million knees bend androtate with less pain with our joint replacement. 40 million eyes focus more clearly wearing Acuvuelenses; 4 million people better manage diabetes with our OneTouch Ultraproducts; and in hospitals around the world, there are enough Ethicon suturesto wrap around the earth eight times. We achieved this vision by focusing on our mission

Louise Mehrotra: Thank you, Nick. We will now begin the Q&A session. Iask that you wait for a microphone as the meeting is being webcast.

Unidentified Analyst: A quick question for Dominic. When we look at last quarterversus this quarter, last quarter you gave guidance of $4.02 to $4.05; thisquarter it is $4.10 to $4.13. The three categories that are different are FX,gains on the other income line and cost-cutting. Can you quantify how that corresponds withthe changes in guidance among those three categories?

Dominic Caruso: Sure, Glenn, I’ll give it a try. The previous guidance wasactually $4.02 to $4.07 and the increased guidance is now $4.10 to $4.13. FXhas had a not that significant of an impact to the overall change, because weessentially hedged most of our foreign currency exposure; therefore, we don’tgain the benefit and or suffer a loss associated with that. In terms of cost-cutting, I think that is probably with mostof our efficiency in our operations, that’s the most significant part of thechange. The third component is some additional other income that Ireferenced which was related to increased royalty income and gain on the salesof our investments in our development portfolio. I would say that costimprovement was the largest part of that swing in our guidance.

Unidentified Analyst: Dominic, can you give us any clear specificity on the other,any one-time items that are in the third quarter, outlook for the fourthquarter? Maybe you can just call that out. Invega, can you give us some kind of update on how it istracking? I think your last public comment was it is on track to be where youwant it to be by the time Risperdal goes generic. Can you just update us onwhat that is and where things stand? Could you review the U.S.stent pricing environment. Our context is suggesting J&J has beenincrementally more aggressive on price in stents. Could you tell us where stentprices were in the quarter and your strategy for dealing with new competitionthere? Thanks so much.

Dominic Caruso: With respect to other income in this particular quarter,other income and expense, you may remember that we executed a settlementagreement with the Department of Justice on the orthopedic industry matters andthat cost associated with that settlement, which we announced was $85 million,is included in our results, fully included in our results now. That’s the onlyone-time unusual item we wouldn’t expect to repeat in future quarters. The royalty income we are experiencing is in certainagreements that have triggering aspects for the royalty agreements. I don’twant to tell you which particular ones they are, but we will see better royaltyincome through the remainder of the year. With respect to Invega, we still continue to see in Invegaas a promising product for the treatment of schizophrenia. I would tell youthat we continue to see restrictions in the use of Invega based on formularystatus, so whether it is prior authorization, et cetera, we continue to seethat. It is a very difficult environment for new products in a newreimbursement arena. Those pressures are difficult to overcome withoutadditional data on the product, especially additional data comparing it otherproducts. Now you may know that we have just recently, this past weekend,had a session on the head to head trial of Invega and Seroquel so it is recent data. Thattrial showed that Invega performed very nicely against the Seroquel placebo in termsefficacy and is very well-tolerated and in fact, the dropout rate for Invega patientsis far lower than either Seroquel or even placebo. So we are very pleasedbecause that is the kind of data that the reimbursement environment is waitingfor to see before lightening up on the respective pressures in place for it.Whether it lightens up enough, we will wait and see. We have taken a realistic view of Invega in both our guidancefor this year and in the cost improvement programs that were previouslyannounced. With respect to DES pricing, Louise might have the actualdata for the quarter.

Louise Mehrotra: So the U.S.price was down about 5%, and that’s down to about $2,000. OUS price was down asimilar amount, higher in terms of local currency, but we did have the favorableimpart of the currency

Unidentified Analyst: This it sounds like it might not be for use [inaudible]Risperdal goes generic. That is my final point on it.

Louise Mehrotra: Well, it is not tracking today where we hoped it would trackby this point and therefore, we have taken that into consideration in our plans.

Unidentified Analyst: First a pharma pipeline question and then maybe a couple ofquestions for Nick since we have him here. The pharma pipeline question is on CNTO148. We are going to see data in a couple of weeks at ACR, I believe inarthritis and ankylosing spondylitis. Could you talk about your filing strategyfor different indications for 148 RA as well as arthritis and so forth? And then the question for Nick, you talked about aninteresting opportunity, and you touched on just a couple of them. The ability to deliver an agent with Acuvue,with your contact lenses franchise. What is the regulatory pathway for thattype of product? How much visibility do you have on that? Anything you can give us, that you have in front of youtoday, on the clinical trials on for ThermoCool, AF and for the CAPS program?

Nick Valeriani: On the pharma pipeline question on CNTO 148 – Louise, helpme out here if I have missed one – our strategy there is in early ’08 we intendto file three indications

Dominic Caruso: Mike, with regards to Acuvue contact lenses, the regulatoryprocess is a PMA filing so what we are able to do, obviously, with this sort ofconversional combination product is certainly in benefit of our pharmaceuticalexpertise that we have inside of Johnson & Johnson as well as otherexpertise that we have in MD&D that bring the right skillsets to bearthere, but it is PMA. With regard to the ThermaCool for afib, we have completedenrollment of the patients for this trial, and so now we are in the follow-upperiod and we will be submitting that PMA in the future. In CAPS, what we have done with CAPS is the pivotal trial isin gastroenterology, so it is for colonoscopy, predominately in the lab. Thatpivotal trial is ongoing today and we anticipate being able to file that PMA inthe early part of 2008. That is our first indication, in the GI lab set.

Unidentified Analyst: Just a follow up on ThermoCool. Is that a randomized trial?Do you know what that looks like and what you need to show in terms of the AFsuccess rates?

Dominic Caruso: Mike, I am not really sure.

Larry Biegelsen –Wachovia: First a pharma question and then just a couple of quickdevice questions. [Ceftobiprole], I think it was previously mentioned as a 2008filing, unless I am wrong. Dominic, you didn’t mention that today as an ’08filing. Could you please give us an update? And then on devices, any sense of timing on the contactlenses with the active ingredient? And then on the bands, the 1.7 billion in the market for2011, what is the split between band and bypass? I think that was a growthmarket. Lastly, do you have a telemetrically adjustable band indevelopment? Thanks.

Dominic Caruso: Larry, on the pipeline I mentioned three filings, CNTA 148, rivaroxaban, and pentadol, but youare correct. There are actually six filings in ’08. [Ceftobiprole] is still ontrack to be filed in ’08; [Vacogen] in the EU is on track to be filed in ’08,as well as [Yondelese] for oncology. So we actually have six filings planned in’08, I happened to mention three earlier.

Nick Valeriani: Larry, again, the timing. We are in the clinical trial rightnow on the contact lenses so we will complete that trial and the submission forthe PMA, it is too early right now to really determine when that will besubmitted, but it is one of our top priority projects in the vision care business. The 1.7 billion market potential for band versus bypass,that really is predominantly going to be, we believe, bypass surgery when youthink about the other clinical benefits associated with these procedures as itrelates to the resolution of other co-morbidities – diabetes and hypertension –but I think, you know, the jury is still out on that in terms of how that wouldfit with the surgery business in the marketplace with the Realize band and ourability to develop that market and work with physicians and payers andconsumers. We are going to see, I think perhaps a changing dynamicthere. Obviously today the indication is BMI of 35 or greater with statedco-morbidities. Who knows where the band could ultimately end up and perhaps beutilized in less severely obese patients. So we might see a segmentation changethat could potentially affect that 1.7 billion projection. As it relates to a remote control adjustment, we are not atliberty at this point to really talk about what is in the early stages rightnow.

Rob Hopkins – LehmanBrothers: Two questions for Nick, in light of the fact that next weekwe have the TCT meeting and the NAS meeting all in the same week, so I have a stentand spine question. First on the stentside, I just wanted to clarify, now your next generation deluding stent are contraplatform-based stent. Then on the spine side, you guys have been losing some shareover the course of the last year. I am wondering, this is a market that is stillgrow in double-digits, how long do you think it will take you to get back to a marketrate of growth and what do you need to do? Are there any key product launchescoming in NAS in the near term that could turn that business around?

Nick Valeriani: As it relates to stents, as you saw in the pipeline we havetwo products that are underdevelopment. It’s our Cypher Elite, which is asurface coated product; and the Contra products. So we have a dual pack goingright now, and as per the plan, the first product for the U.S.market will be Cypher Elite, but again, we remain very excited about the Contraprogram where we believe we will have our first experience in the early part of2008. With regard to spine, we have had some challenges in therecent past. A couple things that were giving us some positive feelings aboutthat business. First and foremost, as we stabilized the distribution network inthe U.S. wewere having a significant degree of turnover on our distributors, and we made aleadership change a couple years ago now. Gary Fischetti has been leading that business and working well with thedistributors. Our Expedian product line is out in the marketplace anddoing very well. Our MIS program as well is supporting the stabilization ofthat business and we are beginning to see a turnaround and some positivemomentum in that business. When we will get the market rates of growth still remains tobe seen.

Rob Hopkins – LehmanBrothers: Just one quick follow-up, Louise. I was wondering if youcould give us the spine and hip and knee numbers, if you don’t mind; U.S.and worldwide.

Louise Mehrotra: Sure. This is operational growth

Unidentified Analyst: If you could just give us an update in terms of how you feelabout your visibility with regard to that product category; I know back in Julythings were very much in flux so if you could give us a quick update there. Two quick follow-ups for Nick. Can you talk in terms of thediabetes products where you guys are, or what your interest is in continuous glucosesensors and also temporary or disposal insulin pump, which seems to be an emergingtechnology area there? I was also surprised to see the amount of information youhave up there in terms of bio markers. If you could give us a sense of whereyou are in that development area and what your capabilities are? Thanks.

Nick Valeriani: With respect to the stimulating agent market, you areabsolutely right. Back in the second quarter call there was still someuncertainty about reimbursement and there was still some uncertainty about whatthe next panel discussion was going to entail; those were renal paneldiscussions that we still have to see the outcome of. I guess two things happened

Dominic Caruso: With regard to diabetes and continuous glucose monitoring,we see that as an important technology for the continuation and improvement in carefor the diabetic patients. We have two programs ongoing inside of our diabetesfranchise and had early clinical experience with one other devices. One of the things, one of the key challenges to ensure thatyou have accuracy to deal with low readings, and if you think about what wewant to try to do with this technology is to monitor and then paste the load ofinfluence to the patient. So we are taking a thoughtful and disciplined approachto understand the benefit of this technology and enhancing care for thediabetics who are using insulin though. With regard to temporary insulin pumps, we are staying abreast of what is going on inthe marketplace. Obviously we arecommitted and excited about the work at our Animas Corporation and the growthof that business year on year and the launch of the Animas 2020, though we alsosee the potential for temporary or disposable insulin pumps, perhaps forsituations like gestational diabetes where you may want a short use of theproduct as opposed to a $4,000 or $5,000 investment as the reusable pumps areused. Then in our OCD business, in the area of bio markers, it isa space we are very excited about. Davis, who runs our OCD business has worked over the last four years nowto really reconfigure the OCD franchise and its strategy. We have been able toleverage some of the expertise we have in our pharmaceutical business, specifically[Adam Latoya] as well as some external licenses to put us in what we think isan exciting position as it relates to the development of these bio markers inthe area of cardiovascular disease, metabolic disorder, oncology and women’shealth. So we see a real transition and obviously our core businessis important, but we really see the strategy moving to one of creating highvalue medical diagnostic testing in the future, and that is what the bio markerstrategy is all about.

Unidentified Analyst: I have a question for you regarding OTC Zyrtec. When you saythat you are preparing for that launch, should we assume that there could be acontribution from OTC Zyrtec on January 1st, 2008? If the launch timeline is beyond the 1stof the new year, what exactly is preventing you from launching at the time thatexclusivity expires?

Dominic Caruso: I would rather not comment on the specific timing, but whatI said is we are preparing for the launch shortly after the product goes offpatent and the product goes off patent in December of this year.

Unidentified Analyst: No indication as to whether that might be a manufacturingissue or approval issue, anything along those lines?

Dominic Caruso: It is just continuing to develop our plans on theappropriate launch strategy.

Unidentified Analyst: It doesn’t put you at a disadvantage with respect to otherswho might be waiting in the wings to launch an OTC version?

Louise Mehrotra: We really can’t comment any further on that at this time.

Unidentified Analyst: The second question is for Nick, one of the topics that you didnot touch on in your prepared comments was the ASR resurfacing system. Couldyou give us an update there as to what is going on, and particularly where westand in the PMA process?

Nick Valeriani: First with regards to ASR, it should be noted that product waslaunched outside the U.S.today and is a very successful part of our hip program. As it relates to thetiming of the PMA submission, 2009 or 2010 timeframe.

Unidentified Analyst: I am just curious how progress is being made in the clinicaltrial for that PMA submission?

Nick Valeriani: I mean, it is progressing fine. Again, it’s a product thatwe have in the marketplace today. We don’t anticipate any issues with regard toproduct performance and surgeon uptake.

Catherine Arnold- CreditSuisse: Last Friday, the FDA issued draft guidance on antibacterials,suggesting that for some indications, non-inferiority would not be anappropriate endpoint. Could you just confirm that you still expect non-inferiorityto be okay for the three indications that you are filing, or have filed?

Dominic Caruso: Our design of the clinical trials obviously was initiated inconsultation with the FDA and the protocol was the protocol that we agreed with,with the FDA. So our plan is to move forward with that agreed-upon protocol andfile in accordance with that endpoint that was established with the FDA.

Celine Brown – Alliance Bernstein : A question for Nick on the drug-eluting stent market. Youhad mentioned that you continued to see declines in PCI procedure volumes aswell as penetration rates. Could you quantify that, if possible, and providesome additional color both for the U.S.and the OUS market?

Nick Valeriani: First of all, when you look at this, this quarter weestimate that PCI penetration year-on-year is probably down somewhere between13% and 15% versus last year. If you look at drug-eluting stent penetration asa percentage of total stents, it is probably somewhere in the 65% range ascompared to, let’s say at its peak it was probably 88%, 89% sometime a yearago. What we see again as one considers the body of evidence thatcontinues to be published here, we believe that we’re going to see a turnaroundin both the PCI penetration and an uptake in the ES penetration. Thedirect-to-patient or direct-to-consumer campaign that we’re launching really isabout getting the word out and informing health care providers, patients andcaregivers that in fact drug-eluting stents, specially Cypher, is as safe as abare metal stent when you consider the long-term potential complications; saferthan [taxis] and more effective than both in treating coronary artery disease. Over the last 12 to 15 months there has been all sorts ofpublicity that’s gone out there that has affected this and we continue to havegreat confidence in our product and its ability to best treat coronary diseasefor the appropriate patient, and that’s really what we’re attempting to do now.

Louise Mehrotra: With respect to everybody’s time, we have time for one morequestion.

Glenn Novarro - Bancof America: One of the concerns that we hear out there is the costcutting that you’re going to undertake in 2008 and beyond. Is that enough costcutting if Procrit disappoints further? If Cypher comes under more pressure? Canyou comment on whether or not there is still wiggle room within that P&Lfor the company to adjust if you haven’t made the right assumptions for 2008?Thanks.

Dominic Caruso: When we embarked on this cost-restructuring program weobviously had to look out in the future and try to get a sense of what theworld would look like with drug-eluting stents and competition, et cetera andthe products like Risperdal and Topamax and patent protection in’08 and ’09. We believe we sized the business appropriately to do twothings. One is to get us through these near-term pressures but also to continueinvesting in the future. As Bill and I talked to you about this when weannounced the restructuring program, it was our goal not only to reduce costs,but to also provide focus on the more exciting, promising opportunities in thepipeline. As we move forward, we will always keep that as a primaryconcern and move through this short-term period and come out of it strongerthan when we entered it. So I think the cost reduction programs are intended tohave a short-term impact and short-term pressures but we certainly don’t wantthem to have a long-term negative impact to reduce our growth rate going forward.So we will keep a close eye on that. I would say our business leaders around the world have becomevery good at managing both cost and including things like implementingstandardization initiatives that I have talked to you about before. I think westill have room to grow there. That’s one area where we have just started andwe have tried to estimate that, but I think there is much more room there. They have also done a fabulous job of balancingcost containment with investment in the future.

Louise Mehrotra: That is the end of the Q&A session. I will now turn itover to Don for some final remarks

Dominic Caruso: Thanks, Louise. I would like to thank Nick for the over viewof the exciting opportunities in our MD&D business this morning. As you cansee from our strong earnings performance this quarter, our broad-based businessmodel enables us to continue delivering profitable growth while continuing toinvest in our future. Thank you for your continued support of Johnson & Johnsonand we look forward to updating you in January on our full year 2007 results. Thanks for your attention today and have a great day.