NEW BRUNSWICK, N.J., July 18, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Johnson & Johnson today announced record sales for the second quarter of $13.4 billion, an increase of 4.7% as compared to the second quarter of 2005. Operational growth was 4.8% with a negative currency impact of .1%. Domestic sales were up 4.4%, while international sales increased 5.1%, reflecting operational growth of 5.2% and a negative currency impact of .1%.
Net earnings and diluted earnings per share for the second quarter of 2006 were $2.8 billion and $.95, respectively. The second quarter included an after-tax in-process research and development charge of $87 million associated with the acquisition of Vascular Control Systems Inc. Prior-year second- quarter net earnings included after-tax in-process research and development charges of $353 million associated with the acquisitions of Peninsula Pharmaceuticals, Inc., CLOSURE Medical Corporation and TransForm Pharmaceuticals, Inc. Net earnings for the second quarter of 2005 also included a gain of $225 million for a tax adjustment associated with a technical correction made to the American Jobs Creation Act. Excluding the impact of these items, net earnings for the current quarter were $2.9 billion and diluted earnings per share were $.98, representing increases of 7.0% and 8.9%, respectively, as compared to the same period in 2005.*
"Our second-quarter results demonstrated improving performance which is anticipated to continue throughout the remainder of the year," said William C. Weldon, Chairman and Chief Executive Officer. "We have made a number of business building investments and have received several significant regulatory product approvals. These investments and approvals will help us both sustain important leadership positions as well as enter new high growth markets characterized by unmet medical need."
Worldwide Medical Devices and Diagnostics sales of $5.2 billion for the second quarter represented a 6.2% increase over the prior year with operational growth of 6.7% and a negative impact from currency of .5%. Domestic sales increased 8.9%, while international sales increased 3.5% (4.6% from operations less 1.1% from negative currency).
Primary contributors to the operational growth included Ethicon Endo- Surgery's minimally invasive products; Cordis' CYPHER Sirolimus-eluting Coronary Stent; Vistakon's disposable contact lenses, and LifeScan's blood glucose monitoring and insulin delivery products.
During the quarter, the Company announced the completion of the acquisition of Vascular Control Systems, Inc., a privately held company focused on developing medical devices to treat fibroids and to control bleeding in obstetric and gynecologic applications. In July, the Company acquired Colbar LifeScience Ltd., a privately held biotechnology company specializing in reconstructive medicine and tissue engineering.
In addition, the Company received CE Mark approval in Europe for CYPHER SELECT PLUS, the first third-generation drug-eluting stent to receive such an approval.
Worldwide Pharmaceutical sales of $5.8 billion for the second quarter represented an increase over the prior year of 3.2% on both a reported and an operational basis. Domestic sales increased 2.4%, while international sales increased 4.7%.
Sales growth reflects the strong performance of RISPERDAL, an antipsychotic medication; REMICADE, a biologic approved for the treatment of a number of immune mediated inflammatory diseases; TOPAMAX, an antiepileptic and a treatment for the prevention of migraine headaches, and CONCERTA, a treatment for attention deficit hyperactivity disorder.
During the quarter, the U.S. Food and Drug Administration (FDA) granted accelerated approval of the anti-HIV medication PREZISTA (darunavir). The FDA also approved IONSYS (fentanyl iontophoretic transdermal system), the first needle-free, patient-activated analgesic system; and REMICADE (infliximab) for reducing signs and symptoms in pediatric patients with moderately to severely active Crohn's disease.
JURNISTA prolonged-release tablets (Hydromorphone HCl), a new prescription treatment for severe pain, received approval through the European Mutual Recognition Procedure. In addition, the Company submitted a Marketing Authorization Application to the European Medicines Agency for Paliperidone prolonged-release tablets, a once daily, oral medication for the treatment of schizophrenia.
Also during the quarter, the Company completed an agreement with Vertex Pharmaceuticals Inc. to develop and commercialize Vertex's investigational hepatitis C virus (HCV) protease inhibitor, VX-950. The Company will have exclusive rights in Europe, South America, the Middle East, Africa and Australia. In June, the Company announced it had entered into an agreement with Metabolex, Inc. for an exclusive license for worldwide development and commercialization of metaglidasen and MBX-2044, two compounds in clinical development for the treatment of type 2 diabetes.
Worldwide Consumer segment sales of $2.4 billion for the second quarter represented a 5.3% increase over the prior year with operational growth of 4.5% and a positive impact from currency of .8%. Domestic sales increased 1.0%, while international sales increased 9.2% (7.7% from operations and 1.5% from currency).
Sales growth reflects strong performance by the skin care lines of AVEENO and JOHNSON'S adult skin products. Baby & Child Care products and McNeil Nutritional's SPLENDA sweetener also contributed to the results in the Consumer segment.
The acquisition of Groupe Vendome, a privately held French marketer of adult and baby skin care products, was completed during the quarter.
In addition, the Company announced that it had entered into a definitive agreement to acquire Pfizer Consumer Healthcare for $16.6 billion in cash. The transaction is projected to close by the end of 2006 and is subject to customary clearances, including the Hart-Scott-Rodino Antitrust Improvements Act and European Union merger control regulation.
Johnson & Johnson is the world's most comprehensive and broadly based manufacturer of health care products, as well as a provider of related services, for the consumer, pharmaceutical, and medical devices and diagnostics markets. The more than 230 Johnson & Johnson operating companies employ approximately 116,200 men and women in 57 countries and sell products throughout the world.
(*) Net earnings and diluted earnings per share excluding in-process
research and development charges and a revised tax impact for the
American Jobs Creation Act are non-GAAP financial measures and should
not be considered replacements for GAAP results. For a reconciliation
of these non-GAAP financial measures to the most directly comparable
GAAP financial measures, see the accompanying tables to this release.
NOTE TO INVESTORS
Johnson & Johnson will conduct a meeting with financial analysts to discuss this news release today at 8:30 a.m., Eastern Daylight Savings Time. A simultaneous webcast of the meeting for interested investors and others may be accessed by visiting the Johnson & Johnson website at http://www.jnj.com. A replay will be available approximately two hours after the live webcast by visiting http://www.jnj.com and clicking on "Webcasts/Presentations" in the Investor Relations section.
(This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from the Company's expectations and projections. Risks and uncertainties include general industry conditions and competition; economic conditions, such as interest rate and currency exchange rate fluctuations; technological advances and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approvals; domestic and foreign health care reforms and governmental laws and regulations; and trends toward health care cost containment. A further list and description of these risks, uncertainties and other factors can be found in Exhibit 99 of the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2006. Copies of this Form 10-K, as well as subsequent filings, are available online at www.sec.gov or on request from the Company. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.)
For more information on Johnson & Johnson, please visit the Company's website at http://www.jnj.com.
Johnson & Johnson and Subsidiaries
Supplementary Sales Data
(Unaudited; Dollars in Millions) SECOND QUARTER
Percent Change
2006 2005 Total Operations Currency
Sales to customers by
segment of business
Consumer
U.S. $1,103 $1,092 1.0% 1.0 -
International 1,295 1,186 9.2 7.7 1.5
2,398 2,278 5.3 4.5 0.8
Pharmaceutical
U.S. 3,682 3,595 2.4 2.4 -
International 2,128 2,033 4.7 4.7 0.0
5,810 5,628 3.2 3.2 0.0
Med Devices & Diagnostics
U.S. 2,590 2,378 8.9 8.9 -
International 2,565 2,478 3.5 4.6 (1.1)
5,155 4,856 6.2 6.7 (0.5)
U.S. 7,375 7,065 4.4 4.4 -
International 5,988 5,697 5.1 5.2 (0.1)
Worldwide $13,363 $12,762 4.7% 4.8 (0.1)
SIX MONTHS
Percent Change
2006 2005 Total Operations Currency
Sales to customers by
segment of business
Consumer
U.S. $2,253 $2,206 2.1% 2.1 -
International 2,500 2,352 6.3 6.7 (0.4)
4,753 4,558 4.3 4.5 (0.2)
Pharmaceutical
U.S. 7,383 7,378 0.1 0.1 -
International 4,053 4,005 1.2 3.8 (2.6)
11,436 11,383 0.5 1.4 (0.9)
Med Devices & Diagnostics
U.S. 5,110 4,739 7.8 7.8 -
International 5,056 4,914 2.9 6.8 (3.9)
10,166 9,653 5.3 7.3 (2.0)
U.S. 14,746 14,323 3.0 3.0 -
International 11,609 11,271 3.0 5.7 (2.7)
Worldwide $26,355 $25,594 3.0% 4.2 (1.2)
Johnson & Johnson and Subsidiaries
Supplementary Sales Data
(Unaudited; Dollars in Millions) SECOND QUARTER
Percent Change
2006 2005 Total Operations Currency
Sales to customers by
geographic area
U.S. $7,375 $7,065 4.4% 4.4 -
Europe 3,295 3,186 3.4 4.3 (0.9)
Western Hemisphere
excluding U.S. 876 751 16.6 9.4 7.2
Asia-Pacific, Africa 1,817 1,760 3.2 5.2 (2.0)
International 5,988 5,697 5.1 5.2 (0.1)
Worldwide $13,363 $12,762 4.7% 4.8 (0.1)
SIX MONTHS
Percent Change
2006 2005 Total Operations Currency
Sales to customers by
geographic area
U.S. $14,746 $14,323 3.0% 3.0 -
Europe 6,366 6,362 0.1 4.8 (4.7)
Western Hemisphere
excluding U.S. 1,698 1,477 15.0 7.5 7.5
Asia-Pacific, Africa 3,545 3,432 3.3 6.7 (3.4)
International 11,609 11,271 3.0 5.7 (2.7)
Worldwide $26,355 $25,594 3.0% 4.2 (1.2)
Johnson & Johnson and Subsidiaries (1)
Condensed Consolidated Statement of Earnings
(Unaudited; in Millions Except
Per Share Figures) SECOND QUARTER
2006 2005
Percent
Percent Percent Increase
Amount to Sales Amount to Sales (Decrease)
Sales to customers $13,363 100.0 $12,762 100.0 4.7
Cost of products sold 3,788 28.3 3,522 27.6 7.6
Selling, marketing and
administrative expenses 4,351 32.6 4,278 33.5 1.7
Research expense 1,828 13.7 1,525 11.9 19.9
In-process research &
development 87 0.6 353 2.8
Interest (income)expense, net (196) (1.5) (94) (0.7)
Other (income)expense, net (98) (0.7) (88) (0.7)
Earnings before provision for
taxes on income 3,603 27.0 3,266 25.6 10.3
Provision for taxes on income 783 5.9 678 5.3 15.5
Net earnings $2,820 21.1 $2,588 20.3 9.0
Net earnings per share
(Diluted) $0.95 $0.86 10.5
Average shares outstanding
(Diluted) 2,974.4 3,024.7
Effective tax rate 21.7 % 20.8 %
Adjusted earnings before
provision for taxes and net
earnings
Earnings before provision
for taxes on income $3,690(2) 27.6 $3,619(3) 28.4 2.0
Net earnings $2,907(2) 21.7 $2,716(3) 21.3 7.0
Net earnings per share
(Diluted) $0.98(2) $0.90(3) 8.9
Effective tax rate 21.2% 25.0%
(1) The company has adopted SFAS No. 123 (R), Shared Based Payment,
applying the modified retrospective transition method. Previously
reported financial statements have been restated accordingly.
(2) The difference between as reported earnings before provision for taxes
on income and net earnings and adjusted earnings before provision for
taxes on income and net earnings is the exclusion of IPR&D of $87 million
before tax with no tax benefit, or $0.03 per share.
(3) The difference between as reported earnings before provision for taxes
on income and net earnings and adjusted earnings before provision for
taxes on income and net earnings is the exclusion of IPR&D of $353 million
before tax with no tax benefit, or $0.12 per share, and the exclusion of a
$225 million tax gain, or $0.08 per share, due to the reversal of a tax
liability related to a technical correction associated with the American
Jobs Creation Act of 2004.
Johnson & Johnson and Subsidiaries (1)
Condensed Consolidated Statement of Earnings
(Unaudited; in Millions Except
Per Share Figures) SIX MONTHS
2006 2005
Percent
Percent Percent Increase
Amount to Sales Amount to Sales (Decrease)
Sales to customers $26,355 100.0 $25,594 100.0 3.0
Cost of products sold 7,400 28.1 7,018 27.4 5.4
Selling, marketing and
administrative expenses 8,446 32.0 8,405 32.8 0.5
Research expense 3,360 12.7 2,909 11.4 15.5
In-process research &
development 124 0.5 353 1.4
Interest (income)expense, net (377) (1.4) (163) (0.6)
Other (income)expense, net (816) (3.1) (121) (0.5)
Earnings before provision for
taxes on income 8,218 31.2 7,193 28.1 14.2
Provision for taxes
on income 2,093 8.0 1,766 6.9 18.5
Net earnings $6,125 23.2 $5,427 21.2 12.9
Net earnings per share
(Diluted) $2.05 $1.80 13.9
Average shares outstanding
(Diluted) 2,982.5 3,021.8
Effective tax rate 25.5 % 24.6 %
Adjusted earnings before
provision for taxes and net
earnings
Earnings before provision
for taxes on income $7,720(2) 29.3 $7,546(3) 29.5 2.3
Net earnings $5,873(2) 22.3 $5,555(3) 21.7 5.7
Net earnings per share
(Diluted) $1.97(2) $1.84(3) 7.1
Effective tax rate 23.9% 26.4%
(1) The company has adopted SFAS No. 123 (R), Shared Based Payment,
applying the modified retrospective transition method. Previously
reported financial statements have been restated accordingly.
(2) The difference between as reported earnings before provision for taxes
on income and net earnings and net earnings per share (diluted) is the
Guidant acquisition termination fee of $622 million and $368 million and
$0.12 per share, respectively, and IRP&D of $124 million and $116 million
and $0.04 per share, respectively.
(3) The difference between as reported earnings before provision for taxes
on income and net earnings and adjusted earnings before provision for
taxes on income and net earnings is the exclusion of IPR&D of $353 million
before tax with no tax benefit, or $0.12 per share, and the exclusion of a
$225 million tax gain, or $0.08 per share, due to the reversal of a tax
liability related to a technical correction associated with the American
Jobs Creation Act of 2004.
SOURCE Johnson & Johnson
Press: Jeffrey J. Leebaw, +1-732-524-3350, or Home: +1-732-821-6007, or Investors: Louise Mehrotra, +1-732-524-6491, or Stan Panasewicz, +1-732-524-2524, all for Johnson & Johnson
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