Johnson & Johnson Reports Fourth-Quarter and Full-Year 2006 Results

2006 Fourth-Quarter EPS Rose 5.7% on Sales Increase of 8.5%

NEW BRUNSWICK, N.J., January 23, 2007 /PRNewswire-FirstCall/ -- Johnson & Johnson today announced record sales of $13.7 billion for the fourth quarter of 2006, an increase of 8.5% as compared to the fourth quarter of 2005. Operational growth was 6.2% with a positive currency impact of 2.3%. Domestic sales were up 6.4%, while international sales increased 11.2%, reflecting operational growth of 6.0% and a positive currency impact of 5.2%. Worldwide sales for the year 2006 were $53.3 billion, an increase of 5.6% over 2005, increasing operationally by 5.3% with currency contributing .3%.

Net earnings and diluted earnings per share for the fourth quarter of 2006 were $2.2 billion and $.74 respectively. Net earnings for the fourth quarter of 2006 included an after-tax charge for in-process research and development of $217 million associated with the acquisition of Pfizer Consumer Healthcare. Excluding this charge, 2006 fourth-quarter net earnings were $2.4 billion and earnings per share were $.81, representing increases of 13.5% and 15.7%, respectively, as compared with the same period in 2005.*

Net earnings and diluted earnings per share for the year, as reported, were $11.1 billion and $3.73, increases of 9.9% and 11.3%, respectively, as compared with 2005. Full-year 2006 net earnings included after-tax charges for in-process research and development of $448 million and an after-tax gain of $368 million associated with the termination of the Guidant acquisition agreement. Full-year 2005 net earnings included after-tax charges for in- process research and development of $359 million and a gain of $225 million for a tax adjustment associated with a technical correction made to the American Jobs Creation Act. Excluding these items, net earnings for the year were $11.1 billion and earnings per share were $3.76, representing increases of 9.2% and 10.9%, respectively, as compared with the same period in 2005.*

"Johnson & Johnson had a solid year in 2006, delivering double-digit growth in earnings per share while continuing to invest in building our businesses for the future," said William C. Weldon, Chairman and Chief Executive Officer. "We're very excited about the completion of the Pfizer Consumer Healthcare acquisition, which not only brings to Johnson & Johnson some of the world's premier consumer brands, but also builds upon our broad base in human health care."

Worldwide, the Medical Devices and Diagnostics segment achieved annual sales of $20.3 billion in 2006, representing an increase over the prior year of 6.2% with operational growth of 6.4% and a negative currency impact of .2%. Domestic sales increased 6.5%, while international sales increased 5.9% (6.2% from operations less .3% from negative currency).

Primary contributors to the operational growth included Ethicon Endo- Surgery's minimally invasive products; DePuy's orthopaedic joint reconstruction, sports medicine and trauma businesses; Vistakon's disposable contact lenses, and LifeScan's blood glucose monitoring and insulin delivery products.

During the quarter, the Company announced that it had entered into a definitive agreement to acquire Conor Medsystems, Inc., a cardiovascular device company with a unique controlled drug delivery technology. The Company also received approval from the U.S. Food and Drug Administration (FDA) for the first blood-screening test for Chagas' disease, a tropical, parasitic disease.

Worldwide Pharmaceutical sales of $23.3 billion for the full-year 2006 represented an increase of 4.2% versus the prior year with operational growth of 3.9% and a positive impact from currency of .3%. Domestic sales increased 4.2%, while international sales also increased 4.2% (3.4% from operations and .8% from currency).

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; VELCADE, a treatment for multiple myeloma, and CONCERTA, a treatment for attention deficit hyperactivity disorder.

During the quarter, the Company received approval from the FDA for INVEGA (paliperidone) Extended-Release Tablets, a new atypical antipsychotic for the treatment of schizophrenia. The Company also submitted a new drug application to the FDA for doripenem, an antibiotic for the treatment of complicated intra-abdominal and complicated urinary tract infections. In addition, the Company submitted a supplemental new drug application for DOXIL (doxorubicin HCl liposome injection) as combination therapy with VELCADE (bortezomib) to treat patients with multiple myeloma who have received at least one prior therapy.

Worldwide Consumer segment annual sales in 2006 were $9.8 billion, an increase of 7.5% over the prior year with operational growth of 6.4% and a positive impact from currency of 1.1%. Domestic sales increased 3.8%, while international sales increased 10.9% (8.7% from operations and 2.2% from currency).

Sales results reflect growth in the skin care lines of AVEENO, JOHNSON's adult skin products, CLEAN & CLEAR, as well as sun care and products from the acquisition of Group Vendome. Strong growth in Baby & Child Care products also contributed to the results.

Late in the quarter, the Company announced the completion of the acquisition of Pfizer Consumer Healthcare, creating the world's premier consumer health care company.

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 200 Johnson & Johnson operating companies employ approximately 122,000 men and women and sell products throughout the world.

    * Net earnings and diluted earnings per share excluding in-process

      research and development charges, the gain associated with the

      termination of the Guidant acquisition agreement, and a tax adjustment

      associated with a technical correction made to 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 Standard Time. A simultaneous webcast of the meeting for interested investors and others may be accessed by visiting the Johnson & Johnson website at www.jnj.com. A webcast and podcast replay will be available approximately two hours after the live webcast by visiting 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 does not undertake 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)


                                                FOURTH QUARTER

                                                          Percent Change

                                   2006     2005   Total   Operations Currency

    Sales to customers by

    segment of business

     Consumer

        U.S.                    $ 1,182    1,124    5.2 %      5.2         -

        International             1,383    1,183   16.9       11.1       5.8

                                  2,565    2,307   11.2        8.2       3.0

     Pharmaceutical

        U.S.                      3,868    3,573    8.3        8.3         -

        International             2,082    1,909    9.1        3.5       5.6

                                  5,950    5,482    8.5        6.6       1.9

     Med Devices & Diagnostics

        U.S.                      2,491    2,390    4.2        4.2         -

        International             2,676    2,431   10.1        5.4       4.7

                                  5,167    4,821    7.2        4.8       2.4


    U.S.                          7,541    7,087    6.4        6.4         -

    International                 6,141    5,523   11.2        6.0       5.2

    Worldwide                   $13,682   12,610    8.5 %      6.2       2.3



    Johnson & Johnson and Subsidiaries

    Supplementary Sales Data


    (Unaudited; Dollars in Millions)


                                                TWELVE MONTHS

                                                          Percent Change

                                   2006     2005   Total   Operations Currency

    Sales to customers by

    segment of business

     Consumer

        U.S.                    $ 4,573    4,405    3.8 %      3.8         -

        International             5,201    4,691   10.9        8.7       2.2

                                  9,774    9,096    7.5        6.4       1.1

     Pharmaceutical

        U.S.                     15,092   14,478    4.2        4.2         -

        International             8,175    7,844    4.2        3.4       0.8

                                 23,267   22,322    4.2        3.9       0.3

     Med Devices & Diagnostics

        U.S.                     10,110    9,494    6.5        6.5         -

        International            10,173    9,602    5.9        6.2      (0.3)

                                 20,283   19,096    6.2        6.4      (0.2)


    U.S.                         29,775   28,377    4.9        4.9         -

    International                23,549   22,137    6.4        5.8       0.6

    Worldwide                   $53,324   50,514    5.6 %      5.3       0.3



    Johnson & Johnson and Subsidiaries

    Supplementary Sales Data


    (Unaudited; Dollars in Millions)


                                               FOURTH QUARTER

                                                         Percent Change

                                   2006     2005   Total   Operations Currency

    Sales to customers by

    geographic area

    U.S.                        $ 7,541    7,087    6.4 %      6.4        -


    Europe                        3,322    2,965   12.0        4.1      7.9

    Western Hemisphere excluding

     U.S.                           943      828   13.9       11.2      2.7

    Asia-Pacific, Africa          1,876    1,730    8.4        6.6      1.8

    International                 6,141    5,523   11.2        6.0      5.2


    Worldwide                   $13,682   12,610    8.5 %      6.2      2.3



    Johnson & Johnson and Subsidiaries

    Supplementary Sales Data


    (Unaudited; Dollars in Millions)


                                               TWELVE MONTHS

                                                         Percent Change

                                   2006     2005   Total   Operations Currency

    Sales to customers by

    geographic area

    U.S.                        $29,775   28,377    4.9 %      4.9        -


    Europe                       12,786   12,187    4.9        4.4      0.5

    Western Hemisphere excluding

     U.S.                         3,542    3,087   14.7        9.3      5.4

    Asia-Pacific, Africa          7,221    6,863    5.2        6.6     (1.4)

    International                23,549   22,137    6.4        5.8      0.6


    Worldwide                   $53,324   50,514    5.6 %      5.3      0.3



    Johnson & Johnson and Subsidiaries (1)

    Condensed Consolidated Statement of Earnings


    (Unaudited; in Millions Except Per Share Figures)


                                                FOURTH QUARTER


                                       2006              2005


                                          Percent          Percent    Percent

                                            to               to      Increase

                                  Amount   Sales   Amount   Sales   (Decrease)


    Sales to customers          $ 13,682   100.0  $12,610   100.0       8.5

    Cost of products sold          4,007    29.3    3,638    28.9      10.1

    Selling, marketing and

     administrative expenses       4,696    34.3    4,645    36.8       1.1

    Research expense               2,046    15.0    2,014    16.0       1.6

    In-process research &

     development                     320     2.3        9     0.1

    Interest (income)expense, net   (195)   (1.4)    (169)   (1.4)

    Other (income)expense, net       100     0.7      (30)   (0.2)

    Earnings before provision for

     taxes on income               2,708    19.8    2,503    19.8       8.2

    Provision for taxes on income    540     4.0      408     3.2      32.4

    Net earnings                $  2,168    15.8  $ 2,095    16.6       3.5


    Net earnings per share

     (Diluted)                  $   0.74          $  0.70               5.7


    Average shares outstanding

     (Diluted)                   2,930.7          3,013.5


    Effective tax rate              19.9 %           16.3 %


    Adjusted earnings before

     provision for taxes and net

     earnings

      Earnings before provision

       for taxes on income      $  3,028(2) 22.1  $ 2,512(3) 19.9      20.5

      Net earnings              $  2,385(2) 17.4  $ 2,101(3) 16.7      13.5

      Net earnings per share

       (Diluted)                $   0.81(2)       $  0.70(3)           15.7

      Effective tax rate           21.2%            16.4%


     (1) The company has adopted SFAS No. 123 (R), Share 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) and

     adjusted earnings before provision for taxes on income and net earnings

     and net earnings per share (diluted) is the exclusion of IPR&D charges of

     $320 million, $217 million, and $0.07 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 IPR&D charges of $9 million and

     $6 million, respectively.



    Johnson & Johnson and Subsidiaries (1)

    Condensed Consolidated Statement of Earnings


    (Unaudited; in Millions Except Per Share Figures)


                                               TWELVE MONTHS


                                      2006              2005

                                         Percent          Percent    Percent

                                           to               to      Increase

                                 Amount   Sales   Amount   Sales   (Decrease)


    Sales to customers          $53,324   100.0  $50,514   100.0       5.6

    Cost of products sold        15,057    28.2   14,010    27.7       7.5

    Selling, marketing and

     administrative expenses     17,433    32.7   17,211    34.1       1.3

    Research expense              7,125    13.4    6,462    12.8      10.3

    In-process research &

     development                    559     1.0      362     0.7

    Interest (income)expense,

     net                           (766)   (1.4)    (433)   (0.9)

    Other (income)expense, net     (671)   (1.3)    (214)   (0.4)

    Earnings before provision

     for taxes on income         14,587    27.4   13,116    26.0      11.2

    Provision for taxes on

     income                       3,534     6.7    3,056     6.1      15.6

    Net earnings                $11,053    20.7  $10,060    19.9       9.9



    Net earnings per share

     (Diluted)                    $3.73            $3.35              11.3


    Average shares outstanding

     (Diluted)                  2,961.0          3,002.8


    Effective tax rate             24.2 %           23.3 %


    Adjusted earnings before

     provision for taxes and

     net earnings

      Earnings before provision

       for taxes on income      $14,524(2) 27.2  $13,478(3) 26.7       7.8

      Net earnings              $11,133(2) 20.9  $10,194(3) 20.2       9.2

      Net earnings per share

       (Diluted)                  $3.76(2)         $3.39(3)           10.9

      Effective tax rate          23.3%            24.4%


     (1) The company has adopted SFAS No. 123 (R), Share 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) and

     adjusted earnings before provision for taxes on income and net earnings

     and net earnings per share (diluted) is the exclusion of the Guidant

     acquisition termination fee of $622 million, $368 million, and $0.12 per

     share, respectively, and the exclusion of IPR&D charges of $559 million,

     $448 million, and $0.15 per share, respectively.


     (3) The difference between as reported earnings before provision for

     taxes on income, net earnings and net earnings per share (diluted) and

     adjusted earnings before provision for taxes on income, net earnings and

     net earnings per share (diluted) is the exclusion of IPR&D charges of

     $362 million, $359 million, and $0.12 per share, respectively.  Adjusted

     net earnings and net earnings per share (diluted) also exclude a tax gain

     of $225 million and $0.08 per share, respectively, due to the reversal of

     a tax liability related to a technical correction associated with the

     American Jobs Creation Act of 2004.


CONTACT: Press, Jeffrey J. Leebaw, +1-732-524-3350, or Home -+1-732-821-6007, or Investors, Louise Mehrotra, +1-732-524-6491, StanPanasewicz, +1-732-524-2524, or Lesley Fishman, +1-732-524-3922, all ofJohnson & Johnson

Web site: http://www.jnj.com/

Company News On-Call: http://www.prnewswire.com/comp/467347.html /

Ticker Symbol: (:JNJ)

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Posted: January 2007


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