Johnson & Johnson Reports Fourth-Quarter and Full-Year 2007 Results

2007 Fourth-Quarter Sales of $16.0 Billion increased 16.6%; EPS of $.82

NEW BRUNSWICK, N.J., Jan. 22 /PRNewswire-FirstCall/ -- Johnson & Johnson
today announced record sales of $16.0 billion for the fourth quarter of 2007,
an increase of 16.6% as compared to the fourth quarter of 2006. Operational
growth was 11.9% and currency contributed 4.7%. Domestic sales were up 9.1%,
while international sales increased 25.8%, reflecting operational growth of
15.3% and a positive currency impact of 10.5%. Worldwide sales for the year
2007 were $61.1 billion, an increase of 14.6% over 2006. Operational growth
was 11.5% with currency contributing 3.1%. On a proforma basis, including the
net impact of the acquisition of Pfizer Consumer Healthcare in both periods,
worldwide sales increased operationally 4.6% and 4.2% for the fourth-quarter
and full-year 2007, respectively.
Net earnings and diluted earnings per share for the fourth quarter of 2007
were $2.4 billion and $.82 respectively, representing increases of 9.5% and
10.8% respectively, compared to the same period in 2006. Net earnings for the
fourth quarter of 2007 included an after-tax, non-cash charge of $441 million
for the write-down of the intangible asset related to NATRECOR (nesiritide)
and a tax gain of $267 million associated with the restructuring of certain
international subsidiaries. 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 these special items, 2007 fourth-quarter net earnings were $2.5
billion and earnings per share were $.88, representing increases of 6.8% and
8.6%, respectively, as compared with the same period in 2006. *
Net earnings and diluted earnings per share for the year, as reported,
were $10.6 billion and $3.63, decreases of 4.3% and 2.7%, respectively, as
compared with 2006. Full-year 2007 net earnings included after-tax charges of
$807 million for in-process research and development; $528 million for
restructuring; an after-tax, non-cash charge of $441 million for the write-
down of the intangible asset related to NATRECOR (nesiritide); and a gain of
$267 million for international tax restructuring. 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. Excluding these special items, net
earnings for 2007 were $12.1 billion and earnings per share were $4.15,
representing increases of 8.6% and 10.4%, respectively, as compared with the
same period in 2006. * The Company announced its earnings guidance for full-
year 2008 of $4.39 to $4.44 per share, which excludes the impact of in-process
research and development charges or other special items.
"Despite challenges in certain markets, our broad base of businesses
allowed us to achieve solid results in 2007, building on our foundation of
long-term profitable growth," said William C. Weldon, Chairman and Chief
Executive Officer. "It was a year of significant progress in our pipeline; the
successful integration of Pfizer Consumer Healthcare; and the creation of new
organizational structures focused on future growth."
Worldwide, the Medical Devices and Diagnostics segment achieved annual
sales of $21.7 billion in 2007, representing an increase over the prior year
of 7.2% with operational growth of 3.9% and a positive currency impact of
3.3%. Domestic sales increased 3.2%, while international sales increased 11.1%
(4.6% from operations and 6.5% from currency).
Primary contributors to the operational growth included Vistakon's
disposable contact lenses; LifeScan's blood glucose monitoring and insulin
delivery products; Ethicon Endo-Surgery's minimally invasive products; DePuy's
orthopaedic joint reconstruction and sports medicine businesses; Ortho-
Clinical Diagnostics' professional products; and Ethicon's wound care and
women's health products. Growth was negatively impacted by lower sales of
drug-eluting stents in our Cordis franchise due primarily to a decline in the
market versus the prior year.
During the quarter, the Company completed the acquisition of certain
assets, including intellectual property rights, related to the treatment of
vertebral compression fractures from Disc-O-Tech Medical Technologies, Ltd., a
privately-held company, and its subsidiary.
Worldwide Pharmaceutical sales of $24.9 billion for the full-year 2007
represented an increase of 6.9% versus the prior year with operational growth
of 4.3% and a positive impact from currency of 2.6%. Domestic sales increased
3.4%, while international sales increased 13.3% (5.9% from operations and 7.4%
from currency).
Sales growth reflects the strong performance of RISPERDAL CONSTA and the
launch of INVEGA, both antipsychotic medications; TOPAMAX, an antiepileptic
and a treatment for the prevention of migraine headaches; REMICADE, a biologic
approved for the treatment of a number of immune mediated inflammatory
diseases; VELCADE, a treatment for multiple myeloma; CONCERTA, a treatment for
attention deficit hyperactivity disorder; and LEVAQUIN, an anti-infective.
Growth was negatively impacted by lower sales of PROCRIT, a product for the
treatment of anemia, due to a decline in the market. This market decline is
related to labeling changes made during the year and a decision memorandum
issued by the Centers for Medicare & Medicaid Services under its national
coverage analysis process.
During the quarter, the Company made significant progress in advancing its
pharmaceutical pipeline with several new drug applications submitted for
approval to regulatory authorities in the U.S. and Europe. These submissions
included:
- Paliperidone palmitate in the U.S. -- a once-monthly atypical
antipsychotic intramuscular injection for the treatment of
schizophrenia;
- Ustekinumab (CNTO 1275) in the U.S. and Europe -- a new, human
monoclonal antibody for the treatment of adult patients with chronic
moderate to severe plaque psoriasis;
- Dapoxetine in Europe for the treatment of premature ejaculation in men
18-64 years of age;
- VELCADE in Europe for the treatment of patients with previously
untreated multiple myeloma; and
- PREZISTA in the U.S. for traditional approval, including an expanded
indication for the treatment of human immunodeficiency virus (HIV)
infection in antiretroviral treatment-naive adult patients.

In January 2008, the Company received accelerated approval from the U.S.
Food and Drug Administration (FDA) for INTELENCE (etravirine) tablets, an
anti-HIV medication. INTELENCE, formerly known as TMC125, is the first non-
nucleoside reverse transcriptase inhibitor (NNRTI) to show antiviral activity
in treatment-experienced adult patients with NNRTI-resistant virus.
The Worldwide Consumer segment achieved annual sales in 2007 of $14.5
billion, an increase of 48.3% over the prior year with operational growth of
44.2% and a positive impact from currency of 4.1%. Domestic sales increased
40.1%, while international sales increased 55.5% (47.8% from operations and
7.7% from currency). On a proforma basis, including the net impact of the
acquisition of Pfizer Consumer Healthcare in both periods, worldwide sales for
the Consumer segment increased 4.6% operationally.
Sales results reflect the strong performance of LISTERINE antiseptic
mouthrinse and the launch of whitening products; Baby and Kids Care products;
the skin care lines of AVEENO, CLEAN & CLEAR, and NEUTROGENA; SPLENDA
sweetener; ROGAINE hair regrowth treatment; and IMODIUM A-D, an antidiarrheal.
During the quarter, the Company received approval from the FDA for the
allergy treatments ZYRTEC (cetirizine HCl) and ZYRTEC-D 12 HOUR (cetirizine
HCl 5 mg/pseudoephedrine HCl 120 mg) to be used without a prescription for
adults and children.
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 250 Johnson & Johnson operating companies
employ approximately 119,000 men and women in 57 countries and sell products
throughout the world.
* Net earnings and diluted earnings per share excluding special items
related to restructuring, intangible asset write-downs, in-process
research and development charges and the gain associated with the
termination of the Guidant acquisition agreement 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 investors and other interested parties
may be accessed by visiting the Johnson & Johnson website at
www.investor.jnj.com. A replay and podcast will be available approximately two
hours after the live webcast by visiting www.investor.jnj.com.
Copies of the financial schedules accompanying this press release are
available at http://www.investor.jnj.com/historical-sales.cfm. The schedules
include supplementary sales data, a condensed consolidated statement of
earnings, and sales of key products/franchises.
Additional information on Johnson & Johnson can be found on the Company's
website at http://www.jnj.com.
(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 Johnson & Johnson'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 December 31, 2006. Copies of this Form 10-K, as well as subsequent
filings, are available online at www.sec.gov, www.jnj.com or on request from
Johnson & Johnson. Johnson & Johnson does not undertake to update any forward-
looking statements as a result of new information or future events or
developments.)

Johnson & Johnson and Subsidiaries
Supplementary Sales Data

(Unaudited; Dollars in Millions) FOURTH QUARTER
Percent
Change
Operat-
2007 2006 Total ions Currency
Sales to customers by
segment of business

Consumer
U.S. $1,626 1,182 37.6 % 37.6 -
International 2,184 1,383 57.9 46.8 11.1
3,810 2,565 48.5 42.5 6.0

Pharmaceutical
U.S. 3,944 3,868 2.0 2.0 -
International 2,453 2,082 17.8 6.8 11.0
6,397 5,950 7.5 3.7 3.8

Med Devices & Diagnostics
U.S. 2,661 2,491 6.8 6.8 -
International 3,089 2,676 15.4 5.6 9.8
5,750 5,167 11.3 6.2 5.1

U.S. 8,231 7,541 9.1 9.1 -
International 7,726 6,141 25.8 15.3 10.5
Worldwide $15,957 13,682 16.6 % 11.9 4.7

Johnson & Johnson and Subsidiaries
Supplementary Sales Data

(Unaudited; Dollars in Millions) TWELVE MONTHS
Percent
Change
Operat-
2007 2006 Total ions Currency
Sales to customers by
segment of business

Consumer
U.S. $6,408 4,573 40.1 % 40.1 -
International 8,085 5,201 55.5 47.8 7.7
14,493 9,774 48.3 44.2 4.1

Pharmaceutical
U.S. 15,603 15,092 3.4 3.4 -
International 9,263 8,175 13.3 5.9 7.4
24,866 23,267 6.9 4.3 2.6

Med Devices & Diagnostics
U.S. 10,433 10,110 3.2 3.2 -
International 11,303 10,173 11.1 4.6 6.5
21,736 20,283 7.2 3.9 3.3

U.S. 32,444 29,775 9.0 9.0 -
International 28,651 23,549 21.7 14.6 7.1
Worldwide $61,095 53,324 14.6 % 11.5 3.1

Johnson & Johnson and Subsidiaries
Supplementary Sales Data

(Unaudited; Dollars in Millions) FOURTH QUARTER
Percent
Change
Operat-
2007 2006 Total ions Currency
Sales to customers by
geographic area
U.S. $8,231 7,541 9.1 % 9.1 -

Europe 4,159 3,322 25.2 13.2 12.0
Western Hemisphere excluding U.S. 1,309 943 38.8 26.1 12.7
Asia-Pacific, Africa 2,258 1,876 20.4 13.6 6.8
International 7,726 6,141 25.8 15.3 10.5

Worldwide $15,957 13,682 16.6 % 11.9 4.7

Johnson & Johnson and Subsidiaries
Supplementary Sales Data

(Unaudited; Dollars in Millions) TWELVE MONTHS
Percent
Change
Operat-
2007 2006 Total ions Currency
Sales to customers by
geographic area
U.S. $32,444 29,775 9.0 % 9.0 -

Europe 15,644 12,786 22.4 13.2 9.2
Western Hemisphere excluding U.S. 4,681 3,542 32.2 25.5 6.7
Asia-Pacific, Africa 8,326 7,221 15.3 11.8 3.5
International 28,651 23,549 21.7 14.6 7.1

Worldwide $61,095 53,324 14.6 % 11.5 3.1

Johnson & Johnson and Subsidiaries
Condensed Consolidated Statement of Earnings

(Unaudited; in Millions
Except Per Share Figures) FOURTH QUARTER

2007 2006 Percent
Percent Percent Increase
Amount to Sales Amount to Sales (Decrease)

Sales to customers 15,957 100.0 $13,682 100.0 16.6
Cost of products sold 4,734 29.7 4,007 29.3 18.1
Selling, marketing and
administrative expenses 5,721 35.8 4,696 34.3 21.8
Research expense 2,328 14.6 2,046 15.0 13.8
In-process research &
development (IPR&D) - - 320 2.3
Restructuring expense - - - -
Interest (income)expense,
net (35) (0.2) (195) (1.4)
Other (income)expense, net 877 5.5 100 0.7
Earnings before provision
for taxes on income 2,332 14.6 2,708 19.8 (13.9)
Provision for taxes on
income (42) (0.3) 540 4.0 (107.8)
Net earnings $2,374 14.9 $2,168 15.8 9.5

Net earnings per share
(Diluted) $0.82 $0.74 10.8

Average shares outstanding
(Diluted) 2,889.2 2,930.7

Effective tax rate (1.8)% 19.9 %

Adjusted earnings before
provision for taxes and
net earnings
Earnings before
provision for taxes
on income $3,010 (1) 18.9 $3,028 (2) 22.1 (0.6)
Net earnings $2,548 (1) 16.0 $2,385 (2) 17.4 6.8
Net earnings per share
(Diluted) $0.88 (1) $0.81 (2) 8.6
Effective tax rate 15.3% 21.2%

(1) The difference between as reported earnings and as adjusted earnings
before provision for taxes on income, net earnings and net earnings per
share (diluted) is the exclusion of the Natrecor intangible asset write-
down of $678 million, $441 million, and $0.15 per share, respectively, and
the exclusion of an international tax gain on restructuring of $267
million on net earnings, and $0.09 per share.

(2) The difference between as reported earnings and as adjusted earnings
before provision for taxes on income, net earnings and net earnings per
share (diluted) is the exclusion of IPR&D of $320 million, $217 million
and $0.07 per share, respectively.

Johnson & Johnson and Subsidiaries
Condensed Consolidated Statement of Earnings

(Unaudited; in Millions
Except Per Share Figures) TWELVE MONTHS

2007 2006 Percent
Percent Percent Increase
Amount to Sales Amount to Sales (Decrease)

Sales to customers $61,095 100.0 $53,324 100.0 14.6
Cost of products sold 17,751 29.1 15,057 28.2 17.9
Selling, marketing and
administrative expenses 20,451 33.5 17,433 32.7 17.3
Research expense 7,680 12.6 7,125 13.4 7.8
In-process research &
development (IPR&D) 807 1.3 559 1.0
Restructuring expense 745 1.2 - -
Interest (income) expense,
net (156) (0.3) (766) (1.4)
Other (income) expense, net 534 0.9 (671) (1.3)
Earnings before provision
for taxes on income 13,283 21.7 14,587 27.4 (8.9)
Provision for taxes on
income 2,707 4.4 3,534 6.7 (23.4)
Net earnings $10,576 17.3 $11,053 20.7 (4.3)

Net earnings per share
(Diluted) $3.63 $3.73 (2.7)

Average shares outstanding
(Diluted) 2,910.7 2,961.0

Effective tax rate 20.4 % 24.2 %

Adjusted earnings before
provision for taxes and
net earnings
Earnings before
provision for taxes
on income $15,513 (1) 25.4 $14,524 (2) 27.2 6.8
Net earnings $12,085 (1) 19.8 $11,133 (2) 20.9 8.6
Net earnings per share
(Diluted) $4.15 (1) $3.76 (2) 10.4
Effective tax rate 22.1% 23.3%

(1) The difference between as reported earnings and as adjusted earnings
before provision for taxes on income, net earnings and net earnings per
share (diluted) is the exclusion of IPR&D of $807 million with no tax
benefit and $0.28 per share, respectively, the exclusion of the
restructuring expense of $745 million, $528 million and $0.18 per share,
respectively, the exclusion of the Natrecor intangible asset write-down of
$678 million, $441 million, and $0.15 per share, respectively, and the
exclusion of an international tax gain on restructuring of $267 million on
net earnings, and $0.09 per share.

(2) The difference between as reported earnings and as adjusted earnings
before provision for taxes on income, net earnings and net earnings per
share (diluted) is the exclusion of the Guidant acquisition agreement
termination fee of $622 million, $368 million and $0.12 per share,
respectively, and the exclusion of IRP&D of $559 million, $448 million and
$0.15 per share, respectively.

SOURCE Johnson & Johnson

Jeffrey J. Leebaw, +1-732-524-3350, or cell, +1-732-642-6608, or Bill Price,
+1-732-524-6623, or cell, +1-732-668-3735; or Investors, Louise Mehrotra,
+1-732-524-6491, or Stan Panasewicz, +1-732-524-2524, or Lesley Fishman,
+1-732-524-3922, or Tina Pinto, +1-732-524-2034, all for Johnson & Johnson