Johnson & Johnson Earnings Down on Tax Charge

Johnson & Johnson (JNJ), maker of a broad range of health care products, reported its fourth quarter profit fell by a third due to a nearly $800 million tax charge, but said its sales rose 13.3 percent.

The maker of contact lenses, surgical products, contraceptives and baby and skin care products said Tuesday it earned $1.2 billion, or 41 cents per share, for the October-December quarter, compared to $1.8 billion, or 62 cents a share, for the same 2003 period.

Excluding a special charge of $789 million associated with funds to be repatriated under the American Jobs Creation Act, and an after-tax gain of $142 million a year ago following a ruling on stent patents, net earnings for the quarter were $2 billion, or 67 cents a share, up nearly 18 percent from a year ago.

Those results beat by 3 cents a share the consensus forecast of analysts surveyed by Thomson First Call.

J&J shares rose $1.95, or 3.2 percent, to $63.44 in midday trading Tuesday on the New York Stock Exchange (search). The shares have traded in a 52-week range of $49.25 to $64.25.

J&J posted $12.75 billion in sales, up from $11.25 billion a year ago. All three of J&J's major divisions recording double-digit sales gains in the latest quarter: consumer products, 14.3 percent; pharmaceutical, 13.8 percent; and medical devices and diagnostics, 12.3 percent.

For 2004, J&J earned $8.5 billion, or $2.84 cents a share, up 18.2 percent from $7.2 billion, or $2.40 a share, in 2003. Sales were $47.3 billion in 2004, up 13.1 percent from $41.9 billion in 2003.

It was the 72nd consecutive year that sales grew, chairman and CEO William C. Weldon told analysts, adding that the company's continued strong cash flow will allow it to continue making acquisitions, such as its pending $23.9 billion purchase of Guidant Corp., of Indianapolis, a leader in medical devices. The deal, announced last month, is subject to regulatory approval, and J&J expects to close in the third quarter.

"Our broad base allows us to pursue medical advances, no matter what course they take," Weldon said.

He added that a steady stream of new products and drugs is expected, asserting "Today, our pipeline is stronger than it ever was."

He said growth in the medical device segment was fueled by LifeScan's blood glucose monitoring products, Vistakon's disposable contact lenses, DePuy's orthopedic joint reconstruction and spinal products and Cordis' circulatory disease management products.

Pharmaceuticals saw increased sales from Risperdal (search) and Risperdal Consta (search), anti-psychotic medications; Topamax, an antiepileptic drugs also used as a treatment to prevent of migraine headaches; Remicade, a treatment for rheumatoid arthritis, Crohn's disease (search), and ankylosing spondylitis; Duragesic, a skin patch for chronic pain; and Concerta, a treatment for attention deficit hyperactivity disorder.

Johnson & Johnson has about 109,900 employees and more than 200 operating companies in 57 countries.