Johnson and Johnson 2005 Annual Report Download - page 31

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION PAGE 29
Major Consumer Franchise Sales: % Change
(Millions of Dollars) 2005 2004 2003 ’05 vs. ’04 ’04 vs. ’03
OTC Pharmaceuticals & Nutritionals $2,678 2,395 2,044 11.8% 17.2
Skin Care 2,401 2,140 1,797 12.2 19.1
Women’s Health 1,568 1,470 1,369 6.7 7.4
Baby & Kids Care 1,561 1,447 1,309 7.9 10.5
Other 888 881 912 0.8 (3.4)
Total $9,096 8,333 7,431 9.2% 12.1
The five-year compound annual growth rates for worldwide,
U.S. and international sales were 11.6%, 10.4% and 13.3%,
respectively. The ten-year compound annual growth rates for
worldwide, U.S. and international sales were 10.5%, 12.1%
and 8.9%, respectively.
All international geographic regions experienced sales
growth during 2005, consisting of 9.3% in Europe, 19.2% in the
Western Hemisphere (excluding the U.S.) and 17.6% in the Asia-
Pacific, Africa regions. These sales gains include a positive
impact of currency fluctuations between the U.S. dollar and for-
eign currencies in Europe of 0.5%, in the Western Hemisphere
(excluding the U.S.) of 9.2% and in the Asia-Pacific, Africa
region of 0.8%.
In 2005, the Company did not have a customer that repre-
sented 10% of total revenues. In 2004, sales to Cardinal
Distribution and McKesson HBOC accounted for 10.2% and
10.0% of total revenues. In 2003, sales to McKesson HBOC
accounted for 10.5% of total revenues.
60
50
40
30
20
10
0
Sales by
Geographic Region
(in billions of dollars)
U.S.
Europe
Western Hemisphere
excluding U.S.
Asia Pacific, Africa
03 04 05
U.S.
International
U.S. and
International Sales
for 10 Years
(in billions of dollars)
60
50
40
30
20
10
095 96 97 98 99 00 01 02 03 04 05
2004 results benefited from the inclusion of a 53rd week.
(See Note 1 for Annual Closing Date details.) The Company esti-
mated that the fiscal fourth quarter growth rate in 2004 was
enhanced by approximately 2% and the year by approximately
0.5%. The net earnings impact of the additional week in 2004
was negligible.
Analysis of Sales by Business Segments
Consumer Segment
Consumer segment sales in 2005 were $9.1 billion, an increase
of 9.2%, over 2004 with operational growth accounting for 7.8%
of the total growth and 1.4% due to positive currency fluctua-
tions. U.S. Consumer segment sales were $4.4 billion, an
increase of 4.3%. International sales were $4.7 billion, an
increase of 14.2%, with 11.3% as a result of operations and
2.9% due to currency fluctuations over 2004.
Consumer segment sales growth in 2005 was attributable
to strong sales performance in the major franchises including
Over-the-Counter (OTC) Pharmaceuticals and Nutritionals
products, Skin Care, Women’s Health and Baby & Kids Care.
OTC franchise sales were $2.7 billion, an increase of 11.8%
over 2004. Overall growth in this franchise primarily resulted
from the rapid growth of SPLENDA®No Calorie Sweetener
in the tabletop category and adult and pediatric analgesics.
This sales growth was partially offset by the negative impact
of retail restrictions implemented on products containing
pseudoephedrine. This will continue to negatively impact
the business until products containing pseudoephedrine
are reformulated.
The Skin Care franchise sales in 2005 were $2.4 billion,
representing a 12.2% increase over 2004. This was attributable
to sales growth in RoC®, AVEENO®, CLEAN & CLEAR®and
NEUTROGENA®brand products. The Women’s Health franchise
60
50
40
30
20
10
0
Sales by Segment
(in billions of dollars)
Consumer
Pharmaceutical
Medical Devices
and Diagnostics
03 04 05