Johnson and Johnson 2009 Annual Report Download - page 29

M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S O F R E S U L T S O F O P E R A T I O N S A N D F I N A N C I A L C O N D I T I O N 27
The five-year compound annual growth rates for worldwide,
U.S. and international sales were 5.5%, 2.2% and 9.6%, respec-
tively. The ten-year compound annual growth rates for worldwide,
U.S. and international sales were 8.5%, 7.1% and 10.1%, respectively.
Sales in Europe experienced a decline of 5.1% including opera-
tional growth of 2.1% and a negative impact from currency of 7.2%.
Sales in the Western Hemisphere (excluding the U.S.) experienced a
decline of 0.3% including operational growth of 8.8% and a negative
impact from currency of 9.1%. Sales in the Asia-Pacific, Africa region
achieved growth of 4.6%, including operational growth of 4.4% and
an increase of 0.2% related to the positive impact of currency.
In 2009, 2008 and 2007, the Company did not have a cus-
tomer that represented 10% or more of total consolidated revenues.
2009 results benefited from the inclusion of a 53rd week.
(See Note 1 to the Consolidated Financial Statements for Annual
Closing Date details). The Company estimated that the fiscal year
2009 growth rate was enhanced by approximately 0.5%. While
the additional week added a few days to sales, it also added a full
week’s worth of operating costs; therefore, the net earnings impact
was negligible.
60
70
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
07 08 09
U.S. and
International Sales
for 10 Years
(in billions of dollars)
U.S.
International
60
70
50
40
30
20
10
099 00 01 02 03 04 05 06 07 08 09
Analysis of Sales by Business Segments
CO NSU M ER SEG M ENT
Consumer segment sales in 2009 were $15.8 billion, a decrease of
1.6% from 2008 with 2.0% of this change due to operational growth
and negative currency impact of 3.6%. U.S. Consumer segment
sales were $6.8 billion, a decrease of 1.4%. International sales were
$9.0 billion, a decrease of 1.7%, with growth of 4.7% achieved by
operations and a decrease of 6.4% resulting from the negative
impact of currency fluctuations.
The Over-the-Counter (OTC) Pharmaceuticals and Nutritionals
franchise sales were $5.6 billion, a decrease of 4.5% from 2008.
This was primarily due to the negative impact of currency and lower
sales of the over-the-counter ZYRTEC® allergy product line related
to the initial build of inventory by the trade during the 2008 launch
year. This was partially offset by sales growth in the SPLENDA®
sweetener product line. The U.S. Food and Drug Administration
(FDA) is currently considering certain recommendations made by
its advisory committee for reducing the potential for overdose with
acetaminophen, the active ingredient in TYLENOL® brand products.
The Company has provided the FDA with its own recommendations
and will continue to be actively engaged with the FDA on this topic.
In December 2009, the Company announced a voluntary recall
of all lots of TYLENOL® Arthritis Pain 100 count with EZ-OPEN CAP
following reports of an uncharacteristic smell; however, there was
an insignificant impact on sales. In January 2010, the Company has
undertaken a broader voluntary recall of TYLENOL® and certain
OTC products as a precautionary action.
The Skin Care franchise sales grew by 2.5% to $3.5 billion in
2009. The sales growth was primarily due to the AVEENO®,
NEUTROGENA®, and DABAO™ skin care lines. The Baby Care franchise
sales were $2.1 billion, a decrease of 4.5% primarily due to the
negative impact of currency and lower sales for Babycenter.com as a
result of exiting the online retail business, partially offset by growth
in the haircare product line. The Women’s Health franchise sales
were $1.9 billion, a decrease of 0.8% primarily due to the negative
impact of currency partially offset by increased sales associated
with the acquisition of a joint venture partner in France in the fiscal
07 08
70
60
50
40
30
20
10
0
Sales by
Segment
(in billions of dollars)
Consumer
Pharmaceutical
Medical Devices
and Diagnostics
09
Major Consumer Franchise Sales:
% Change
_____________________
(Dollars in Millions) 2009 2008 2007 ’09 vs. ’08 ’08 vs. ’07
OTC Pharmaceuticals & Nutritionals $ 5,630 5,894 5,142 (4.5)% 14.6
Skin Care 3,467 3,381 3,051 2.5 10.8
Baby Care 2,115 2,214 1,982 (4.5) 11.7
Women’s Health 1,895 1,911 1,806 (0.8) 5.8
Oral Care 1,569 1,624 1,488 (3.4) 9.1
Wound Care/Other 1,127 1,030 1,024 9.4 0.6
Total $15,803 16,054 14,493 (1.6)% 10.8