10-QPeriod: Q3 FY2013

JOHNSON & JOHNSON Quarterly Report for Q3 Ended Sep 29, 2013

Filed November 4, 2013For Securities:JNJ

Summary

Johnson & Johnson reported solid financial results for the fiscal third quarter and the first nine months of 2013, demonstrating revenue growth across key segments. Total sales for the nine months ended September 29, 2013, increased by 6.6% to $53.0 billion, driven by operational growth of 8.1%, partially offset by a negative currency impact. The Pharmaceutical segment showed particularly strong performance, with sales up 10.6% for the nine months, bolstered by significant growth in Immunology and Oncology. The Medical Devices and Diagnostics segment also saw an increase of 5.7%, albeit with some segment-level declines. Net earnings for the nine months attributable to Johnson & Johnson rose to $10.3 billion, a substantial increase from $8.3 billion in the prior year period. The company also maintained a strong liquidity position, with cash and cash equivalents at $17.2 billion, and continued to return value to shareholders through consistent dividend payments.

Financial Highlights

54 data points
Beta

Revenue

$17.57B

69.6% Gross Margin

Net Income

$2.98B

17.0% Net Margin

EPS (Diluted)

$1.04

Total Assets

$126.93B

Cash & Equivalents

$17.20B

Free Cash Flow

$5.14B

Financial Statements
Beta
Revenue$17.57B
Cost of Revenue$5.34B
Gross Profit$12.23B
SG&A Expenses$5.31B
Operating Income$3.87B
Interest Expense$105.00M
Net Income$2.98B
EPS (Basic)$1.06
EPS (Diluted)$1.04
Shares Outstanding (Basic)2.82B
Shares Outstanding (Diluted)2.88B

Key Highlights

  • 1Worldwide sales grew by 6.6% to $53.0 billion for the first nine months of 2013, with operational growth of 8.1% offsetting negative currency impacts.
  • 2The Pharmaceutical segment was a key growth driver, with sales increasing by 10.6% to $20.8 billion for the nine-month period, led by strong performance in Immunology and Oncology.
  • 3Net earnings attributable to Johnson & Johnson for the first nine months of 2013 significantly increased to $10.3 billion, up from $8.3 billion in the comparable 2012 period.
  • 4The company maintained a robust liquidity position, with cash and cash equivalents totaling $17.2 billion as of September 29, 2013.
  • 5Dividends to shareholders remained a priority, with $5.4 billion paid out in the first nine months of 2013, and the company expects to continue regular quarterly cash dividends.
  • 6The Medical Devices and Diagnostics segment sales increased by 5.7% to $21.2 billion for the nine months, although certain sub-segments experienced declines.
  • 7The company is managing a significant number of legal proceedings and product liability claims, which, while not expected to have a material adverse effect on financial position, could impact results of operations and cash flows in a given period.

Frequently Asked Questions

Revenue growth was primarily driven by strong operational performance across segments, particularly in the Pharmaceutical division. Key therapeutic areas like Immunology (driven by REMICADE®, SIMPONI®, and STELARA®) and Oncology (driven by ZYTIGA® and VELCADE®) showed significant increases. The Medical Devices and Diagnostics segment also contributed positively, with Orthopaedics showing substantial growth, partly due to the Synthes acquisition. Currency fluctuations had a negative impact, but operational improvements largely compensated for this.

Profitability saw a significant improvement. Net earnings attributable to Johnson & Johnson for the nine months ended September 29, 2013, rose to $10.3 billion, compared to $8.3 billion in the same period of 2012. This was supported by sales growth, effective cost containment initiatives, and a net gain on equity investment transactions, partially offset by increased litigation expenses.

Johnson & Johnson maintained a strong financial position. Cash and cash equivalents stood at $17.2 billion as of September 29, 2013, an increase from the previous year-end. Operating activities generated substantial cash flow ($13.3 billion for the nine months). The company also has access to significant credit facilities, indicating robust liquidity to fund operations and strategic initiatives.

Yes, Johnson & Johnson is involved in numerous ongoing legal proceedings and product liability claims related to various products, including hip implants, pelvic meshes, and pharmaceuticals like LEVAQUIN® and RISPERDAL®. While the company believes the ultimate resolution will not have a material adverse effect on its financial position, these matters can impact results of operations and cash flows in specific periods. The company is also subject to extensive government regulation and investigations, which are ongoing.