(Operator Instructions) Welcome to the Johnson & Johnson First Quarter 2009 Earnings Conference Call. I would now like to turn the call over to Johnson & Johnson.
I’m Louise Mehrotra, Vice President of Investor Relations for Johnson & Johnson and it is my pleasure this morning to review our business results for the first quarter of 2009. Joining me on the call today is Dominic Caruso, Vice President, Finance and Chief Financial Officer.
A few logistics before we get into the details, this review is being made available to a broader audience via a webcast accessible through the Investor Relations section of the Johnson & Johnson website. I’ll begin by briefly reviewing highlights of the first quarter for the Corporation and highlights for our three business segments. Following my remarks Dominic will provide some additional commentary on the first quarter results and guidance for the full year of 2009. We will then open the call to your questions.
We expect the call to last approximately one hour. Included with the press release that was sent to the investment community earlier this morning is a schedule showing sales for major products and/or business franchises to facilitate updating your models. These are also available on the Johnson & Johnson website as is the press release.
Before I get into the results let remind you that some of the statements made during this call may be considered forward looking statements. The 10-K for the fiscal year 2008 identifies certain factors that could cause the company’s actual results to differ materially from those projected in any forward looking statements made this morning. The company does not undertake to update any forward looking statements as a result of new information or future events or developments. The 10-K is available through the company or online.
Last item, during the call, non-GAAP financial measures may be used to provide information pertinent to ongoing business performance. These measures are reconciled to the GAAP measures and are available in the press release or on the Johnson & Johnson website. Now I would like to review our results for the first quarter of 2009. If you would refer to your copy of the press release, let’s begin with the schedule titled supplementary sales data by geographic area.
Worldwide sales to customers were $15 billion for the first quarter of 2009 down 7.2% as compared to the first quarter of 2008. On an operational basis sales were down 1.2% and currency had a negative impact of 6%. In the US, sales declined 5%. In regions outside the US our operational growth was 3% while the effect of currency exchange rates negatively impacted our reported results by 12.6 points.
Our strongest performing region was the Asia/Pacific/Africa region which grew 8.5% on an operational basis. The Western Hemisphere excluding the US grew by 4.5% operationally while Europe declined 0.2% operationally.
If you now turn to the consolidated statement of earnings, net earnings on a reported basis were $3.5 billion compared to $3.6 billion in the same period in 2008, a decrease of 2.5%. Earnings per share were $1.26 in both periods. I would now like to make some additional comments relative to the components leading to earnings before we move on to the segment highlights.
Cost of goods sold at 28.3% of sales was 20 basis points less then the same period in 2008 due to cost containment primarily in our MD&D business, partially offset by unfavorable mix in our consumer and pharmaceutical businesses. Selling, marketing and administrative expenses at 30.7% of sales were down 90 basis points versus last year driven by leverage across the businesses most notably consumer.
Our investment in research and development as a percent to sales was 10.1%, 50 basis points less then the first quarter of 2008 due to a change in the mix of the businesses and reductions in spending levels. Interest expense net of interest income of $81 million compares to $16 million in the first quarter of 2008. This change in the net expense was due primarily to lower interest rates on our cash balance.
Other income net of other expense was $75 million in the first quarter of 2009 compared to $18 million in the same period last year. The 2008 results included expenses related to the integration of Pfizer Consumer Healthcare.
Taxes were 24.5% in the first quarter of 2009 versus 24.2% in the first quarter of 2008 reflecting the change in the mix of the businesses. Turning now to business segment highlights please refer to your supplementary sales schedules highlighting major products or business franchises. I’ll begin with the Consumer segment.
Worldwide Consumer segment sales for the first quarter of 2009 of $3.7 billion decreased 8.7% as compared to the same period last year. On an operational basis sales declined 1% while the impact of currency was -7.7 points. US sales were down 5.1% while international sales grew 2.4% on an operational basis. The first quarter results for 2008 included the launch of Zyrtec OTC. Excluding the impact of Zyrtec the Consumer business grew approximately 1% operationally.
For the first quarter of 2009 sales for the over the counter pharmaceuticals and nutritionals declined 8.4% on an operational basis compared to the same period in 2008. Sales in the US were down 13.8% with approximately half the decline due to the 2008 inventory build for initial stocking related to the launch of Zyrtec.
The OTC category in the US in the first quarter is estimated to decline by 2% to 3% and competition from private label has intensified. A milder flu and fever season has impacted sales in the upper respiratory and analgesics categories. Sales outside the US were down 2.4% operationally due to the general softness in the economy and new competitive entrants in certain categories.
Our skincare business achieved operational sales growth of 7.8% in the first quarter of 2009 with sales in the US growing at 10.7% and sales outside the US up 5.4% on an operational basis. Strong growth was driven by the newly acquired products from Dabao, the leading moisturizer in China, Neutrogena and Aveeno, partially offset by lower sales of rock products outside the US.
Baby care products achieved operational growth of 0.9% when compared to the first quarter of 2008. Sales in the US were down 11.3% primarily due to lower sales for babycenter.com. Baby center has exited the online retail business and will focus on online content. Sales outside the US were up 4.3% operationally due to strong growth in cleansers and powders.
Women’s health achieved operational growth of 0.7%. Sales in the US were up 0.7% while sales outside the US were up on an operational basis by 0.5%. Strong growth in the KY product line was driven by the success of new product launches. The feminine hygiene products were negatively impacted in the quarter by competitive pressure.
Operational sales growth in the oral care franchise was 2.8%. In the US sales were down 5.5% due to slower sales in Whitening Strips and mouth fresheners compounded by decline in category growth overall. This was partially offset by increased sales of Listerine due to a gain in share driven by the launch of new products. Sales outside the US increased 11.6% operationally driven by very strong growth for Listerine across the major regions.
Sales in the wound care other category was up 4% on an operational basis with the US up 3.8% and the business outside the US up 4.2% operationally. US growth was driven by the recent acquisitions in wellness and prevention, partially offset by slower category growth and lower trade inventory levels in the wound care business. That completes our review of the Consumer segment and I’ll now review highlights for the Pharmaceutical segment.
Worldwide net sales for the first quarter of $5.8 billion were down 10.1% versus the same period last year. On an operational basis sales were down 5.1% with a currency impact of negative five points. Sales in the US decreased 9.7% while sales outside the US increased on an operational basis by 2.8%. Our results continue to be impacted by generic competition on some of our products namely Risperdal Oral, Razadyne, and Topamax.
The marketing exclusivity for Risperdal expired in the US at the end of June 2008 and there are generic competitors for Risperdal in most markets. Marketing exclusivity for Topamax expired at the end of March this year and multiple generics have entered the market. While generic competitors for Razadyne entered the US market in the later half of 2008.
The combined impact of these three products has reduced the first quarter worldwide pharmaceutical growth rate by approximately 10 points with the US impact estimated at approximately 14% and the impact outside the US estimated at 3%. Excluding the impact of generic competition on these products worldwide operational sales growth was approximately 5%.
Now reviewing the major products, sales of Remicade, a biologic approved for the treatment of a number of immune mediated inflammatory diseases were up 3% when compared to the first quarter of 2008. Sales growth in the US was 9% due to strong market growth. Sales to our customer from markets outside the US were down 10.6%. As we previously mentioned, the first quarter 2008 sales included a significant inventory build due to inventory planning on our customer’s part. Excluding the impact of inventory build sales outside the US were estimated to have grown over 20%.
Procrit Eprex declined operationally by 6.8% during the quarter as compared to the same quarter last year with Procrit down 3.9% and Eprex down 10% operationally. A softening of the market has contributed to the lower sales results for Eprex. Procrit results have been impacted by a decline in the market versus the first quarter of 2008 estimated at 13% partially offset by an increase in overall market share. Procrit aggregate share across all markets was approximately 48% in the first quarter of 2009 up three points versus the same period last year.
Sales of Levaquin our anti-infective were down 13.4% on an operational basis when compared to the same period a year ago. The US anti-infective market is estimated to be down over 15% in the quarter due to a lower incidence of respiratory illness and flu.
Concerta, a product for attention deficit hyperactivity disorder grew 23.9% operationally in the first quarter as compared to the same period last year with sales in the US up 20.1% partially due to strong market growth. Sales outside the US were up 37% operationally with strong growth seen across the major regions.
Risperdal Consta, our long acting injectable formulation achieved first quarter sales growth of 17.5% on an operational basis. US sales growth was 24.8% while sales outside the US were up 13.9% operationally with continued positive momentum and share.
AcipHex, as it’s known in the US market and Pariet, outside the US is a proton pump inhibitor or PPI that we co-market with Eisai. On an operational basis sales were up 3% with US sales up 19% and sales outside the US down 8.4% operationally. In the US, sales in the first quarter of 2008 were such that the year over year comparison was favorably impacted. Script share in the US was down 1%. Sales outside the US had been impacted by the market entry in Canada of generic Rabeprazole, the active ingredient in Pariet.
Velcade, a treatment for multiple myeloma is being co-developed with Millennium pharmaceuticals. We have commercialization rights in Europe and the rest of the world outside the US. Operational sales growth was strong at 20.5% driven by the additional approval last year for first line therapy.
To provide more insight into results for our new pharmaceutical product going forward we will report a new product once it has reached the $200 million milestone in annual revenue. Prezista and Invega reached this important milestone in 2008 and our included in the schedule of pharmaceutical segment sales by product. We have included on our website 2008 information for these products to help you in updating your models.
Prezista, a protease inhibitor for treatment of HIV grew operationally 77.3% with the US growing 125% and sales outside the US growing at 41.1%. Expanded labeling to include treatment-naïve patients contributed to the positive results. Invega, our newest atypical anti psychotic grew operationally 43.8% with the US growing 15.8% and sales outside the US growing over 200% driven by continued positive momentum in share.
Wrapping up the review of the pharmaceutical segment we continue to make progress in advancing our pharmaceutical pipeline. In February we submitted our response to the FDA on the complete response letter for Paliperidone Palmitate. This submission was designated as a class two response and has been assigned a six month review clock.
Also in our anti psychotic franchise we submitted two SNDAs for Invega and Schizo effective disorder which received priority review designation. With Risperdal Consta we submitted our response to the complete response letter for the bi-polar indication which the FDA has assigned a class one or two month review. Also in Europe and Canada Prezista, our HIV compound, received an additional approval for the treatment of naïve patients.
I’ll now review the medical devices and diagnostic segment results. Worldwide medical devices and diagnostic segment sales of $5.5 billion grew 3.1% operationally as compared to the same period in 2008. Currency had a negative impact of six points resulting in total sales decline of 2.9%. Sales in the US were up 2.5% while sales outside the US increased at an operational basis by 3.6%. Results have been impacted by lower sales of drug eluting stents. Sales excluding the impact of lower sales of drug eluting stents grew nearly 6% operationally.
Now turning to the franchises starting with Cordis, Cordis sale were down 12.9% operationally with the US down 28.1% and sales outside the US down 1.7% operationally. Cordis results were impacted by lower sales of Cypher, our Sirolimus-eluting stent, partially offset by the solid growth in our Biosense Webster business. Cypher sales were approximately $250 million down 36% on an operational basis versus the prior year. Sales in the US of approximately $70 million were down 60%.
In comparison to the first quarter of 2008 the US drug eluting stent market growth is estimated at 6%. Penetration rates are estimated at 74% up from 65% a year ago while PCI procedures are up approximately 4% in the quarter versus the same period last year. The estimated price for Cypher in the US is down approximately 5% versus the first quarter of 2008. Estimated share in the US of 15% was flat sequentially and down 28 points from the first quarter of 2008 due to the market entry to two new competitors in 2008.
Sales outside the US of approximately $180 million declined 18% operationally. The estimated market share in the quarter of 31% was flat on a sequential basis and down five points from the first quarter of 2008. Increased competition has impacted the share outside the US. Cypher estimated worldwide share for the quarter was 24% down one point sequentially and down 15 points from the first quarter of 2008. Biosense Webster, our electrophysiology business achieved strong double digit operational growth in the quarter due to the strong performance of Lasso and Soundstar catheter.
The neurovascular business previously reported in our Cordis franchise and the Codman business that is part of our DePuy franchise had been combined to form a global neuroscience business that is now reported in the DePuy franchise. A schedule of 2008 results by quarter reflecting this structure is available on our website and the 2009 comparisons reflect the new reporting in both periods.
Our DePuy franchise had operational growth of 7.3% when compared to the same period in 2008 with the US growing 8% and the business outside the US growing by 6.4% operationally. Hip growth on a worldwide basis was approximately 9% operational with the US growth at approximately 13%, significantly outpacing the market.
On an operational basis worldwide knee growth was approximately 3%. Spine achieved strong operational growth of approximately 13% continuing the acceleration of the rate of growth due to the successful launch of a number of products. Mitek, our sports medicine business, grew approximately 11% operationally above the estimated market growth.
The diabetes franchise was down 6% operationally in the first quarter of 2009 with the US business down 10.9%. Positive momentum and share has been offset by pricing pressure and a decline in the market due to the current economic pressures and the out of pocket expenditure associated with this business. Similar dynamics impacted the business outside the US with sales decreasing 1.3% operationally.
Animas, our insulin pump business, grew over 30% on an operational basis due to new product launches and continued development of the international market. Ethicon worldwide sales grew operationally by 9.1% with the US up 18.8% and sales outside the US up 3.7% operationally. The acquisitions of Mentor and Omrix offset by the divestiture of the professional wound care business added approximately two points to the worldwide growth.
Sales in the US on a pro-forma basis for our newly acquired aesthetics products from Mentor although lower then 2008 performed better then the estimated market. Strong double digit growth was achieved in meshes and bio-surgical.
Ethicon Endo-Surgery achieved operational growth of 8.6% in the first quarter of 2009 with the US sales growing 5.8% and sales outside the US growing on an operational basis by 11.4%. The Harmonic technology business achieved strong double digit operational growth due to the global success of recently launched products and the underlying strength of this platform.
Also contributing to the growth in the quarter was the realized gastric band launched last year in the US and the strong performance of the Endoscope products in the international markets driven by the increased awareness of the benefits of minimally invasive procedures as well as the metabolic benefits of obesity surgery.
Ortho clinical diagnostics achieved operational growth of 10.3% in the first quarter. Sales growth in the US was 16.4% while sales outside the US were up 3.2% on an operational basis. The launch of the Vitros 5600 and 3600 made strong contributions to the results this quarter. Also contributing to the growth were the strong results for donor screening and automated blood bank testing.
Rounding out the review of the medical devices and diagnostics segment our Vision Care franchise achieved operational sales growth of 0.6% in the first quarter compared to the same period last year. Sales in the US increased 3.5%. Sales outside the US declined 1.1% on an operational basis. The lens market overall is estimated to be flat compared to the same period last year. Despite the softness in the market Acuvue Oasys, One-Day Acuvue Moist and the Acuvue Oasys for astigmatism achieved strong double digit growth.
That completes highlights for the medical devices and diagnostics segment and concludes segment highlights for Johnson & Johnson’s first quarter of 2009.
I’ll now turn the call over to Dominic Caruso.
We are pleased with our results for the first quarter of 2009 which Louise has already highlighted for you and now I would like to walk you through some additional points on the quarter, our progress on a number of fronts, and our guidance for your models for full year 2009.
When we met with you in January we outlined several factors that would influence our 2009 business performance and those are playing out much as we expected in the first quarter. As Louise pointed out earlier, excluding the impact of generics, the launch of new drug eluting stent competitors and the effect of launching Zyrtec last year, the underlying business is growing at approximately 4% operationally in this difficult economy.
Consistent with what we said in January the economic slowdown was reflected in lower sales this quarter for some of our consumer products where we saw a decline in the overall markets, some increased private label competition and some lower levels of retail inventories. Our consumer sales also reflected a tougher comparison to the first quarter of 2008 when we launched Zyrtec and excluding this impact, consumer sales grew nearly 1% operationally.
As you can see from the solid performances of our skincare products and Listerine the market still appreciates innovation and high quality brands and we are continuing to invest to bring these to the marketplace. As we expected, we also felt the effects of tighter customer spending in the more consumer facing parts of our medical device businesses which typically require out of pocket expenditures such as contact lenses and diabetes test strips.
However, we also saw some parts of our medical device business such as orthopedics and surgery performing very well in the face of economic challenges and partially offsetting declines in the more economically sensitive parts of the business. Overall our medical device and diagnostic business was impacted by additional competitors in the drug eluting stent market and excluding this impact grew 6% operationally for the quarter.
Our pharmaceutical business saw the impact of generic competition and excluding that impact the business grew approximately 5% operationally. Our broad base of healthcare business, the strength of our brands and our ability to bring innovations to the market continue to demonstrate why Johnson & Johnson has performed well historically through challenging economic cycles.
Our strong earnings performance also demonstrated once again our financial discipline and the ability of our business leaders to continue managing costs and improving margins. Our first quarter results reflected an improvement in our pre-tax operating margin as we expected when providing our annual guidance in January.
We also discussed currency in January and how we would speak to its effects this year. As we said, we are providing both reported and operational actual results for sales and EPS each quarter and for our full year guidance, therefore calling out for you the impact of currency movements. This quarter we continued to experience significant impacts from fluctuating currency exchange rates.
Based on our full year guidance in January you would have expected the impact of currency this quarter to have been negative by about 4% on sales and approximately $0.05 per share on EPS for the quarter, based on a 2009 projected average Euro exchange rate of $1.35. The impact of currency translation on sales, however, was actually -6% and the impact on earnings per share was actually negative by approximately $0.07 per share, based on an actual average Euro rate of $1.31 for the quarter reflecting a slightly stronger US dollar.
Our strong operational EPS growth offset the negative impact of currency translation on earnings per share. Overall, our first quarter 2009 EPS reflects approximately $0.07 of operational EPS growth offset by the approximately $0.07 of negative currency translation impact to EPS as compared to first quarter 2008.
Now we’d like to turn to a few of the business highlights in the quarter that illustrate where we are headed with some of the long term investments in the business and the progress we are making in advancing our pharmaceutical pipeline.
We completed our acquisition of Mentor Corporation at the end of January and we are moving full speed ahead on integration of Mentor and Omrix Biopharmaceuticals within our Ethicon Surgical business. We are making progress with the integration of health media and human performance institute as we advance our new wellness and prevention platform. This business is now being reported as part of the Consumer segments financial results.
These and our other acquisitions like Dabao Cosmetics and SurgRX are adding important sales and growth opportunities to our business but I would remind you that this quarter and the years results will also reflect the divestiture of our professional wound care business which was sold in the fourth quarter of 2008.
We continue to make progress with our ramp up and introduction of new products across the business. In terms of the MD&D pipeline and clinical trials this quarter Cordis announced plans for a global head to head randomized clinical trial comparing our Nevo Sirolimus-eluting coronary stent to the Zion stent. We continue to feel very positive about Nevo and want to compare it a recently approved and well received product. Results from our first Nevo trial comparing Nevo to the Taxus stent are targeted to be presented next month at the Euro PCR meeting in Barcelona.
As we look to strengthen our cardiovascular franchise our Biosense Webster business received FDA approval to market the Navistar Thermocool Catheter for the treatment atria fibrillation which is one of the most common causes of stroke. Biosense Webster is the first and only company with an approved indication in the United States for an ablation catheter to treat this disorder which affects and estimated 10 million people worldwide.
We also made progress in our pharmaceutical pipeline with the approval of Stelara in Europe. Stelara, also known as Ustekinumab, is the first in a new class of biologics for the treatment of moderate to severe plaque psoriasis. It is undergoing regulator review in the US.
Meanwhile Simponi or Golimumab, another important biologic in our pipeline received its first market approval in Canada for the treatment of rheumatoid arthritis, psoriatic arthritis and ankylosing spondylitis. It is under regulatory review in the US. We also received approval in several European countries for Priligy or dapoxetine which is for the treatment of premature ejaculation.
There are several key milestones for our pipeline over the next six months as responses from the FDA are expected on Simponi, Stelara, Rivaroxaban and Paliperidone Palmitate. We look forward to a deeper discussion of our pipeline with you when we hold our pharmaceutical business review on June 4th.
Now I’d like to provide some guidance for you to consider as you refine your models for 2009. Let’s start with a discussion of cash and interest incumbent expense. At the end of the first quarter we had approximately $200 million of net debt. This consists of approximately $13.9 billion of cash and investments and $14.1 billion of debt. This was a decrease of $1.1 billion in our overall net cash position from year end 2008 as we continued to buy back our shares and we completed the acquisition of Mentor Corporation.
During the first quarter we used approximately $500 million to repurchase shares of our stock in connection with our $10 billion share repurchase program which began in 2007. To date we have purchased approximately $8.6 billion of our stock and we expect to complete this program during 2009. Our financial position remains strong.
We generate strong cash flows and we continue to have good access to the credit markets for our financing needs at reasonable rates. As always, we will examine the best uses of our financial strength to invest in the long term growth of our business and to return value to our shareowners.
For purposes of your models, assuming no major acquisitions and the completion of the share repurchase program, I suggest you consider modeling net interest expense of between $200 and $300 million a slight increase from our previous guidance.
Turning to other income and expense, as a reminder this is the account where we record royalty income as well as one time gains and losses arising from such items as litigation, investments by our development corporation and asset sales or write offs. This account is difficult to forecast but assuming no major one time gains or losses I would recommend that you consider modeling other income and expense for 2009 as a net gain ranging from approximately $200 to $300 million a slight increase from our previous guidance.
Now a word on taxes, for the first quarter of 2009 the company’s effective tax rate was 24.5%. We suggest that you model our effective tax rate for 2009 in the range of 24% to 25% consistent with our previous guidance. As always, we will continue to pursue opportunities in this area to approve upon this rate throughout the year.
Now turning to sales and earnings, it remains very difficult to predict movements in currency exchange rates and their impact on sales and earnings especially given the ongoing economic volatility and the resulting monetary policy changes that governments around the world are employing to address the situation.
As we told you in January our guidance for 2009 will continue to be based first on a constant currency basis reflecting our results from operations assuming that average currency rates for 2009 will be the same as they were for 2008. This is the way we manage our business and we believe this provides a good understanding of the underlying operational performance of the business. We will also continue to provide an estimate of our reported sales and EPS results for the year with the impact that currency exchange rates could have using the Euro as an example.
Turning to sales and taking into consideration the loss of US market exclusivity of both Risperdal Oral and Topamax which have about a 4% to 5% impact on our overall sales growth rate, we would be comfortable with your models reflecting an operational sales change on a constant currency basis of between -1% and 1% consistent with our previous guidance. This would result in sales from 2009 from operations, again on a constant currency basis, of between $63 and $64 billion.
While we are not predicting the impact of currency movements, to give you an idea of the potential impact if average currency exchange rates for the remainder of 2009 were to remain where they were as of last week, using the Euro as an example, this would imply an average rate for the Euro of $1.32 for the year. Then our sales growth rate would be negatively impacted by approximately 5% or approximately $3 billion. This is an increased negative impact as compared to our previous guidance.
Thus under this scenario we would expect reported sales to decline to a range between -4% and -6% for a total expected level of reported sales of between $60 and $61 billion slightly below our previous guidance range but due solely to the impact of currency movements.
Now turning to earnings, when I last checked the recent first call mean estimate for our EPS for full year 2009 was $4.49 per share. I suggest that you consider full year 2009 EPS estimates excluding the impact of special items of between $4.60 and $4.70 per share on an operational basis. That is assuming the same average exchange rates for 2009 as we saw in 2008. This represents an operational growth rate of 1% to 3% consistent with our previous guidance.
While we are not predicting the impact of currency movements to give you an idea of the potential impact on EPS if currency exchange rates for the remainder of 2009 were to remain where they were as of last week with the average Euro rate for the year at $1.32 then our EPS growth rate would be negatively impacted by approximately 4% or approximately $0.20 per share compared to an anticipated negative impact when we provided guidance in January of approximately $0.15 per share.
The dollar has strengthened slightly versus our estimates in January and therefore we would expect a slightly more negative impact to EPS due solely to currency fluctuation. However, given the strength of our first quarter EPS performance we would be comfortable with your models reflecting full year reported EPS excluding special items around the midpoint between $4.45 and $4.55 per share consistent with our previous guidance.
As you refine your models for 2009 I want to remind you to consider the impact to our results from the loss of US market exclusivity of Risperdal Oral at the end of June 2008 and the loss of US market exclusivity of Topamax at the end of March 2009. These events will obviously have significant impacts on the quarterly year over year comparisons especially on the second quarter results. It appears that many of the analysts have reflected this in their models but may not have reflected the full negative currency impact.
As for operating margins, many of your models already reflect an improvement in pre-tax operating margins for 2009. We are comfortable with that but not to the extent we saw in the first quarter. While operating margins may vary by business segment year to year or may be impacted from time to time by short term dilutive impacts of acquisitions, improving the overall pre-tax operating margin by growing income faster then sales over time is a fundamental discipline we use in managing our business.
Now Louise back to you.
Could you give the instructions for the Q&A session please?
(Operator Instructions) Your first question comes from Matthew Dodds - Citigroup
Matthew Dodds - Citigroup
On the gross margin I’m surprised it’s up year over year and I’m just trying to understand if foreign exchange was negative or positive first of all? Second, was there anything unique in the quarter that may have inflated it or increased it versus where you expect it to be for the rest of the year?
There was good improvement in the gross margin year over year as you saw 20 basis points. I would say that that is not something we’d expect to continue for the year especially as Topamax now rolls off, of course another high margin product rolling off due to generic competition. We did see cost improvement across primarily the MD&D business but there were some items in the prior year that were a little bit not repetitive in the current year and so we saw those as slight benefits in the first quarter.
We don’t expect that improvement to continue through the year which is why I mentioned our pre-tax operating margin improvement year over year is expected but not to the extent that we saw in the first quarter.
Matthew Dodds - Citigroup
Were there any drugs in particular where you might have seen a large change in inventory distributor levels that break out on the negative side?
I think the only one that’s worth noting is Remicade OUS which as Louise mentioned was a result of our customer’s inventory planning from last year so that comparison was the only thing that we saw of any significance.
Your next question comes from Bruce Nudell - UBS
Bruce Nudell - UBS
On the pipeline drugs, is there anything notable that we should know about that you could share with regards to FDA questions regarding Golimumab and Ustekinumab?
I don’t this so. We’ve submitted our responses to the FDA, we have a FIDUFA date of end of April for Golimumab and I think the date is sometime in July for Ustekinumab. We responded pretty rapidly to those questions when they came in, ongoing dialogue with the FDA as usual. Nothing else that I could add to that except those two expected responses in April and July.
Bruce Nudell - UBS
Pertaining to the elephant in the room regarding Remicade and Golimumab ex. US could you enlighten us as to the company’s leanings or discussions or do you think there will be satisfactory resolution of that sheering Merck issue.
We’re not going to comment on that matter.
Your next question comes from Sara Michelmore – Cowen
Sara Michelmore – Cowen
Just to clarify again on your comments on Q2, its sounds like we should not expect the pre-tax income improvements that we saw in Q1 to reoccur in Q2 but are we still expecting the margins to be up in Q2 or should we be thinking about that more conservatively for that quarter given the sales headwinds?
As you know we don’t give quarterly guidance. I would say for the year it’s still going to be up, pre-tax margin is going to be up but not to the extent that we saw it in the first quarter so then you could model accordingly. Obviously second quarter will be a tough quarter for us with Topamax going off patent of course.
Sara Michelmore – Cowen
On the R&D from an absolute dollars standpoint it was down quite a bit this quarter and just to kind of clarify the moving parts there I assume a lot of that is related to just some of the phase three trial expense you had last year kind of rolling off the P&L but if you could give us a little color about the general trajectory of that R&D line and what some of the underlying factor may be that would be helpful.
As a general trajectory as you know, as the mix of the business changes with consumer sales up and Pharma sales going down obviously because of the generic impact the mix would cause a lower percent of sales overall for the R&D line. As we noted before in several meetings we do see a reduction in the absolute level of R&D spend particularly in the Pharma business as we’re moderating that total spend to be now closer to the industry norm and you know we had for many year invested at above the industry norm and we’re very proud of the pipeline as a result of that investment.
I’d say this is just consistent with what we’ve said before it will moderate down to a more of an industry norm throughout the year and into the following years.
Sara Michelmore – Cowen
Is there any update on the Concerta citizens petition, I know there was some developments in terms of the legal front there but just wondering if there was any update from your end of what should we expect vis-à-vis the outstanding citizens petition for Concerta?
As you know the citizens petition was filed back in 2004. There are several ANDA filers even before the new patents were issued, two new patents were issued and there were at least two new ANDA filers even before they were issued. We have not had any other discussion or input from the FDA on the citizen’s petition. Obviously we feel that we have a meritorious citizen’s petition on file. The recent patent litigation that resulted in a ruling against us is something that we don’t believe changes the outlook for Concerta. In my guidance for the year we don’t assume that a generic Concerta will come to market.
Your next question comes from Rick Wise - Leerink Swann
Rick Wise - Leerink Swann
Can you discuss a little more specifically your comments on Remicade? If I heard you correctly you said Remicade did well in the context of a strong US market growth but we’ve been concerned about how economically sensitive to the anti-TNF market is and are you expecting slower growth or continued strong growth here just if you could review those for us it’d be helpful.
In the first quarter the US grew about 13%, that’s consistent with 2008 and though it’s slightly down from the first quarter of 2008 where it grew about 16.5%. Remicade is an infusion so we think it may be a little less sensitive to the economic cycles. That’s what we figure in the market at this point.
Rick Wise - Leerink Swann
Can you expand a little more on the operating leverage issue? Clearly it’s visible as you all have done a great job of maintaining gross margins and lowering SG&A and R&D as a percentage of sales. Can you help us think about your operating margin goals over the next couple of years directionally? Do you think you’ll need to do another restructuring to continue to expand operating margins in 2010 and beyond?
As I’ve said many times we look at our business, our business leaders around the world just do a fabulous job of growing the business profitably, of growing their income faster then the rate of growth and sales. In terms of restructuring these are very unusual events for Johnson & Johnson. As you know we did one in 2007 it was specifically related to the Cordis business because of the advent of the new competitors and the drug eluting stent market and specifically related to the pharmaceutical business because what we all knew was coming which was the scheduled patent expirations of two very significant products.
Prior to that I think it was something like 10 years ago when another restructuring took place at Johnson & Johnson. I’d say typically we’re pretty good. I’m very proud of the folks in the company in managing through either economic cycles or dips in the business or competitive threats, etc. It’s only when there’s something sort of severe like the impact of generic and drug eluting stents sort of happening in the same time period that we felt we needed to get ahead of that. As you know, we took that restructuring actions in 2007.
Baring any other significant impact like those two I would say we’d be able to continue to manage our operating expenses appropriately as we’ve always had throughout the years. Again, that’s a tribute to the folks, the men and women that run these businesses around the world for us.
Rick Wise - Leerink Swann
Basically you think we can see continued operating margin improvement in the years ahead?
Yes, and I think that would vary by year and by sector depending on our investment opportunities. Obviously as you get to a point where the competitiveness is impacted by how profitable you are you want to maybe slow that down a little bit to make sure you’re not missing investment opportunities. That’s what we do all the time, that’s what our business leaders are always constantly balancing the appropriateness of improving operating profit and compared to the investment opportunity that they have available to them.
Rick Wise - Leerink Swann
Deferred fund income seems to be possibly set up to get taxed in a way that has not in the past under the Obama administration. How are you planning for it? Should we expect J&J is going to see higher tax rates in ’10, ’11, ’12 as a result?
We won’t comment as you know on guidance for any year beyond the current year. You’re absolutely right that the President’s budget proposal includes a provision to raise some $200 billion over 10 years by reforming the tax rules on the treatment of international income. The way we’re dealing with it quite frankly is we’re doing everything we can to help educate the administration on why deferral is important to keep US multi-nationals competitive in a global economy.
Five percent of the consumers in the world reside in the US so much of the competitive pressure that we’ll face will be throughout the world and we want to remain competitive as a US multi-national as do many other US multi-nationals. We’re spending quite a bit of time educating the administration and the Treasury department on the benefits that US multi-nationals bring to the US in terms of increased employment, in terms of increased research and development spending and the fact that they are competitive on a worldwide scale because of this deferral of US income tax on foreign operations.
To eliminate that might be a short sighted way of filling a budget gap that would have a longer term impact on the competitiveness of US corporations. We’re actively engaged in the dialogue and so far, as I’ve said, we’re not going to comment on what tax rates might be beyond 2009.
Your next question comes from Mike Weinstein - JP Morgan
Mike Weinstein - JP Morgan
Velcade sales showed a fairly significant deceleration from the growth rates we saw in 2008. If you could add some additional color on the performance there.
I think Velcade had obviously a ramp up nicely in 2008 as it was growing throughout the world. I think part of it is just a tougher comparison as the business was ramping up in 2008 versus today. We saw Velcade was a major growth driver in countries such as Russia and we’ve seen a little bit of a deceleration of healthcare spending in certain economies like Russia that are impacted by certain matters that are unrelated to healthcare like oil prices. I would say partly is the comparison and partly due to the slower growth in economies such as Russia.
Mike Weinstein - JP Morgan
I want to make sure I understand your comments on Concerta. You commented that generic competition this year and you haven’t had any incremental dialogue with the FDA. Is your comfort level that you don’t expect to see competition this year? From which angle does that stem, is it just the fact that there hasn’t been any new dialogue? I’m expecting the FDA to rule on this in 2009, what gives you the comfort at this point?
One is that obviously we feel that the citizen’s petition is meritory, it’s not number one. Number two its been in the FDAs hands now for quite a while and in fact just to remind you we were actually requested by the FDA to submit a citizens petition to describe the bio-equivalency and clinical equivalency aspects of that product. Lastly, the various competitors had filed their ANDAs as I said earlier even before the various new patents issued. They could have been approved some time ago even before the patents issued.
There’s a combination of factors that gives us reasonable comfort that our guidance for the year does not include the launch of a generic competitor for Concerta.
Mike Weinstein - JP Morgan
Let me have you touch quickly just on some of the pipeline products that were brought up earlier. You have a number of products where you are expecting to hear back from the agency either for the first time or second time and over the course of the year; let me just rattle them off if I could; Golimumab, Ustekinumab, Paliperidone Palmitate, Xarelto, [inaudible]. Which of those products are in your guidance for the back half of the year?
The expected approval dates by the FDA I would say Stelara obviously, Simponi which is Golimumab, Xarelto which is at the end of ’08 actually all the products that have this year as an expected response for the FDA are included in our estimates. As I said in our meeting in January we’re relatively conservative when we estimate these products in our plans because of sometimes the uncertainty related to the actual approval date given the FIDUFA date so we do take that into consideration when we include these products in our own internal models going forward. We may be a little more conservative then you all might be in that regard.
Mike Weinstein - JP Morgan
You said on the fourth quarter call that you expected to complete the share repurchase program during the early part of 2009. You didn’t repurchase as much stock as we thought you were during the first quarter and I understand over the course of 2009 any commentary you want to provide there?
The only thing I would say that’s a little different in our expectation for completion of it, I didn’t want to commit to early part of ’09 now that I saw what happened in the first quarter. During the first quarter a number of things happened. We issue stock to our employees as part of our compensation programs and you may be aware that we’re not permitted to buy stock under more then one program at any one time.
What we do in that case is we suspend the $10 billion share repurchase and we buy back stock that’s issued in our compensation programs. We’ve done that historically that basically eliminates any dilution from the compensation programs issuance of stock. Secondly, when the stock price is ticking down you might expect that we’d be buying a lot more, that’s sort of a natural expectation.
The rules for purchasing your stock are that you cannot buy the stock unless it’s on an up-tick. When the stock is decrease as it was in the first quarter it makes it harder actually to buy stock because you actually can’t enter the market and buy until you see an up-tick. We’ve just modified our expectation that we’ll still get it done this year but it may not be early in the year.
Your next question comes from Tao Levy - Deutsche Bank
Tao Levy - Deutsche Bank
On the surgical part of the business if you look at your orthopedic business it seemed like it did fairly well with and again in the backdrop of the potentially slowing elective surgeries. Have you not seen a slowdown in the ortho procedures, knees, hip, and spine?
We did see a slowdown in some of the ortho procedures particularly knees, although hips performed nicely, very strong growth and actually our spine business performed very strongly during the quarter so I think that offsets some of the slowdown that we saw in knee procedures. We had mentioned before that some of the elective parts of the orthopedics business, the sports medicine part of the business that was slowing, we commented on that even at the end of last year. That slowdown is moderated now so we haven’t seen a pronounced slowdown in that particular area of the business.
Tao Levy - Deutsche Bank
You also mentioned cost containment in MD&D can you flush that out a little bit?
I was commenting on the fact that in our gross margin some of the most significant impacts to the slightly better performance in gross margin then maybe some of you had anticipated was through cost containment particularly in the MD&D business. We’ve been on a plant rationalization effort for quite some time in our MD&D businesses particularly in Europe. We’re seeing the benefits of that come to fruition now.
Tao Levy - Deutsche Bank
The impact from acquisitions in MD&D you made a few in the fourth quarter, first quarter, is there a number you could provide?
Overall the impact, let me just see if I can estimate that for you. I want to remind you that also in the end of last year we divested something in our MD&D business. The total impact from both adding acquisitions and removing divestitures in just the MD&D business from an operational perspective was probably about fourth tenths of a point so the 3.1 would have been 2.7 or 2.8.
Your next question comes from Bob Hopkins - Banc of America-Merrill Lynch
Bob Hopkins - Banc of America-Merrill Lynch
I wanted to ask about the consumer division because your guidance being on a constant currency basis for the full year being the same as you provided at the end of the year I assume suggests that the consumer decline you feel has now stabilized and won’t get much worse. Is that the case? Does the implied stability in your guidance is that across all the consumer business or you expect further weakness in some parts and strengthens in some of the brands? I’m just wondering what we can read into your guidance as it relates to the consumer business and frankly to the overall economy.
Obviously the guidance that we provide for the year is for the enterprise overall. I think that implies is that when we estimated what was going to happen in 2009 we considered that in our guidance across all factors of the business or all aspects of the business. As I said in my earlier comments, it appears as if those factors are playing out much as we had expected it would play out. I do think that in the consumer business we did see some more pronounced impact of the economy in the first quarter, in certain aspects of the consumer business.
In other aspects of the business as I mentioned in our skincare for example or our Listerine business they seem to hold up pretty well. I would say the only thing to take away from my comment is that we had projected what the year might look like and the economic impact to the overall business of J&J and its pretty much working out as we anticipated in the first quarter so we saw no reason to change our overall guidance for the year.
Bob Hopkins - Banc of America-Merrill Lynch
On the medical device franchise to follow up on Tao’s question are you getting any sense from your business heads as you talked about the first quarter as far as their expectations for the two businesses and the Ethicon businesses as we look forward? Do they expect growth to moderate in those areas as a result of the economy or do they feel good about the ability to continue to drive the kind of decent growth that we’ve seen in the last quarter or two?
Generally speaking for the surgery business excluding orthopedics we’ve seen both from the performance of Ethicon and Ethicon-Endo no much of an impact from the overall economy to the surgery businesses. We’ve seen, as we mentioned before, some impact to women’s health, procedures as elective procedures within surgery but that seems to have stabilized a little bit.
Then in terms of orthopedics we did project consistent with some other published sources that the joint reconstruction business overall would just be a little bit slower growth of a point or so slower then the prior year and that’s what we’re seeing as we look at the marketplace.
Bob Hopkins - Banc of America-Merrill Lynch
On a strategic basis, historically J&J hasn’t done a large pharmaceutical deal and I just wanted to get your perspective on has that been due more to issues relating to price and strategic fit or is it simply that J&J has intentionally not pursued large cost cutting deals in Pharma because you just don’t think that that type of deal can ultimately add a lot of long term value?
The best way to characterize our acquisition approach in general is obviously we look for acquisitions that are going to create significant shareholder value and are probably going to get us or most desirably get us into new spaces or new areas where we currently don’t participate. That’s primarily our goal, obviously that’s to create shareholder value and then get into new spaces.
In the Pharma business you’ve seen over the years that we’ve taken several approaches to the Pharma business. We’ve obviously increased our own internal R&D spend so obviously we’re excited about our business, we’ve invested internally, we thought that was the most capital efficient way to grow the business. Secondly we’ve done quite a bit of licensing in the Pharma business so rather then a major acquisition we’ve done some licensing in some products such as Rivaroxaban for example or exciting new products in our pipeline as a result of licensing.
I would say we don’t rule out anything in particular. I’d say we have several plays in our playbook and we operate on which of those plays make the most sense in any particular point in time. You shouldn’t read too much more into it then that.
Your next question comes from Larry Biegelsen - Wachovia
Larry Biegelsen - Wachovia
On the sales guidance operational growth of -1% to 1% I’m asking on of the earlier questions just a different way. It was -1.2% in the first quarter. It would seem to get tougher with Topamax going generic at the end of March. What gets better throughout the year?
Obviously we’re launching new products across all of our businesses throughout the year. You’re right it gets particularly worse with Topamax in particular in the second quarter. Then in the back half of the year remember Risperdal went off patent in June of 2008 so the back half of the year comparisons won’t be as pronounced for Risperdal in particular. That’s a much more significant product then Topamax was.
Larry Biegelsen - Wachovia
I didn’t hear any mention of Cefto, Carisbamate or Tapentadol, I’m sorry if I missed an update on those three.
Carisbamate we filed it in October last year and it’s a standard 10 month review so we’ll hear toward the end of the year. Regarding Cefto we continue to work with the FDA. We’ve met and we’ve actually designed an audit plan with them and we intend to meet with them again at the end of the year to review that one. Tapentadol it’s actually the 30 day comment period is now over and the remaining scheduling will be in the next couple months hopefully.
Larry Biegelsen - Wachovia
You expect to hear in the next couple months?
On Tapentadol yes.
Remember Tapentadol is approved by the FDA so we’re just waiting for the scheduling as it’s a narcotic. As Louise mentioned the 30 day wait period is now over so now we’re just basically waiting for the product to get formal scheduling and we’ll be able to launch it.
Your next question comes from Catherine Arnold - Credit Suisse
Catherine Arnold - Credit Suisse
A quick question was how Remicade patient share has changed in RA in the United States but a broader question is in regards to products like Remicade and Procrit where you may have seen economic sensitivity that would have surprised you and if you could comment on that. We’ve heard from an oncology company that they’ve experienced some weakness in oncology business.
I was wondering if you guys are doing anything new or noteworthy or increased your participation in programs that take away the burden from patients on things like their up front deductibles for the year that might put off their treatment or out of pocket in the case of Procrit?
Let me just comment a little bit on Procrit and I’m not going to speak specifically about what we may be doing in the marketplace. As Louise mentioned we actually gained share in Procrit. The market decline was as we anticipated it would be. In the first quarter we actually gained two or three points in share. We haven’t seen much of an impact there on the Procrit business.
Remicade as Louise mentioned in the US the market was growing about 13% and our published sales are about 9% so obviously we did lose a little share for Remicade in the US.
Catherine Arnold - Credit Suisse
That 13% number that’s the broader market not the infusional market demand just to be clear?
It’s the broader market.
Catherine Arnold - Credit Suisse
I was wondering if you could comment on mandatory Medicare rebates. It’s now something that we saw in the Presidential budget proposal in February there was some surprise that we didn’t see relief that we didn’t see that. Do you think that is something that is unlikely to be touched in future proposals?
You’re right it wasn’t specifically called out in the President’s budget and we were glad we did not see it in the President’s budget. I think there’s a realization that the Medicare Part D program has worked reasonably well. There seems to be a movement towards having a continued open market system with multiple insurance options for patient’s rather then one option which would be a governmental plan which then result in the mandatory Medicare rebate issue that you discussed.
I think there’s a general willingness to listen to the industry’s point of view on this. It’s not highlighted as a specific target in the President’s budget proposal and hopefully it will stay that way.
Your next question comes from David Lewis – Morgan Stanley
David Lewis – Morgan Stanley
A quick clarification on your comments about your confidence in EBIT margin improvement over the next several years. Would it be safe to say that that improvement is more tied to the pharmaceutical pipeline improvement as opposed to cost restructuring?
Let me just generalize for a minute. We generally run our business with an objective to grow our earnings faster then sales. We’ve been doing that for 75 plus years. When you look at what we’ve done in our business so far we have streamlined the business through these restructuring efforts. We’ve implemented these standardization efforts that you’ve heard me talk about before; they’re not fully implemented so they need to continue to be implemented around the world.
Lastly, once the cost structure is well under control we’ve been able to demonstrate that. Obviously we’re very excited about the pipeline coming to fruition in pharmaceuticals as well as in MD&D and new products in Consumer as well. Having a good handle on our ability to control costs gives me great confidence that as the new products come to market we can remain very profitable as a company going forward.
It’s a combination of our ability to control costs, the additional steps that we’re taking that are not yet fully implemented and then when you put that in the backdrop and you say now on top of that you launch very exciting new products in the marketplace that bodes well for an operating profit improvement formula.
David Lewis – Morgan Stanley
Would you say from a revenue perspective are there any strategic initiative you can think of other than the pharmaceutical pipeline proving that would be a more acute driver of that profitability over the next three years?
I don’t think there’s anything so specific that I can comment on. All of our businesses have a pretty robust pipeline of new products. You saw how we discussed those at the MD&D day both in comprehensive care and surgical care, a wide array of products coming to market. We’ll give you further update on what’s happening with the pharmaceutical business at our meeting on June 4th.
David Lewis – Morgan Stanley
If you look at Pharma devices and Consumer based on your prior comments in Q&A the visibility in those lines seem relatively in line with where it was at the end of the year. I wonder from a macro perspective do you think about inventory, global pricing, and emerging markets; would you say on those three categories that you feel as good as you did at the end of 2008 better or worse.
I would say pretty much in line. We estimated emerging markets would be a slower impact not as pronounced as it was in prior years and we’re seeing that play out now as we expected. Inventory contraction we expected it to play out, we’ve seen it a little it. Pricing, you may remember that we don’t really base much of our growth projections on heavy reliance on pricing so it’s never a major factor when we look our outlook for the years ahead or in the future.
David Lewis – Morgan Stanley
I don’t think I caught on orthopedics the specific OUS breakout for knees.
The US is 4% in knees; OUS is 2% for a total of 3%.
Your last question comes from Glenn Novarro – RBC
Glenn Novarro – RBC
On Pharma, were there any price increases on any of the products in the quarter? On Topamax as it goes generic is it going to be, should we assume 80% to 90% of the brand just goes away when the first quarter or two, will there be any brand loyalty? Can you give us an update on what we should expect R&D as a percent of sales to be for the Corporation this year?
Yes there was some pricing in the first quarter for pharmaceutical products but not anything that I want to speak about specifically but it’s really not that significant overall for the business. With respect to Topamax, we would model it like you would any generic entry but obviously we’re hopeful that there is some loyalty to a fabulous product over many, many years. It has both an anti-epileptic effect and a migraine effect. I would say we’ll probably look at it as any other generic competition coming to the market.
With the anti-epileptic market it may be a slightly smaller erosion curve but remember the majority of Topamax was for migraine.
I can’t give you a specific target for R&D expense going forward other than the comments that we made earlier that we would expect the R&D expense in the Pharma business to moderate closer to the industry norms over time and they have been as you’ve seen in our published reports higher then the industry norms over the last several years.
Glenn Novarro – RBC
From a modeling point of view on R&D we should expect it to tick up though for the rest of the year with always the fourth quarter traditionally being the biggest quarter for the year. I’m just trying to get an idea of the R&D expenses because it did come in significantly less then I was thinking for the first quarter.
We don’t comment on each and every line in the P&L because we have a great deal of flexibility on how we manage those lines throughout the year. Other than to say we expect our, as I said earlier, operating profit margins to improve year over year but not to the extent that we saw in the first quarter. I’d just leave it at that.
Some final comments from Dominic.
In closing let me just offer these final thoughts. Many of the factors that were anticipated to impact our results for 2009 are playing out as we expected. As I noted earlier the underlying growth for the business is solid, especially in this economy. While we recognize there are challenging factors in today’s economic environment such as currency volatility and uncertainty surrounding the depth and length of the current recession, we remain financially strong and well positioned for long term profitable growth.
I am confident in our ability to address the matters we can control, continue bringing innovative products to the market and thoughtfully managing our costs and expenses as we progress through 2009, thanks to the dedication and focus of the talented people across the Johnson & Johnson family of companies. We remain committed to growing the business profitably over the long term and taking advantage of the current period to become an even stronger more competitive leader in the global healthcare industry.
I look forward to updating you on our progress throughout the year and I look forward to seeing you at our pharmaceutical business review on June 4th. Thanks everyone and have a great day.
This concludes today’s Johnson & Johnson First Quarter 2009 Earnings Conference Call. You may now disconnect.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: firstname.lastname@example.org. Thank you!