LINDA A. JOHNSONProduct recalls, flat U.S. sales and litigation and restructuring costs slashed Johnson & Johnson's second-quarter profit by 20 percent, and that's after a big currency exchange benefit boosted results. J&J executives said Tuesday that they're making progress on their manufacturing problems and have numerous new drugs, medical devices and toiletries hitting the market or coming soon. But J&J shares fell by 1.4 percent before recovering somewhat, a big drop for the health care giant, which makes everything from Band-Aids and Listerine to biologic medicines and surgical devices. J&J said its second-quarter profit fell nearly 20 percent due to the one-time costs and higher spending on product launches, manufacturing improvements and research. While the results topped Wall Street expectations, total U.S. revenue was flat as consumer health product sales were down 8.5 percent because recalled products remain off store shelves. Foreign sales were up 16 percent, but mostly due to favorable exchange rates. On the bright side, sales were up in all three divisions â¿¿ consumer health, prescription drugs and medical devices and diagnostics â¿¿ for the first time since 2009's last quarter, shortly after the start of an embarrassing series of more than 25 product recalls. Investors weren't impressed, as shares fell 69 cents, or 1 percent, to $66.40 in afternoon trading while the broader markets edged higher. The New Brunswick, N.J., company said its net income was $2.78 billion, or $1 per share, boosted by a lower tax rate than last year at 19.6 percent. Net income was $3.45 billion, or $1.23 per share, in the 2010 second quarter. Revenue rose 8.3 percent, to $16.6 billion from $15.33 billion a year ago. Excluding one-time items, income would have been $3.55 billion, or $1.28 per share. The items totaled $991 million, including $676 million for restructuring the ailing Cordis heart device business, $363 million for litigation and $54 million for recalling defective DePuy hip implants, partly offset by a $102 million gain from a currency option.