I'll begin by briefly reviewing highlights of the third quarter for the Corporation and highlights for our 3 business segments. Following my remarks, Dominic will provide some additional commentary on the third quarter results and guidance for the full year 2011.We will then open the call to your questions. We expect the call to last approximately 1 hour. Included with the press release that was sent to the investment committee earlier this morning is the schedule showing sales for major products and/or businesses to facilitate updating new models. These are also available on the Johnson & Johnson website, as is the press release. Before I get into the results, let me remind you that some of the statements made during this call may be considered forward-looking statements. The 10-K for the fiscal year 2010 identify 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. Tables reconciling these measures to the most comparable GAAP measures are available in the press release or on the Investor Relations section of the Johnson & Johnson website at jnj.investor.com. Now I would like to review our results for the third quarter of 2011. 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 $16 billion for the third quarter of 2011, up 6.8% as compared to the third quarter of 2010. On an operational basis, sales were up 2.6%, and currency had a positive impact of 4.2%.
In the U.S., sales decreased 3.7%. In regions outside the U.S., our operational growth was 8.3%, while the effective currency exchange rates positively impacted our reported results by 8.1 points.The Western Hemisphere, excluding the U.S., grew by 17.1% operationally, while the Asia-Pacific, Africa region grew 8.1% on an operational basis. Europe grew 4.9% operationally. If you'll now turn to the consolidated statement of earnings. Net earnings were $3.2 billion compared to $3.4 billion in the same period in 2010. Earnings per share were $1.15 versus $1.23 a year ago. Please direct your attention to the box section of the schedule where we have provided earnings adjusted to exclude special items. As referenced in the footnote, third quarter net earnings this quarter were adjusted to exclude an after-tax mark-to-market adjustment to the value of the currency option and deal cost related to the planned acquisition of Synthes, Inc. Net earnings on an adjusted basis were $3.4 billion, and earnings per share were $1.24, up 0.8% versus the third quarter of 2010. 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 31.7% of sales was 100 basis points higher than the same period in 2010, primarily due to the ongoing remediation work in our OTC business and the impact of integrating the Crucell business. Selling, marketing and administrative expenses, up 32.7% of sales, were up 130 basis points. As we discussed last quarter, expenses include investment spending behind our new products, as well as the fee on our branded pharmaceutical products included as part of the U.S. Health Care Reform legislation. Our investment in research and development as a percent of sales was 11.1%, consistent with the third quarter of 2010. Interest expense net of interest income of $117 million was up $22 million versus the third quarter of 2010 due to a higher average debt balance.
Other income net of other expense was $308 million in the third quarter of 2011 compared to $292 million in the same period last year.Excluding special items, net other income was $624 million, which Dominic will address in his commentary. Excluding special items, taxes were 22.2% in the third quarter of 2011, bringing our year-to-date effective tax rate to 21.6%. Now turning to the consolidated statement of earnings for the first 9 months of 2011. Consolidated sales to customers for the first 9 months of 2011 were $48.8 billion, an increase of 6.2% as compared to the same period a year ago. On a year-to-date basis, sales were up 2.3 points operationally, and currency had a positive impact of 3.9 points. On the consolidated statement of year-to-date earnings, I'd like to draw your attention to the box section. Adjusted net earnings of $10.7 billion in 2011 compares to adjusted net earnings of $10.4 billion in 2010. Adjusted earnings per share at $3.87 were up 3.8% versus the 2010 results. Turning now to business segment highlights, please refer to the supplementary sales schedule highlighting major products and/or businesses. I'll begin with the Consumer segment. Worldwide consumer segment sales for the third quarter of 2011, up $3.7 billion, increased 4.9% as compared to the same period last year. On an operational basis, sales increased 0.5%, while the impact of currency was positive 4.4 points. U.S. sales were down 4.5%, while the international sales grew 3.3% on an operational basis. Excluding the impact of lower U.S. over-the-counter or OTC revenues, operational sales grew approximately 3%. For the third quarter of 2011, sales for the OTC pharmaceuticals and nutritionals decreased 9.4% on an operational basis compared to the same period in 2010, with U.S. sales down 24.2%, primarily due to supply constraints. On March 10 this year, McNeil-PPC announced the signing of a Consent Decree covering the manufacturing facilities in Las Piedras, Puerto Rico and Fort Washington and Lancaster, Pennsylvania. To date, McNeil has achieved all major commitments under and is in compliance with the terms of the Consent Decree. Side assessments were completed on schedule, and McNeil is tracking to achieve the committed milestones. Site specific work plans are required to be developed and submitted to the FDA before the end of October. McNeil continues to operate the manufacturing facilities in Las Piedras and Lancaster. Read the rest of this transcript for free on seekingalpha.com