This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Mead Johnson Nutrition Reports Third Quarter Earnings; Year To Date Constant Dollar Sales Up 7 Percent

Stocks in this article: MJN

Corporate and Other expenses decreased from lower IT and separation costs, lower performance-based compensation expense and the elimination of duplicate costs from the overlap in shared services providers incurred in the prior year during the SAP implementation project. These factors were partially offset by the earlier recognition of higher pension settlement expense, which was not incurred until the fourth quarter in 2011.

Outlook for 2012

“For the full year, we anticipate annual constant dollar sales to grow in the range of six to seven percent compared to the prior year,” Mr. Golsby said. “While our China market share clearly began to recover in the third quarter and additional gains are expected in the fourth quarter, further distributor inventory reductions and lower share versus the prior year will continue to dampen sales growth in the fourth quarter compared to the same period a year ago. Importantly, we expect to maintain the strong performance seen in the other markets of Latin America and Southeast Asia and retain full confidence in our ability to deliver compelling long-term growth in China once we have worked through current temporary challenges. We now estimate that non-GAAP earnings will be in the range of $3.02 to $3.07 per diluted share. As we entered the year, we forecast that non-GAAP EPS would be in the range of $3.00 to $3.10 per diluted share. While our performance in China has added volatility to our earnings forecasts since January, the midpoint of our current and initial guidance is consistent.”

Conference Call Scheduled

Mead Johnson will host a conference call at 8:30 a.m. CDT today, during which company executives will review third quarter financial results and respond to questions from analysts and investors. The call will be broadcast over the Internet at meadjohnson.com. To listen to the call, visit the website at least 15 minutes before the call and click on the Investors tab. Security analysts and investors wishing to participate by telephone should call 1-866-578-5788, pass code: Mead Johnson. Callers outside of North America should call +1-617-213-8057 to be connected. A replay of the conference call will be available through midnight EDT Thursday, November 1, 2012, by calling 1-888-286-8010 or outside of North America +1-617-801-6888, pass code: 37115410. The replay will also be available at meadjohnson.com.

Forward-Looking Statements

Certain statements in this news release are forward looking as defined in the Private Securities Litigation Reform Act of 1995. These statements, which are identified by words such as “expects,” “intends” and “believes,” involve certain risks, uncertainties and assumptions that may cause actual results to differ materially from expectations as of the date of this news release. These risks include, but are not limited to: (1) the ability to sustain brand strength, particularly the “Enfa” family of brands; (2) the effect on the company’s reputation of real or perceived quality issues; (3) the adverse effect of commodity costs; (4) increased competition from branded, private label, store and economy-branded products; (5) the effect of an economic downturn on consumers’ purchasing behavior and customers’ ability to pay for product; (6) inventory reductions by customers; (7) the adverse effect of changes in foreign currency exchange rates; (8) the effect of changes in economic, political and social conditions in the markets where we operate; (9) legislative, regulatory or judicial action that may adversely affect the company’s ability to advertise its products or maintain product margins; (10) the possibility of changes in the Women, Infant and Children (WIC) program, or participation in WIC; and (11) the ability to develop and market new, innovative products. For additional information on these and other factors, see the risk factors identified in the company’s periodic reports, including the annual report on Form 10-K for 2011, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with, or furnished to, the Securities and Exchange Commission, available upon request or at meadjohnson.com. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

About Mead Johnson

Mead Johnson, a global leader in pediatric nutrition, develops, manufactures, markets and distributes more than 70 products in over 50 markets worldwide. The company’s mission is to nourish the world’s children for the best start in life. The Mead Johnson name has been associated with science-based pediatric nutrition products for over 100 years. The company’s “Enfa” family of brands, including Enfamil ® infant formula, is the world’s leading brand franchise in pediatric nutrition. For more information, visit meadjohnson.com.

 
MEAD JOHNSON NUTRITION COMPANY
       
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in millions, except per share data)
(UNAUDITED)
 
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
NET SALES $ 921.3 $ 933.9 $ 2,920.2 $ 2,765.7
Cost of Products Sold   357.5     358.3     1,103.3   1,007.4
GROSS PROFIT 563.8 575.6 1,816.9 1,758.3
Expenses:
Selling, General and Administrative 210.7 229.5 642.2 689.5
Advertising and Promotion 138.8 129.8 413.3 373.0
Research and Development 21.5 22.9 67.6 64.4
Other Expenses/(Income) – net   9.6     (8.3 )   13.5   3.4
EARNINGS BEFORE INTEREST AND INCOME TAXES   183.2     201.7     680.3   628.0
 
Interest Expense – net   16.9     13.1     49.0   38.4
EARNINGS BEFORE INCOME TAXES   166.3     188.6     631.3   589.6
 
Provision for Income Taxes   27.1     42.7     151.2   159.9
NET EARNINGS 139.2 145.9 480.1 429.7
Less Net Earnings/(Loss) Attributable to Noncontrolling Interests   (1.1 )   1.2     9.8   6.8
NET EARNINGS ATTRIBUTABLE TO SHAREHOLDERS $ 140.3   $ 144.7   $ 470.3 $ 422.9
Earnings per Share – Basic
Net Earnings Attributable to Shareholders $ 0.69   $ 0.71   $ 2.30 $ 2.06
Earnings per Share – Diluted
Net Earnings Attributable to Shareholders $ 0.69   $ 0.70   $ 2.29 $ 2.06
 
Dividends Declared per Share $ 0.30 $ 0.26 $ 0.90 $ 0.78

 
MEAD JOHNSON NUTRITION COMPANY
       
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in millions)
(UNAUDITED)
 
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
NET EARNINGS $ 139.2 $ 145.9 $ 480.1 $ 429.7
 
OTHER COMPREHENSIVE INCOME/(LOSS)
Foreign Currency Translation Adjustments
Translation Adjustments 25.6 (50.6 ) (4.2 ) (13.8 )
Tax Benefit/(Expense) (17.5 ) 9.3 (12.2 ) 4.0
Deferred Gains/(Losses) on Derivatives Qualifying as Hedges

Deferred Gains/(Losses) on Derivatives Qualifying as Hedges for the Period

(5.4 ) 11.7 (9.5 ) 5.9

Reclassification Adjustment for (Gains)/Losses Included in Net Earnings

(0.4 ) 2.0 (0.9 ) 5.4
Tax Benefit/(Expense) 1.7 (4.0 ) 3.1 (3.3 )
Pension and Other Post-Retirement Benefits

Deferred Gains on Pension and Other Post-Retirement Benefits

0.2 0.2

Reclassification Adjustment for (Gains)/Losses Included in Net Earnings

5.9 1.1 18.4 3.6
Tax Benefit/(Expense)   (2.2 )   (0.6 )   (5.4 )   (3.3 )
OTHER COMPREHENSIVE INCOME/(LOSS)   7.7     (30.9 )   (10.7 )   (1.3 )
 
COMPREHENSIVE INCOME $ 146.9   $ 115.0   $ 469.4   $ 428.4  
 
Less Comprehensive Income/(Loss) Attributable to Noncontrolling Interests   (1.1 )   1.2     9.8     7.0  
 
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREHOLDERS $ 148.0   $ 113.8   $ 459.6   $ 421.4  

 
MEAD JOHNSON NUTRITION COMPANY
   
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in millions, except per share data)
(UNAUDITED)
 
 
September 30, December 31,
2012 2011
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 958.4 $ 840.3
Receivables – net of allowances of $6.7 and $6.3, respectively 380.2 352.6
Inventories 472.9 534.9
Deferred Income Taxes – net of valuation allowance 116.9 118.5
Income Taxes Receivable 8.4 3.3
Prepaid Expenses and Other Assets   49.5     40.1  
Total Current Assets 1,986.3 1,889.7
 
Property, Plant, and Equipment – net 608.6 576.1
Goodwill 277.6 117.5
Other Intangible Assets – net 136.3 91.6
Deferred Income Taxes – net of valuation allowance 21.0 16.5
Other Assets   115.6     75.4  
TOTAL $ 3,145.4   $ 2,766.8  
 
LIABILITIES AND EQUITY/(DEFICIT)
CURRENT LIABILITIES:
Short-term Borrowings $ 155.2 $
Accounts Payable 437.0 488.1
Dividends Payable 61.5 53.3
Note Payable 53.9
Accrued Expenses 224.5 229.0
Accrued Rebates and Returns 319.8 300.1
Deferred Income – current 9.5 47.0
Income Taxes – payable and deferred   32.5     82.6  
Total Current Liabilities 1,293.9 1,200.1
 
Long-Term Debt 1,525.4 1,531.9
Deferred Income Taxes – noncurrent 29.8 5.2
Pension, Post-Retirement and Post Employment Liabilities 138.0 157.2
Other Liabilities   81.6     40.4  
Total Liabilities 3,068.7 2,934.8
 
COMMITMENTS AND CONTINGENCIES
 
REDEEMABLE NONCONTROLLING INTEREST 34.2
 
EQUITY/(DEFICIT)
Shareholders’ Equity
Common Stock, $0.01 par value: 3,000 authorized, 206.0 and 205.1 issued, respectively 2.1 2.1
Additional Paid-in/(Distributed) Capital (687.2 ) (728.4 )
Retained Earnings 1,053.4 770.0
Treasury Stock – at cost (198.0 ) (89.7 )
Accumulated Other Comprehensive Income   (143.8 )   (133.1 )
Total Shareholders’ Equity/(Deficit) 26.5 (179.1 )
Noncontrolling Interests   16.0     11.1  
Total Equity/(Deficit)   42.5     (168.0 )
TOTAL $ 3,145.4   $ 2,766.8  

               
MEAD JOHNSON NUTRITION COMPANY
 
CONSOLIDATED STATEMENTS OF EQUITY/(DEFICIT) AND REDEEMABLE NONCONTROLLING INTEREST
(Dollars in millions)
(UNAUDITED)
 
 
Additional Accumulated Redeemable
Paid-in Other Non- Total Non-
Common (Distributed) Retained Treasury Comprehensive controlling Equity/ controlling
Stock Capital Earnings Stock Loss Interests (Deficit) Interest
Balance as of January 1, 2011 $ 2.0 $ (775.6 ) $ 474.0 $ (3.2 ) $ (64.6 ) $ 9.1 $ (358.3 ) $
Stock-based Compensation Awards 34.8 34.8
Treasury Stock Acquired (81.6 ) (81.6 )
Distributions to Noncontrolling Interests (8.6 ) (8.6 )
Cash Dividends Declared (159.5 ) (159.5 )
Net Earnings 422.9 6.8 429.7
Other Comprehensive Income           (1.5 )   0.2     (1.3 )  
Balance as of September 30, 2011 $ 2.0 $ (740.8 ) $ 737.4   $ (84.8 ) $ (66.1 ) $ 7.5   $ (144.8 ) $
 
Balance as of January 1, 2012 $ 2.1 $ (728.4 ) $ 770.0 $ (89.7 ) $ (133.1 ) $ 11.1 $ (168.0 ) $
Stock-based Compensation Awards 41.2 (15.0 ) 26.2
Treasury Stock Acquired (93.3 ) (93.3 )
Acquisition 30.2
Distributions to Noncontrolling Interests (4.0 ) (4.0 )
Cash Dividends Declared (183.8 ) (183.8 )
Net Earnings 470.3 8.9 479.2 0.9
Redeemable Noncontrolling Interest Accretion (3.1 ) (3.1 ) 3.1
Other Comprehensive Income           (10.7 )       (10.7 )  
Balance as of September 30, 2012 $ 2.1 $ (687.2 ) $ 1,053.4   $ (198.0 ) $ (143.8 ) $ 16.0   $ 42.5   $ 34.2

 
MEAD JOHNSON NUTRITION COMPANY
   
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(UNAUDITED)
 
 
Nine Months Ended September 30,
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 480.1 $ 429.7
Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and Amortization 56.7 57.1
Other 23.5 33.7
Changes in Assets and Liabilities (95.3 ) (56.0 )
Pension and Other Post Retirement Benefits Contributions   (24.9 )   (4.6 )
Net Cash Provided by Operating Activities 440.1 459.9
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
Payments for Capital Expenditures (85.7 ) (77.4 )
Proceeds from Sale of Property, Plant and Equipment 1.2 1.1
Proceeds from Sale of Intangible Assets 5.5
Investment in Other Companies (3.3 )
Acquisition   (106.1 )    
Net Cash Used in Investing Activities (188.4 ) (76.3 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
Proceeds from Short-term Borrowings 385.2 67.4
Repayments of Short-term Borrowings (230.0 ) (68.6 )
Repayments of Notes Payable (26.8 )
Payments of Dividends (175.6 ) (152.6 )
Stock-based-compensation-related Proceeds and Excess Tax Benefits 21.0 3.1
Purchases of Treasury Stock (108.3 ) (82.8 )
Proceeds from Termination of Interest Rate Swaps 23.5
Distributions to Noncontrolling Interests   (2.2 )   (8.6 )
Net Cash Used in Financing Activities (136.7 ) (218.6 )
 
Effects of Changes in Exchange Rates on Cash and Cash Equivalents   3.1     0.7  
 
NET INCREASE IN CASH AND CASH EQUIVALENTS 118.1 165.7
 
CASH AND CASH EQUIVALENTS:
Beginning of Period   840.3     595.6  
End of Period $ 958.4   $ 761.3  

           
MEAD JOHNSON NUTRITION COMPANY
 
SUPPLEMENTAL FINANCIAL INFORMATION
(Dollars in millions)
(UNAUDITED)
% Change Due to
Three Months Ended September 30, Foreign
2012 2011 % Change Volume Price Exchange
Net Sales
Asia/Latin America $ 639.9 $ 636.1 1 % -5 % 8 % -2 %
North America/Europe   281.4     297.8   -6 % -7 % 3 % -2 %
Total $ 921.3   $ 933.9   -1 % -5 % 6 % -2 %
 
Earnings Before Interest and Income Taxes
Asia/Latin America $ 190.7 $ 198.4 -4 %
North America/Europe 55.6 71.9 -23 %
Corporate and Other   (63.1 )   (68.6 ) 8 %
Total $ 183.2   $ 201.7   -9 %
 
 
 
 
% Change Due to
Nine Months Ended September 30, Foreign
2012 2011 % Change Volume Price Exchange
Net Sales
Asia/Latin America $ 2,036.4 $ 1,824.6 12 % 5 % 8 % -1 %
North America/Europe   883.8     941.1   -6 % -9 % 4 % -1 %
Total $ 2,920.2   $ 2,765.7   6 % 1 % 6 % -1 %
 
Earnings Before Interest and Income Taxes
Asia/Latin America $ 707.2 $ 625.0 13 %
North America/Europe 163.9 251.2 -35 %
Corporate and Other   (190.8 )   (248.2 ) 23 %
Total $ 680.3   $ 628.0   8 %

Non-GAAP Financial Measures

This news release contains non-GAAP financial measures, including non-GAAP EBIT, earnings and earnings per share information. The items included in GAAP measures, but excluded for the purpose of determining non-GAAP EBIT, earnings and earnings per share, are IT separation and other costs (Specified Items). In addition, other items include the tax impact on Specified Items. Non-GAAP EBIT, earnings and earnings per share information adjusted for these items is an indication of the company’s underlying operating results and intended to enhance an investor’s overall understanding of the company’s financial performance. In addition, this information is among the primary indicators the company uses as a basis for evaluating company performance, setting incentive compensation targets, and planning and forecasting of future periods. This information is not intended to be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Tables that reconcile GAAP to non-GAAP disclosure follow:

           
MEAD JOHNSON NUTRITION COMPANY
 
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(Dollars in millions, except per share data)
(UNAUDITED)
 
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012 and 2011
 
Earnings Before Interest Net Earnings Attributable Earnings per Common
and Income Taxes to Shareholders Share - Diluted
2012 2011 2012 2011 2012 2011
GAAP results $ 183.2 $ 201.7 $ 140.3 $ 144.7 $ 0.69 $ 0.70
Specified Items: (1)
IT and other separation costs (2) 4.9 21.1
Gain on sale of certain non-core intangible assets (3) (5.5 ) -
Severance and other costs (3) 8.1 0.2
Legal, settlements and related costs (2,3)   0.2     3.2
Specified Items before income taxes 7.7 24.5 7.7 24.5 0.04 0.12
Income tax impact on items above   (3.2 )   (8.2 )   (0.02 )   (0.04 )
Non-GAAP results $ 190.9   $ 226.2 $ 144.8   $ 161.0     0.71     0.78  
 
 
 
 
 
 
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 and 2011
 
Earnings Before Interest Net Earnings Attributable Earnings per Common
and Income Taxes to Shareholders Share - Diluted
2012 2011 2012 2011 2012 2011
GAAP results $ 680.3 $ 628.0 $ 470.3 $ 422.9 $ 2.29 $ 2.06
Specified Items: (1)
IT and other separation costs (2) 12.0 61.2
Gain on sale of certain non-core intangible assets (3) (5.5 ) -
Severance and other costs (3) 9.6 0.2
Legal, settlements and related costs (2,3)   3.1     4.4
Specified Items before income taxes 19.2 65.8 19.2 65.8 0.09 0.32
Income tax impact on items above   (6.1 )   (22.2 )   (0.02 )   (0.11 )
Non-GAAP results $ 699.5   $ 693.8 $ 483.4   $ 466.5   $ 2.36   $ 2.27  
 
(1) All Specified Items are included in the Corporate and Other segment
(2) Included in Selling, General and Administrative expenses
(3) Included in Other Expenses/(Income)-net




6 of 7

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,719.00 +33.27 0.19%
S&P 500 2,052.75 +4.03 0.20%
NASDAQ 4,701.8670 +26.1550 0.56%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs