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Mead Johnson Nutrition Reports Third Quarter Constant Dollar Sales Growth Of 16 Percent; Raises Full-Year Guidance

Mead Johnson Nutrition Company (NYSE: MJN) today announced its financial results for the quarter ended September 30, 2013.

  • Third quarter sales of $1,047 million increased 14 percent from $921 million in the same quarter a year ago. On a constant dollar basis, sales were up 16 percent. Constant dollar sales grew 21 percent in the Asia/Latin America segment and two percent in the North America/Europe segment.
  • Four percent of the company's sales growth was due to an easier comparison attributed to distributors' inventory reductions in China during the prior-year quarter. In addition, price increases in Venezuela and Argentina that helped mitigate high inflation in these markets contributed two percent to company growth.
  • GAAP net earnings in the third quarter of 2013 were $0.79 per diluted share, compared to $0.69 per diluted share a year ago. China's National Development and Reform Commission (“NDRC”) assessed an administrative penalty in connection with its antitrust review, which impacted third quarter net earnings by $0.11 per diluted share.
  • Non-GAAP (1) net earnings were $0.91 per diluted share for the third quarter of 2013, compared to $0.71 per diluted share in the prior-year quarter, driven by higher sales and gross margin, partially offset by a higher effective tax rate and higher demand-generation investments.
  • Full-year GAAP EPS guidance is expected to be in the range of $3.12 to $3.19. Specified Items are estimated at $0.18 per diluted share, which includes the administrative penalty related to the China antitrust review. Full-year non-GAAP EPS is now expected to be in the range of $3.30 to $3.37, an increase from $3.22 to $3.30.

“We delivered record EPS driven by double-digit sales growth while continuing near record level demand-generation investments,” said Chief Executive Officer Kasper Jakobsen. “Sales growth was strong in all regions, with share gains in most markets. Strong double-digit growth was driven by higher volumes, most notably in China/Hong Kong. In the North America/Europe segment, excellent share gains in Canada and higher non-WIC (2) market share in the U.S. were somewhat offset by lower U.S. category consumption. Our strong year-to-date reported sales growth of eight percent has led us to increase sales and earnings guidance for the full year.”

(1) For the definition of Specified Items and a reconciliation of GAAP and non-GAAP results, see “Non-GAAP Financial Measures” on the schedule titled “Supplemental Financial Information,” included in this release. (2) WIC=United States Department of Agriculture Special Supplemental Nutrition Program for W omen, I nfants, and C hildren

Third Quarter Results

Sales for the third quarter of 2013 totaled $1,046.8 million, up 14 percent from $921.3 million in the prior-year quarter. Sales benefited 12 percent from volume and four percent from price, reduced by two percent from foreign exchange. Gross margin for the third quarter of 2013 was 65.1 percent, up 390 basis points from 61.2 percent in the third quarter of 2012. The improvement was in both the Asia/Latin America and the North America/Europe segments. Higher gross margin was driven by pricing, productivity gains and favorable manufacturing volumes.

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