Mead Johnson Reports Solid First Quarter Earnings; Delivers Five Percent Constant Dollar Sales Growth; and Reaffirms Annual

  Mead Johnson Reports Solid First Quarter Earnings; Delivers Five Percent
  Constant Dollar Sales Growth; and Reaffirms Annual Guidance

Business Wire

GLENVIEW, Ill. -- April 25, 2013

Mead Johnson Nutrition Company (NYSE: MJN) today announced its financial
results for the quarter ended March 31, 2013.

  *First quarter sales of $1,037.9 million increased five percent, on both a
    reported and constant dollar basis, up from $986.6 million in the same
    quarter a year ago. This sales increase was driven by seven percent growth
    in the Asia/Latin America segment and one percent growth in the North
    America/Europe segment.
  *Excluding the impact of several non-core businesses exited in late 2012,
    sales growth in the first quarter of 2013 was six percent compared to the
    same quarter a year ago. On the same basis, the North America/Europe
    segment, which included most of the non-core businesses, grew by five
    percent.
  *GAAP net earnings of $0.85 per diluted share for the first quarter of 2013
    were up from $0.80 per diluted share a year ago.
  *Non-GAAP ^(1) net earnings of $0.85 per diluted share for the first
    quarter of 2013 increased from $0.82 per diluted share in 2012.
  *Earnings benefited from higher sales and a lower effective tax rate,
    partially offset by higher demand-generation investments and pension
    settlement expense.
  *Mead Johnson confirms its full-year GAAP EPS is expected to be in the
    range of $3.20 to $3.28. Excluding Specified Items,^(1) estimated at $0.02
    per diluted share, the full-year 2013 non-GAAP EPS is expected to be in
    the range of $3.22 to $3.30.

^(1) For the definition of Specified Items and a reconciliation of GAAP and
non-GAAP results, see “Non-GAAP Financial Measures” on the scheduled titled
“Supplemental Financial Information,” included in this release.

“We are pleased with our solid sales and earnings growth during the first
quarter,” said Chief Executive Officer Stephen W. Golsby. “Sales growth was
strong and broad-based across South Asia and Latin America. As expected, sales
in China were down compared to last year, given higher market share in the
first quarter of 2012, although we continued to deliver gains on a sequential
basis, with first quarter market share higher than in the fourth quarter of
2012. Hong Kong experienced particularly strong sales growth, which we believe
reflected heavy demand in anticipation of the March 1st implementation of a
new regulation limiting exports into China. We are maintaining a cautious
outlook on the ongoing impact, since retail demand in Hong Kong fell in March
as the new regulation took effect. In the North America/Europe segment, we
continued to make progress building non-WIC* market share in the United
States, which mitigated the impact of several non-core businesses exited in
2012 and lower category consumption. During the quarter, we made noticeably
higher demand-generation investments to drive sustainable growth. While
mindful of the added uncertainty created by the new Hong Kong regulation, we
remain confident in the strong growth of our business and continue to expect
core sales to grow in the range of seven to eight percent in 2013.”

*WIC = United States Department of Agriculture Special Supplemental Nutrition
Program for Women, Infants, and Children

First Quarter Results

Sales for the first quarter of 2013 totaled $1,037.9 million, up five percent
from $986.6 million a year ago. Sales benefited six percent from price, offset
by a one percent decline in volume. Earnings before interest and income taxes
(“EBIT”) totaled $249.1 million, up from $248.8 million in the prior-year
quarter. Higher demand-generation investments and pension settlement expense
offset the benefit of higher sales.

Net earnings attributable to shareholders totaled $172.5 million, or $0.85 per
diluted share, in the first quarter of 2013, compared to $164.2 million, or
$0.80 per diluted share, in the prior-year quarter. The effective tax rate
(“ETR”) was 25.7 percent in the first quarter, compared to 27.5 percent a year
ago. The decrease in the ETR was primarily attributable to management's
assertion that certain current-year foreign earnings and profits are
permanently invested abroad.

On a non-GAAP basis, which excludes Specified Items, net earnings attributable
to shareholders totaled $174.0 million, or $0.85 per diluted share, for the
first quarter of 2013, compared to $167.4 million, or $0.82 per diluted share,
for the same quarter a year ago.

First Quarter Segment Results

The Asia/Latin America segment reported sales of $755.3 million for the first
quarter of 2013, up seven percent from $707.3 million in the first quarter of
2012. Sales increased six percent from price and one percent from volume.
Sales volume benefited from the Argentine acquisition in March 2012 and
category growth combined with increased market share throughout the segment.
These factors were offset by lower market share in China compared to the
year-ago quarter. For Hong Kong, first quarter sales benefited from higher
demand in anticipation of the new export regulation. EBIT for the Asia/Latin
America segment totaled $268.4 million in the first quarter of 2013, compared
to $280.9 million for the same quarter a year ago. The lower EBIT was driven
by higher demand-generation investments.

The North America/Europe segment reported sales of $282.6 million for the
first quarter of 2013, up one percent from $279.3 million in the first quarter
of 2012. Sales benefited five percent from price offset by a four percent
decline in volume. The volume decline was entirely driven by the elimination
of several non-core businesses. Higher non-WIC market share in the United
States, along with share gains in Canada, were offset by lower category
consumption in the U.S. EBIT for the North America/Europe segment totaled
$51.3 million in the first quarter of 2013, up 61 percent from $31.8 million
in the first quarter a year ago. The increase was mainly the result of
improved gross margins from pricing gains and lower U.S. dairy costs and the
timing of demand-generation spending.

Corporate and Other expenses increased primarily from higher operating
expenses and pension settlement expense, which is reported in Other Expenses
in the consolidated statement of earnings.

Outlook for 2013

“While still cautious about China/Hong Kong, we remain confident in our 2013
performance,” said Mr. Golsby. “Therefore, we confirm that annual constant
dollar sales growth from core operations remains in line with previous
guidance expectations of seven percent to eight percent. Including the impact
of the discontinued non-core businesses, full-year constant dollar sales
growth is expected to be in the range of six percent to seven percent.
Improved annual gross margins are expected to fund continued growth in
demand-generation investments. Non-GAAP EPS is expected to be in the range of
$3.22 to $3.30.”

Conference Call Scheduled

Mead Johnson will host a conference call at 8:30 a.m. CDT today, during which
company executives will review first quarter financial results and respond to
questions from analysts and investors. The call will be broadcast over the
Internet at www.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 (866)
318-8618, pass code: Mead Johnson.Callers outside of North America should
call +1-617-399-5137 to be connected. A replay of the conference call will be
available through midnight CDT Thursday, May 2, 2013, by calling (888)
286-8010 or outside of North America +1-617-801-6888, pass code: 98251622. The
replay will also be available at www.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 forward-looking
statements may be identified by the fact they use words such as “should,”
“expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,”
“intend,” “plan,” “believe” and other words and terms of similar meaning and
expression. Such statements are likely to relate to, among other things, a
discussion of goals, plans and projections regarding financial position,
results of operations, cash flows, market position, product development,
product approvals, sales efforts, expenses, capital expenditures, performance
or results of current and anticipated products and the outcome of
contingencies such as legal proceedings and financial results. Forward-looking
statements can also be identified by the fact that they do not relate strictly
to historical or current facts. Such forward-looking statements are based on
current expectations that involve inherent 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 effect of regulatory restrictions related to
the company's products; (4) the adverse effect of commodity costs; (5)
increased competition from branded, private label, store and economy-branded
products; (6) the effect of an economic downturn on consumers’ purchasing
behavior and customers’ ability to pay for product; (7) inventory reductions
by customers; (8) the adverse effect of changes in foreign currency exchange
rates; (9) the effect of changes in economic, political and social conditions
in the markets where we operate; (10) changing consumer preferences; (11) the
possibility of changes in the WIC program, or participation in WIC; (12)
legislative, regulatory or judicial action that may adversely affect the
company’s ability to advertise its products or maintain product margins; and
(13) the ability to develop and market new, innovative products. For
additional information regarding these and other factors, see the company’s
filings with the United States Securities and Exchange Commission (the “SEC”),
including its most recent Annual Report on Form 10-K, which filings are
available upon request from the SEC or at www.meadjohnson.com. The company
cautions readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made. 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, go to www.meadjohnson.com.

                                                
MEAD JOHNSON NUTRITION COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars and shares in millions, except per share data)
(UNAUDITED)
                                                  
                                                  Three Months Ended March 31,
                                                  2013              2012
NET SALES                                         $   1,037.9        $  986.6
Cost of Products Sold                             390.9             373.5
GROSS PROFIT                                      647.0              613.1
Expenses:
Selling, General and Administrative               217.0              210.4
Advertising and Promotion                         144.5              125.8
Research and Development                          24.2               22.5
Other Expenses                                    12.2              5.6
EARNINGS BEFORE INTEREST AND INCOME TAXES         249.1              248.8
                                                                     
Interest Expense                                  14.2              14.5
EARNINGS BEFORE INCOME TAXES                      234.9              234.3
                                                                     
Provision for Income Taxes                        60.4              64.5
NET EARNINGS                                      174.5              169.8
Less Net Earnings Attributable to                 2.0               5.6
Noncontrolling Interests
NET EARNINGS ATTRIBUTABLE TO SHAREHOLDERS         $   172.5         $  164.2
Earnings per Share—Basic
Net Earnings Attributable to Shareholders         $   0.85          $  0.80
Earnings per Share—Diluted
Net Earnings Attributable to Shareholders         $   0.85           $  0.80
Dividends Declared per Share                      $   0.34           $  0.30

                                                       
MEAD JOHNSON NUTRITION COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in millions)
(UNAUDITED)
                                                         
                                                         March 31,
                                                         2013       2012
NET EARNINGS                                             $ 174.5     $ 169.8
                                                                     
OTHER COMPREHENSIVE INCOME/(LOSS)
Foreign Currency Translation Adjustments
Translation Adjustments                                  (34.7   )   22.9
Tax Benefit/(Expense)                                    3.2         (6.4    )
Deferred Gains/(Losses) on Derivatives Qualifying as
Hedges
Deferred (Losses) on Derivatives Qualifying as Hedges    (4.4    )   (6.4    )
for the Period
Reclassification Adjustment for (Gains)/Losses           3.0         (1.0    )
Included in Net Earnings
Tax Benefit                                              0.5         2.2
Pension and Other Postretirement Benefits
Deferred Gains/(Losses) on Pension and Other             1.0         (0.1    )
Postretirement Benefits
Reclassification Adjustment for (Gains)/Losses           8.9         1.8
Included in Net Earnings
Tax Benefit/(Expense)                                    (3.5    )   0.8     
OTHER COMPREHENSIVE INCOME/(LOSS)                        (26.0   )   13.8    
                                                                     
COMPREHENSIVE INCOME                                     148.5      183.6   
                                                                     
Less Comprehensive Income Attributable to                (3.2    )   5.6     
Noncontrolling Interests
                                                                     
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHAREHOLDERS        $ 151.7    $ 178.0 

                                                          
MEAD JOHNSON NUTRITION COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in millions, except per share data)
(UNAUDITED)
                                                             
                                            March 31, 2013   December 31, 2012
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents                   $  1,017.2       $   1,042.1
Receivables – net of allowances of $6.8     413.4            364.6
and $7.6, respectively
Inventories                                 444.0            435.9
Deferred Income Taxes – net of valuation    83.8             86.4
allowance
Income Taxes Receivable                     31.2             26.0
Prepaid Expenses and Other Assets           66.3            60.0          
Total Current Assets                        2,055.9          2,015.0
Property, Plant, and Equipment – net        716.8            689.9
Goodwill                                    228.2            270.6
Other Intangible Assets – net               122.6            129.9
Deferred Income Taxes – net of valuation    21.7             24.5
allowance
Other Assets                                130.3           128.3         
TOTAL                                       $  3,275.5      $   3,258.2   
LIABILITIES AND EQUITY/(DEFICIT)
CURRENT LIABILITIES:
Short-term Borrowings                       $  103.1         $   161.0
Accounts Payable                            511.7            508.5
Dividends Payable                           69.4             61.3
Note Payable                                19.1             26.0
Accrued Expenses                            201.5            220.4
Accrued Rebates and Returns                 319.6            314.8
Deferred Income – current                   28.3             36.1
Income Taxes – payable and deferred         64.2            41.8          
Total Current Liabilities                   1,316.9          1,369.9
Long-Term Debt                              1,521.1          1,523.2
Deferred Income Taxes – noncurrent          17.3             15.9
Pension, Postretirement and                 186.2            188.8
Postemployment Liabilities
Other Liabilities                           106.0           95.1          
Total Liabilities                           3,147.5          3,192.9
COMMITMENTS AND CONTINGENCIES
                                                             
REDEEMABLE NONCONTROLLING INTEREST          39.3             36.3
                                                             
EQUITY/(DEFICIT)
Shareholders’ Equity
Common Stock, $0.01 par value: 3,000
authorized, 206.4 and 206.0 issued,         2.1              2.1
respectively
Additional Paid-in/(Distributed) Capital    (661.3      )    (676.6        )
Retained Earnings                           1,218.6          1,124.8
Treasury Stock – at cost                    (276.7      )    (244.6        )
Accumulated Other Comprehensive Loss        (207.8      )    (187.0        )
Total Shareholders’ Equity/(Deficit)        74.9             18.7
Noncontrolling Interests                    13.8            10.3          
Total Equity/(Deficit)                      88.7            29.0          
TOTAL                                       $  3,275.5      $   3,258.2   

                                                                                                        
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        Income (Loss)   Interests     (Deficit)    Interest
Balance as of
January 1,       $ 2.1    $  (676.6  )    $ 1,124.8    $ (244.6 )   $   (187.0  )   $  10.3      $ 29.0      $   36.3  
2013
Stock-based
Compensation               15.3                          (9.1     )                                 6.2
Awards
Treasury Stock                                           (23.0    )                                 (23.0    )
Acquired
Distributions
to                                                                                    —             —
Noncontrolling
Interests
Cash Dividends                             (69.0     )                                              (69.0    )
Declared
Net Earnings                               172.5                                      1.7           174.2        0.3
Redeemable
Noncontrolling                             (9.7      )                                              (9.7     )   9.7
Interest
Accretion
Other
Comprehensive                                                     (20.8       )   1.8          (19.0    )   (7.0      )
Income (Loss)
Balance as of    $ 2.1    $  (661.3  )    $ 1,218.6    $ (276.7 )   $   (207.8  )   $  13.8      $ 88.7      $   39.3  
March 31, 2013
                                                                                                                 
Balance as of
January 1,       $ 2.1     $  (728.4  )    $ 770.0       $ (89.7  )   $   (133.1  )   $  11.1       $ (168.0 )   $   —
2012
Stock-based
Compensation               17.8                          (13.6    )                                 4.2
Awards
Treasury Stock                                           (17.2    )                                 (17.2    )
Acquired
Acquisition                                                                                                      30.2
Distributions
to                                                                                    —             —
Noncontrolling
Interests
Cash Dividends                             (61.3     )                                              (61.3    )
Declared
Net Earnings                               164.2                                      5.5           169.7        0.1
Other
Comprehensive                                                     13.8           —            13.8        
Income (Loss)
Balance as of    $ 2.1    $  (710.6  )    $ 872.9      $ (120.5 )   $   (119.3  )   $  16.6      $ (58.8  )   $   30.3  
March 31, 2012

                                                     
MEAD JOHNSON NUTRITION COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(UNAUDITED)
                                                       
                                                       March 31,
                                                       2013         2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings                                           $ 174.5       $ 169.8
Adjustments to Reconcile Net Earnings to Net Cash
Provided by Operating Activities:
Depreciation and Amortization                          20.1          18.5
Other                                                  30.3          28.0
Changes in Assets and Liabilities                      (14.4     )   (196.0  )
Pension and Other Postretirement Benefits              (2.6      )   (0.9    )
Contributions
Net Cash Provided by Operating Activities              207.9         19.4
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for Capital Expenditures                      (77.5     )   (30.4   )
Proceeds from Sale of Property, Plant and Equipment    0.8           0.5
Investment in Other Companies                          (0.7      )   —
Acquisition                                            —            (106.1  )
Net Cash Used in Investing Activities                  (77.4     )   (136.0  )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Short-term Borrowings                    3.1           30.0
Repayments of Short-term Borrowings                    (61.0     )   (30.0   )
Repayments of Notes Payable                            (8.4      )   —
Payments of Dividends                                  (60.9     )   (53.0   )
Stock-based-compensation-related Proceeds and Excess   5.2           11.5
Tax Benefits
Purchases of Treasury Stock                            (32.1     )   (29.6   )
Net Cash Used in Financing Activities                  (154.1    )   (71.1   )
Effects of Changes in Exchange Rates on Cash and       (1.3      )   8.1     
Cash Equivalents
NET DECREASE IN CASH AND CASH EQUIVALENTS              (24.9     )   (179.6  )
CASH AND CASH EQUIVALENTS:
Beginning of Period                                    1,042.1      840.3   
End of Period                                          $ 1,017.2    $ 660.7 

                                                 
MEAD JOHNSON NUTRITION COMPANY
SUPPLEMENTAL FINANCIAL INFORMATION
(Dollars in millions)
(UNAUDITED)
                                                                           
During the fourth quarter of 2012, the company implemented a change in its
organizational structure involving the transfer of its Puerto Rican operations
from North America to Latin America. This change did not impact Europe or Asia
and did not have a material impact on the assets of North America or Latin
America. Segment information, for all periods presented, has been revised to
be consistent with the new basis of presentation. See our fourth quarter 2012
Earnings Release for the revised results.
                                                                           
                  Three Months Ended                 % Change Due to
                  March 31,
Net Sales         2013         2012        %        Volume  Price  Foreign
                                            Change                    Exchange
Asia/Latin        $ 755.3       $ 707.3     7   %    1   %    6  %    —    %
America
North             282.6        279.3      1   %    (4  )%   5  %    —    %
America/Europe
Net Sales         $ 1,037.9    $ 986.6    5   %    (1  )%   6  %    —    %
                                                                      
                                                                      
Earnings Before
Interest and
Income Taxes
Asia/Latin        $ 268.4       $ 280.9     (4  )%
America
North             51.3          31.8        61  %
America/Europe
Corporate and     (70.6     )   (63.9   )   (10 )%
Other
EBIT              $ 249.1      $ 248.8    —   %
                                                                      

Non-GAAP Financial Measures

This news release contains non-GAAP financial measures, including non-GAAP
EBIT, earnings and earnings per share information. Specified Items, listed in
the table below, are items included in GAAP measures, but excluded for the
purpose of determining non-GAAP EBIT, earnings and earnings per share.
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)
        
                 Three Months ended March 31,
                 Earnings Before        Net Earnings           Earnings per
                 Interest                Attributable            Common
                 and Income Taxes        to Shareholders         Share - Diluted
                 2013       2012        2013       2012        2013      2012
GAAP Results     $ 249.1     $ 248.8     $ 172.5     $ 164.2     $ 0.85     $ 0.80
Specified
Items: ^ (1)
IT and other
separation       —           1.7
costs ^(2)
Severance and
other costs      1.4         1.0
^(3)
Legal,
settlements      0.2        1.5     
and related
costs ^(2,3)
Specified
Items before     1.6         4.2         1.6         4.2         —          0.02
income taxes
Income tax
impact on                                (0.1    )   (1.0    )   —         —
items above
Non-GAAP         $ 250.7    $ 253.0    $ 174.0    $ 167.4    $ 0.85    $ 0.82
Results
                                                                              
^(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-net

Contact:

Mead Johnson Nutrition Company
Investors:
Kathy MacDonald, (847) 832-2182
kathy.macdonald@mjn.com
or
Media:
Christopher Perille, (847) 832-2178
chris.perille@mjn.com
 
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