Thursday, May 10, 2012

Missouri Corporate 2011 Annual Earnings Up 21% Over 2010

I found 36 Corporations, headquartered in Missouri, which file with the SEC, and which had Pretax Income or Pretax Loss of more than $100 mil in any of the most recent three fiscal years.

These 36 Missouri Corps, generated Total Pretax Earnings in 2011 of $18.0 bil, up a very robust 21% over 2010, and up 36% over such amount two years ago in 2009.

In deriving Pretax Income, I start with Pretax Income under Generally Accepted Accounting Principles (GAAP), and then exclude several clearly unusual very large items relative to Pretax Income, such as Asset Impairments, Gains and Losses on both Debt Retirements and Asset Dispositions, and Special Litigation Charges and Gains.  I also am excluding from Pretax Income or Loss Express Scripts’ Acquisition Transaction Costs and Financing Fees on Bridge Loans related to its Acquisitions, MEMC Electronic Materials’ Restructuring Charges, and Patriot Coal’s Sales Contract Liability Accretion Gains related to an Acquisition.

Missouri citizens should be extremely proud of the operating performance of their fine Missouri Corporations, particularly in 2011. 

Clearly, the Obama Administration has created an economic environment that has permitted these Missouri Corporations to flourish. 

Missouri is very fortunate to have as one of its US Senators, Claire McCaskill, who fights as hard for her Missouri companies of all sizes as any US Senator.  And likewise for these strong advocates for Missouri companies in the US House: Russ Carnahan, Lacy Clay and Emanuel Cleaver.

You know when there are so many unreasonably belligerent TV attack ads against Claire McCaskill, funded by undisclosed out-of-state Super PACs, that she is doing a great job for Missouri’s 99%, like she did when she fought so hard recently to eliminate Big Oil Tax Subsidies.

I think the only way to ensure that these fine Missouri Corps will be able to generate Total Pretax Earnings growth for the remainder of 2012 of at least 15%, and at the same time, also result in very robust US job creation, is for the US Congress to immediately pass the following economic initiatives, which should be particularly helpful to Missouri’s many manufacturing companies:

  • Extend the 100% first-year tax expensing of equipment and computer software investments made in the remainder of 2012.  The CBO-scored cost should not be very significant.
  • Substantially accelerate first-year tax depreciation on all new building and building remodeling investments made in the remainder of 2012, and rein in its CBO-scored cost, by lowering tax depreciation in years 2 through 10.
  • Pass the Research and Experimentation Tax Credit for businesses for all 2012 expenditures, but substantially enhance it, especially for smaller businesses, and simplify it.
  • Give small businesses, creating US jobs in 2012, a 10% tax credit.
  • Give businesses a 20% income tax credit for the expenses of moving operations from overseas back to the US.  And pay for this by removing income tax deductions businesses now get for moving their production from the US to overseas.  This one's pretty cool, where the pay-for is also positive to the US job count.
  • Permit US taxpayers, who have their mortgage loans financed by either Fannie Mae or Freddie Mac, to have their mortgages refinanced at the current lower prevailing market interest rates.  
  • Pass the substantial amount of school construction infrastructure fix ups for K-12 Schools and for Community Colleges, which is in the American Jobs Act (AJA).  And all of these school investments should occur in 2012, and mostly from now through the end of the summer of 2012.

The above first two will result in explosive US economic stimulation, particularly when viewed in light of future business income tax reform, which should result in a much lower business income tax rate in 2013 and going forward.

Thus, businesses will get both the 100% first-year tax depreciation on equipment purchases and the substantially accelerated first-year tax deprecation on building investments in 2012 at a business income tax rate reduction which is much higher in 2012, and then the future earnings from these equipment and building investments will generate post 2012 earnings streams from these investments which are taxed at a much lower post tax reform business income tax rate.  Wow, now that is bold economic stimulation.

This above bold economic stimulation effectively works like a back-door, stealth investment tax credit in 2012, due to the expected future reduction in business income tax rates starting in 2013 under any reasonable business tax reform. 

The investment tax credit was used first by President Jack Kennedy in the early 1960s to get the US out of a deep recession.  And President Lyndon Johnson also used it after he took over.  The end result was US real GDP growth which averaged 4.85% from 1960 to 1968.  And the US unemployment rate dropped substantially while this investment tax credit was in effect during the 1960s

This kind of very robust US real GDP growth, markedly north of 4%, and for an extended period of time, is precisely what the US economy now needs.  And this very strong GDP growth is by far the best way to substantially reduce the massive US Deficit.  

But these explosive economic benefits to US businesses from this accelerated first-year tax depreciation does not necessarily mean that there will be resultant substantial US job creation from it.

Thus, I would make sure that the largest of the US Corps…..say the top 50 or so…..would get these first-year accelerated tax depreciation benefits in 2012 only if they add a sufficient number of US full-time workers in 2012.

And similar economic benefits will result from the Research and Experimentation Expenditures.  Not only will businesses get higher Research Tax Credits in 2012 for making investments in 2012, but they will also get 2012 tax deductions from these Research investments made in 2012 at the higher business income tax rate in 2012, and then subsequently get the future earnings stream from these Research investments taxed at the lower post tax reform business income tax rate that will be applicable starting in 2013 and going forward.

Below here is the Missouri headquarters location of each of these 36 Missouri Corporations. 

Missouri Corporation Missouri HQs


Emerson Electric St Louis
Monsanto St Louis
Express Scripts St Louis
Peabody Energy St Louis
Reinsurance Group Chesterfield
O'Reilly Automotive Springfield
H&R Block Kansas City
Sigma Aldrich St Louis
Jones Financial Companies St Louis
Cerner Kansas City
Kansas City Southern Kansas City
Energizer Holdings St Louis
Ralcorp St Louis
Amdocs Chesterfield
Commerce Bancshares Kansas City
Solutia St Louis
DST Systems Kansas City
Arch Coal St Louis
Panera Bread St Louis
Jack Henry Monett
Leggett & Platt Carthage
Olin Clayton
Centene St Louis
UMB Financial Kansas City
Belden St Louis
Stifel Financial St Louis
Graybar Electric St Louis
Charter Communications St Louis
MEMC Electronic Materials St Peters
Patriot Coal St Louis


Late Additions  
US Premium Beef Kansas City
Entertainment Properties Trust Kansas City
Inergy LP Kansas City
Novation Companies Kansas City
Furniture Brands Intl St Louis
First Banks St Louis


And below here is the Pretax Income (PTI) and Pretax Loss (PTL) of these 36 Missouri Corps for each of the most recent three years, with the most recent fiscal year ends ranging from April 2011 to December 2011.






Obama





Bump




PTI(L) PTI(L)

1 Year 2 Year

PTI(L) PTI(L) PTI(L) % %

2011 2010 2009 Change Change
mils $s mils $s mils $s

Missouri




Emerson Electric 3,631 2,879 2,450 26% 48%
Monsanto 2,374 1,490 2,918 59% -19%
Express Scripts 2,192 1,909 1,437 15% 53%
Peabody Energy 1,374 1,142 629 20% 118%
Reinsurance Group 834 864 592 -3% 41%
O'Reilly Automotive 816 689 497 18% 64%
H&R Block 677 784 839 -14% -19%
Sigma Aldrich 640 544 490 18% 31%
Jones Financial Cos 482 393 269 23% 79%
Cerner 470 362 293 30% 60%
Kansas City Southern 455 357 102 27% 346%
Energizer Holdings 406 543 445 -25% -9%
Ralcorp 400 354 350 13% 14%
Amdocs 385 366 418 5% -8%
Commerce Bancshares 381 318 242 20% 57%
Solutia 297 211 121 41% 145%
DST Systems 274 356 355 -23% -23%
Arch Coal 239 135 25 77% 856%
Panera Bread 220 180 140 22% 57%
Jack Henry 208 181 157 15% 32%
Leggett & Platt 206 256 198 -20% 4%
Olin 198 77 210 157% -6%
Centene 175 154 138 14% 27%
UMB Financial 146 127 120 15% 22%
Belden 140 99 39 41% 259%
Stifel Financial 139 0 120 NM 16%
Graybar Electric 133 69 63 93% 111%
Charter Communications 73 143 78 -49% -6%
MEMC Electronic Materials (128) (13) (47) -885% -172%
Patriot Coal (206) (217) (179) 5% -15%





Total all 30 17,631 14,752 13,509 20% 31%

Late Additions




US Premium Beef LLC 249 239 166 4% 50%
Entertainment Properties Trust 127 115 34 10% 274%
Inergy LP 50 59 107 -15% -53%
Novation Companies 5 (9) (182) 156% 103%
Furniture Brands Intl (38) (48) (137) 21% 72%
First Banks (43) (190) (299) 77% 86%






Grand Total all 36 17,981 14,918 13,198 21% 36%