Included in these 16 Largest Indiana Corps are two health care giants, Eli Lilly and WellPoint, which comprised 58% of the Total Pretax Income in 2011 of all of the 16 Largest Indiana Corps combined.
Due in part to the positive health care cost-cutting initiatives in the new Affordable Health Care Act, the earnings growth of these two huge health care giants dropped off the cliff in 2011, with Eli Lilly's 2011 Pretax Income being precisely flat with that of two years ago, and WellPoint's 2011 Pretax Income being down 14% from 2009. But US citizens shouldn't be feeling too sorry for WellPoint, since its Core Earnings Per Share, the driver of its stock price and the major compensation component of many of its executives, increased by 15% in the most recent two years, while its Pretax Income was decreasing by 14%.....oh, the mathematical magic of using its insurance premiums received to buy back tons of its own common stock, thereby pumping up its Earnings Per Share due to the resultant lower common share denominator.
US citizens do owe Health and Human Services Secretary Kathleen Sebelius a great deal of gratitude for her accomplishments here in helping to bend down the long-term US health care cost curve.
The remaining 14 Largest Indiana Corps, led by the very well run Cummins, had their Total Pretax Income in 2011 increase by an off-the-charts 148% over that of two years ago in 2009.
Now I want to focus on the Smaller Corps, filing with the SEC. In an earlier post, I found 29 Indiana headquartered Smaller Corps filing with the SEC, which had Pretax Income or Pretax Loss of $20 mil or more in any of the most recent three years, and which weren't included in the 16 Largest Indiana Corps. Thus, these 29 Smaller Indiana Corps also did not have Pretax Income or Pretax Loss of $100 mil or more in any of the most recent three years.
How did they do? Well, these 29 Smaller Indiana Corps generated total earnings growth in the most recent two years of an even more substantially off-the-charts 282%.
In this post, I am drilling down and focusing on even Smaller Indiana Corps filing with the SEC. Thus, I decided to bring the earnings threshold down from $20 mil to $5 mil.
I found 49 Indiana headquartered Smaller Corps filing with the SEC, which had Pretax Income or Pretax Loss of $5 mil or more in any of the most recent three years, and which weren't included in the 16 Largest Indiana Corps. Thus, these 49 Smaller Indiana Corps also did not have Pretax Income or Pretax Loss of $100 mil or more in any of the most recent three years.
How did they do? Well, these 49 Smaller Indiana Corps generated total earnings growth in the most recent two years of an even more substantially off-the-charts 525%.
Clearly, Indiana citizens should be very proud of their many superb Indiana companies.
And yeah, the Obama Administration created a very robust US economic environment, which permitted the overwhelming majority of these Indiana companies of all sizes to do just fantastically on the earnings front in the most recent two years.
But a second story here are the earnings results by year.
It is just incredible how much better the total earnings growth of both the 16 Largest and the 49 Smaller Indiana Corps was in 2010 over 2009, when the US House was under Moderate Democratic control, than it was in 2011 over 2010, when the US House was under Very Conservative Republican control, with Vice Presidential Candidate Paul Ryan, Eric Cantor, and Indiana's own twosome of Mike Pence and Dr. Larry Bucshon, being a handful of the key drivers of this Uncompromising, Very Conservative Republican Movement, which has such an extremely low approval rating in the eyes of US citizens.
The 2 Mega Health Care Indiana Corps.....Eli Lilly and WellPoint.....generated Total Pretax Income growth of 4% in 2010 over 2009, but these earnings then reversed course with a 9% total decline in 2011 from 2010.
The 14 Next Largest Indiana Corps, with Pretax Income of at least $100 mil, generated Total Pretax Income growth of 89% in 2010 over 2009. Then in 2011, this total earnings growth nearly dropped by two-thirds down to a much lower 31% over 2010.
And hitting the Trifecta, the 49 Smaller Indiana Corps, with Pretax Income of at least $5 mil, registered Total Pretax Income growth of an incredibly off-the-charts 299% in 2010 over 2009. Then in 2011, this total earnings growth dropped by nearly four-fifths to a substantially lower 56%.
And in the first half of 2012, the total earnings of the 16 Largest Indiana Corps actually declined by quite a bit from the first half of 2011.
So why is it that these Indiana Corps did so much better in 2010 than they did in both 2011 and in the first half of 2012? I think you need to look at the political situation.
In both years, the President was the same.....a Moderate Democrat.
However, the US House was under Uncompromising, Very Conservative Republican control in both 2011 and the first half of 2012, but under Democratic control in 2010, including a Democratic Moderate in Indiana's 8th District.....Brad Ellsworth.....and another Democratic Moderate in its 9th District.....Baron Hill.
Also, the US Senate had a lower Democratic majority in 2011 than it did in 2010. One Moderate Democrat reduction here in 2011 was Indiana's Evan Bayh.
And the State Governors and State Legislatures, all across the country, were clearly more Very Conservative Republican in 2011 than they were in 2010.
So clearly, there was a substantial shift nationally from Moderate Democratic control in 2010 to Very Conservative Republican control in 2011.
How could this change in political control make such a huge difference in Indiana State company earnings?
It is pretty clear to me that in 2010, a Moderate Democratic President, coupled most importantly with a US House in Democratic hands, but also having a US Senate in Democratic hands, and further with having more State Governors and State Legislatures in Moderate Democratic hands, did wonders for corporate earnings growth in 2010. With this political structure, economic stimulus, much needed targeted individual income tax cuts, very targeted business income tax stimulus and wise, carefully-vetted US Government investment spending, can occur on a robust scale. And this very strong economic stimulus was in full throttle starting in the 4Q 2009, and did Corporations ever reap the benefit of this by generating exceptionally strong profits.
The worse thing that can happen after a financial meltdown, and near depression, is a US government that just waits for the free markets to correct themselves.....a laissez-faire approach, so favored by so many Republicans. Fortunately for the country, the exact opposite to that wisely happened in 2009 and 2010.
But then in 2011 and the first half of 2012, the US government was unfortunately forced into a laissez-faire economic approach, due to an uncompromising Very Conservative US Congress stopping nearly every economic initiative of the Obama Administration. The focus of the US Congress was almost singularly on austerity, when the improving, but still clearly struggling, US economy was shouting out for more economic stimulus, wisely designed.
Thus, things stopped to a walk on the US economic front when the US House switched to Uncompromising, Very Conservative Republican control with the 2010 election, coupled with the US Senate Democratic majority rule being significantly reduced, and with many US States switching from Moderate Democratic Control to Very Conservative Republican Control.
Case in point is Business Income Tax Reform, which the Obama Administration strongly supports, and which nearly all Republicans say they are behind. If the President's Framework for Business Income Tax Reform, presented about six months ago, is strengthened by the US Congress and passed, I am pretty certain that all of the US economic problems, including US real GDP growth, US unemployment, US underemployment, and the US Deficit....would all be substantially improved, and on an ongoing sustainable basis over the long run.
However, the US House Ways and Means Committee must initiate the legislation on this critically needed Business Income Tax Reform. And what have they done so far? Pretty much nothing of substance. I'm not kidding. On the other hand, if the US House were under Democratic control, I am pretty certain that this Business Income Tax Reform would have gotten out of the US House Ways and Means Committee by now and been placed on the US House Floor.
Instead, the Uncompromising, Very Conservative Republicans in the US House, led by people like Paul Ryan, Eric Cantor, and the Indiana twosome of Mike Pence and Dr. Larry Bucshon, are focused on attempting to pass an extension of the much lower Bush income tax rates on the wealthy, which increases the US Deficit by roughly a trillion dollars over the next decade, and creates almost no US jobs. This continual off-focus approach to governing by the Uncompromising, Very Conservative Republicans in the US House shows that they are clearly unfit to be reelected, due to either their gross incompetence on US economic issues, or to their only be interested in governing for the top 1% of the country.
On the other hand, when the President is a Moderate Democrat and the US House is in Democratic control, economic initiatives move forward, and they clearly did very robustly in 2009 and 2010.....and did US businesses ever profit from this. And so did the US stock market, which has doubled in the most recent three and a half years. Corporate earnings drive stock prices.
So, just who are the losers from this lack of action on drastically needed US economic initiatives by these Republicans in the US House? Well, it's not just the unemployed, the underemployed, the dwindling middle class, and the people trying to get into the middle class. US Businesses were also big losers, by having their earnings growth substantially decelerate in 2011, and even more dramatically so in the first half of 2012.
So, how does the country get out of this horrible economic pickle?
Well, in Indiana, citizens would be best to elect Dave Crooks as its 8th District US House Representative, John Gregg as its State Governor, and Joe Donnelly as one of its US Senators. All three of these are as Democratically Moderate as you can get. On the other hand, their opponents.....Dr. Larry Bucshon, Mike Pence, and Richard Mourdock.....are all as Uncompromising, Very Conservative Republican as you can get.
In deriving Ongoing, Core 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, and Gains and Losses on both Debt Retirements and Asset Dispositions.
I use Pretax Income rather than After-tax Net Income, since so much of the change in effective income tax rates just happens due to financial engineering.
I excluded Corps in the Development Stage, and ones without significant enough Total Revenues.
Below here is the Ongoing, Core Pretax Income (PTI) and Pretax Loss (PTL) of these 16 Largest and 49 Smaller Indiana Corps for each of the most recent three years, along with the related percentage changes.
|US House||US House||Bump|
|mils $s||mils $s||mils $s||2010||2009||2009|
|All Indiana Corps|
|Big 2 Health Care|
|Total of both||9,955.0||10,987.4||10,560.3||-9%||4%||-6%|
|Next 14: PTI(L)> $100 Mil|
|Simon Property Group||Indianapolis||951.6||717.1||612.0||33%||17%||55%|
|Mead Johnson Nutrition||Evansville||815.8||705.7||668.1||16%||6%||22%|
|ITT Educational Services||Carmel||508.2||614.1||491.4||-17%||25%||3%|
|Steel Dynamics||Fort Wayne||424.3||226.3||(18.2)||87%||1343%||2431%|
|CNO Financial Group||Carmel||379.2||293.5||173.6||29%||69%||118%|
|KAR Auction Services||Carmel||143.5||129.5||34.3||11%||278%||318%|
|Total all Next 14 Largest Corps||7,334.9||5,603.8||2,957.3||31%||89%||148%|
|Old National Bancorp||Evansville||99.8||43.5||(7.4)||129%||688%||1449%|
|Vera Bradley||Fort Wayne||95.0||51.7||44.1||84%||17%||115%|
|1st Source||South Bend||73.8||60.5||31.5||22%||92%||134%|
|Calumet Specialty Products Partners||Indianapolis||70.2||40.8||34.3||72%||19%||105%|
|First Financial Corp||Terre Haute||51.6||40.0||25.2||29%||59%||105%|
|German American Bancorp||Jasper||28.0||19.0||16.2||47%||17%||73%|
|Mainsource Financial Group||Greensburg||27.6||15.0||4.5||84%||233%||513%|
|Cardinal Ethanol LLC||Union City||25.5||20.5||(1.0)||24%||2150%||2650%|
|Interactive Intelligence Group||Indianapolis||22.2||22.6||15.0||-2%||51%||48%|
|Horizon Bancorp||Michigan City||17.0||13.4||11.2||27%||20%||52%|
|Community Bank Shares||New Albany||9.5||8.8||(10.7)||8%||182%||189%|
|NorthWest lndiana Bancorp||Munster||6.6||6.0||1.7||10%||253%||288%|
|National Bank Indianapolis||Indianapolis||6.5||4.5||(1.1)||44%||509%||691%|
|First Savings Financial Group||Clarksville||5.7||3.4||(0.2)||68%||1800%||2950%|
|Tower Financial||Fort Wayne||5.1||4.1||(7.8)||24%||153%||165%|
|Kite Realty Group Trust||Indianapolis||1.1||(8.9)||3.3||112%||-370%||-67%|
|Bioanalytical Systems||West Lafayette||0.6||(3.0)||(5.2)||120%||42%||112%|
|Indiana Community Bancorp||Columbus||(4.2)||7.8||(8.0)||-154%||198%||48%|
|Chromcraft Revington||West Lafayette||(4.4)||(6.9)||(8.5)||36%||19%||48%|
|Commercial Barge Line||Jeffersonville||(27.3)||2.4||(6.9)||-1238%||135%||-296%|
|Baldwin & Lyons||Indianapolis||(45.3)||34.8||64.3||-230%||-46%||-170%|
|Total all 49 Smaller Corps||954.3||610.4||152.8||56%||299%||525%|