Monday, August 27, 2012

Indiana 8th Congressional District Corporate Earnings On Fire During the Obama Administration

I hear, and also read online, so many people, including many in the US Congress, and even Republican Presidential Candidate Mitt Romney, continually asserting that the Obama Administration has severely harmed US businesses.

I think the best way to objectively test whether US businesses have been severely harmed economically by the Obama Administration’s economic and other policies is to compare the earnings of these US businesses at the end of the previous Bush/Cheney Administration with their current earnings during the Obama Administration.

I have done this throughout the country by extensively reviewing the audited financial statements of more than 1,000 of these companies, which file with the SEC.  And clearly, the earnings of these companies have improved dramatically during the Obama Administration.

Let me localize this finding by focusing on all non-utility companies filing with SEC and which either have their headquarters in Indiana's 8th District or their operational headquarters there.  This 8th District is located in Southwestern Indiana, and has historically been labeled "The Bloody Eighth".

I found eleven non-utility Corporations which are either headquartered in Indiana’s 8th District, or have their operational headquarters there…eight in Evansville (Mead Johnson Nutrition, Old National Bancorp, Shoe Carnival, Berry Plastics, Escalade, Imperial Petroleum, Accuride and Springleaf Finance)…two in Jasper (German American Bancorp and Kimball International)…and one in Terre Haute (First Financial Corp).

These eleven Corporations combined had an externally audited, under generally accepted accounting principles (GAAP), Total After-tax Net Loss of $1,222.9 mil in 2008, the last year of the Bush/Cheney Administration, as compared with an audited under GAAP Total After-tax Net Income of $232.3 mil in 2011, thus an after-tax profit improvement of a staggering $1,455.2 mil in the first 3 years of the Obama Administration.  Yeah, that's more than a $1.45 bil profit improvement.  And that’s just for the eleven companies in one Indiana US House District.  Whew!

Below here is a breakdown of these audited under GAAP After-tax Earnings or Losses for each of these eleven Indiana 8th Congressional District companies filing with the SEC.  Most of these companies have a December fiscal year end (FYE).

FYE FYE Three Year

2011 2008 Net Income

Reported Reported (Loss)

Audited Audited Change

After-Tax After-Tax 2008-2011

Net Income Net Income Better

(Loss) (Loss) (Worse)

HQs mils of $s mils of $s mils of $s

Mead Johnson Nutrition Evansville 519.0 401.0 118.0
Old National Bancorp Evansville 75.5 62.5 13.0
First Financial Corp Terre Haute 37.2 24.8 12.4
Shoe Carnival Evansville 26.4 5.3 21.1
German American Bancorp Jasper 20.2 12.8 7.4
Kimball International Jasper 11.6 17.3 (5.7)
Imperial Petroleum Evansville 6.1 (2.6) 8.7
Escalade Evansville 4.4 (7.5) 11.9
Accuride Evansville (14.4) (328.3) 313.9
Springleaf Finance Evansville (224.7) (1,307.2) 1,082.5
Berry Plastics Evansville (229.0) (101.0) (128.0)

Total all 11
232.3 (1,222.9) 1,455.2

There are many large, non-recurring items included in these audited under GAAP After-tax Earnings or Losses.  Included among these are long-term asset impairment charges, gains and losses on both non-core asset sales and early debt extinguishments, acquisition gains, and special litigation settlements.  Also, there are some unusual, non-recurring income tax expense or income tax benefit items which are included in earnings under GAAP.

This is why many companies, as well as external independent investment analysts, convert US GAAP earnings of a company to Ongoing, Core Pretax Earnings.

When I convert the audited under GAAP After-tax Net Income of these eleven Indiana 8th District companies to Ongoing, Core Pretax Income, these eleven companies had their Total Ongoing, Core Pretax Profits grow from $58.4 mil in 2008 to $766.4 mil in 2011, or an increase of an amazing 1,212% during the first three years of the Obama Administration.  And all eleven Corps had very strong earnings improvements.

This massive earnings improvement sheds light on why the US stock market has doubled in the most recent 3 and a half years.  Corporate earnings drive stock prices.

All citizens in Indiana's 8th US House Congressional District should be very proud of the exceptional operating performance of their 8th District Companies during the Obama Administration.  And so should these companies, all of their employees, the extended families of their employees, and their stockholders.

Below here is a breakdown of these Ongoing, Core Pretax Income or Loss for each of these Indiana 8th Congressional District companies filing with the SEC.

Three Year

Ongoing Three Year

Core Pretax Ongoing

FYE FYE Income Core Pretax

2011 2008 (Loss) Income

Ongoing Ongoing Change (Loss)

Core Pretax Core Pretax 2008-2011 % Change

Income Income Better All

HQs (Loss) (Loss) (Worse) Better

mils of $s mils of $s mils of $s

Mead Johnson Nutrition Evansville 815.8 630.8 185.0 29%
Old National Bancorp Evansville 99.8 61.6 38.2 62%
First Financial Corp Terre Haute 51.6 32.6 19.0 58%
Shoe Carnival Evansville 42.0 8.4 33.6 400%
German American Bancorp Jasper 28.0 18.4 9.6 52%
Berry Plastics Evansville 24.0 (150.0) 174.0 116%
Kimball International Jasper 17.7 6.5 11.2 172%
Escalade Evansville 11.3 (6.0) 17.3 288%
Imperial Petroleum Evansville 5.9 (2.7) 8.6 319%
Accuride Evansville (6.6) (55.9) 49.3 88%
Springleaf Finance Evansville (323.1) (485.3) 162.2 33%

Total all 11
766.4 58.4 708.0 1212%

It is also helpful to analyze these total earnings by year.  Here is the Total Ongoing, Core Pretax Income or Loss of these eleven companies combined for each of the most recent four years from 2008 to 2011.

......Year...Total Ongoing Core Pretax Income or (Loss)

…..2008…..........…...$58.4 mil
…..2009….............$(307.5) mil  
…..2010……............$478.7 mil
…..2011…...............$766.4 mil

As you can see from the above earnings numbers by year, these total earnings had a huge drop in 2009, when the US economy was suffering from a Very Deep Recession, particularly in the first nine months of 2009.

So many pundits, including many in the US Congress, are quick to write off the Obama Economic Stimulus as worthless.  It didn’t start kicking in until the 4Q 2009, when the very healthy individual income tax cuts, business income tax incentives and  wisely-designed, carefully-vetted US Government investments were all going full throttle, and did the profits of US businesses ever subsequently benefit from it.

To illustrate, these eleven Indiana 8th District Companies had their Total Ongoing Core Pretax Loss for 2009 of $307.5 mil completely reverse course to a Total Pretax Profit of $478.7 mil in 2010.  Yeah, that’s a staggering $786.2 mil profit improvement in only one year…..2010…..and that amount is for just the eleven companies in one, not exactly large, US House Congressional District.

I don’t think the US economy will be great again unless you have a combination of a Moderate Democratic President and a US House Under Control By Moderate Democrats, who are willing to work across the aisle.  This was precisely the case in 2010, when Corporate Earnings were on a tear, all throughout the country.

Then, the US House turned to Uncompromising, Very Conservative Republican Control in 2011, where the party line strategy was to stop, by block voting, every wise, desperately needed economic initiative of the Obama Administration, regardless of the horrible economic consequences to US citizens.  As a result of this whole-scale effort to stop cold the Obama Administration from strengthening the US economy, this widespread, exceptionally robust 2010 Corporate earnings growth sharply decelerated in 2011, and even stopped to a walk in the first half of 2012.

From a very extensive review of more than 1,000 companies filing with the SEC, what happened here in Indiana’s 8th US Congressional District was pretty much consistent all throughout the country.  Companies of all sizes, filing with the SEC, had their earnings flat out skyrocket in 2010, when the US House was under Moderate Democratic control, and the US President was a Moderate Democrat, perfectly willing to work across the aisle.

Given that the Total Ongoing, Core Pretax Income of all Indiana 8th District companies filing with the SEC grew from $58.4 mil in 2008 to $766.4 mil in 2011, for an incredibly off-the-charts increase of 1,212% during the first three years of the Obama Administration, I suggest that for someone to assert that the Obama Administration has severely harmed economically businesses in Indiana’s 8th District is way off target, and clearly out of touch with his constituents. 

The present 8th District US House Republican Dr. Larry Bucshon has repeatedly and very noisily made this incredible assertion.  Further, Bucshon's focus is almost entirely on the very wealthy.  In addition, I have yet to see Bucshon work across the aisle on any significant issue.  

On the other hand, Bucshon's extremely hard-working, highly perceptive, very personable Moderate Democratic opponent Dave Crooks has both a much better feel and concern for Indiana 8th District citizens and businesses.  And Crooks is spot on in having his focus on all 8th District citizens, not just on the very wealthy.  And the open-minded Crooks knows the importance of effectively working across the aisle to get sound bipartisan legislation passed, as he has shown consistently in his past work in the Indiana legislature.

And just what's in the water of smaller city Washington, Indiana?  First, it's the Zeller Trifecta.....all three class valedictorians, all team leaders of their Indiana High School State Basketball Champions, all Indiana Mr. Basketballs, all stellar college students academically at fine Universities, all playing big time college basketball at the highest level:  Cody at Indiana University, Tyler at the University of North Carolina, and Luke at Notre Dame, and all without an ounce of arrogance.  Maybe it's not just the water, but also the amazing parents.  And now Dave Crooks, who possesses some of the same fine character traits of this incredible Zeller five-some.