US Big Oil & Gas Corps 1Q 2013 GAAP Pretax Income Down 11%.....US Congress Responds By Fleeing DC

I found 14 US Big Oil & Gas Corps, which have filed their calendar 1Q 2013 earnings with the SEC by April 26, 2013, and which had Pretax Income of more than $200 mil in either the 1Q 2013 or the 1Q 2012.

These 14 US Big Oil & Gas Corps generated US Generally Accepted Accepted Accounting Principles (GAAP) Total Pretax Income in the 1Q 2013 of $38,386 mil, which was down 10.5% from the $42,894 mil earned in the 1Q 2012.

On the other hand, these same 14 US Big Oil & Gas Corps generated GAAP Total After-tax Net Income which was down by a substantially lower 2.4% in the 1Q 2013 as compared with the 1Q 2012.

So, what's up with the 8.1% positive earnings spread from the down 10.5% Pretax Income in the 1Q 2013 to the down 2.4% After-tax Net Income in the 1Q 2013?

Well, it's all about the effective income tax rate and financial engineering.

In total, these 14 US Big Oil & Gas Corps slashed their effective income tax rates on a book basis from 42.9% of Pretax Income in the 1Q 2012 to 37.7% in the 1Q 2013.  The reported effective income tax rates of the largest US Big Oil & Gas Corps are higher than that of US Corps in Other Sectors because these largest US Big Oil & Gas Corps appear to include some of the royalties paid to foreign countries to extract natural resources as foreign income tax expense, rather than as royalty expense.

Having the US Big Oil & Gas Sector generating a total decline of 10.5% in Pretax earnings in the 1Q 2013 is not good for the US economy.  And it also is not good for US job creation in this key US sector.  The key question is that, given these poor operating results, just how much shedding of US jobs will there be in this key US Big Oil & Gas Sector.

So, how does the US Congress react to this poor 1Q 2013 quarter for the key US Big Oil & Gas Sector?  Well, they flee Washington DC.

It is pretty clear that substantial fiscal stimulus to the US economy has been needed for quite some time.  So how has the US Congress responded?  Now granted the Obama Administration should have been bolder and more creative, but the US Congress has rejected nearly every recommendation made by the Obama Administration to spur the US economy and US job creation.

And so what has the US Congress done instead?  They passed an immediate severe austerity Sequester which substantially harms US economic growth, US job creation, the profits of these US Big Oil & Gas Corps, of US Health Care Corps, of US Manufacturers, of US Technology Corps, and of the huge Dow Industrial Corps.

And what is the intellectual foundation that the US Congress used to pass this immediate severe austerity Sequester, which results in a substantial reduction in US jobs and US economic growth?  An economic study by two Harvard professors which concludes that when the US debt level is 90% of US GDP, that as if by magic, GDP growth drops dramatically.

And now that it has been proven that this economic study is clearly erroneous, how does the US Congress react to the complete collapse of the intellectual foundation of their immediate severe austerity Sequester initiative?  By ignoring its collapse.

Below here is the GAAP Pretax Income, GAAP Income Tax Expense, and GAAP Effective Income Tax Rates on a book basis for both the calendar 1Q 2013 as well as the 1Q 2012 for each of these 14 US Big Oil & Gas Corps:

			1Q 2013				1Q 2012			GAAP
		1Q 2013	GAAP			1Q 2012	GAAP		GAAP	Combined
	1Q 2013	GAAP	Effective		1Q 2012	GAAP	Effective		Pretax	Net
	GAAP	Income	Income		GAAP	Income	Income		Income	Income
	Pretax	Tax	Tax		Pretax	Tax	Tax		Increase	Increase
	Income	Expense	Rate		Income	Expense	Rate		(Decrease)	(Decrease)
	mil $s	mil $s			mil $s	mil $s			mil $s	mil $s
US Big Oil & Gas Corps
ExxonMobil	16,038	6,277	39.1%		17,515	7,716	44.1%		(1,477)	(38)
Chevron	10,283	4,044	39.3%		12,069	5,570	46.2%		(1,786)	(260)
ConocoPhillips	3,787	1,763	46.6%		4,265	2,086	48.9%		(478)	(155)
Occidental Petroleum	2,203	844	38.3%		2,699	1,139	42.2%		(496)	(201)
Schlumberger	1,679	412	24.5%		1,687	400	23.7%		(8)	(20)
Hess	1,653	470	28.4%		867	328	37.8%		786	644
Kinder Morgan Inc	937	279	29.8%		401	96	23.9%		536	353
National Oilwell Varco	724	224	30.9%		873	269	30.8%		(149)	(104)
Baker Hughes	400	132	33.0%		573	193	33.7%		(173)	(112)
Noble Energy	318	86	27.0%		335	86	25.7%		(17)	(17)
Helmerich & Payne	232	81	34.9%		205	75	36.6%		27	21
Diamond Offshore	206	30	14.6%		251	66	26.3%		(45)	(9)
Nabor Industries	109	11	10.1%		212	69	32.5%		(103)	(45)
Halliburton	(183)	(172)	94.0%		942	304	32.3%		(1,125)	(649)
Total all 14 Big Oil & Gas	38,386	14,481	37.7%		42,894	18,397	42.9%		(4,508)	(592)
Total Pretax Income % Decrease	-10.51%
Total After-tax Combined Net Income % Decrease	-2.42%
= Positive Income Tax Earnings Spread	8.09%

US Big Health Care Corps 1Q 2013 GAAP Pretax Income Down 7%.....US Congress Responds By Fleeing DC

I found 23 US Health Care Corps, which have filed their calendar 1Q 2013 earnings with the SEC by April 26, 2013, and which had Pretax Income of more than $200 mil in either the 1Q 2013 or the 1Q 2012.

These 23 US Health Care Corps generated US Generally Accepted Accepted Accounting Principles (GAAP) Total Pretax Income in the 1Q 2013 of $19,998 mil, which was down 7.3% from the $21,574 mil earned in the 1Q 2012.

On the other hand, these same 23 US Health Care Corps generated GAAP Total After-tax Net Income which was down by a substantially lower 1.8% in the 1Q 2013 as compared with the 1Q 2012.

So, what's up with the 5.5% positive earnings spread from the down 7.3% Pretax Income in the 1Q 2013 to the down 1.8% After-tax Net Income in the 1Q 2013?

Well, it's all about the effective income tax rate and financial engineering.

In total, these 23 US Health Care Corps slashed their effective income tax rates on a book basis from 25.0% of Pretax Income in the 1Q 2012 to 20.6% in the 1Q 2013.

Having the key US Health Care Sector generating a total decline of 7.3% in Pretax earnings in the 1Q 2013 is just horrible for the US economy.  And it's also terrible for US job creation in this key US sector.  The key question is that, given these horrible operating results, just how much shedding of US jobs will there be in this key US Health Care Sector.

So, how does the US Congress react to this horrible 1Q 2013 quarter for the key US Health Care Sector?  Well, they flee Washington DC.

It is pretty clear that substantial fiscal stimulus to the US economy has been needed for quite some time.  So how has the US Congress responded?  Now granted the Obama Administration should have been bolder and more creative, but the US Congress has rejected nearly every recommendation made by the Obama Administration to spur the US economy and US job creation.

And so what has the US Congress done instead?  They passed an immediate severe austerity Sequester which substantially harms US economic growth, US job creation, the profits of these US Health Care Corps, of US Manufacturers, of US Technology Corps, and of the huge Dow Industrial Corps.

And what is the intellectual foundation that the US Congress used to pass this immediate severe austerity Sequester, which results in a substantial reduction in US jobs and US economic growth?  An economic study by two Harvard professors which concludes that when the US debt level is 90% of US GDP, that as if by magic, GDP growth drops dramatically.

And now that it has been proven that this economic study is clearly erroneous, how does the US Congress react to the complete collapse of the intellectual foundation of their immediate severe austerity Sequester initiative?  By ignoring its collapse.

Below here is the GAAP Pretax Income, GAAP Income Tax Expense, and GAAP Effective Income Tax Rates on a book basis for both the calendar 1Q 2013 as well as the 1Q 2012 for each of these 23 US Health Care Corps:

			1Q 2013				1Q 2012			GAAP
		1Q 2013	GAAP			1Q 2012	GAAP		GAAP	Combined
	1Q 2013	GAAP	Effective		1Q 2012	GAAP	Effective		Pretax	Net
	GAAP	Income	Income		GAAP	Income	Income		Income	Income
	Pretax	Tax	Tax		Pretax	Tax	Tax		Increase	Increase
	Income	Expense	Rate		Income	Expense	Rate		(Decrease)	(Decrease)
	mil $s	mil $s			mil $s	mil $s			mil $s	mil $s
Health Care Corps
Johnson & Johnson	4,261	764	17.9%		5,045	1,135	22.5%		(784)	(413)
United Health Group	1,961	721	36.8%		2,169	781	36.0%		(208)	(148)
Eli Lilly	1,951	403	20.7%		1,335	324	24.3%		616	537
Amgen	1,343	(91)	-6.8%		1,366	182	13.3%		(23)	250
WellPoint	1,287	402	31.2%		1,310	453	34.6%		(23)	28
AbbVie	1,239	271	21.9%		1,006	123	12.2%		233	85
Walgreen's	1,192	436	36.6%		1,088	405	37.2%		104	73
Medtronic	1,155	167	14.5%		1,053	208	19.8%		102	143
Baxter	693	141	20.3%		732	144	19.7%		(39)	(36)
Bristol Myers Sqlulibb	674	51	7.6%		2,027	545	26.9%		(1,353)	(859)
Covidien Ltd	565	124	21.9%		568	77	13.6%		(3)	(50)
Abbott Labs	554	10	1.8%		463	112	24.2%		91	193
Biogen IDEC	496	66	13.3%		385	82	21.3%		111	127
Celgene	448	64	14.3%		474	73	15.4%		(26)	(17)
Stryker	375	71	18.9%		468	118	25.2%		(93)	(46)
AmeriSource Bergen	331	127	38.4%		354	135	38.1%		(23)	(15)
Zimmer Holdings	284	66	23.2%		281	72	25.6%		3	9
St Jude Medical	260	38	14.6%		279	67	24.0%		(19)	10
Intuitive Surgical	256	67	26.2%		197	54	27.4%		59	46
Lab Corp of America	241	94	39.0%		270	108	40.0%		(29)	(15)
Universal Health Services	204	74	36.3%		222	80	36.0%		(18)	(12)
Quest Diagnostics	197	73	37.1%		268	103	38.4%		(71)	(41)
Forest Labs	31	(15)	-48.4%		214	21	9.8%		(183)	(147)
Total all 23 Health Care	19,998	4,124	20.6%		21,574	5,402	25.0%		(1,576)	(298)
Total Pretax Income % Decrease	-7.31%
Total After-tax Combined Net Income % Decrease	-1.84%
= Positive Income Tax Earnings Spread	5.46%

US Big Broad-Based Manufacturing Corps 1Q 2013 GAAP Pretax Income Down 6%.....US Congress Responds By Fleeing DC

I found 41 US Broad-Based Manufacturing Corps, which have filed their calendar 1Q 2013 earnings with the SEC by April 26, 2013, and which had Pretax Income of more than $100 mil in either the 1Q 2013 or the 1Q 2012.

Included in these 41 was Danaher, whose one-time Gain in the 1Q 2013 comprised the entire Pretax Income increase in the 1Q 2013 over the 1Q 2012.  Also included in these 41 was PPG Industries, whose Restructuring and Environmental Remediation Charges in the 1Q 2012 comprised the entire Pretax Income increase in the 1Q 2013 over the 1Q 2012.  Thus, I excluded both of them below.

That leaves me with 39 Broad-Based Manufacturing Corps.

These 39 US Broad-Based Manufacturing Corps generated US Generally Accepted Accepted Accounting Principles (GAAP) Total Pretax Income in the 1Q 2013 of $19,876 mil, which was down 5.55% from the $21,044 mil earned in the 1Q 2012.

On the other hand, these same 39 US Broad-Based Manufacturing Corps generated GAAP Total After-tax Net Income which was down by a substantially lower 0.75% in the 1Q 2013 as compared with the 1Q 2012.

So, what's up with the 4.80% positive earnings spread from the down 5.55% Pretax Income in the 1Q 2013 to the down 0.75% After-tax Net Income in the 1Q 2013?

Well, it's all about the effective income tax rate and financial engineering.

In total, these 39 US Broad-Based Manufacturing Corps slashed their effective income tax rates on a book basis from 28.9% of Pretax Income in the 1Q 2012 to 25.3% in the 1Q 2013.

Having the key US Broad-Based Manufacturing Sector generating a total decline of 5.55% in Pretax earnings in the 1Q 2013 is just horrible for the US economy.  And it's also terrible for US job creation in this critical US sector.  The key question is that, given these horrible operating results, just how much shedding of US jobs will there be in this key US Broad-Based Manufacturing Sector.  And since these largest US Broad-Based Manufacturing Corps generated such a significant Pretax Income decline in the 1Q 2013, then it only makes sense that the huge number of smaller US Manufacturing Corps will be doing likewise, and even more so.  This is flat out horrible for US job creation since in this sector is where a lot of the good-paying US jobs are now located.

So, how does the US Congress react to this horrible 1Q 2013 quarter for the critical US Broad-Based Manufacturing Sector?  Well, they flee Washington DC.

It is pretty clear that substantial fiscal stimulus to the US economy has been needed for quite some time.  So how has the US Congress responded?  Now granted the Obama Administration should have been bolder and more creative, but the US Congress has rejected nearly every recommendation made by the Obama Administration to spur the US economy and US job creation.

And so what has the US Congress done instead?  They passed an immediate severe austerity Sequester which substantially harms US economic growth, US job creation, the profits of these US Manufacturers and also the profits of US Technology Corps.

And what is the intellectual foundation that the US Congress used to pass this immediate severe austerity Sequester, which results in a substantial reduction in US jobs and US economic growth?  An economic study by two Harvard professors which concludes that when the US debt level is 90% of US GDP, that as if by magic, GDP growth drops dramatically.

And now that it has been proven that this economic study is clearly erroneous, how does the US Congress react to the complete collapse of the intellectual foundation of their immediate severe austerity Sequester initiative?  By ignoring its collapse.

Below here is the GAAP Pretax Income, GAAP Income Tax Expense, and GAAP Effective Income Tax Rates on a book basis for both the calendar 1Q 2013 as well as the 1Q 2012 for each of these 39 US Big Broad-Based Manufacturing Corps:

			1Q 2013				1Q 2012			GAAP
		1Q 2013	GAAP			1Q 2012	GAAP		GAAP	Combined
	1Q 2013	GAAP	Effective		1Q 2012	GAAP	Effective		Pretax	Net
	GAAP	Income	Income		GAAP	Income	Income		Income	Income
	Pretax	Tax	Tax		Pretax	Tax	Tax		Increase	Increase
	Income	Expense	Rate		Income	Expense	Rate		(Decrease)	(Decrease)
	mil $s	mil $s			mil $s	mil $s			mil $s	mil $s
Broad-Based Manufacturing Corps
Ford Motor	2,123	511	24.1%		2,038	640	31.4%		85	214
United Technologies	1,770	418	23.6%		1,584	320	20.2%		186	88
3M	1,617	470	29.1%		1,603	462	28.8%		14	6
Boeing	1,438	332	23.1%		1,463	539	36.8%		(25)	182
Honeywell	1,260	291	23.1%		1,122	297	26.5%		138	144
Caterpillar	1,127	246	21.8%		2,298	689	30.0%		(1,171)	(728)
Lockheed Martin	1,025	264	25.8%		951	283	29.8%		74	93
Deere	946	289	30.5%		800	266	33.3%		146	123
General Dynamics	824	253	30.7%		821	257	31.3%		3	7
Northrop Grumman	712	223	31.3%		756	250	33.1%		(44)	(17)
Raytheon	663	167	25.2%		666	212	31.8%		(3)	42
Illinois Tool Works	646	187	28.9%		652	188	28.8%		(6)	(5)
Corning	528	34	6.4%		592	118	19.9%		(64)	20
Johnson Controls	395	217	54.9%		519	102	19.7%		(124)	(239)
Parker Hannifin	339	82	24.2%		401	88	21.9%		(62)	(56)
Harley-Davidson	339	114	33.6%		266	94	35.3%		73	53
TE Connectivity Ltd	338	60	17.8%		359	91	25.3%		(21)	10
Paccar	337	101	30.0%		479	152	31.7%		(142)	(91)
L-3 Communications	273	79	28.9%		283	96	33.9%		(10)	7
Dover	267	70	26.2%		260	74	28.5%		7	11
Alcoa	234	64	27.4%		138	39	28.3%		96	71
Rockwell Automation	227	51	22.5%		223	56	25.1%		4	9
Joy Global	206	64	31.1%		198	55	27.8%		8	(1)
Borg Warner	200	51	25.5%		221	58	26.2%		(21)	(14)
Rockwell Collins	197	36	18.3%		213	52	24.4%		(16)	0
Amphenol	194	41	21.1%		174	46	26.4%		20	25
Whirlpool	190	(67)	-35.3%		133	36	27.1%		57	160
Ametek	176	51	29.0%		162	52	32.1%		14	15
Nucor	153	43	28.1%		225	62	27.6%		(72)	(53)
Flowserve	148	49	33.1%		129	36	27.9%		19	6
Lear	147	38	25.9%		174	39	22.4%		(27)	(26)
Textron	143	28	19.6%		177	57	32.2%		(34)	(5)
Ingersoll-Rand	126	24	19.0%		142	38	26.8%		(16)	(2)
Timken	114	39	34.2%		238	82	34.5%		(124)	(81)
Pall Corp	102	22	21.6%		98	23	23.5%		4	5
Ball Corp	98	18	18.4%		122	28	23.0%		(24)	(14)
Crown Holdings	93	24	25.8%		122	32	26.2%		(29)	(21)
Stanley Black & Decker	90	9	10.0%		135	30	22.2%		(45)	(24)
Dana Holding	71	27	38.0%		107	37	34.6%		(36)	(26)
Total all 39	19,876	5,020	25.3%		21,044	6,076	28.9%		(1,168)	(112)
Total Pretax Income % Decrease	-5.55%
Total After-tax Combined Net Income % Decrease	-0.75%
= Positive Income Tax Earnings Spread	4.80%