 Investor
Presentation November 2009 Mead Johnson Nutrition Company Investor Road Show Presentation Filed by Mead Johnson Nutrition Company Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Bristol-Myers Squibb Company Subject Company’s Commission File No.: 1-1136 |
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Certain statements in this presentation about the company’s future plans and prospects, including
statements about our financial position, business strategy and research pipeline, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements, as well as others identified by such words as “anticipates,” “expects,” “intends” and “believes,” involve certain
risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this presentation. 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 adverse effect of commodity price increases; (4) increased competition
from branded, private label, store and economy-branded products; (5) the effect of an
economic downturn on consumers’ purchasing behavior and customers’ ability to pay for product; (6) inventory reductions by customers; (7) the adverse effect of changes in foreign currency exchange rates; (8) the possibility of changes in the Women, Infant and Children (WIC)
program, or increases in levels of participation in WIC; and (9) the ability to develop and
market new, innovative products. In addition, there can be no guarantee that the exchange offer being made by Bristol-Myers Squibb Company (“BMS”) that is referred to in this presentation will be completed, or if it is completed, that it will close within the anticipated
time period. For additional information on these and other factors, see the risk factors identified in the company’s periodic reports, including the annual report on Form 10-K for 2008,
quarterly reports on Form 10-Q and current reports on Form 8-K, filed or furnished to the SEC, and the Registration Statement on Form S-4 that the company filed in connection with the
exchange offer, all of which are available upon request or at www.meadjohnson.com. The
company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. This presentation contains adjusted non-GAAP financial measures, including non-GAAP net sales and
EBIT, adjusted for factors that affect comparability due primarily to the impact of the
company’s IPO. The items included in GAAP measures, but excluded for the purpose of determining non-GAAP net sales and EBIT, are the impact of operating model adjustments, a gain on sale of an intangible asset, a favorable patent settlement and specified IPO and
other costs. Non-GAAP net sales and EBIT adjusting 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 are included in the Appendix. The terms and conditions of the exchange offer being made by BMS are more fully described in the
registration statement filed by Mead Johnson with the SEC and a Schedule TO
None of BMS, Mead Johnson
or any of their respective directors or officers or any dealer manager appointed with respect to the exchange offer makes any recommendation as to whether investors should participate in the exchange
offer. Investors can obtain a free copy of the prospectus and other related documents filed with the SEC by BMS and Mead Johnson at the SEC’s web site at www.sec.gov, and those documents may
also be obtained for free, as applicable, from BMS at www.bms.com or Mead Johnson at
www.meadjohnson.com. The numbers used in this presentation have been subject to rounding. Forward-Looking Statements Factors Affecting Comparability—Adjusted Non-GAAP Financial Measures Additional Information
The prospectus, which is included in the registration statement, contains important
information about BMS, Mead Johnson, the exchange offer and related matters.
Investors and security holders are urged to read carefully and in its entirety the prospectus and any other relevant documents filed with the SEC before making any investment decision. Safe Harbor Statement filed by BMS with the SEC. |
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The Exchange Offer Issuer: Mead Johnson Nutrition Company (“MJN” or “Mead Johnson”) Offer to Exchange: Up to 170.0 million shares of MJN Class A common stock for outstanding shares of Bristol- Myers Squibb Company (“BMS”) common stock Exchange Ratio: Upper limit of 0.6027 shares of MJN per share of BMS Averaging Period: Expected December 8, 9 and 10, 2009 Expiration: Expected December 14, 2009 at 12:00 midnight New York City time Exchange / Ticker: NYSE / MJN Dealer Managers: Citi, Goldman Sachs, Morgan Stanley Minimum Condition: 144.5 million shares of MJN |
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Presenters Steve Golsby President and Chief Executive Officer Pete Leemputte Senior Vice President and Chief Financial Officer |
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Edward Mead Johnson, Sr., with his son, Ted 1 clinically supported infant feeding product in the U.S. (1911) Mead Johnson Heritage and Focus Our Mission to create nutritional brands and products trusted to give infants and children the best start in life st |
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A global leader in pediatric nutrition 1 2 3 4 5 INFANT NUTRITION (0–12 MONTHS) Rank Abbott Nestl Danone Wyeth Company CHILDREN’S NUTRITION (>12 MONTHS) 1 2 3 4 5 Rank Nestl Danone Abbott Wyeth Company Source: Annual AC Nielsen Value Share (USD), 2008, which excludes Wal-Mart and
other non-tracked channels. Note: Global leadership based on
markets in which Mead Johnson competes. Mead Johnson Today Our Vision to be the world’s premier pediatric nutrition company |
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Mead Johnson Formula for Growth |
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$0 $10 $20 $30 $40 2004 2009E 2014E Attractive Growth Industry Global industry sales Source: ERC Infant Children’s Sales by Country, September 2009. Asia leading industry growth $14.0 $23.1 $32.2 Total Change in Market Size 2009E – 2014E 100% $9.1 % of Total $ Growth $BN Asia Latin America North America Europe Other $5.2 57% 12% 14% 12% 5% $1.1 $1.2 $1.1 $0.5 |
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Growth Driven by Strong Fundamentals Consumers value the nutritional benefits of premium products Role of early nutrition in lifelong health More women in the workforce Increasing middle-class births in emerging countries |
 10 Iconic Global Brands Complete nutrition for 100% peace of mind Recommended by pediatricians and trusted by moms to nourish every infant’s and child’s potential Creating superior, innovative, science- based nutritional products trusted to give infants and children the best start in life for more than 100 years Providing superior nutritional solutions for babies with severe cow’s milk protein allergies |
 11 The Enfa Brand Architecture Prenatal to school age |
 12 Comprehensive Product Portfolio Routine Children’s Specialty Solutions Meeting all pediatric nutritional needs For routine feeding For mild intolerance / allergies For children’s nutritional supplementation For prematurity, severe intolerance, allergies and metabolic disorders |
 13 Demand Creation Medical / Consumer / Retail |
 14 Portfolio of Stable Markets… |
 15 …With Strength in Emerging Markets MALAYSIA CHINA VIETNAM PHILIPPINES INDONESIA THAILAND PERU COLOMBIA BRAZIL VENEZUELA MEXICO RUSSIA INDIA |
 16 U.S. market share 1 stabilized in Q3 2009 by unit U.S. Growth Strategy Innovation Toddler Business Consumer Messaging Medical / Retail Strategy 1. Nielsen Retail Audits for the 13 weeks ending October 24, 2009. • Investing at record levels • Message resonating with consumers • Consumers responding positively to innovations • Best-in-class execution in hospitals and retail • Strengthened leadership in key functions Mead Johnson 4 Pillar Growth Strategy 3 4 1 2 |
 17 China: Our 2 nd Largest Market 1. Excludes Hong Kong. Mead Johnson in China $322 MM 1 NET SALES • Launched operations in 1994 • EBIT break-even in 2000 • Mead Johnson’s “best start in life” brand message resonates with parents • Systematic geographic expansion into 100+ of the largest cities • Further expansion planned in mid- tier cities • Strong operational capabilities 1995 1997 1999 2001 2003 2005 2007 2008 |
 18 Other Growth Markets • 6 of Mead Johnson’s top 10 markets • Success underpinned by market growth and market share gains Rest of Asia Latin America • Investing behind momentum • Strong brand portfolio • Economic prospects and demographic trends are favorable 2006 2007 2008 ASIA / LATIN AMERICA NET SALES EX-CHINA ~$1.2 BN |
 19 Seed Opportunities India • 25 million annual births with growing middle class • Complex, highly regulated market • Significant latent demand potential • Estimated 2009 $800 million market Russia • Concentrated population • Upper-middle-class Russian mothers want Western brands and listen to healthcare professionals • Estimated 2009 $600 million market Source: US Census (International Data), ERC. MJN Approach Replicate Proven Business Model Bring Science-Based Nutrition to Markets Build Scale Systematic Expansion of Distribution Footprint |
 20 Proven Leader in Innovation Accelerating pace of innovation in 2009 – over 30 new products Enfagrow with Flavor Enhancement Pouches for Greater Value / Less Waste Increased DHA and Prebiotics / Fiber Enfamil LIPIL with Prebiotics: Triple Health Guard Nutramigen LIPIL with Probiotic LGG Night Time Powder for Hungry Babies Enfagrow Gentlease |
 21 Innovations Provide Tangible Developmental Benefits 60 80 100 120 Control Enfamil LIPIL 1. Same formulation but without DHA and ARA. 2. Defined as wheezing, asthma or atopic dermatitis. 0 20 40 60 Control Enfamil LIPIL ALLERGIC MANIFESTATIONS IN FIRST THREE YEARS OF LIFE 2 Improved Vision CONTROL 1 ~20/40 VISION ENFAMIL LIPIL ~20/28 VISION
Reduced Allergic Reaction +7 pts Improved Brain Development 55% 26% 1 1 |
 22 100 Years of Product Quality and Productivity MJN SPRAY DRYER AND PACKAGING MJN GLOBAL LIQUIDS CONTRACT MJN SPRAY DRYER MJN PACKAGING THIRD-PARTY PACKAGING USA MEXICO BRAZIL MALAYSIA PHILIPPINES CHINA THAILAND NETHERLANDS AUSTRALIA Highlights Efficient and flexible manufacturing process Culture of productivity Efficient use of capital Quality embedded throughout product life cycle |
 23 Diverse and Experienced Leadership Steve Golsby President and CEO MJN: 12 years Career: 32 years UK Bill P’Pool SVP, Gen. Counsel / Secretary MJN: 5 years Career: 19 years USA Charles Urbain President, Asia / Europe MJN: 13 years Career: 26 years South Africa Pete Leemputte SVP, CFO MJN: 1 year Career: 28 years USA Jeff Jobe SVP, Supply Chain MJN: 21 years Career: 28 years USA Lynn Clark SVP, Human Resources MJN: 1 year Career: 26 years USA Dirk Hondmann SVP, R&D MJN: 5 years Career: 16 years The Netherlands Kasper Jakobsen President, Americas MJN: 11 years Career: 21 years Denmark |
 24 Financial Review ………...………….............................................................................................................................................................................................................................…………………………
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 25 Compelling Financial Performance $2,847 $2,541 $2,309 $1,500 $2,000 $2,500 $3,000 2006 2007 2008 $735 $645 $675 $500 $600 $700 $800 2006 2007 2008 1. Adjusted to exclude $36 million related to a number of operating model changes and delays in establishing new operating subsidiaries in Europe, Mexico and Brazil in connection with Mead Johnson’s separation from BMS. 2. Adjusted to exclude $16 million impairment charge in 2006, $18 million bad debt expense
in 2007 and $45 million in separation costs in 2008. Excludes $6
million related to a number of operating model changes and delays in establishing new operating subsidiaries in Europe, Mexico and Brazil in connection with Mead Johnson’s separation from BMS. A consistent history of sales and profit growth ADJUSTED NET SALES 1 ADJUSTED EBIT 2 |
 26 Note: Nine-month results not audited.
1. Adjusted to exclude $25 million in 2008 related to operating model changes and delays in establishing new
operating subsidiaries in Europe, Mexico and Brazil
in connection with Mead Johnson’s separation from BMS. 2. Adjusted to exclude $14 million in separation costs in 2008 and $31 million in separation costs, $5 million
in litigation costs, $10 million in severance costs,
$12 million gain on sale of a non-strategic intangible asset and $10 million favorable patent settlement in 2009. Excludes $2 million in 2008 related to operating model changes and delays in establishing new operating subsidiaries in
Europe, Mexico and Brazil in connection with Mead Johnson’s separation from BMS. Before FX After FX Before FX After FX 2009 September YTD Performance Strong sales growth in emerging markets and lower commodity costs driving profit improvement ADJUSTED NET SALES 1 ADJUSTED EBIT 2 $2,112 $2,149 $2,240 $500 $1,000 $1,500 $2,000 $2,500 9M2008 9M2009 $668 $591 $573 $0 $200 $400 $600 $800 9M2008 9M2009 |
 27 Constant Dollar Sales Growth 2005-2008 CAGR 4.2% 3.8% Balanced growth over time between pricing and volume 9.0% 1.9% 3.2% 1.5% 1.7% 3.2% 3.4% 8.5% 10.7% 5.1% 6.6% 10.0% 2005 1 PRICE VOLUME 2006
2007
2008
1. Adjusted to exclude the Adult Nutrition business, which was sold in 2004.
Volume growth was 7.3% on a reported basis. |
 28 Cost of Goods Sold Dairy accounts for about one-quarter of approximately $1 billion annual COGS Conversion and Other Dairy Agricultural Products Other Raw Materials Packaging |
 29 $0 $1 $2 $3 $4 $5 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 50% 55% 60% 65% 70% Dairy Prices and Gross Margin Trends Note: All data shown on a GAAP basis. Nine-month results not audited. 1. Weighted average for Oceania, Europe and North America non-fat / skim milk powder.
WEIGHTED GLOBAL MILK PRICES ON 6 MONTH LAG 1 ANNUAL MJN GROSS MARGIN 63.7% 63.2% 62.5% 65.5% |
 30 2004 2005 2006 2007 2008 Supply Chain Productivity Productivity improvements contribute to our industry-leading margins Target is 3% COGS reduction each year $30 $33 $32 $32 $37 ESTIMATED ANNUAL REDUCTION IN COGS |
 31 Operating Expense Spending A&P % OF NET SALES 13.4% 2009 YTD 12.8% 2008 12.4% 2007 SALES FORCE ADDITIONS Investing in key emerging markets, including China and “seed” countries R&D SPENDING $73 $67 $62 $51 $43 2004 2005 2006 2007 2008 Investments for sustainable growth Note: All data shown on a GAAP basis. |
 32 Still to Come • Tax • IT • Back Office Accounting • Indirect Procurement • Installation of SAP Platform • Replacement of BMS Shared Services with IBM Accomplished in 2009 • Human Resources • Legal • Internal Audit • Treasury • Financial Controls and Reporting • Investor Relations • Communications Transition to Stand-Alone |
 33 • Fully repaid $1.74BN debt owed to BMS • Refinanced at attractive rates • Doubled average duration from 6 to 12 years NOVEMBER DEBT REFINANCING Pro Forma Capitalization 1. At September 30, 2009, Mead Johnson had cash and cash equivalents of $597 million.
As described in Mead Johnson’s registration statement on Form S-4
filed with the SEC on November 16, 2009, Mead Johnson paid down $1,744 million of debt owed to BMS with proceeds of $1,483 million from a bond issuance, a $200 million draw on its revolver and $61 million cash on hand. 2. Consists of capital lease obligations and other debt. Does not include pension
liability of $102 million. $200 Revolver $1,500 Senior Unsecured Notes $50 Other Debt 2 $ in Millions Cash 1 $536 Debt: Total Debt $1,750 Shareholders’ (Deficit) ($698) Total Capitalization $1,052 9/30/09 Pro Forma Capitalization Anticipate after-tax interest expense savings of about $0.07 to $0.09 per
share in 2010, including fixed to floating rate swaps CURRENT CAPITAL STRUCTURE • $500MM of 5-year notes due in 2014 • $700MM of 10-year notes due in 2019 • $300MM of 30-year notes due in 2039 • $200MM revolver drawdown ($410MM total capacity) |
 34 Strong and Stable Free Cash Flow $ in Millions Net Earnings 1 Depreciation and Amortization Change in Working Capital Other Net Cash from Operations Capital Expenditures Free Cash Flow 2007 $430 $51 ($33) $31 $479 ($78) $400 2008 $401 $52 $20 $16 $489 ($81) $408 2009 $343 $44 $47 ($18) $417 ($59) $357 2008 $354 $38 ($18) $10 $384 ($51) $333 September YTD Full Year Note: All data
shown on a GAAP basis. Nine-month results not audited. 1. Reflects interest expense of
$43 million incurred by Mead Johnson & Company (“MJC”) in 2008 with respect to the $2,000 million intercompany note that MJC issued to BMS in August 2008. Does not reflect the effect of the restructuring of such intercompany note at the
IPO date and the subsequent refinancing of the intercompany note by MJN in November 2009 with
the proceeds of (i) the issue by MJN of $500 million aggregate principal amount of 3.50% notes due 2014, $700 million aggregate principal amount of 4.90% notes due 2019 and $300 million aggregate principal amount of 5.90% notes due 2039 and (ii)
the borrowing by MJN of $200 million under its revolving credit facility. In November
2009, MJN also entered into interest rate swaps agreements with respect to $500 million in aggregate principal amount of 3.50% notes due 2014 and $200 million out of the $700 million aggregate principal amount of 4.90% notes due 2019. |
 35 Mead Johnson Strategy for Growth Market Share Gains Adjacencies New / Expanded Geographies Market Growth |
 36 QUALITY & PRODUCTIVITY GROWTH INDUSTRY LEADING BRANDS GLOBAL REACH INNOVATION PIPELINE EXPERIENCED LEADERSHIP FINANCIAL PERFORMANCE • Global leader in pediatric nutrition, an attractive growth industry • “Enfa” family of brands is the #1 global brand franchise in pediatric nutrition • Leadership in emerging markets • Robust new product and innovation pipeline • 100-year history of quality and productivity • Diverse and experienced management team • Industry-leading profitability and strong free cash flow Investment Highlights |
 37 Appendix |
 38 Reconciliation of GAAP to Non-GAAP Year Ended December 31, 9 Months Ended September 30, $ in millions 2006 2007 2008 2008 2009 Net Sales GAAP $2,345 $2,576 $2,882 $2,175 $2,112 Adjustments: Operating Model 1 (36) (36) (36) (25) 0 Adjusted Non-GAAP $2,309 $2,541 $2,847 $2,149 $2,112 Earnings Before Interest and Income Taxes (EBIT) GAAP $635 $663 $696 $561 $567 Adjustments: Operating Model 1 (6) (6) (6) (2) 0 Impairment Charge 16 0 0 0 0 Bad Debt Expense 2 0 18 0 0 0 Separation Costs 3 0 0 45 14 31 Litigation Costs 0 0 0 0 5 Severance Costs 0 0 0 0 10 Gain on Sale of an Intangible Asset 0 0 0 0 (12) Favorable Patent Settlement 0 0 0 0 (10) Adjusted Non-GAAP $645 $675 $735 $573 $591 Note: Nine-month results not audited. 1. Reflects the combined effect of a number of operating model changes and delays in
establishing new operating subsidiaries in Europe, Mexico and Brazil in connection with MJN’s separation from BMS. In Europe, MJN has transitioned to a third-party distributor
model with BMS temporarily serving as MJN’s distributor. In Mexico, MJN operates MJN's business through a newly formed operating subsidiary that is expected to incur higher profit sharing
costs than were allocated to MJN when MJN operated within BMS. Furthermore, a BMS
subsidiary currently leases to MJN’s Mexico operating subsidiary all of the property, plant and equipment at MJN’s manufacturing facility in Delicias under a 20-year lease that is treated as a capital lease. In Brazil, MJN’s ability to operate as a
standalone subsidiary was delayed until late in the third quarter of 2009 and, prior to that
time, BMS distributed and recorded sales for MJN’s products, and MJN conducted marketing activities. For more detail, please see “Management Discussion and Analysis of Financial Condition and Results of Operations of MJN” in MJN’s Prospectus dated November 16,
2009 included in MJN’s Registration Statement on Form S-4 filed with the SEC on
November 16, 2009. 2. Reflects a bad debt expense
related to a distributor’s insolvency in Asia.
3. Reflects separation costs incurred in connection with Mead Johnson’s IPO, including costs relating to legal, accounting, systems implementation and consulting services. |