Moody's assigns Baa1 rating to Mead Johnson's proposed US$500M of 30-year senior unsecured notes; net proceeds will be used to refinance November 2014 notes

Nevin Barich

NEW YORK , May 6, 2014 (press release) – Net proceeds to be used to refinance November 2014 notes

Moody's Investors Service ("Moody's") today assigned a Baa1 rating to proposed $500 million of 30-year senior unsecured notes being offered by Mead Johnson Nutrition Company. ("MJN" or "Mead Johnson"). Net proceeds from the issuance will be used to redeem the company's upcoming $500 million maturity of 3.50% senior unsecured notes due November 1, 2014. Pending the planned notes redemption, the company will invest all or a portion of the net proceeds from today's offering in short-term, investment grade securities.

RATINGS RATIONALE

Mead Johnson's Baa1 rating reflects its strong credit metrics, including operating margins in excess of 20%, debt to EBITDA under 2 times, and retained cash flow to debt of over 50%. The rating is also supported by the leading position of its "Enfa"-branded global pediatric nutrition franchise that generates a solid base of sales and earnings in the U.S. and reflects its strong presence in the fast-growing Asian and Latin American markets. These strengths are balanced against key risk factors that include high product category concentration, high sensitivity of demand to product safety, and a declining U.S. infant feeding market due partly to low birth rates and high unemployment rates among women.

Rating assigned:

Mead Johnson Nutrition Company:

$500 million senior unsecured notes due 2044 at Baa1.

The rating outlook is stable.

The stable outlook reflects Moody's assumption that MJN's core U.S. infant nutrition business remains relatively stable, that the company will continue to profitably expand its global footprint, and that there will be no major shifts in credit metrics or financial policy.

An upgrade could occur if MJN sustains stable growth and operating performance, expands segmental and geographic sales diversity, maintains operating margins above 20%, and sustains a conservative financial policy. A downgrade would likely result from a significant deterioration in operating performance; major share loss due to competition; EBITA margins falling below 20%, or either a large leveraged transaction or a financial policy shift that causes debt/EBITDA to rise above 2.5 times.

For more information on Mead Johnson Co. please refer to moodys.com.

Based in Glenview, Illinois, Mead Johnson is a maker of more than 70 pediatric nutrition products that are distributed in more than 50 markets worldwide. The company's leading "Enfa" family of brands, including Enfamil® infant formula, is the largest brand franchise in pediatric nutrition. For the 12 months ended March 31, 2014, Mead Johnson reported $4.3 billion in sales and $952 million in operating income.

The principal methodology used in this rating was Global Packaged Goods published in June 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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