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This excerpt taken from the HSY 8-K filed Oct 22, 2009. HERSHEY, Pa., October 22, 2009
— The Hershey Company (NYSE: HSY) today announced sales and earnings for
the third quarter ended October 4, 2009. Consolidated net sales were
$1,484,118,000 compared with $1,489,609,000 for the third quarter of 2008.
Reported net income for the third quarter of 2009 was $162,023,000 or $0.71 per
share-diluted, compared with $124,538,000 or $0.54 per share-diluted, for the
comparable period of 2008.
For the
third quarters of 2009 and 2008, these results, prepared in accordance with
generally accepted accounting principles (GAAP), include net pre-tax charges of
$11.0 million and $31.0 million, or $0.02 and $0.10 per share-diluted,
respectively. These charges were associated with the Global Supply Chain
Transformation (GSCT) program. Adjusted net income, which excludes
these net charges, was $168,508,000 or $0.73 per share-diluted in the third
quarter of 2009, compared with $145,813,000, or $0.64 per share-diluted in the
third quarter of 2008, an increase of 14.1 percent in adjusted earnings per
share-diluted.
For the
first nine months of 2009, consolidated net sales were $3,891,332,000 compared
with $3,755,388,000 for the first nine months of 2008. Reported net income for
the first nine months of 2009 was $309,215,000 or $1.35 per share-diluted,
compared with $229,250,000 or $1.00 per share-diluted, for the first nine months
of 2008.
For the
first nine months of 2009 and 2008, these results, prepared in accordance with
GAAP, include net pre-tax charges of $72.7 million and $101.0 million, or
$0.19 and $0.30 per share, respectively. These charges were associated with the
GSCT program.
Adjusted
net income for the first nine months of 2009, which excludes these net charges,
was $352,465,000, or $1.54 per share-diluted, compared with $296,680,000 or
$1.30 per share-diluted in 2008, an increase of 18.5 percent in adjusted
earnings per share-diluted.
Total
GSCT program costs to date are $602.7 million. The forecast for total charges
related to the program remains $640 million to $665 million and includes the
non-cash pension settlement charges discussed in prior quarters and described in
Appendix A. In 2009, the Company expects to record total GAAP charges,
including possible non-cash pension settlement charges, of about $0.26 to $0.32
per share-diluted, generating expected GAAP earnings of $1.80 to $1.88 per
share-diluted (see “Note” for GAAP to adjusted earnings per share-diluted
reconciliation).
Third Quarter Performance
and Outlook
“I’m
pleased with Hershey’s third quarter results, which were driven by core brand
growth, solid performance within key retail channels and strong productivity
gains,” said David J. West, President and Chief Executive Officer. “Net sales,
down slightly in the quarter versus the prior year, were in-line with our
expectations as we’re lapping the buy-in related to the August 2008 price
increase. Importantly, U.S. retail takeaway for the 12-weeks ended
October 3, 2009, in channels that account for over 80 percent of our U.S. retail
business, was up 4.8 percent. In the channels measured by syndicated data, U.S.
market share was flat for the 12-weeks ended October 3, 2009, and up 0.3 points
year-to-date. These results were driven by the investments we have made
behind our core brands, including advertising, up about 50 percent in the
third quarter.
“Increased
levels of in-store programming and merchandising, as well as outstanding
execution at the retail level, continue to drive our positive marketplace
results in the food, convenience and mass classes of trade. We’ll continue to
invest in our brands and business capabilities and anticipate a solid finish to
the year.
“As
anticipated, in the third quarter, net sales gains from the U.S. pricing action
were offset by volume declines associated with pricing elasticity, the impact of
unfavorable foreign currency exchange rates and previously communicated 2009
mid-year actions to discontinue certain premium chocolate products. Overall, the
investments we made in selling capabilities were successful in the quarter and
contributed to consumer acceptance of the new higher everyday, promoted and
seasonal price points.
“Adjusted
income before interest and income taxes increased 15.8 percent in the third
quarter, slightly greater than our expectations, and resulted in a 280 basis
point margin improvement. The increase was driven by net price realization,
supply chain efficiencies and productivity gains. Offsetting a
portion of these gains were higher commodity and employee-related costs,
including pension expense. Additionally, our earnings growth, as well as our
focus on improving net trading capital, generated strong operating cash flow in
the quarter.
“We are
working closely with retail customers and are monitoring category and Hershey
brand performance given the higher promoted price points of seasonal
candy. We’ll make the necessary consumer investments in the coming
weeks and months to ensure a healthy category and Halloween and Holiday sell
through at the retail level. Halloween-specific seasonal promotions,
merchandising and advertising are currently being executed in the
marketplace. We are also planning an additional increase in
advertising in the fourth quarter and expect full-year 2009 advertising expense
to increase about 50 percent versus 2008. This investment will benefit our
everyday and seasonal business in the near term and into next year, as well as
the December launches of
Hershey’s Bliss white chocolate and the introduction of Hershey’s Special Dark, Almond Joy and York Pieces. These Hershey
favorites, in a crunchy candy shell, are an expansion of the popular Reese’s Pieces format and
will be available in take-home, resealable, standup pouches. These two launches
represent the type of close-in innovation on our iconic brands that we believe
resonate with consumers in this challenging environment.
“In the
fourth quarter, gains from pricing will not be as significant as the Holiday
season is smaller than Halloween. Additionally, due to timing, we
expect shipments of Valentine’s and Easter seasonal product to be lower in the
fourth quarter of 2009 versus 2008. Based on the year-to-date price/volume
elasticity trends and brand-building and marketplace initiatives for the
remainder of the year, we expect 2009 net sales growth to be within our 3 to 5
percent long-term objective. Over the balance of the year, we’re
accelerating domestic and international investments in consumer capabilities,
customer insights and category management techniques that will benefit the
Company over the long term. Therefore, we anticipate adjusted earnings per
share-diluted for the full-year to be in the $2.12 to $2.14 range.
“As we
look to 2010, we assume the economic environment for consumers in the U.S. and
international markets will continue to be challenging. We’ll continue to focus
on and make appropriate investments in our core brands and expect 2010 net sales
growth to be within our 3 to 5 percent long-term objective. The sell through at
retail for Halloween will be greatly affected by the remaining days in the
season and will determine our approach to the upcoming Holiday, Valentine’s and
Easter seasons, all of which we expect will be at the higher seasonal promoted
price points. While still early, for 2010, given our current views of our
investments, marketplace performance and cost structure, we expect growth in
adjusted earnings per share-diluted to be within our long-term objective of 6 to
8 percent,” West concluded.
This excerpt taken from the HSY 8-K filed Jul 23, 2009. HERSHEY, Pa., July 23, 2009 — The Hershey Company (NYSE: HSY) today announced sales and earnings for the second quarter ended July 5, 2009. Consolidated net sales were $1,171,183,000 compared with $1,105,437,000 for the second quarter of 2008. Net income for the second quarter of
2009 was $71,298,000 or $0.31 per share-diluted, compared with $41,467,000 or $0.18 per share-diluted, for the comparable period of 2008.
For the second quarters of 2009 and 2008, these results, prepared in accordance with generally accepted accounting principles (“GAAP”), include net pre-tax charges of $42.7 million and $39.3 million, or $0.12 and $0.11 per share-diluted, respectively. These charges were associated with the Global Supply Chain Transformation
(“GSCT”) program. Adjusted net income, which excludes these net charges, was $97,965,000 or $0.43 per share-diluted in the second quarter of 2009, compared with $66,952,000, or $0.29 per share-diluted in the second quarter of 2008, an increase of 48 percent in adjusted earnings per share-diluted.
For the first six months of 2009, consolidated net sales were $2,407,214,000 compared with $2,265,779,000 for the first six months of 2008. Reported net income for the first six months of 2009 was $147,192,000 or $0.64 per share-diluted, compared with $104,712,000 or $0.46 per share-diluted, for the first six months of 2008. For the first six months of 2009 and 2008, these results, prepared in accordance with GAAP, include net pre-tax charges of $61.7 million and $69.9 million, or $0.17 and $0.20 per share, respectively. These charges were associated with the GSCT program. Adjusted net income for the first six months of 2009, which excludes these net charges,
was $183,957,000, or $0.81 per share-diluted, compared with $150,867,000 or $0.66 per share-diluted in 2008, an increase of 23 percent in adjusted earnings per share-diluted.
Total GSCT program costs to date are $591.7 million. The forecast for total charges related to the program has been narrowed and is now expected to be $640 million to $665 million and includes $40 million to $65 million of non-cash pension settlement charges, discussed in prior quarters and described in Appendix A. For 2009, total GAAP
charges related to the GSCT program are expected to be $85 million to $120 million, including non-cash pension settlement charges of $40 million to $50 million.
Second Quarter Performance and Outlook
“Hershey’s second quarter results reflect continued momentum in the marketplace,” said David J. West, President and Chief Executive Officer. “Investments in our core brands and retail selling capabilities have resulted in strong gains in net sales, profit and U.S. market share. Net sales increased by 5.9 percent driven
by the U.S. pricing action announced in August 2008, partially offset by volume declines associated with pricing elasticity and the impact of unfavorable foreign currency exchange rates. Core brands are responding to the investments in advertising, in-store programming and merchandising. In the second quarter, advertising increased 46 percent as we were on air supporting our core brands, the Easter season and the kick-off of our annual S’mores promotion.
“U.S. retail takeaway for the 24-weeks ended June 14, 2009, which along with the comparable period in 2008 encompasses each year’s entire Easter season results, in channels that account for over 80 percent of our retail business, was up 8.9 percent. In the channels measured by syndicated data, U.S. market share in the second quarter
and year-to-date periods increased an identical 0.5 points.
“Performance was balanced across all classes of trade. Where we have focused resources, particularly in the food and convenience channels, results have exceeded our expectations. In the convenience store channel, Hershey has outpaced category retail takeaway for 11 consecutive four-week periods. In the second quarter, convenience store
retail takeaway was up mid-single digits.
“Adjusted income before interest and income taxes increased 19.5 percent in the second quarter, resulting in a 150 basis point margin improvement, driven by net price realization; volume trends that were better than our initial expectations, particularly for our standard and king-size bars; supply chain efficiencies; and productivity
gains. Offsetting a portion of these gains were higher commodity and energy costs, employee-related costs, including pension expense, and greater levels of consumer investment spending.
“Despite the challenging economic environment, we have maintained strong momentum. As we enter the third quarter, we are well-positioned to deliver on our financial objectives. Brand-building initiatives are having the desired effect and have helped to mitigate volume declines due to price elasticity. We expect consumers to see markedly
higher promoted price points in the upcoming Halloween and Holiday seasons, which represent approximately one-third of our U.S. revenues in the second half of the year. Additionally, in the fourth quarter we begin to lap the August 2008 every day price increase. We intend to make the necessary consumer investments to ensure that the category continues to perform well in the second half of the year and are closely monitoring consumer and competitor response to our pricing models. Therefore, we are planning additional
increases in advertising for the full year and expect advertising expense to increase 40 to 45 percent in 2009. This investment will benefit the business in both the near term and next year. As a result, we expect full year net sales growth to be within our 3 to 5 percent long-term objective.
“While our year-over-year commodity cost increase remains significant, it will be less than our initial estimate of $175 million. We have visibility into most of the cost structure, except costs for dairy products which remain lower than our initial estimates. While there is not a developed futures market for dairy, over the remainder
of the year we do not expect material price inflation for dairy products. Our first-half performance has given us the flexibility to increase full-year brand-building advertising. We’ll also make further investments in category management and global go-to-market capabilities that will benefit the Company over the long term. Considering our strong first-half performance, a good start to the third quarter, solid seasonal programming and, based on year-to-date price/volume elasticity trends, we now expect
the increase in adjusted earnings per share-diluted for the full year to be slightly above our long-term objective of 6 to 8 percent,” West concluded.
This excerpt taken from the HSY 8-K filed Apr 23, 2009. HERSHEY, Pa., April 23, 2009 —
The Hershey Company (NYSE: HSY) today announced sales and earnings for the first
quarter ended April 5, 2009. Consolidated net sales were $1,236,031,000 compared
with $1,160,342,000 for the first quarter of 2008. Reported net income for the
first quarter of 2009 was $75,894,000, or $0.33 per share-diluted, compared with
$63,245,000, or $0.28 per share-diluted, for the comparable period of
2008.
For the
first quarters of 2009 and 2008, these results, prepared in accordance with
generally accepted accounting principles (“GAAP”), include net pre-tax charges
of $19.0 million and $30.7 million, or $0.05 and $0.09 per share-diluted,
respectively. These charges were associated with the Global Supply Chain
Transformation (“GSCT”) program. Adjusted net income, which excludes
these net charges, also referred to in this release as “net income from
operations,” was $85,992,000 or $0.38 per share-diluted in the first quarter of
2009, compared
with $83,915,000, or $0.37 per share-diluted in the first quarter of 2008, an
increase of 2.7 percent in earnings per share-diluted.
Total
GSCT program costs to date are $549.0 million. The forecast for total charges
related to the program is now $615 million to $665 million and includes $40
million to $65 million of non-cash pension settlement charges, discussed in
prior quarters and described in Appendix A. For 2009, total GAAP
charges related to the GSCT program are expected to be $85 million to $120
million, including non-cash pension settlement charges of $40 million to $50
million.
First Quarter Performance
and Outlook
“Hershey’s
first quarter results represent a good start to 2009,” said David J. West,
President and Chief Executive Officer. “Performance was solid with gains in net
sales, profitability and U.S. market share. Net sales increased by 6.5
percent driven by the pricing action announced in August 2008 and a longer
Easter season, partially offset by unfavorable foreign currency exchange rates
and volume declines driven by pricing elasticity.
“U.S.
retail takeaway for the 12-weeks ended March 22, 2009, excluding the impact of
Easter seasonal activity in the year ago and current period was up 7.4 percent,
in channels that account for over 80 percent of our retail business. In
the channels measured by syndicated data, U.S. market share, including Easter
seasonal activity in the year ago and current period, increased 0.5 points. This
performance reflects solid market share gains within our core chocolate and
sugar confectionery businesses as we gained market share in all classes of trade
on both an everyday and seasonal basis. Convenience store results
were particularly strong with retail takeaway up high single digits driven by
pricing and a comparison to soft performance in the year ago
period. Hershey seasonal performance was also strong as we gained
market share in the Valentine’s period. Preliminary data indicate an
Easter season market share gain as well. Driving the successful core
brand performance in the quarter was our balanced commitment to brand-building
initiatives, including advertising, up about 40 percent versus the year ago
period, seasonal programs and retail coverage.
“First
quarter profitability benefited from net price realization, better volume trends
than we had initially expected and supply chain efficiencies and
productivity. A portion of these gains was offset by higher commodity and
pension costs as well as increased levels of brand-building investment
spending.
“We
have good U.S. marketplace momentum as we enter the second
quarter. Incremental year-over-year advertising, in-store programming
and focused retail execution will continue throughout the remainder of
2009. However, as we previously reported, we expect that consumers will
now begin to see higher promoted retail price points on our seasonal and
everyday take-home packaged candy through the balance of the year. We
still expect full year net sales growth of 2-3 percent. We continue
to estimate that our year-over-year annual pension and commodity cost increases
will be significant. To date, dairy costs are favorable versus our initial
estimates. If dairy spot market prices remain at current levels for
the balance of the year, we would expect the year-over-year annual commodity
cost impact to be somewhat less than our initial estimate of $175 million.
Therefore, despite the uncertainty related to volume declines due to pricing
elasticity, we have confidence that earnings per share-diluted from operations
will increase, but less than the long-term objective of 6-8 percent,” West
concluded.
This excerpt taken from the HSY 8-K filed Jan 27, 2009. HERSHEY, Pa., January 27, 2009
— The Hershey Company (NYSE: HSY) today announced sales and earnings for
the fourth quarter and year ended December 31, 2008. Consolidated net sales
were $1,377,380,000 compared with $1,342,222,000 for the fourth quarter of
2007. Reported net income for the fourth quarter of 2008 was $82,155,000 or
$0.36 per share-diluted, compared with $54,343,000 or $0.24 per share-diluted,
for the comparable period of 2007.
For the
fourth quarter of 2008, these results, prepared in accordance with generally
accepted accounting principles (“GAAP”), included net pre-tax charges of $79.7
million, or $0.23 per share-diluted. Charges associated with the Global Supply
Chain Transformation program announced in February 2007 were $34.0 million, or
$0.10 per share-diluted. Additionally, as part of the Company's annual review of
intangible assets a non-cash impairment charge of $45.7 million, or $0.13 per
share-diluted, was recorded related to trademark values, primarily Mauna Loa. This resulted from
an in-depth market structure and portfolio review which led to a re-evaluation
of the role and level of investment of the Mauna Loa brand.
For the
fourth quarter of 2007, GAAP results include net pre-tax charges of $95.9
million, or $0.30 per share-diluted. The majority of these charges were
associated with the Global Supply Chain Transformation program announced in
February 2007.
Net
income adjusted to exclude these net charges, which is referred to in this
release as “net income from operations,” was $133,842,000 or $0.59 per
share-diluted in the fourth quarter of 2008, compared with $124,120,000 or $0.54
per share-diluted in the fourth quarter of 2007, an increase of 9.3 percent in
earnings per share-diluted.
For the
full year 2008, consolidated net sales were $5,132,768,000 compared with
$4,946,716,000 in 2007, an increase of 3.8 percent. Reported net income for 2008
was $311,405,000 or $1.36 per share-diluted, compared with $214,154,000, or
$0.93 per share-diluted for 2007.
For the
full years 2008 and 2007, these results, prepared in accordance with GAAP,
include net pre-tax charges of $180.7 million and $412.6 million, or $0.52 and
$1.15 per share-diluted, respectively. The 2008 charges of $134.9 million, or
$0.39 per share-diluted, are primarily associated with the Global Supply Chain
Transformation program and $45.7 million in non-cash impairment charges related
to intangible trademark values, primarily Mauna Loa. The majority of
the 2007 charges were associated with the Global Supply Chain Transformation
program.
Net
income from operations, which is adjusted to exclude the net charges for the
full years 2008 and 2007, was $430,522,000 or $1.88 per share-diluted in
2008, compared with $481,807,000, or $2.08 per share-diluted in 2007, a decrease
of 9.6 percent in earnings per share-diluted.
Cumulative
charges to-date for the Global Supply Chain Transformation program were $530.0
million. The forecast for total project charges related to the initial program
remains within but at the high end of the $550 million to $575 million range. As
discussed last quarter, the forecast amount for non-cash pension settlement
charges could increase as a result of impacted employee pension fund withdrawals
combined with declines in the financial markets. Non-cash pension settlement
costs are required in accordance with applicable accounting standards and are
described further in Appendix A. These non-cash charges could increase the
forecast by up to $65 million.
During
the fourth quarter of 2008, the scope of the Global Supply Chain Transformation
program increased modestly to include the closure of two subscale manufacturing
facilities of Artisan Confections Company, a wholly owned subsidiary, and
consolidation of the associated production into existing U.S. facilities, along
with rationalization of other select items. These initiatives, which will be
completed in 2009, increase the expected total cost and savings of the Global
Supply Chain Transformation program by approximately $25 million and $5 million,
respectively. Approximately $15 million of the increased costs are non-cash
charges.
Cumulative
savings for the Global Supply Chain Transformation program are approximately
$81 million and the estimate for total ongoing annual savings by 2010 is
$175 million to $195 million.
Fourth Quarter Performance
and Outlook
“Hershey’s
strong fourth quarter results represent a solid end to the year and further
validate our strategy of focusing investment on core brands,” said David J.
West, President and Chief Executive Officer. “Net sales increased by 2.6 percent
driven primarily by pricing, offset somewhat by the impact of unfavorable
foreign currency exchange rates and sales volume declines primarily in the U.S.
The results were also dampened by the shift of about 2 percentage points of net
sales growth into the third quarter due to the timing of a buy-in related to the
August price increase. Core brand strength was attributable to increased
advertising and retail effectiveness, with U.S. advertising expense up 26
percent in the fourth quarter. Focused investment behind the Reese’s and Hershey’s
brands delivered an 8 percent gain on retail takeaway for these franchises,
in the channels that account for over 80 percent of our retail
business.
“Fourth
quarter profitability was slightly ahead of our expectations. We benefited from
net price realization, better-than-expected volume and mix trends compared to
our initial estimates associated with the August price increase, and supply
chain savings. These gains were substantially offset by higher input costs and
greater levels of investment spending in the U.S. and key international
markets.
“U.S.
retail takeaway in the fourth quarter increased 5.2 percent in channels that
account for over 80 percent of our retail business. The gain was identical in
channels measured by syndicated data and resulted in a market share gain of 0.5
points in these channels. This performance reflects solid market share gains in
both the Halloween and Holiday seasons. Importantly, trends
improved sequentially throughout the year in all channels and we exited 2008
with marketplace momentum.
“In 2008,
the commodity and financial markets were volatile. In August, we estimated that
our 2009 commodity cost basket would increase by about $225 million. As the year
progressed, commodity costs declined somewhat, reducing this projected increase
to about $175 million, or roughly $0.50 per share-diluted. This decline is more
than offset by a year-over-year increase in 2009 pension expense of
approximately $70 million, or about $0.20 per share-diluted, resulting
from the significant decline in the fair value of our pension assets. Our
primary pension plans continue to be well-funded versus the projected benefit
obligations.
“The
financial market and credit crisis has not had a material effect on our business
operations or liquidity, to date. However, the increase in our cost structure
and uncertainties in the financial markets and in the broader economy present
challenges as we head into 2009. Despite these issues, we’ll continue
to invest in our core brands in the U.S. and key international markets to build
on our momentum. Specifically, advertising is expected to increase $30 million
to $35 million, or about $0.08 to $0.10 per share-diluted in 2009. These cost
increases will be more than offset by higher net pricing, savings from the
Global Supply Chain Transformation program and on-going operating productivity
improvement.
“For
2009, we expect net sales growth of 2-3 percent as our pricing actions, as well
as core brand sales growth, will be partially offset by lower volumes and the
impact of unfavorable foreign currency exchange rates. As we’ve stated since
last June, 2009 earnings per share-diluted from operations is expected to
increase, however, due to the unprecedented commodity and pension cost
increases, higher levels of core brand investment spending and current
macroeconomic conditions, we expect growth to be at a rate below our long-term
objective of 6-8 percent,” West concluded.
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