Hershey: announces second quarter results

Hershey / PA. (thc) The Hershey Company announced sales and earnings for the second quarter ended July 04, 2010. Consolidated net sales were 1’233’242’000 USD compared with 1’171’183’000 USD for the second quarter of 2009. Net income for the second quarter of 2010 was 46’723’000 USD or 0,20 USD per share-diluted, compared with 71’298’000 USD or 0,31 USD per share-diluted, for the comparable period 2009.

For the second quarter of 2010, these results, prepared in accordance with generally accepted accounting principles (GAAP), included net pre-tax charges of 86,2 million USD, or 0,31 USD per share-diluted. Charges associated with the Project Next Century program announced in June 2010, were 41,5 million USD, or 0,11 USD per share-diluted. Additionally, the Company recorded a non-cash goodwill impairment charge of 44,7 million USD, or 0,20 USD per share-diluted related to the Godrej Hershey Limited joint venture in India. There was no tax benefit associated with the non-cash goodwill impairment charge. While the joint venture has achieved growth, it has been less than initial expectations due to slower realization of development plans and changes in input costs, as well as the macroeconomic environment which has delayed distribution expansion and the implementation of new price points. The India market in which the Godrej Hershey Limited joint venture competes remains a strategic growth market for the Company. Despite the business realignment and goodwill impairment charges, reported income before interest and income taxes increased 6,6 percent. For the second quarter of 2009, GAAP results included net pre-tax charges of 42,7 million USD, or 0,12 USD per share-diluted. These charges related to the Global Supply Chain Transformation (GSCT) program completed in December 2009. Adjusted net income, which excludes these net charges, was 117’047’000 USD or 0,51 USD per share-diluted in the second quarter of 2010, compared with 97’965’000 USD, or 0,43 USD per share-diluted in the second quarter of 2009, an increase of 19 percent in adjusted earnings per share-diluted.

For the first six months of 2010, consolidated net sales were 2’641’085’000 USD compared with 2’407’214’000 USD for the first six months of 2009. Reported net income for the first six months of 2010 was 194’117’000 USD or 0,84 USD per share-diluted, compared with 147’192’000 USD or 0,64 USD per share-diluted, for the first six months of 2009.

For the first six months of 2010 and 2009, these results, prepared in accordance with GAAP, include net pre-tax charges of 86,2 million USD and 61,7 million USD, or 0,31 USD and 0,17 USD per share, respectively. The 2010 charges are associated with the Project Next Century program announced in June and the non-cash goodwill impairment charge associated with the Godrej Hershey Limited joint venture, while the 2009 charges are related to the GSCT program completed in December 2009. Adjusted net income for the first six months of 2010, which excludes these net charges, was 264’441’000 USD or 1,15 USD per share-diluted, compared with 183’957’000 USD or 0,81 USD per share-diluted in 2009, an increase of 42 percent in adjusted earnings per share-diluted.

In 2010, reported gross margin, reported income before interest and income taxes (EBIT) margin and reported earnings per share-diluted will be impacted by the start-up of Project Next Century and the non-cash goodwill impairment charge associated with Godrej Hershey Limited. As a result, reported earnings per share-diluted, including restructuring and impairment charges of 0,40 USD to 0,43 USD per share-diluted, is expected to be in the 2,04 USD to 2,12 USD range.

The forecast for total pre-tax GAAP charges and non-recurring project implementation costs related to the Project Next Century program remains at 140 million USD to 170 million USD. The Company now expects to record 75 million USD to 85 million USD in program charges in 2010. Total program estimates include 120 million USD to 150 million USD in pre-tax business realignment and impairment charges and approximately 20 million USD in project implementation and start-up costs. The cash portion of the total charge is estimated to be 95 million USD to 110 million USD, including project implementation and start-up costs. At the conclusion of the program in 2014, ongoing annual savings are expected to be approximately 60 million USD to 80 million USD.

Info: The expected timing of events and estimated costs and savings, provided in the complete press release, reflects the aforementioned updated estimates.
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