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x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
(Exact name of registrant as specified in its charter)
|
||||
Delaware
|
23-0691590
|
|||
(State or other jurisdiction of incorporation
or organization)
|
(I.R.S. Employer Identification No.)
|
|||
100 Crystal A Drive, Hershey, PA
17033
|
||||
(Address of principal executive offices)
(Zip Code)
|
||||
717-534-4200
|
||||
(Registrant’s telephone number, including area code)
|
||||
Not Applicable
|
||||
(Former name, former address and former fiscal year, if changed since last report)
|
Part I. Financial Information
|
Page Number
|
Item 1. Consolidated Financial Statements (Unaudited)
|
3
|
Consolidated Statements of Income
|
|
Three months ended October 2, 2011 and October 3, 2010
|
3
|
Consolidated Statements of Income
|
|
Nine months ended October 2, 2011 and October 3, 2010
|
4
|
Consolidated Balance Sheets
|
|
October 2, 2011 and December 31, 2010
|
5
|
Consolidated Statements of Cash Flows
|
|
Nine months ended October 2, 2011 and October 3, 2010
|
6
|
Notes to Consolidated Financial Statements
|
7
|
Item 2. Management’s Discussion and Analysis of
|
|
Results of Operations and Financial Condition
|
21
|
Item 3. Quantitative and Qualitative Disclosures
|
|
About Market Risk
|
28
|
Item 4. Controls and Procedures
|
29
|
Part II. Other Information
|
|
Item 2. Unregistered Sales of Equity Securities and Use
|
|
of Proceeds
|
30
|
Item 6. Exhibits
|
30
|
For the Three Months Ended
|
||||||
October 2,
2011
|
October 3,
2010
|
|||||
Net Sales
|
$ | 1,624,249 | $ | 1,547,115 | ||
Costs and Expenses:
|
||||||
Cost of sales
|
944,068 | 891,895 | ||||
Selling, marketing and administrative
|
356,878 | 357,624 | ||||
Business realignment and impairment charges (credits), net
|
2,187 | (2,052 | ) | |||
|
||||||
Total costs and expenses
|
1,303,133 | 1,247,467 | ||||
Income before Interest and Income Taxes
|
321,116 | 299,648 | ||||
Interest expense, net
|
23,041 | 22,259 | ||||
Income before Income Taxes
|
298,075 | 277,389 | ||||
Provision for income taxes
|
101,380 | 97,220 | ||||
Net Income
|
$ | 196,695 | $ | 180,169 | ||
Earnings Per Share - Basic - Class B Common Stock
|
$ | .81 | $ | .74 | ||
Earnings Per Share - Diluted - Class B Common Stock
|
$ | .80 | $ | .73 | ||
Earnings Per Share - Basic - Common Stock
|
$ | .89 | $ | .81 | ||
Earnings Per Share - Diluted - Common Stock
|
$ | .86 | $ | .78 | ||
Average Shares Outstanding - Basic - Common Stock
|
165,917 | 166,900 | ||||
Average Shares Outstanding - Basic - Class B Common Stock
|
60,632 | 60,708 | ||||
Average Shares Outstanding - Diluted
|
229,849 | 230,491 | ||||
Cash Dividends Paid Per Share:
|
||||||
Common Stock
|
$ | .3450 | $ | .3200 | ||
Class B Common Stock
|
$ | .3125 | $ | .2900 | ||
For the Nine Months Ended
|
|||||
October 2,
2011
|
October 3,
2010
|
||||
Net Sales
|
$ | 4,513,643 | $ | 4,188,200 | |
Costs and Expenses:
|
|||||
Cost of sales
|
2,612,957 | 2,392,462 | |||
Selling, marketing and administrative
|
1,080,594 | 1,035,250 | |||
Business realignment and impairment (credits) charges, net
|
(5,927 | ) | 83,082 | ||
|
|||||
Total costs and expenses
|
3,687,624 | 3,510,794 | |||
Income before Interest and Income Taxes
|
826,019 | 677,406 | |||
Interest expense, net
|
70,869 | 68,788 | |||
Income before Income Taxes
|
755,150 | 608,618 | |||
Provision for income taxes
|
268,321 | 234,332 | |||
Net Income
|
$ | 486,829 | $ | 374,286 | |
Earnings Per Share - Basic - Class B Common Stock
|
$ | 2.00 | $ | 1.53 | |
Earnings Per Share - Diluted - Class B Common Stock
|
$ | 1.98 | $ | 1.52 | |
Earnings Per Share - Basic - Common Stock
|
$ | 2.20 | $ | 1.68 | |
Earnings Per Share - Diluted - Common Stock
|
$ | 2.12 | $ | 1.63 | |
Average Shares Outstanding - Basic - Common Stock
|
166,223 | 167,030 | |||
Average Shares Outstanding - Basic - Class B Common Stock
|
60,649 | 60,708 | |||
Average Shares Outstanding - Diluted
|
230,114 | 230,138 | |||
Cash Dividends Paid Per Share:
|
|||||
Common Stock
|
$ | 1.0350 | $ | .9600 | |
Class B Common Stock
|
$ | .9375 | $ | .8700 | |
ASSETS
|
October 2,
2011
|
December 31,
2010
|
|||||
Current Assets:
|
|||||||
Cash and cash equivalents
|
$ | 292,339 | $ | 884,642 | |||
Accounts receivable - trade
|
620,745 | 390,061 | |||||
Inventories
|
654,455 | 533,622 | |||||
Deferred income taxes
|
106,694 | 55,760 | |||||
Prepaid expenses and other
|
139,782 | 141,132 | |||||
Total current assets
|
1,814,015 | 2,005,217 | |||||
Property, Plant and Equipment, at cost
|
3,507,324 | 3,324,763 | |||||
Less-accumulated depreciation and amortization
|
(1,994,544 | ) | (1,887,061 | ) | |||
Net property, plant and equipment
|
1,512,780 | 1,437,702 | |||||
Goodwill
|
517,157 | 524,134 | |||||
Other Intangibles
|
113,803 | 123,080 | |||||
Deferred Income Taxes
|
11,313 | 21,387 | |||||
Other Assets
|
161,438 | 161,212 | |||||
Total assets
|
$ | 4,130,506 | $ | 4,272,732 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||
Current Liabilities:
|
|||||||
Accounts payable
|
$ | 430,251 | $ | 410,655 | |||
Accrued liabilities
|
596,680 | 593,308 | |||||
Accrued income taxes
|
15,083 | 9,402 | |||||
Short-term debt
|
39,861 | 24,088 | |||||
Current portion of long-term debt
|
99,552 | 261,392 | |||||
Total current liabilities
|
1,181,427 | 1,298,845 | |||||
Long-term Debt
|
1,498,862 | 1,541,825 | |||||
Other Long-term Liabilities
|
495,540 | 494,461 | |||||
Total liabilities
|
3,175,829 | 3,335,131 | |||||
Stockholders' Equity:
|
|||||||
The Hershey Company Stockholders’ Equity
|
|||||||
Preferred Stock, shares issued:
none in 2011 and 2010
|
$ | — | $ | — | |||
Common Stock, shares issued: 299,269,702 in 2011 and
299,195,325 in 2010
|
299,269 | 299,195 | |||||
Class B Common Stock, shares issued: 60,632,042 in 2011 and
60,706,419 in 2010
|
60,632 | 60,706 | |||||
Additional paid-in capital
|
470,491 | 434,865 | |||||
Retained earnings
|
4,633,156 | 4,374,718 | |||||
Treasury-Common Stock shares at cost:
134,572,801 in 2011 and 132,871,512 in 2010
|
(4,243,616 | ) | (4,052,101 | ) | |||
Accumulated other comprehensive loss
|
(292,260 | ) | (215,067 | ) | |||
The Hershey Company stockholders’ equity
|
927,672 | 902,316 | |||||
Noncontrolling interests in subsidiaries
|
27,005 | 35,285 | |||||
Total stockholders' equity
|
954,677 | 937,601 | |||||
Total liabilities and stockholders' equity
|
$ | 4,130,506 | $ | 4,272,732 |
For the Nine Months Ended
|
|||||||
October 2,
2011
|
October 3,
2010
|
||||||
Cash Flows Provided from (Used by) Operating Activities
|
|||||||
Net Income
|
$ | 486,829 | $ | 374,286 | |||
Adjustments to Reconcile Net Income to Net Cash
|
|||||||
Provided from Operations:
|
|||||||
Depreciation and amortization
|
157,561 | 145,736 | |||||
Stock-based compensation expense, net of tax of $10,963 and
$13,850, respectively
|
19,831 | 24,623 | |||||
Excess tax benefits from exercise of stock options
|
(9,561 | ) | (690 | ) | |||
Deferred income taxes
|
4,157 | 1,900 | |||||
Gain on sale of trademark licensing rights, net of tax of $5,962
|
(11,072 | ) | — | ||||
Business realignment and impairment charges, net of tax of $8,104 and $17,618, respectively
|
13,335 | 73,073 | |||||
Contributions to pension plans
|
(3,871 | ) | (4,053 | ) | |||
Changes in assets and liabilities, net of effects from business acquisitions:
|
|||||||
Accounts receivable - trade
|
(230,684 | ) | (195,351 | ) | |||
Inventories
|
(125,533 | ) | (60,262 | ) | |||
Accounts payable
|
51,882 | 62,318 | |||||
Other assets and liabilities
|
(95,645 | ) | (33,381 | ) | |||
Net Cash Flows Provided from Operating Activities
|
257,229 | 388,199 | |||||
Cash Flows Provided from (Used by) Investing Activities
|
|||||||
Capital additions
|
(251,206 | ) | (108,569 | ) | |||
Capitalized software additions
|
(14,390 | ) | (15,131 | ) | |||
Proceeds from sales of property, plant and equipment
|
260 | 2,090 | |||||
Proceeds from sale of trademark licensing rights
|
20,000 | — | |||||
Business acquisition
|
(5,750 | ) | — | ||||
Net Cash Flows (Used by) Investing Activities
|
(251,086 | ) | (121,610 | ) | |||
Cash Flows Provided from (Used by) Financing Activities
|
|||||||
Net increase (decrease) in short-term debt
|
13,082 | (8,480 | ) | ||||
Long-term borrowings
|
478 | 127 | |||||
Repayment of long-term debt
|
(254,756 | ) | (5,746 | ) | |||
Proceeds from lease financing agreement
|
47,601 | — | |||||
Cash dividends paid
|
(228,391 | ) | (212,602 | ) | |||
Exercise of stock options
|
171,629 | 74,004 | |||||
Excess tax benefits from exercise of stock options
|
9,561 | 690 | |||||
Contributions from noncontrolling interests in subsidiaries
|
— | 10,199 | |||||
Repurchase of Common Stock
|
(357,650 | ) | (133,439 | ) | |||
Net Cash Flows (Used by) Financing Activities
|
(598,446 | ) | (275,247 | ) | |||
Decrease in Cash and Cash Equivalents
|
(592,303 | ) | (8,658 | ) | |||
Cash and Cash Equivalents, beginning of period
|
884,642 | 253,605 | |||||
Cash and Cash Equivalents, end of period
|
$ | 292,339 | $ | 244,947 | |||
Interest Paid
|
$ | 84,050 | $ | 90,654 | |||
Income Taxes Paid
|
$ | 223,991 | $ | 236,632 |
For the Three Months
Ended
|
For the Nine Months
Ended
|
||||||||||||
October 2,
2011
|
October 3,
2010
|
October 2,
2011
|
October 3,
2010
|
||||||||||
In millions of dollars
|
|||||||||||||
Total compensation amount charged against income for stock options,
performance stock units (“PSUs”)
and restricted stock units
|
$ | 6.8 | $ | 11.3 | $ | 30.8 | $ | 38.5 | |||||
Total income tax benefit recognized in the Consolidated Statements
of
Income
for share-based compensation
|
$ | 2.3 | $ | 3.7 | $ | 11.0 | $ | 13.9 |
For the Nine Months Ended
|
||||||
October 2,
2011
|
October 3,
2010
|
|||||
Estimated values
|
$ | 37.79 | $ | 28.62 | ||
Dividend yields
|
2.7% | 3.2% | ||||
Expected volatility
|
28.8% | 29.5% |
For the Nine Months Ended
|
||||||
October 2,
2011
|
October 3,
2010
|
|||||
Dividend yields
|
2.7% | 3.2% | ||||
Expected volatility
|
22.6% | 21.7% | ||||
Risk-free interest rates
|
2.8% | 3.1% | ||||
Expected lives in years
|
6.6 | 6.5 |
For the Nine Months Ended October 2, 2011
|
|||||||
Stock Options
|
Shares
|
Weighted-Average
Exercise Price
|
Weighted-Average
Remaining
Contractual Term
|
||||
Outstanding at beginning of the period
|
17,997,082 | $42.21 |
6.1 years
|
||||
Granted
|
2,184,035 | $51.60 | |||||
Exercised
|
(4,526,643) | $37.99 | |||||
Forfeited
|
(752,662) | $43.87 | |||||
Outstanding as of October 2, 2011
|
14,901,812 | $44.79 |
6.0 years
|
||||
Options exercisable as of October 2, 2011
|
8,738,062 | $46.79 |
4.5 years
|
For the Nine Months Ended
|
|||||
October 2,
2011
|
October 3,
2010
|
||||
Weighted-average fair value of options granted (per share)
|
$ 9.98
|
$ 6.85
|
|||
Intrinsic value of options exercised (in millions of dollars)
|
$ 75.3
|
$ 23.5
|
Performance Stock Units and Restricted Stock Units
|
For the Nine
Months
Ended
October 2, 2011
|
Weighted-average grant date fair
value for equity awards or market
value for liability awards
|
|||
Outstanding at beginning of year
|
1,948,758
|
$38.00
|
|||
Granted
|
508,877
|
$52.23
|
|||
Performance assumption change
|
143,876
|
$45.96
|
|||
Vested
|
(661,676)
|
$37.28
|
|||
Forfeited
|
(241,119)
|
$40.26
|
|||
Outstanding as of October 2, 2011
|
1,698,716
|
$43.18
|
For the Nine Months Ended
|
|||||
October 2,
2011
|
October 3,
2010
|
||||
Intrinsic value of share-based liabilities paid, combined with
the fair value of shares vested (in millions of dollars)
|
$ 34.3
|
$ 15.5
|
For the Nine Months Ended
|
||||||||
October 2,
2011
|
October 3,
2010
|
|||||||
In thousands of dollars
|
||||||||
Interest expense
|
$ | 78,191 | $ | 70,958 | ||||
Interest income
|
(1,976) | (829) | ||||||
Capitalized interest
|
(5,346) | (1,341) | ||||||
Interest expense, net
|
$ | 70,869 | $ | 68,788 |
For the Three
Months Ended
|
For the Nine
Months Ended
|
|||||||
October 2,
2011
|
October 3,
2010
|
October 2,
2011
|
October 3,
2010
|
|||||
In thousands of dollars
|
||||||||
Cost of sales – Next Century program
|
$ 9,464
|
$ 6,123
|
$ 23,346
|
$ 7,099
|
||||
Selling, marketing and administrative – Next Century program
|
1,868
|
387
|
4,020
|
510
|
||||
Business realignment and impairment charges, net
|
||||||||
Next Century program
|
||||||||
Plant closure expenses and fixed asset impairment charges
|
1,600
|
843
|
3,727
|
5,147
|
||||
Employee separation costs (credits)
|
587
|
(2,895)
|
(9,654)
|
33,243
|
||||
Godrej Hershey Ltd. goodwill impairment
|
—
|
—
|
—
|
44,692
|
||||
Total business realignment and
impairment charges (credits), net
|
2,187
|
(2,052)
|
(5,927)
|
83,082
|
||||
Total business realignment and impairment charges
|
$ 13,519
|
$ 4,458
|
$ 21,439
|
$ 90,691
|
For the Three
Months Ended
|
For the Nine
Months Ended
|
||||||||||||
October 2,
2011
|
October 3,
2010
|
October 2,
2011
|
October 3,
2010
|
||||||||||
In thousands except per share amounts
|
|||||||||||||
Net income
|
$ | 196,695 | $ | 180,169 | $ | 486,829 | $ | 374,286 | |||||
Weighted-average shares - Basic
|
|||||||||||||
Common Stock
|
165,917 | 166,900 | 166,223 | 167,030 | |||||||||
Class B Common Stock
|
60,632 | 60,708 | 60,649 | 60,708 | |||||||||
Total weighted-average shares - Basic
|
226,549 | 227,608 | 226,872 | 227,738 | |||||||||
Effect of dilutive securities:
|
|||||||||||||
Employee stock options
|
2,580 | 2,126 | 2,564 | 1,740 | |||||||||
Performance and restricted stock units
|
720 | 757 | 678 | 660 | |||||||||
Weighted-average shares - Diluted
|
229,849 | 230,491 | 230,114 | 230,138 | |||||||||
Earnings Per Share - Basic
|
|||||||||||||
Class B Common Stock
|
$ | .81 | $ | .74 | $ | 2.00 | $ | 1.53 | |||||
Common Stock
|
$ | .89 | $ | .81 | $ | 2.20 | $ | 1.68 | |||||
Earnings Per Share - Diluted
|
|||||||||||||
Class B Common Stock
|
$ | .80 | $ | .73 | $ | 1.98 | $ | 1.52 | |||||
Common Stock
|
$ | .86 | $ | .78 | $ | 2.12 | $ | 1.63 |
For the Three
Months Ended
|
For the Nine
Months Ended
|
||||||||
October 2,
2011
|
October 3,
2010
|
October 2,
2011
|
October 3,
2010
|
||||||
In millions
|
|||||||||
Stock options excluded from diluted earnings per share calculation because
the
effect would have been antidilutive
|
1.6 | 4.9 | 6.9 | 8.7 |
Balance Sheet Caption
|
Interest Rate Swap
Agreements
|
Foreign Exchange
Forward Contracts
and Options
|
Commodities
Futures and
Options
Contracts
|
|||||||||
In thousands of dollars
|
||||||||||||
Prepaid expense and other current assets
|
$ | — | $ | 8,596 | $ | 1,460 | ||||||
Other assets
|
$ | — | $ | 1,636 | $ | — | ||||||
Accrued liabilities
|
$ | 1,017 | $ | 5,335 | $ | 29,559 | ||||||
Other long-term liabilities
|
$ | — | $ | 818 | $ | — |
Balance Sheet Caption
|
Interest Rate Swap
Agreements
|
Foreign Exchange
Forward Contracts
and Options
|
Commodities
Futures and
Options
Contracts
|
|||||||||
In thousands of dollars
|
||||||||||||
Prepaid expense and other current assets
|
$ | — | $ | 6,748 | $ | — | ||||||
Other assets
|
$ | — | $ | 2,737 | $ | — | ||||||
Accrued liabilities
|
$ | 8,873 | $ | 5,109 | $ | 3,233 | ||||||
Other long-term liabilities
|
$ | — | $ | 2,348 | $ | — |
Cash Flow Hedging Derivatives
|
Interest Rate Swap
Agreements
|
Foreign Exchange
Forward Contracts
and Options
|
Commodities
Futures and
Options
Contracts
|
|||||||||
In thousands of dollars
|
||||||||||||
Gains (losses) recognized in other comprehensive
income (“OCI”) (effective portion)
|
$ | 7,856 | $ | (21,786) | $ | (69,750) | ||||||
Gains (losses) reclassified from accumulated OCI into
income (effective portion) (a)
|
$ | — | $ | 2,281 | $ | 22,400 | ||||||
Gains (losses) recognized in income (ineffective portion) (b)
|
$ | — | $ | — | $ | (691) |
Cash Flow Hedging Derivatives
|
Interest Rate Swap
Agreements
|
Foreign Exchange
Forward Contracts
and Options
|
Commodities
Futures and
Options
Contracts
|
|||||||||
In thousands of dollars
|
||||||||||||
Gains (losses) recognized in other comprehensive
income (“OCI”) (effective portion)
|
$ | (27,237) | $ | 6,477 | $ | (37,502) | ||||||
Gains (losses) reclassified from accumulated OCI into
income (effective portion) (a)
|
$ | — | $ | (5,886) | $ | 44,800 | ||||||
Gains (losses) recognized in income (ineffective portion) (b)
|
$ | — | $ | — | $ | 469 |
|
(a)
|
Gains (losses) reclassified from accumulated OCI into earnings were included in cost of sales for commodities futures and options contracts and for foreign exchange forward contracts and options designated as hedges of intercompany purchases of inventory. Other gains and losses for foreign exchange forward contracts and options were included in selling, marketing and administrative expenses.
|
|
(b)
|
Gains (losses) recognized in earnings were included in cost of sales.
|
For the Three Months Ended October 2, 2011
|
||||||||||||
Pre-Tax
Amount
|
Tax
(Expense)
Benefit
|
After-Tax
Amount
|
||||||||||
In thousands of dollars
|
||||||||||||
Net income
|
$ | 196,695 | ||||||||||
Other comprehensive income (loss):
|
||||||||||||
Foreign currency translation adjustments
|
$ | (37,826 | ) | $ | — | (37,826 | ) | |||||
Pension and post-retirement benefit plans
|
8,178 | (2,993 | ) | 5,185 | ||||||||
Cash flow hedges:
|
||||||||||||
Losses on cash flow hedging derivatives
|
(78,216 | ) | 31,444 | (46,772 | ) | |||||||
Reclassification adjustments
|
(11,504 | ) | 4,479 | (7,025 | ) | |||||||
Total other comprehensive loss
|
$ | (119,368 | ) | $ | 32,930 | (86,438 | ) | |||||
Comprehensive income
|
$ | 110,257 |
For the Three Months Ended October 3, 2010
|
||||||||||||
Pre-Tax
Amount
|
Tax
(Expense)
Benefit
|
After-Tax
Amount
|
||||||||||
In thousands of dollars
|
||||||||||||
Net income
|
$ | 180,169 | ||||||||||
Other comprehensive income (loss):
|
||||||||||||
Foreign currency translation adjustments
|
$ | 12,243 | $ | — | 12,243 | |||||||
Pension and post-retirement benefit plans
|
7,099 | (2,744 | ) | 4,355 | ||||||||
Cash flow hedges:
|
||||||||||||
Losses on cash flow hedging derivatives
|
(11,776 | ) | 4,064 | (7,712 | ) | |||||||
Reclassification adjustments
|
(11,043 | ) | 4,231 | (6,812 | ) | |||||||
Total other comprehensive income
|
$ | (3,477 | ) | $ | 5,551 | 2,074 | ||||||
Comprehensive income
|
$ | 182,243 |
For the Nine Months Ended October 2, 2011
|
||||||||||||
Pre-Tax
Amount
|
Tax
(Expense)
Benefit
|
After-Tax
Amount
|
||||||||||
In thousands of dollars
|
||||||||||||
Net income
|
$ | 486,829 | ||||||||||
Other comprehensive income (loss):
|
||||||||||||
Foreign currency translation adjustments
|
$ | (24,219 | ) | $ | — | (24,219 | ) | |||||
Pension and post-retirement benefit plans
|
21,670 | (8,429 | ) | 13,241 | ||||||||
Cash flow hedges:
|
||||||||||||
Losses on cash flow hedging derivatives
|
(83,680 | ) | 32,622 | (51,058 | ) | |||||||
Reclassification adjustments
|
(24,681 | ) | 9,524 | (15,157 | ) | |||||||
Total other comprehensive loss
|
$ | (110,910 | ) | $ | 33,717 | (77,193 | ) | |||||
Comprehensive income
|
$ | 409,636 |
For the Nine Months Ended October 3, 2010
|
||||||||||||
Pre-Tax
Amount
|
Tax
(Expense)
Benefit
|
After-Tax
Amount
|
||||||||||
In thousands of dollars
|
||||||||||||
Net income
|
$ | 374,286 | ||||||||||
Other comprehensive income (loss):
|
||||||||||||
Foreign currency translation adjustments
|
$ | 9,370 | $ | — | 9,370 | |||||||
Pension and post-retirement benefit plans
|
21,778 | (8,358 | ) | 13,420 | ||||||||
Cash flow hedges:
|
||||||||||||
Losses on cash flow hedging derivatives
|
(58,264 | ) | 21,958 | (36,306 | ) | |||||||
Reclassification adjustments
|
(38,914 | ) | 14,902 | (24,012 | ) | |||||||
Total other comprehensive loss
|
$ | (66,030 | ) | $ | 28,502 | (37,528 | ) | |||||
Comprehensive income
|
$ | 336,758 |
October 2,
2011
|
December 31,
2010
|
|||||||
In thousands of dollars
|
||||||||
Foreign currency translation adjustments
|
$ | (1,547 | ) | $ | 22,672 | |||
Pension and post-retirement benefit plans, net of tax
|
(257,339 | ) | (270,580 | ) | ||||
Cash flow hedges, net of tax
|
(33,374 | ) | 32,841 | |||||
Total accumulated other comprehensive loss
|
$ | (292,260 | ) | $ | (215,067 | ) |
October 2,
2011
|
December 31,
2010
|
|||||||
In thousands of dollars
|
||||||||
Raw materials
|
$ | 221,779 | $ | 209,058 | ||||
Goods in process
|
86,911 | 73,068 | ||||||
Finished goods
|
502,907 | 404,666 | ||||||
Inventories at FIFO
|
811,597 | 686,792 | ||||||
Adjustment to LIFO
|
(157,142 | ) | (153,170 | ) | ||||
Total inventories
|
$ | 654,455 | $ | 533,622 |
October 2, 2011
|
||||||||
Contract
Amount
|
Primary Currencies
|
|||||||
In millions of dollars
|
||||||||
Foreign exchange forward contracts to
purchase foreign currencies
|
$ | 79.4 |
Euros
British pound sterling
Canadian dollars
|
|||||
Foreign exchange forward contracts to
sell foreign currencies
|
$ | 124.9 |
Canadian dollars
|
Description
|
Fair Value as of October 2,
2011
|
Quoted Prices
in Active
Markets of
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
In thousands of dollars
|
||||||||||||
Assets | ||||||||||||
Cash flow hedging derivatives
|
$ | 11,692 | $ | 1,460 | $ | 10,232 | $ | — | ||||
Liabilities
|
||||||||||||
Cash flow hedging derivatives
|
$ | 36,729 | $ | 29,559 | $ | 7,170 | $ | — |
Description
|
Fair Value as of
December 31, 2010
|
Quoted Prices
in Active
Markets of
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
In thousands of dollars
|
||||||||||||
Assets | ||||||||||||
Cash flow hedging derivatives
|
$ | 9,485 | $ | — | $ | 9,485 | $ | — | ||||
Liabilities
|
||||||||||||
Cash flow hedging derivatives
|
$ | 19,563 | $ | 3,233 | $ | 16,330 | $ | — |
Pension Benefits
|
Other Benefits
|
|||||||||||||||
For the Three Months Ended
|
||||||||||||||||
October 2,
2011
|
October 3,
2010
|
October 2,
2011
|
October 3,
2010
|
|||||||||||||
In thousands of dollars
|
||||||||||||||||
Service cost
|
$ | 7,507 | $ | 7,061 | $ | 333 | $ | 346 | ||||||||
Interest cost
|
13,147 | 13,367 | 3,744 | 4,061 | ||||||||||||
Expected return on plan assets
|
(19,640 | ) | (19,022 | ) | — | — | ||||||||||
Amortization of prior service cost (credit)
|
231 | 287 | (63 | ) | (69 | ) | ||||||||||
Recognized net actuarial loss (gain)
|
6,693 | 7,129 | (18 | ) | (33 | ) | ||||||||||
Administrative expenses
|
134 | 141 | 110 | 75 | ||||||||||||
Net periodic benefit cost
|
8,072 | 8,963 | 4,106 | 4,380 | ||||||||||||
Curtailment credit
|
(7 | ) | — | — | — | |||||||||||
Total amount reflected in earnings
|
$ | 8,065 | $ | 8,963 | $ | 4,106 | $ | 4,380 |
Pension Benefits
|
Other Benefits
|
|||||||||||||||
For the Nine Months Ended
|
||||||||||||||||
October 2,
2011
|
October 3,
2010
|
October 2,
2011
|
October 3,
2010
|
|||||||||||||
In thousands of dollars
|
||||||||||||||||
Service cost
|
$ | 22,544 | $ | 21,198 | $ | 1,000 | $ | 1,038 | ||||||||
Interest cost
|
39,752 | 40,107 | 11,232 | 12,186 | ||||||||||||
Expected return on plan assets
|
(58,675 | ) | (57,074 | ) | — | — | ||||||||||
Amortization of prior service cost (credit)
|
692 | 858 | (190 | ) | (208 | ) | ||||||||||
Recognized net actuarial loss (gain)
|
20,779 | 21,391 | (54 | ) | (100 | ) | ||||||||||
Administrative expenses
|
550 | 358 | 211 | 221 | ||||||||||||
Net periodic benefit cost
|
25,642 | 26,838 | 12,199 | 13,137 | ||||||||||||
Curtailment loss (credit)
|
1,826 | — | (174 | ) | — | |||||||||||
Total amount reflected in earnings
|
$ | 27,468 | $ | 26,838 | $ | 12,025 | $ | 13,137 |
For the Nine Months Ended
October 2, 2011
|
||||||
Shares
|
Dollars
|
|||||
I n thousands | ||||||
Shares repurchased in the open market under pre-approved
share repurchase programs
|
1,903 | $ | 100,015 | |||
Shares repurchased to replace Treasury Stock issued for stock options a
nd incentive compensation
|
4,715 | 257,635 | ||||
Total share repurchases
|
6,618 | 357,650 | ||||
Shares issued for stock options and incentive compensation
|
(4,917) | (166,135) | ||||
Net change
|
1,701 | $ | 191,515 |
For the Three Months Ended
|
For the Nine Months Ended
|
||||||||||||||||||
October 2,
2011
|
October 3,
2010
|
Percent
Change
Increase
(Decrease)
|
October 2,
2011
|
October 3,
2010
|
Percent
Change
Increase
(Decrease)
|
||||||||||||||
In thousands except per share amounts
|
|||||||||||||||||||
Net Sales
|
$ | 1,624.3 | $ | 1,547.1 | 5.0% | $ | 4,513.6 | $ | 4,188.2 | 7.8% | |||||||||
Cost of Sales
|
944.1 | 891.9 | 5.8 | 2,612.9 | 2,392.5 | 9.2 | |||||||||||||
Gross Profit
|
680.2 | 655.2 | 3.8 | 1,900.7 | 1,795.7 | 5.8 | |||||||||||||
Gross Margin
|
41.9% | 42.4% | 42.1% | 42.9% | |||||||||||||||
SM&A Expense
|
356.9 | 357.6 | (0.2) | 1,080.6 | 1,035.2 | 4.4 | |||||||||||||
SM&A Expense as a percent of sales
|
22.0% | 23.1% | 23.9% | 24.7% | |||||||||||||||
Business Realignment and Impairment Charges (Credits), net
|
2.2 | (2.1 | ) | 206.6 | (5.9 | ) | 83.1 | (107.1) | |||||||||||
EBIT
|
321.1 | 299.7 | 7.2 | 826.0 | 677.4 | 21.9 | |||||||||||||
EBIT Margin
|
19.8% | 19.4% | 18.3% | 16.2% | |||||||||||||||
Interest Expense, net
|
23.0 | 22.3 | 3.5 | 70.9 | 68.8 | 3.0 | |||||||||||||
Provision for Income Taxes
|
101.4 | 97.2 | 4.3 | 268.3 | 234.3 | 14.5 | |||||||||||||
Effective Income Tax Rate
|
34.0% | 35.0% | 35.5% | 38.5% | |||||||||||||||
Net Income
|
$ | 196.7 | $ | 180.2 | 9.2 | $ | 486.8 | $ | 374.3 | 30.1 | |||||||||
Net Income Per Share-Diluted
|
$ | 0.86 | $ | 0.78 | 10.3 | $ | 2.12 | $ | 1.63 | 30.1 |
2010
|
2011 (Projected)
|
||||||
Reported EPS-Diluted
|
$2.21 | $2.72 - $2.76 | |||||
Gain on sale of trademark
licensing rights
|
— | $(0.05) | |||||
Total Business Realignment
and Impairment Charges
|
$0.34 | $0.11 - $0.12 | |||||
Adjusted EPS-Diluted *
|
$2.55 | $2.79 - $2.82 |
|
·
|
Issues or concerns related to the quality and safety of our products, ingredients or packaging could cause
a product recall and/or result in harm to the Company’s reputation, negatively impacting our operating results;
|
|
·
|
Increases in raw material and energy costs, along with the availability of adequate supplies of raw materials could affect future financial results;
|
|
·
|
Price increases may not be sufficient to offset cost increases and maintain profitability, or may result in sales volume declines associated with pricing elasticity;
|
|
·
|
Market demand for new and existing products could decline;
|
|
·
|
Increased marketplace competition could hurt our business;
|
|
·
|
Disruption to our supply chain could impair our ability to produce or deliver our finished products, resulting in a negative impact on our operating results;
|
|
·
|
Our financial results may be adversely impacted by the failure to successfully execute acquisitions, divestitures and joint ventures;
|
|
·
|
Changes in governmental laws and regulations could increase our costs and liabilities or impact demand for our products;
|
|
·
|
Political, economic, and/or financial market conditions could negatively impact our financial results;
|
|
·
|
International operations could fluctuate unexpectedly and adversely impact our business;
|
|
·
|
Disruptions, failures or security breaches of our information technology infrastructure could have a negative impact on our operations;
|
·
|
Future developments related to the investigation by government regulators of alleged pricing practices
by members of the confectionery industry could impact our reputation, the regulatory environment
under which we operate, and our operating results;
|
|
·
|
Pension costs or funding requirements could increase at a higher than anticipated rate;
|
|
·
|
Implementation of our Project Next Century program may not occur within the anticipated timeframe and/or may exceed our cost estimates;
|
|
·
|
Annual savings from initiatives to transform our supply chain and advance our value-enhancing strategy may be less than we expect; and
|
|
·
|
Such other matters as discussed in our Annual Report on Form 10-K for 2010.
|
Period
|
(a) Total Number
of Shares
Purchased
|
(b) Average Price
Paid
per Share
|
(c) Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs
|
(d) Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans
or Programs
|
|||||||
In thousands of dollars
|
|||||||||||
July 4 through
July 31, 2011
|
— | $ | — | — | $ | 250,000 | |||||
August 1 through
August 28, 2011
|
2,502,388 | $ | 56.23 | — | $ | 250,000 | |||||
August 29 through
October 2, 2011
|
409,771 | $ | 58.57 | — | $ | 250,000 | |||||
Total
|
2,912,159 | $ | 56.56 | — |
Exhibit
Number
|
Description
|
||
12.1
|
Statement showing computation of ratio of earnings to fixed charges for the nine months ended October 2, 2011 and October 3, 2010.
|
||
31.1
|
Certification of John P. Bilbrey, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
31.2
|
Certification of Humberto P. Alfonso, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32.1
|
Certification of John P. Bilbrey, Chief Executive Officer, and Humberto P. Alfonso, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
THE HERSHEY COMPANY
|
|
(Registrant)
|
|
Date: November 4, 2011
|
/s/Humberto P. Alfonso
Humberto P. Alfonso
Chief Financial Officer
|
Date: November 4, 2011
|
/s/David W. Tacka
David W. Tacka
Chief Accounting Officer
|
EXHIBIT INDEX
|
||
Exhibit 12.1
|
Computation of Ratio of Earnings to Fixed Charges
|
|
Exhibit 31.1
|
Certification of John P. Bilbrey, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Exhibit 31.2
|
Certification of Humberto P. Alfonso, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Exhibit 32.1
|
Certification of John P. Bilbrey, Chief Executive Officer, and Humberto P. Alfonso, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Exhibit 101.INS
|
XBRL Instance Document
|
|
Exhibit 101.SCH
|
XBRL Taxonomy Extension Schema
|
|
Exhibit 101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
Exhibit 101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
Exhibit 101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
Exhibit 101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
No Customers Found
Suppliers
Supplier name | Ticker |
---|---|
General Electric Company | GE |
The Kraft Heinz Company | KHC |
Illinois Tool Works Inc. | ITW |
CSX Corporation | CSX |
Ball Corporation | BLL |
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|