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HERSHEY, Pa., Jan. 29 /PRNewswire-FirstCall/ -- Hershey Foods Corporation
(NYSE: HSY) today announced sales and earnings for the fourth quarter ended
December 31, 2002. Consolidated net sales for the fourth quarter were
$1,156,028,000 compared with $1,152,980,000 for the fourth quarter of 2001.
Net income was $130,320,000, or $.96 per share-diluted, compared with a loss
of ($44,951,000), or ($.33) per share-diluted, in 2001.
The results for the fourth quarter of 2002 included a pre-tax charge of
$13.3 million, or $.06 per share-diluted, associated with the business
realignment initiatives announced in October 2001. The results for the fourth
quarter of 2001 included a one-time charge of $278.4 million, or $1.25 per
share-diluted, related to the realignment process, as well as the amortization
of goodwill. Excluding the one-time items, net income for the fourth quarter
of 2002 was $138,690,000, or $1.02 per share-diluted, compared with
$130,523,000, or $.95 per share-diluted, a gain of 7.4 percent.
For the full year 2002, consolidated net sales were $4,120,317,000
compared with $4,137,217,000 for 2001. Net income for 2002 was $403,578,000,
or $2.93 per share-diluted, compared with $207,156,000, or $1.50 per share
diluted, the prior year.
Results for 2002 included cumulative pre-tax realignment charges of $34.0
million, or $.16 per share-diluted, and pre-tax expenses of $17.2 million, or
$.08 per share-diluted, related to the exploration of the sale of the Company;
and in 2001, results included the pre-tax charge of $278.4 million, or $1.25
per share-diluted, related to the realignment initiatives, the gain on the
sale of the Luden's business in the third quarter, and the amortization of
goodwill.
Excluding one-time items, net income for 2002 was $435,994,000, or $3.17
per share-diluted, compared with $391,482,000, or $2.84 per share-diluted, for
2001, an increase of 11.6 percent. A pro forma income statement reflecting
these adjustments accompanies this press release.
Net sales for the fourth quarter of 2002 increased by 0.3 percent on a
nominal basis. On a comparable basis, net sales increased by about 1.0
percent spurred by a customer buy-in related to the price increase announced
on December 10, 2002. Fourth quarter sales were one to two percent higher
than they would have been absent the buy-in. This increase in sales was
offset somewhat by higher trade promotion expense, lower domestic seasonal
sales, and weakness in the Canadian market. Gross margin improved by 60 basis
points as a result of improved mix and enhanced supply chain efficiencies.
Selling, Marketing, and Administrative expenses decreased by 30 basis points
as a percentage of sales resulting from significantly lower general and
administrative costs, which were only partially offset by higher selling and
marketing expenses.
For the year, sales were off slightly, but the mix of revenues was
significantly strengthened as we focused on higher margin products, packtypes,
and channels of trade. The improved sales mix, price increases on the packaged
candy line, and supply chain efficiencies led to a 130 basis point improvement
in gross margin. For the year, Selling, Marketing and Administrative expenses
declined 30 basis points as a percentage of sales, due to lower general and
administrative costs, which more than offset higher selling and marketing
expenses.
"Hershey's fourth quarter results were in line with expectations,
achieving a balance of improved marketplace performance and profitability,"
said Richard H. Lenny, Chairman, President, and Chief Executive Officer.
"Despite a sluggish retail environment, Hershey's consumer takeaway increased,
resulting in a 0.4 point gain in market share. Equally as important, supply
chain productivity and tight expense control continued to deliver solid gains
during the quarter.
"For the full year, we made good progress against our value-enhancing
strategy. Profitability, margins, and returns delivered strong growth versus
2001, reflecting improved mix, productivity gains across the supply chain, and
lower general and administrative spending. Although net sales were flat in
the U.S. business, retail takeaway in all food, drug, mass, and convenience
channels increased by three percent. This performance reflects our disciplined
focus on building Hershey's core brands (+8 %), expanding our leadership
position in the key chocolate category (+5 %), and significantly improving
performance in the high growth convenience store channel (+9 %).
"Overall, I'm most pleased with the Company's results in 2002. Our
ability to deliver solid performance, despite numerous challenges, positions
us well as we continue to implement Hershey's long-term growth initiatives,"
Lenny concluded.
Safe Harbor Statement
This release contains statements which are forward-looking. These
statements are made based upon current expectations which are subject to risk
and uncertainty. Actual results may differ materially from those contained in
the forward-looking statements. Factors which could cause results to differ
materially include, but are not limited to: changes in the confectionery and
grocery business environment, including actions of competitors and changes in
consumer preferences; changes in governmental laws and regulations including
taxes; market demand for new and existing products; changes in raw material
and other costs; and pension cost factors, such as actuarial assumptions and
market performance, as discussed in the Company's annual report on Form 10-K
for 2001.
Live Webcast
As previously announced, the Company will hold a conference call with
analysts today at 10 a.m. EST. The conference call will be webcast live via
Hershey's corporate web site www.hersheys.com. Please go to the Investor
Relations Section of the Web site for further details.
Hershey Foods Corporation
Summary of Consolidated Statements of Income
for the periods ended December 31, 2002 and December 31, 2001
(in thousands of dollars except per share amounts)
Fourth Quarter Twelve Months
2002 2001 2002 2001
Net Sales $1,156,028 $1,152,980 $4,120,317 $4,137,217
Costs and Expenses:
Cost of Sales 709,840 759,914 2,561,052 2,668,530
Selling, Marketing
and Administrative 216,758 224,049 833,426 846,976
Business Realignment
Charge, net 8,278 228,314 27,552 228,314
Gain on Sale of
Business --- --- --- (19,237)
Total Costs and
Expenses 934,876 1,212,277 3,422,030 3,724,583
Income Before Interest
and Income Taxes 221,152 (59,297) 698,287 412,634
Interest Expense, net 15,274 16,722 60,722 69,093
Income Before Income
Taxes 205,878 (76,019) 637,565 343,541
Provision for Income
Taxes 75,558 (31,068) 233,987 136,385
Net Income $130,320 ($44,951) $403,578 $207,156
Net Income Per Share
- Basic $0.96 ($0.33) $2.96 $1.52
- Diluted $0.96 ($0.33) $2.93 $1.50
Shares Outstanding
- Basic 135,409 135,953 136,538 136,245
- Diluted 136,337 135,953 137,714 137,696
Hershey Foods Corporation
Pro Forma Summary of Consolidated Statements of Income
for the periods ended December 31, 2002 and December 31, 2001
(in thousands of dollars except per share amounts)
Fourth Quarter
2002 2001
Net Sales $1,156,028 $1,152,980
Costs and Expenses:
Cost of Sales 704,821 (a) 709,812 (d)
Selling, Marketing and
Administrative 216,834 (b) 220,575 (e)
Business Realignment Charge, net --- (c) --- (f)
Gain on Sale of Business --- ---
Total Costs and Expenses 921,655 930,387
Income Before Interest and Income Taxes 234,373 222,593
Interest Expense, net 15,274 16,722
Income Before Income Taxes 219,099 205,871
Provision for Income Taxes 80,409 75,348
Net Income $138,690 $130,523
Net Income Per Share - Basic $1.02 $0.96
- Diluted $1.02 $0.95
Shares Outstanding - Basic 135,409 135,953
- Diluted 136,337 137,450
Twelve Months
2002 2001
Net Sales $4,120,317 $4,137,217
Costs and Expenses:
Cost of Sales 2,554,625 (a) 2,618,428 (d)
Selling, Marketing and
Administrative 816,196 (b) 832,217 (e)
Business Realignment Charge, net --- (c) --- (f)
Gain on Sale of Business --- --- (g)
Total Costs and Expenses 3,370,821 3,450,645
Income Before Interest and Income Taxes 749,496 686,572
Interest Expense, net 60,722 69,093
Income Before Income Taxes 688,774 617,479
Provision for Income Taxes 252,780 225,997
Net Income $435,994 $391,482
Net Income Per Share - Basic $3.19 $2.87
- Diluted $3.17 $2.84
Shares Outstanding - Basic 136,538 136,245
- Diluted 137,714 137,696
(a) Excludes business realignment charges of $5.0 million for the
fourth quarter and $6.4 million for the twelve months.
(b) Excludes an adjustment to expenses of $(0.1) million in the fourth
quarter and total expenses of $17.2 million, or $.08 per share-
diluted, for the twelve months, related to the exploration of the
possible sale of the Corporation.
(c) Excludes business realignment charges of $8.3 million, or $.04 per
share-diluted, for the fourth quarter and $27.6 million, or $.13 per
share-diluted, for the twelve months.
(d) Excludes business realignment charges of $50.1 million, or $30.9
million after-tax, for both the fourth quarter and twelve months.
(e) Excludes goodwill amortization of $3.5 million for the fourth
quarter and $14.8 million for the twelve months.
(f) Excludes business realignment charges of $228.3 million, or $140.9
million after-tax, for both the fourth quarter and twelve months.
(g) Excludes gain on Luden's sale of $19.2 million pre-tax, $1.1
million after-tax, or $.01 per share-diluted, for the twelve months.
Hershey Foods Corporation
Consolidated Balance Sheets
as of December 31, 2002 and December 31, 2001
(in thousands of dollars)
Assets 2002 2001
Cash and Cash Equivalents $297,743 $134,147
Accounts Receivable - Trade (Net) 370,976 361,726
Deferred Income Taxes --- 96,939
Inventories 503,291 512,134
Prepaid Expenses and Other 91,608 62,595
Total Current Assets 1,263,618 1,167,541
Net Plant and Property 1,486,055 1,534,901
Goodwill 378,453 388,702
Other Intangibles 39,898 40,426
Other Assets 312,527 115,860
Total Assets $3,480,551 $3,247,430
Liabilities and Stockholders' Equity
Loans Payable $28,124 $7,926
Accounts Payable 124,507 133,049
Accrued Liabilities 356,716 462,901
Taxes Payable 12,731 2,568
Deferred Income Taxes 24,768 ---
Total Current Liabilities 546,846 606,444
Long-Term Debt 851,800 876,972
Other Long-Term Liabilities 362,162 361,041
Deferred Income Taxes 348,040 255,769
Total Liabilities 2,108,848 2,100,226
Total Stockholders' Equity 1,371,703 1,147,204
Total Liabilities and Stockholders'
Equity $3,480,551 $3,247,430
SOURCE Hershey Foods Corporation
/CONTACT: Christine M. Dugan, +1-717-508-3238; or Financial: James A.
Edris, +1-717-534-7556, both of Hershey Foods Corporation/
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