The Hershey Company announced yesterday (21 December) its intention to begin expensing employee stock options and other share-based compensation in the fourth quarter of 2005.
In accordance with the Financial Accounting Standards Board Statement of Financial Accounting Standards number 123 Share-Based Payment (SFAS 123R), calculations will be made using the modified retrospective method.
Full-year results will be reported as though stock options granted by the company had been expensed in January 2005. The financial statements for years prior to 2005 will be adjusted to reflect the impact of SFAS 123R. Projections suggest that its impact in 2005 will be approximately US$0.09 per share-diluted, of which $0.03 per share-diluted will be recorded in the fourth quarter. Calculations will also take into account a deferred income tax benefit and will adjust the combined balance sheets accordingly.
Hershey’s is predicting that the amount of share-based compensation in 2006 will be comparable to 2005 levels.