Hershey Foods Corporation (NYSE: HSY) today announced sales and earnings for the fourth quarter ended December 31, 2000. Consolidated net sales for the fourth quarter were $1,194,902,000 compared with $1,105,838,000 for the fourth quarter of 1999. Net income for the fourth quarter of 2000 was $115,962,000, or $.84 per share diluted, compared with $98,007,000, or $.70 per share diluted, for the comparable period in 1999, an EPS increase of 20.0 percent. No operating results from the acquisition of the mint and gum businesses of Nabisco, Inc. were included in the fourth quarter of 2000, as the transaction was completed very late in the year.
For the year 2000, consolidated net sales were $4,220,976,000 compared with $3,970,924,000 for 1999. Net income for 2000 was $334,543,000, or $2.42 per share diluted, compared with $460,310,000, or $3.26 per share diluted, for 1999. In addition to the gain on the sale of the Corporation’s pasta business in January 1999, as well as one month’s operational results for this business, these results include a gain from changes in the retiree medical program which occurred in the first quarter of 1999, and a $.03 per share one-time gain on the swap of corporate aircraft in the first quarter of 2000. On a pro forma basis, which excludes all of these one-time items, earnings per share for the year 2000 were $2.39 per share diluted versus $2.03 per share diluted for 1999, an increase of 17.7 percent.
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“We are very pleased with the solid finish, for both sales and earnings, achieved in the fourth quarter of 2000,” said Kenneth L. Wolfe, Chairman and Chief Executive Officer.
“As expected, our sales increased at a healthy rate of 8.1 percent, as we experienced a strong Christmas season following an excellent Halloween season. In addition, all other business units achieved solid sales increases. Our corporate-wide information system performed well, and the new Eastern Distribution Center located near Hershey also helped us provide customers with improved service. Hershey’s strong brands did the rest, selling through retail channels at an accelerated pace, leading to an increase in market share. For the year, the domestic confectionery category grew by 3.7 percent, as measured by INFOSCAN, and Hershey’s retail sales grew at a rate of 4.7 percent.
“Operating income for the fourth quarter increased at a rate significantly higher than sales, as lower commodity and logistics costs, as well as manufacturing efficiencies, more than offset higher marketing and administrative costs. Fewer weighted average shares outstanding also contributed to the earnings per share growth.
“As we look to the year 2001, we expect to achieve solid growth from our core businesses, as well as incremental sales and earnings from our recent acquisition which will strengthen our position in the overall confectionery, gum and mint category. The integration of these businesses is proceeding according to plan. We are continuing to revamp our logistics capabilities in the west and mid-west, which will result in better customer service and lower costs going forward. Altogether, we expect another fine year for Hershey in 2001 as we increase support for our strong brands and provide the best quality products at a good value for both our customers and consumers,” Wolfe concluded.
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By GlobalDataSAFE 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; the Corporation’s ability to implement improvements to and reduce costs associated with the corporation’s distribution operations; and changes in raw material costs, as discussed in the Corporation’s Annual Report on Form 10-K for 1999.
Hershey Foods Corporation
Summary of Consolidated Statements of Income
for the periods ended December 31, 2000 and December 31, 1999
(in thousands of dollars except per share amounts)
Fourth Quarter Twelve Months
2000 1999 2000 1999
Net Sales $1,194,902 $1,105,838 $4,220,976 $3,970,924
Costs and Expenses:
Cost of Sales 667,553 645,722 2,471,151 2,354,724
Selling, Marketing
and Administrative 318,965 281,140 1,127,175 1,057,840
Gain on Sale
of Business – – – (243,785)
Total Costs and
Expenses 986,518 926,862 3,598,326 3,168,779
Income Before Interest
and Income Taxes 208,384 178,976 622,650 802,145
Interest Expense, net 19,486 18,309 76,011 74,271
Income Before Income
Taxes 188,898 160,667 546,639 727,874
Provision for Income
Taxes 72,936 62,660 212,096 267,564
Net Income $115,962 $98,007 $334,543 $460,310
Net Income Per Share
– Basic $.85 $.71 $2.44 $3.29
– Diluted $.84 $.70 $2.42 $3.26
NOTE: Net Income Per Share – Basic and Diluted have been computed based
on the provisions of Statement of Financial Accounting Standards
No. 128 Earnings per Share. Basic shares outstanding for the
fourth quarter of 2000 were 136,594,000 compared with 138,736,000
for the fourth quarter of 1999. Diluted shares outstanding for the
fourth quarter of 2000 were 137,987,000 compared with 139,792,000
for the fourth quarter of 1999. Basic shares outstanding for the
twelve months of 2000 were 137,326,000 compared with 140,031,000
for the twelve months of 1999. Diluted shares outstanding for the
twelve months of 2000 were 138,365,000 compared with 141,300,000
for the comparable period of 1999. Net income for the twelve
months of 1999 includes a one-time, after-tax gain on the
January 1999 sale of the corporation’s pasta business of
$165,016,000, or $1.17 per share diluted.
Hershey Foods Corporation
Consolidated Balance Sheets
as of December 31, 2000 and December 31, 1999
(in thousands of dollars)
Assets 2000 1999
Cash and Cash Equivalents $31,969 $118,078
Accounts Receivable – Trade (Net) 379,680 352,750
Deferred Income Taxes 76,136 80,303
Inventories 605,173 602,202
Prepaid Expenses and Other 202,390 126,647
Total Current Assets 1,295,348 1,279,980
Net Plant and Property 1,585,388 1,510,460
Intangibles Resulting from Business
Acquisitions 474,448 450,165
Other Assets 92,580 106,047
Total Assets $3,447,764 $3,346,652
Liabilities and Stockholders’ Equity
Loans Payable 258,123 211,606
Accounts Payable 149,232 136,567
Accrued Liabilities 358,067 292,497
Taxes Payable 1,479 72,159
Total Current Liabilities 766,901 712,829
Long-Term Debt 877,654 878,213
Other Long-Term Liabilities 327,674 330,938
Deferred Income Taxes 300,499 326,045
Total Liabilities 2,272,728 2,248,025
Total Stockholders’ Equity 1,175,036 1,098,627
Total Liabilities and Stockholders’ Equity $3,447,764 $3,346,652
Hershey Foods Corporation
Pro Forma Summary of Consolidated Statements of Income
Excluding One-Time Items
for the periods ended December 31, 2000 and December 31, 1999
(in thousands except per share amounts)
Fourth Quarter Twelve Months
2000 1999 (a) 2000 1999 (c)
Net Sales $1,194,902 $1,098,698 $4,220,976 $3,923,311
Costs and Expenses:
Cost of Sales 667,553 645,722 2,471,151 2,351,159(d)
Selling, Marketing
and Administrative 318,965 274,000 1,134,487(b) 1,028,757
Total Costs and
Expenses 986,518 919,722 3,605,638 3,379,916
Income Before Interest
and Income Taxes 208,384 178,976 615,338 543,395
Interest Expense, net 19,486 18,309 76,011 74,271
Income Before Income
Taxes 188,898 160,667 539,327 469,124
Provision for Income
Taxes 72,936 62,660 209,259 182,958
Net Income $115,962 $98,007 $330,068 $286,166
Net Income Per Share
– Basic $.85 $.71 $2.40 $2.04
– Diluted $.84 $.70 $2.39 $2.03
Shares Outstanding
– Basic 136,594 138,736 137,326 140,031
Shares Outstanding
– Diluted 137,987 139,792 138,365 141,300
EBIT $208,384 $178,976 $615,338 $543,395
EBITDA $253,226 $221,617 $791,302 $706,478
(a) Reflects minor reclassification of sales for the international
division wherein certain promotional expenditures were netted against
sales instead of being classified as selling expenses.
(b) Excludes airplane swap pre-tax gain of $7.3 million recorded in the
first quarter of 2000.
(c) Excludes gain on the sale of the corporation’s pasta business in
January 1999, as well as one month’s operational results for the pasta
business. Also, reflects minor reclassification of sales for the
international division wherein certain promotional expenditures were
netted against sales instead of being classified as selling expenses.
(d) Excludes FAS 106 pre-tax gain on retiree medical benefits of
$12.5 million recorded in the first quarter of 1999.
