Hershey Foods Corporation (NYSE: HSY) yesterday announced record sales and earnings for the third quarter ended September 30, 2001. Consolidated net sales for the third quarter of 2001 were $1,304,184,000 compared with $1,196,755,000 for the third quarter of 2000. Net income for the third quarter of 2001 was $120,762,000, or $.88 per share diluted, compared with $107,405,000, or $.78 per share diluted, for the comparable period of 2000, an EPS increase of 12.8 percent.
For the first nine months of 2001, consolidated net sales were $3,283,324,000 compared with $3,026,074,000 for the first nine months of 2000. Net income for the first nine months of 2001 was $252,107,000, or $1.83 per share diluted, compared with $218,581,000, or $1.58 per share diluted, for the same period in 2000, an EPS increase of 15.8 percent.
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Hershey Foods Corporation (download)
During the third quarter, sales increased by nine percent, driven by a solid three percent increase in the base business, as well as continued strength in the acquired mint and gum business. In addition, Hershey’s retail sales growth, as measured by IRI, continues to outpace the category resulting in market share gains over the latest twelve-week, year-to-date, and 52-week periods.
Hershey achieved continued improvement in its gross margin as a result of lower logistics costs and overall improved supply chain efficiencies. This improvement enabled additional marketing spending, which contributed to the strong retail performance.
The pre-tax gain of $19.2 million on the September 5 sale of Luden’s was largely offset by an $18.1 million tax liability on the transaction, resulting in an increase of approximately $.01 per share diluted for the quarter. Given the highly seasonal nature of the Luden’s business, it is expected that the overall effect of the transaction will be neutral by the end of the year.
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By GlobalData“Hershey’s Back-to-School and Halloween sell-in to our retail customers developed very well as evidenced by these results,” said Richard H. Lenny, President and Chief Executive Officer. “While the economic environment has been challenging, Hershey delivered a solid third quarter performance. I’m very pleased with how well our organization is delivering on several initiatives put in place during the year, which are beginning to deliver meaningful results,” 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; the Corporation’s ability to implement improvements to and reduce costs associated with the Corporation’s distribution operations; and changes in raw material and other costs, as discussed in the Corporation’s Annual Report on Form 10-K for 2000.
Hershey Foods Corporation
Summary of Consolidated Statements of Income
for the periods ended September 30, 2001 and October 1, 2000
(in thousands of dollars except per share amounts)
Third Quarter Nine Months
2001 2000 2001 2000
Net Sales $1,304,184 $1,196,755 $3,283,324 $3,026,074
Costs and Expenses:
Cost of Sales 752,575 696,431 1,906,719 1,803,598
Selling, Marketing
and Administrative 342,622 303,688 923,911 808,210
Gain on Sale of
Business (19,237) — (19,237) —
Total Costs and
Expenses 1,075,960 1,000,119 2,811,393 2,611,808
Income Before Interest
and Income Taxes 228,224 196,636 471,931 414,266
Interest Expense, net 18,147 21,152 52,371 56,525
Income Before Income
Taxes 210,077 175,484 419,560 357,741
Provision for Income
Taxes 89,315 68,079 167,453 139,160
Net Income $120,762 $107,405 $252,107 $218,581
Net Income Per Share
– Basic $0.89 $0.78 $1.85 $1.59
– Diluted $0.88 $0.78 $1.83 $1.58
Shares Outstanding
– Basic 135,869 136,836 136,343 137,568
– Diluted 137,213 137,690 137,768 138,480
Hershey Foods Corporation
Consolidated Balance Sheets
as of September 30, 2001 and December 31, 2000
(in thousands of dollars)
Assets 2001 2000
Cash and Cash Equivalents $49,168 $31,969
Accounts Receivable – Trade (Net) 548,409 379,680
Deferred Income Taxes 68,950 76,136
Inventories 725,703 605,173
Prepaid Expenses and Other 75,985 202,390
Total Current Assets 1,468,215 1,295,348
Net Plant and Property 1,576,946 1,585,388
Intangibles Resulting from Business
Acquisitions 438,875 474,448
Other Assets 127,303 92,580
Total Assets $3,611,339 $3,447,764
Liabilities and Stockholders’ Equity
Loans Payable $238,298 $258,123
Accounts Payable 162,998 149,232
Accrued Liabilities 365,238 358,067
Taxes Payable 94,022 1,479
Total Current Liabilities 860,556 766,901
Long-Term Debt 876,981 877,654
Other Long-Term Liabilities 332,602 327,674
Deferred Income Taxes 299,590 300,499
Total Liabilities 2,369,729 2,272,728
Total Stockholders’ Equity 1,241,610 1,175,036
Total Liabilities and Stockholders’
Equity $3,611,339 $3,447,764
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