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
|
State
of Incorporation
|
IRS
Employer Identification No.
|
|
Delaware
|
23-0691590
|
Large
accelerated filer x
|
Accelerated
filer o
|
|
Non-accelerated
filer o (Do not check if a smaller
reporting company)
|
Smaller
reporting company o
|
Part
I. Financial Information
|
Page
Number
|
Item
1. Consolidated Financial Statements
(Unaudited)
|
|
Consolidated
Statements of Income
|
|
Three
months ended April 5, 2009 and March 30, 2008
|
3
|
Consolidated
Balance Sheets
|
|
April
5, 2009 and December 31, 2008
|
4
|
Consolidated
Statements of Cash Flows
|
|
Three
months ended April 5, 2009 and March 30, 2008
|
5
|
Notes
to Consolidated Financial Statements
|
6
|
Item
2. Management’s Discussion and Analysis of
|
|
Results
of Operations and Financial Condition
|
18
|
Item
3. Quantitative and Qualitative Disclosures
|
|
About
Market Risk
|
22
|
Item
4. Controls and Procedures
|
22
|
Part
II. Other Information
|
|
Item
2. Unregistered Sales of Equity Securities and
Use
|
|
of
Proceeds
|
24
|
Item
6. Exhibits
|
24
|
For
the Three Months Ended
|
||||||||
April
5,
2009
|
March
30,
2008
|
|||||||
Net
Sales
|
$ | 1,236,031 | $ | 1,160,342 | ||||
Costs
and Expenses:
|
||||||||
Cost
of sales
|
795,803 | 783,890 | ||||||
Selling,
marketing and administrative
|
274,456 | 249,949 | ||||||
Business
realignment and impairment charges, net
|
12,838 | 4,085 | ||||||
Total
costs and expenses
|
1,083,097 | 1,037,924 | ||||||
Income
before Interest and Income Taxes
|
152,934 | 122,418 | ||||||
Interest
expense, net
|
23,896 | 24,386 | ||||||
Income
before Income Taxes
|
129,038 | 98,032 | ||||||
Provision
for income taxes
|
53,144 | 34,787 | ||||||
Net
Income
|
$ | 75,894 | $ | 63,245 | ||||
Earnings
Per Share - Basic - Class B Common Stock
|
$ | .31 | $ | .26 | ||||
Earnings
Per Share - Diluted - Class B Common Stock
|
$ | .31 | $ | .26 | ||||
Earnings
Per Share - Basic - Common Stock
|
$ | .34 | $ | .29 | ||||
Earnings
Per Share - Diluted - Common Stock
|
$ | .33 | $ | .28 | ||||
Average
Shares Outstanding - Basic - Common Stock
|
166,767 | 166,771 | ||||||
Average
Shares Outstanding - Basic - Class B Common Stock
|
60,711 | 60,806 | ||||||
Average
Shares Outstanding - Diluted
|
228,284 | 228,926 | ||||||
Cash
Dividends Paid Per Share:
|
||||||||
Common
Stock
|
$ | .2975 | $ | .2975 | ||||
Class
B Common Stock
|
$ | .2678 | $ | .2678 | ||||
ASSETS
|
April
5,
2009
|
December 31,
2008
|
||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 70,936 | $ | 37,103 | ||||
Accounts
receivable - trade
|
331,031 | 455,153 | ||||||
Inventories
|
572,767 | 592,530 | ||||||
Deferred
income taxes
|
61,018 | 70,903 | ||||||
Prepaid
expenses and other
|
171,018 | 189,256 | ||||||
Total
current assets
|
1,206,770 | 1,344,945 | ||||||
Property,
Plant and Equipment, at cost
|
3,428,030 | 3,437,420 | ||||||
Less-accumulated
depreciation and amortization
|
(1,980,916 | ) | (1,978,471 | ) | ||||
Net
property, plant and equipment
|
1,447,114 | 1,458,949 | ||||||
Goodwill
|
555,024 | 554,677 | ||||||
Other
Intangibles
|
123,559 | 110,772 | ||||||
Deferred
Income Taxes
|
19,303 | 13,815 | ||||||
Other
Assets
|
154,774 | 151,561 | ||||||
Total
assets
|
$ | 3,506,544 | $ | 3,634,719 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$ | 239,634 | $ | 249,454 | ||||
Accrued
liabilities
|
431,782 | 504,065 | ||||||
Accrued
income taxes
|
57,081 | 15,189 | ||||||
Short-term
debt
|
357,737 | 483,120 | ||||||
Current
portion of long-term debt
|
17,112 | 18,384 | ||||||
Total
current liabilities
|
1,103,346 | 1,270,212 | ||||||
Long-term
Debt
|
1,505,281 | 1,505,954 | ||||||
Other
Long-term Liabilities
|
503,602 | 504,963 | ||||||
Deferred
Income Taxes
|
7,697 | 3,646 | ||||||
Total
liabilities
|
3,119,926 | 3,284,775 | ||||||
Stockholders'
Equity:
|
||||||||
The
Hershey Company Stockholders’ Equity
|
||||||||
Preferred
Stock, shares issued:
|
||||||||
none
in 2009 and 2008
|
— | — | ||||||
Common Stock,
shares issued: 299,191,836 in 2009 and
299,190,836 in 2008
|
299,191 | 299,190 | ||||||
Class B Common Stock, shares issued: 60,709,908 in 2009
and
60,710,908
in 2008
|
60,710 | 60,711 | ||||||
Additional
paid-in capital
|
357,584 | 352,375 | ||||||
Retained
earnings
|
3,985,927 | 3,975,762 | ||||||
Treasury-Common
Stock shares at cost:
|
||||||||
132,891,936
in 2009 and 132,866,673 in 2008
|
(4,011,853 | ) | (4,009,931 | ) | ||||
Accumulated
other comprehensive loss
|
(342,454 | ) | (359,908 | ) | ||||
The
Hershey Company stockholders’ equity
|
349,105 | 318,199 | ||||||
Noncontrolling
interests in subsidiaries
|
37,513 | 31,745 | ||||||
Total
stockholders' equity
|
386,618 | 349,944 | ||||||
Total
liabilities and stockholders' equity
|
$ | 3,506,544 | $ | 3,634,719 |
For
the Three Months Ended
|
||||||||
April
5,
2009
|
March
30,
2008
|
|||||||
Cash
Flows Provided from (Used by) Operating Activities
|
||||||||
Net
Income
|
$ | 75,894 | $ | 63,245 | ||||
Adjustments
to Reconcile Net Income to Net Cash
|
||||||||
Provided
from Operations:
|
||||||||
Depreciation
and amortization
|
46,877 | 68,297 | ||||||
Stock-based
compensation expense, net of tax of $4,760 and
$3,216,
respectively
|
6,601 | 5,842 | ||||||
Excess
tax benefits from exercise of stock options
|
(653 | ) | (182 | ) | ||||
Deferred
income taxes
|
8,966 | 9,751 | ||||||
Business
realignment initiatives, net of tax of $8,874 and
$10,003,
respectively
|
10,098 | 20,670 | ||||||
Contributions
to pension plans
|
(1,250 | ) | (3,270 | ) | ||||
Changes
in assets and liabilities, net of effects from business
acquisitions and divestitures:
|
||||||||
Accounts
receivable - trade
|
125,847 | 188,617 | ||||||
Inventories
|
6,345 | (11,255 | ) | |||||
Accounts
payable
|
(11,041 | ) | 8,963 | |||||
Other
assets and liabilities
|
9,492 | (92,650 | ) | |||||
Net
Cash Flows Provided from Operating Activities
|
277,176 | 258,028 | ||||||
Cash
Flows Provided from (Used by) Investing Activities
|
||||||||
Capital
additions
|
(32,972 | ) | (67,295 | ) | ||||
Capitalized
software additions
|
(4,496 | ) | (3,450 | ) | ||||
Proceeds
from sales of property, plant and equipment
|
117 | 44,281 | ||||||
Business
acquisition
|
(15,220 | ) | — | |||||
Proceeds
from divestiture
|
— | 1,960 | ||||||
Net
Cash Flows (Used by) Investing Activities
|
(52,571 | ) | (24,504 | ) | ||||
Cash
Flows Provided from (Used by) Financing Activities
|
||||||||
Net
decrease in short-term debt
|
(125,252 | ) | (376,970 | ) | ||||
Long-term
borrowings
|
— | 247,845 | ||||||
Repayment
of long-term debt
|
(1,561 | ) | (48 | ) | ||||
Cash
dividends paid
|
(65,729 | ) | (65,750 | ) | ||||
Exercise
of stock options
|
3,109 | 3,224 | ||||||
Excess
tax benefits from exercise of stock options
|
653 | 182 | ||||||
Contributions
from noncontrolling interests in subsidiaries
|
7,322 | — | ||||||
Repurchase
of Common Stock
|
(9,314 | ) | (18,330 | ) | ||||
Net
Cash Flows (Used by) Financing Activities
|
(190,772 | ) | (209,847 | ) | ||||
Increase
in Cash and Cash Equivalents
|
33,833 | 23,677 | ||||||
Cash
and Cash Equivalents, beginning of period
|
37,103 | 129,198 | ||||||
Cash
and Cash Equivalents, end of period
|
$ | 70,936 | $ | 152,875 | ||||
Interest
Paid
|
$ | 45,791 | $ | 45,270 | ||||
Income
Taxes Paid
|
$ | 16,655 | $ | 5,843 |
For
the Three Months Ended
|
||||
April
5,
2009
|
March
30,
2008
|
|||
(in
millions of dollars)
|
||||
Total
compensation amount charged against income for stock options,
performance stock
units (“PSUs”) and restricted stock units
|
$ 11.2
|
$ 8.8
|
||
Total
income tax benefit recognized in the Consolidated Statements of
Income
for share-based compensation
|
$4.7
|
$
3.0
|
For
the Three Months Ended
|
||||
April
5,
2009
|
March
30,
2008
|
|||
Dividend
yields
|
3.3%
|
2.4%
|
||
Expected
volatility
|
21.6%
|
18.1%
|
||
Risk-free
interest rates
|
2.0%
|
3.1%
|
||
Expected
lives in years
|
6.6
|
6.6
|
For
the Three Months Ended April 5, 2009
|
|||
Stock
Options
|
Shares
|
Weighted-Average
Exercise
Price
|
Weighted-Average
Remaining
Contractual
Term
|
Outstanding
at beginning of the period
|
16,671,643
|
$42.08
|
6.6
years
|
Granted
|
3,116,220
|
$34.89
|
|
Exercised
|
(118,481)
|
$26.24
|
|
Forfeited
|
(228,224)
|
$45.76
|
|
Outstanding
as of April 5, 2009
|
19,441,158
|
$40.98
|
6.7
years
|
Options
exercisable as of April 5, 2009
|
10,245,041
|
$41.56
|
5.0
years
|
For
the Three Months Ended
|
||||
April
5,
2009
|
March
30,
2008
|
|||
Weighted-average
fair value of options granted (per share)
|
$ 5.31
|
$ 6.21
|
||
Intrinsic
value of options exercised (in millions of dollars)
|
$ 1.0
|
$ .5
|
·
|
As
of April 5, 2009, the aggregate intrinsic value of options outstanding was
$23.1 million and the aggregate intrinsic value of options
exercisable was $18.3 million.
|
·
|
As
of April 5, 2009, there was $43.5 million of total unrecognized
compensation cost related to non-vested stock option compensation
arrangements granted under our stock option plans. That cost is expected
to be recognized over a weighted-average period of
2.8 years.
|
Performance
Stock Units and Restricted Stock Units
|
For
the Three
Months
Ended
April
5,
2009
|
Weighted-average
grant date
fair
value for equity awards or
market
value for liability
awards
|
|||
Outstanding
at beginning of year
|
766,209
|
$36.13
|
|||
Granted
|
547,592
|
$34.98
|
|||
Performance
assumption change
|
10,120
|
$39.38
|
|||
Vested
|
(213,158)
|
$33.55
|
|||
Forfeited
|
(7,792)
|
$36.65
|
|||
Outstanding
as of April 5, 2009
|
1,102,971
|
$37.62
|
For
the Three Months Ended
|
||||
April
5,
2009
|
March
30,
2008
|
|||
Intrinsic
value of share-based liabilities paid, combined with the fair value of
shares vested (in millions of dollars)
|
$ 7.2
|
$ 8.2
|
For
the Three Months Ended
|
||||||
April
5,
2009
|
March
30,
2008
|
|||||
(in
thousands of dollars)
|
||||||
Interest
expense
|
$ | 24,770 | $ | 26,455 | ||
Interest
income
|
(277 | ) | (774 | ) | ||
Capitalized
interest
|
(597 | ) | (1,295 | ) | ||
Interest
expense, net
|
$ | 23,896 | $ | 24,386 |
For
the Three Months Ended
|
||||||||
April
5,
2009
|
March
30,
2008
|
|||||||
(in
thousands of dollars)
|
||||||||
Cost
of sales - 2007 business realignment initiatives
|
$ | 4,051 | $ | 25,154 | ||||
Selling,
marketing and administrative - 2007 business realignment
initiatives
|
2,083 | 1,434 | ||||||
Business
realignment and impairment charges, net:
|
||||||||
Global
supply chain transformation program
|
||||||||
Gains
on sale of fixed assets
|
— | (13,900 | ) | |||||
Fixed
asset impairments and plant closure expenses
|
10,493 | 9,777 | ||||||
Employee
separation costs
|
2,345 | 3,889 | ||||||
Brazilian
business realignment
|
||||||||
Employee
separation costs
|
— | 1,860 | ||||||
Fixed
asset impairments
|
— | 722 | ||||||
Contract
terminations and other exit costs
|
— | 1,737 | ||||||
Total
business realignment and impairment charges, net
|
12,838 | 4,085 | ||||||
Total
net charges associated with 2007 business realignment
initiatives
|
$ | 18,972 | $ | 30,673 |
For
the Three Months Ended
|
|||||
April
5,
2009
|
March
30,
2008
|
||||
(in
thousands except per share amounts)
|
|||||
Net
income
|
$ | 75,894 | $ |
63,245
|
|
Weighted-average
shares - Basic
|
|||||
Common
Stock
|
166,767 | 166,771 | |||
Class
B Common Stock
|
60,711 | 60,806 | |||
Total
weighted-average shares - Basic
|
227,478 | 227,577 | |||
Effect
of dilutive securities:
|
|||||
Employee
stock options
|
593 | 976 | |||
Performance
and restricted stock units
|
213 | 373 | |||
Weighted-average
shares - Diluted
|
228,284 | 228,926 | |||
Earnings
Per Share - Basic
|
|||||
Class
B Common Stock
|
$ | .31 | $ | .26 | |
Common
Stock
|
$ | .34 | $ | .29 | |
Earnings
Per Share - Diluted
|
|||||
Class
B Common Stock
|
$ | .31 | $ | .26 | |
Common
Stock
|
$ | .33 | $ | .28 |
|
•
|
whether
the instrument qualifies for, and has been designated as, a hedging
relationship; and
|
|
•
|
the
type of hedging relationship.
|
|
•
|
cash
flow hedge;
|
|
•
|
fair
value hedge; and
|
|
•
|
hedge
of foreign currency exposure of a net investment in a foreign
operation.
|
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
|
$ |
—
|
$ |
10,338
|
$ |
8,414
|
||||||
Other
assets
|
$ |
107
|
$ |
—
|
$ |
—
|
||||||
Accrued
liabilities
|
$ |
—
|
$ |
1,054
|
$ |
—
|
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)
|
$ |
107
|
$ |
1,959
|
$ |
18,978
|
||||||
Gains
(losses) reclassified from accumulated OCI into income (effective portion)
(a)
|
$ |
—
|
$ |
3,274
|
$ |
(3,500)
|
||||||
Gains
(losses) recognized in income (ineffective portion) (b)
|
$ |
—
|
$ |
—
|
$ |
171
|
(a)
|
Gains
(losses) reclassified from accumulated OCI into earnings was included in
cost of sales for commodities futures and options contracts and in
selling, marketing and administrative expenses for foreign exchange
forward contracts and options.
|
(b)
|
Gains
(losses) recognized in earnings was included in cost of
sales.
|
For
the Three Months Ended
April
5, 2009
|
||||||||||||
Pre-Tax
Amount
|
Tax
(Expense)
Benefit
|
After-Tax
Amount
|
||||||||||
(in
thousands of dollars)
|
||||||||||||
Net
income
|
$ | 75,894 | ||||||||||
Other
comprehensive income (loss):
|
||||||||||||
Foreign
currency translation adjustments
|
$ | (1,767 | ) | $ | — | (1,767 | ) | |||||
Pension
and post-retirement benefit plans
|
8,145 | (3,135 | ) | 5,010 | ||||||||
Cash
flow hedges:
|
||||||||||||
Gains
on cash flow hedging derivatives
|
21,044 | (6,971 | ) | 14,073 | ||||||||
Reclassification
adjustments
|
226 | (88 | ) | 138 | ||||||||
Total
other comprehensive income
|
$ | 27,648 | $ | (10,194 | ) | 17,454 | ||||||
Comprehensive
income
|
$ | 93,348 |
For
the Three Months Ended
March
30, 2008
|
||||||||||||
Pre-Tax
Amount
|
Tax
(Expense)
Benefit
|
After-Tax
Amount
|
||||||||||
(in
thousands of dollars)
|
||||||||||||
Net
income
|
$ | 63,245 | ||||||||||
Other
comprehensive income (loss):
|
||||||||||||
Foreign
currency translation adjustments
|
$ | (3,882 | ) | $ | — | (3,882 | ) | |||||
Pension
and post-retirement benefit plans
|
94 | (43 | ) | 51 | ||||||||
Cash
flow hedges:
|
||||||||||||
Gains
on cash flow hedging derivatives
|
33,739 | (12,143 | ) | 21,596 | ||||||||
Reclassification
adjustments
|
(10,197 | ) | 3,691 | (6,506 | ) | |||||||
Total
other comprehensive income
|
$ | 19,754 | $ | (8,495 | ) | 11,259 | ||||||
Comprehensive
income
|
$ | 74,504 |
April
5,
2009
|
December
31,
2008
|
|||||||
(in
thousands of dollars)
|
||||||||
Foreign
currency translation adjustments
|
$ | (31,520 | ) | $ | (29,753 | ) | ||
Pension
and post-retirement benefit plans, net of tax
|
(309,343 | ) | (314,353 | ) | ||||
Cash
flow hedges, net of tax
|
(1,591 | ) | (15,802 | ) | ||||
Total
accumulated other comprehensive loss
|
$ | (342,454 | ) | $ | (359,908 | ) |
April
5,
2009
|
December
31,
2008
|
|||||||
(in
thousands of dollars)
|
||||||||
Raw
materials
|
$ | 260,726 | $ | 215,309 | ||||
Goods
in process
|
108,809 | 95,986 | ||||||
Finished
goods
|
399,143 | 419,016 | ||||||
Inventories
at FIFO
|
768,678 | 730,311 | ||||||
Adjustment
to LIFO
|
(195,911 | ) | (137,781 | ) | ||||
Total
inventories
|
$ | 572,767 | $ | 592,530 |
April
5, 2009
|
||
Contract
Amount
|
Primary Currencies
|
|
(in
millions of dollars)
|
||
Foreign
exchange forward contracts to
purchase
foreign currencies
|
$ 11.4
|
Euros
Mexican
pesos
|
Foreign
exchange forward contracts to
sell
foreign currencies
|
$ 56.2
|
Canadian
dollars
|
Description
|
Fair
Value as
of
April 5,
2009
|
Quoted
Prices
in
Active
Markets
of IdenticalAssets
(Level
1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level
3)
|
||||||||
(in
thousands of dollars)
|
||||||||||||
Assets
|
||||||||||||
Cash
flow hedging derivatives
|
$ | 18,859 | $ |
8,414
|
$ |
10,445
|
$ |
—
|
||||
Liabilities
|
|
|||||||||||
Cash
flow hedging derivatives
|
$ | 1,054 | $ |
—
|
$ |
1,054
|
$ |
—
|
Pension Benefits
|
Other
Benefits
|
||||||
For
the Three Months Ended
|
|||||||
April
5,
2009
|
March
30,
2008
|
April
5,
2009
|
March
30,
2008
|
||||
(in
thousands of
dollars)
|
Service
cost
|
$ 6,468
|
$ 8,025
|
$ 383
|
$ 487
|
|||
Interest
cost
|
14,583
|
15,013
|
4,817
|
5,422
|
|||
Expected
return on plan assets
|
(17,530)
|
(27,333)
|
—
|
—
|
|||
Amortization
of prior service cost
|
299
|
319
|
(120)
|
(114)
|
|||
Recognized
net actuarial (gain) loss
|
8,445
|
(47)
|
(26)
|
53
|
|||
Administrative
expenses
|
94
|
88
|
—
|
—
|
|||
Net
periodic benefits cost (income) reflected in earnings
|
$ 12,359
|
$ (3,935)
|
$ 5,054
|
$ 5,848
|
|||
For
the Three Months Ended
April
5, 2009
|
||||||
Shares
|
Dollars
|
|||||
(in
thousands)
|
||||||
Shares
repurchased in the open market under pre-approved
share
repurchase programs
|
— | $ | — | |||
Shares
repurchased to replace Treasury Stock issued for stock
options
and
incentive compensation
|
252 | 9,314 | ||||
Total
share repurchases
|
252 | 9,314 | ||||
Shares
issued for stock options and incentive compensation
|
(227 | ) | (7,392 | ) | ||
Net
change
|
25 | $ | 1,922 |
For
the Three Months Ended
|
||||||||||
April
5,
2009
|
March
30,
2008
|
Percent
Change
Increase
(Decrease)
|
||||||||
(in millions except
per
share
amounts)
|
||||||||||
Net
Sales
|
$ | 1,236.0 | $ | 1,160.3 |
6.5
|
% | ||||
Cost
of Sales
|
795.8 | 783.9 | 1.5 | % | ||||||
Gross
Profit
|
440.2 | 376.4 | 16.9 | % | ||||||
Gross
Margin
|
35.6% | 32.4% | ||||||||
SM&A
Expense
|
274.5
|
249.9 | 9.8 | % | ||||||
SM&A
Expense as a percent of sales
|
22.2% | 21.5% | ||||||||
Business
Realignment Charge, net
|
12.8 | 4.1 | 214.3 | % | ||||||
EBIT
|
152.9 | 122.4 | 24.9 | % | ||||||
EBIT
Margin
|
12.4% | 10.6% | ||||||||
Interest
Expense, net
|
23.9 | 24.4 | (2.0) | % | ||||||
Provision
for Income Taxes
|
53.1 | 34.8 | 52.8 | % | ||||||
Effective
Income Tax Rate
|
41.2% | 35.5% | ||||||||
Net
Income
|
$ |
75.9
|
$ | 63.2 | 20.0 | % | ||||
Net
Income Per Share-Diluted
|
$ | .33 | $ | .28 | 17.9 | % |
|
·
|
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 could affect future financial
results;
|
|
·
|
Price
increases may not be sufficient to offset cost increases and maintain
profitability;
|
|
·
|
Market
demand for new and existing products could
decline;
|
|
·
|
Increased
marketplace competition could hurt our
business;
|
|
·
|
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 in the United States and
abroad could negatively impact our financial
results;
|
|
·
|
International
operations could fluctuate unexpectedly and adversely impact our
business;
|
|
·
|
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;
|
|
·
|
Annual
savings from initiatives to transform our supply chain and advance our
value-enhancing strategy may be less than we
expect;
|
|
·
|
Implementation
of our global supply chain transformation program may not occur within the
anticipated timeframe and/or may exceed our cost estimates;
and
|
|
·
|
Such
other matters as discussed in our Annual Report on Form 10-K for
2008.
|
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)
|
||||
January
1 through
February
1, 2009
|
—
|
$ —
|
—
|
$100,017
|
February
2 through
March
1, 2009
|
237,000
|
$ 37.18
|
—
|
$100,017
|
March
2 through
April
5, 2009
|
15,000
|
$ 33.46
|
—
|
$100,017
|
Total
|
252,000
|
—
|
Exhibit
Number
|
Description
|
|
12.1
|
Statement
showing computation of ratio of earnings to fixed charges for the three
months ended April 5, 2009 and March 30, 2008.
|
|
31.1
|
Certification
of David J. West, 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 David J. West, Chief Executive Officer, and Humberto P. Alfonso, Chief
Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
*Pursuant
to Securities and Exchange Commission Release No. 33-8212, this
certification will be treated as “accompanying” this Quarterly Report on
Form 10-Q and not “filed” as part of such report for purposes of Section
18 of the Exchange Act or otherwise subject to the liability of Section 18
of the Exchange Act, and this certification will not be deemed to be
incorporated by reference into any filing under the Securities Act of
1933, as amended, or the Exchange Act, except to the extent that the
Company specifically incorporates it by
reference.
|
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: May
13, 2009
|
/s/Humberto P.
Alfonso
Humberto P. Alfonso
Chief Financial Officer
|
Date: May
13, 2009
|
/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 David J. West, 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 David J. West, Chief Executive Officer, and Humberto P. Alfonso, Chief
Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
For
the Three Months Ended
|
||||||||
April
5,
2009
|
March
30,
2008
|
|||||||
Earnings:
|
||||||||
Income
before income taxes
|
$ | 129,038 | $ | 98,032 | ||||
Add
(deduct):
|
||||||||
Interest
on indebtedness
|
24,173 | 25,160 | ||||||
Portion
of rents representative of the
interest
factor (a)
|
2,308 | 2,077 | ||||||
Amortization
of debt expense
|
256 | 183 | ||||||
Amortization
of capitalized interest
|
374 | 418 | ||||||
Adjustment
to exclude noncontrolling interests
in
subsidiaries and income from equity investee
|
(2,876 | ) | (1,714 | ) | ||||
Earnings
as adjusted
|
$ | 153,273 | $ | 124,156 | ||||
Fixed
Charges:
|
||||||||
Interest
on indebtedness
|
$ | 24,173 | $ | 25,160 | ||||
Portion
of rents representative of the
interest
factor (a)
|
2,308 | 2,077 | ||||||
Amortization
of debt expense
|
256 | 183 | ||||||
Capitalized
interest
|
597 | 1,295 | ||||||
Total
fixed charges
|
$ | 27,334 | $ | 28,715 | ||||
Ratio
of earnings to fixed charges
|
5.61 | 4.32 |
(a)
|
Portion
of rents representative of the interest factor consists of one-third of
rental expense for operating
leases.
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of The Hershey
Company;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of The Hershey
Company;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
(b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
(d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|