TIDMHSH
The Hillshire Brands Company (NYSE: HSH) today reported earnings
for the second quarter and first half of fiscal year 2013.
Second Quarter Highlights (continuing operations)
-- Adjusted1 diluted EPS increased $0.14 to $0.62; reported
diluted EPS increased $0.38 to $0.47
-- Adjusted and reported net sales increased by 2.5% and 0.7%,
respectively, to $1.06 billion
-- Adjusted operating income increased $26 million to $127 million;
reported operating income increased $76 million to $99
million
-- Full year 2013 guidance raised - new adjusted diluted EPS range of
$1.60-$1.70
CEO Perspective
"Our business is continuing to perform well and I am very
pleased with the progress we're making," said Sean Connolly,
president and chief executive officer, The Hillshire Brands
Company. "Our investment in MAP is strengthening our core brands,
our innovation pipeline is becoming more robust, and we remain
highly focused on managing costs. We also clearly benefited from
favorable input costs, an area that we expect to become more
challenging in calendar year 2013. Based on our strong first half
results, and taking into account our outlook for the rest of the
year, we are raising full year EPS guidance."
Key Financial Data, Continuing
Operations
$ in millions, except
per share
Second Quarter First Half
2013 2012 % Change 2013 2012 % Change
Adjusted Net $ 1,060 $ 1,035 2.5% $ 2,034 $ 1,988 2.3%
Sales
Reported Net 1,060 1,053 0.7% 2,034 2,040 (0.3)%
Sales
Adj. Operating 127 101 25.8% 228 158 44.2%
Income
Rep. Operating 99 23 NM 183 47 NM
Income
Adj. Diluted EPS 0.62 0.48 29.2% 1.10 0.74 48.6%
Rep. Diluted EPS 0.47 0.09 NM 0.87 0.13 NM
Discussion of Second Quarter Continuing Operations Results
For the second consecutive quarter, Hillshire Brands posted
increases in adjusted net sales and adjusted operating income
versus the prior year quarter. The business has responded well to
increased MAP investment and has also benefitted from deflationary
input costs.
Retail
Net sales in the Retail segment increased 2.2% over the prior
year quarter behind higher volumes and favorable mix. Strong
performance in Jimmy Dean sandwiches, Aidells, and Hillshire Farm
lunchmeat fueled the volume gains in the quarter. Hillshire Farm
seasonal items also performed well. Additionally, Hillshire Farm
lunchmeat's packaging improvements and product quality enhancements
are on track to roll out in the third quarter.
Adjusted operating segment income increased by 23.2% and
reported operating segment income increased by 31.5%. Lower input
costs were a significant contributor to the increased profit.
Higher sales also contributed to earnings growth. In line with the
company's growth strategy, MAP investment for the quarter was
meaningfully increased from the prior year.
Foodservice/Other
The Foodservice/Other segment reported solid results, with
increased net sales of 2.8% behind volume gains in both commodity
meats and Foodservice meats. In Foodservice bakery, volumes
declined but showed signs of stabilization.
Adjusted operating segment income increased by 8.5% and reported
operating segment income decreased by 4.1%. The increase in
adjusted operating segment income resulted from higher volume and
lower commodity input costs. These gains were partially offset by
negative mix from high commodity meat sales and higher bakery
production costs.
Corporate
Excluding significant items, corporate expenses of $13 million
decreased $4million versus the second quarter of fiscal 2012 on
lower headcount and the benefit of cost saving initiatives. These
reductions were partially offset by commodity mark-to-market losses
of $4 million for the quarter versus $3 million in gains in the
previous year.
Guidance and Outlook
After two quarters of strong business results, Hillshire Brands
updated its fiscal 2013 guidance for adjusted diluted EPS to $1.60
- $1.70, with slightly positive sales growth for the year. This
guidance range reflects the first half results and the company's
strategy to continue to invest in brand building and capabilities.
Additionally, the company expects commodity input costs to become
more challenging as calendar year 2013 progresses.
Webcast and Form 10-Q
The Hillshire Brands Company's review of its results for the
second quarter and first half of fiscal 2013 will be broadcast live
via the Internet today at 9:30 a.m. CST. The live webcast, together
with the slides reviewed during the webcast, can be accessed in the
Investor Relations section on www.hillshirebrands.com. For people
who are unable to listen to the webcast live, a recording will be
available on the website at 2:00 p.m. CST on the day of the webcast
until July 31, 2013.
About The Hillshire Brands Company
The Hillshire Brands Company (NYSE: HSH) is a leader in
meat-centric food solutions for the retail and foodservice markets.
The company generates approximately $4 billion in annual sales and
has approximately 9,500 employees. Hillshire Brands' portfolio
includes iconic brands such as Jimmy Dean, Ball Park, Hillshire
Farm, State Fair,Sara Lee frozen bakery and Chef Pierre pies, as
well as artisanal brands Aidells and GalloSalame. For more
information on the company, please visit
www.hillshirebrands.com.
Forward-Looking Statements
This release contains forward-looking statements regarding
Hillshire Brands' business prospects and future financial results
and metrics, including statements contained under the heading "CEO
Perspective" and "Guidance and Outlook". Forward-looking statements
are typically preceded by terms such as "will," "anticipates,"
"intends," "expects," "likely" or "believes" and other similar
terms. These forward-looking statements are based on currently
available competitive, financial and economic data and management's
views and assumptions regarding future events and are inherently
uncertain.
Investors must recognize that actual results may differ from
those expressed or implied in the forward-looking statements, and
the company wishes to caution readers not to place undue reliance
on any forward-looking statements. Among the factors that could
cause Hillshire Brands' actual results to differ from such
forward-looking statements are those described under Item 1A, Risk
Factors, in Hillshire Brands' most recent Annual Report on Form
10-K, as well as factors relating to:
-- Hillshire Brands' spin-off of its international coffee and tea
business in June 2012, including (i) Hillshire Brands' ability
to
generate the anticipated benefits from the spin-off; (ii)
the
transition of leadership to a new senior management team and
the
departure of key personnel with historical knowledge; and
(iii)
potential tax liabilities and other indemnification
obligations;
-- The consumer marketplace, such as (i) intense competition, including
advertising, promotional and price competition; (ii) changes
in
consumer behavior due to economic conditions, such as a shift
in
consumer demand toward private label; (iii) fluctuations in
raw
material costs, Hillshire Brands' ability to increase or
maintain
product prices in response to cost fluctuations and the impact
on
profitability; (iv) the impact of various food safety issues
and
regulations on sales and profitability of Hillshire Brands'
products;
and (v) inherent risks in the marketplace associated with
product
innovations, including uncertainties about trade and
consumer
acceptance;
-- Hillshire Brands' relationship with its customers, such as (i) a
significant change in Hillshire Brands' business with any of its
major
customers, such as Wal-Mart, its largest customer; and (ii)
credit and
other business risks associated with customers operating in a
highly
competitive retail environment; and
-- Other factors, such as (i) Hillshire Brands' ability to generate
margin improvement through cost reduction and productivity
improvement
initiatives; (ii) Hillshire Brands' credit ratings, the impact
of
Hillshire Brands' capital plans on such credit ratings and the
impact
these ratings and changes in these ratings may have on
Hillshire
Brands' cost to borrow funds and access to capital/debt markets;
and
(iii) the settlement of a number of ongoing reviews of
Hillshire
Brands' income tax filing positions and inherent uncertainties
related
to the interpretation of tax regulations in the jurisdictions in
which
Hillshire Brands transacts or has transacted business.
1 The term "adjusted diluted EPS" and other financial measures
identified as "adjusted" are explained and reconciled to comparable
GAAP measures at the end of this release.
Financial Summary -
As Adjusted (1)
For the Quarter and Six Months ended Dec. 29, 2012 and Dec.
31, 2011 (in millions, except per share data - unaudited)
Quarter ended Six Months ended
Dec. 29, Dec. 31, % Dec. 29, Dec. 31, %
2012 2011 Change 2012 2011 Change
Continuing
operations:
Adjusted net
sales:
Retail $ 777 $ 761 2.2 % $ 1,496 $ 1,459 2.6 %
Foodservice/Other 283 276 2.8 538 535 0.7
Intersegment - (2 ) - (6 )
Total adjusted net sales $ 1,060 $ 1,035 2.5 % $ 2,034 $ 1,988 2.3 %
Adjusted operating
income/(loss)
Retail $ 112 $ 91 23.2 % $ 196 $ 149 31.8 %
Foodservice/Other 28 27 8.5 53 49 9.6
Adjusted operating segment income 140 118 19.9 % 249 198 26.4 %
General corporate expenses (8 ) (19 ) (20 ) (37 )
Mark-to-market derivatives gains/(losses) (4 ) 3 1 (1 )
Amortization of trademarks & intangibles (1 ) (1 ) (2 ) (2 )
Total adjusted operating income $ 127 $ 101 25.8 % $ 228 $ 158 44.2 %
Adjusted income from continuing operations $ 76 $ 56 33.6 % $ 136 $ 87 54.9 %
Adjusted net $ 79 $ 178 (55.7 )% $ 141 $ 304 (53.7 )%
income
Adjusted net Income attributable
to Hillshire Brands:
Continuing operations $ 76 $ 56 33.6 % $ 136 $ 87 54.9 %
Discontinued operations $ 3 $ 121 (97.7 )% $ 5 $ 214 (97.5 )%
Adjusted diluted earnings
per share:
Income from continuing operations $ 0.62 $ 0.48 29.2 % $ 1.10 $ 0.74 48.6 %
Net income $ 0.64 $ 1.49 (57.0 )% $ 1.15 $ 2.54 (54.7 )%
Adjusted operating
margin:
Retail 14.4 % 11.9 % 2.5 % 13.1 % 10.2 % 2.9 %
Foodservice/Other 9.9 9.4 0.5 9.9 9.1 0.8
Total Hillshire Brands 12.0 % 9.8 % 2.2 % 11.2 % 8.0 % 3.2 %
(1) Represents a non-GAAP financial measure. See detailed explanation
of these and other non-GAAP measures at end of this release
Financial Summary
- As Reported
For the Quarter and Six Months ended Dec. 29, 2012 and Dec.
31, 2011 (in millions, except per share data - unaudited)
Quarter ended Six Months ended
Dec. 29, Dec. 31, % Dec. 29, Dec. 31, %
2012 2011 Change 2012 2011 Change
Continuing
operations:
Net
sales:
Retail $ 777 $ 761 2.2 % $ 1,496 $ 1,459 2.6 %
Foodservice/Other 283 294 (3.7 ) 538 587 (8.3 )
Intersegment - (2 ) - (6 )
Total net sales $ 1,060 $ 1,053 0.7 % $ 2,034 $ 2,040 (0.3 )%
Operating
income/(loss)
Retail $ 112 $ 85 31.5 % $ 198 $ 129 53.6 %
Foodservice/Other 28 29 (4.1 ) 53 54 (2.1 )
Operating segment income 140 114 22.5 % 251 183 37.2 %
General corporate expenses (36 ) (93 ) (67 ) (133 )
Mark-to-market derivatives gains/(losses) (4 ) 3 1 (1 )
Amortization of trademarks & intangibles (1 ) (1 ) (2 ) (2 )
Total operating income $ 99 $ 23 NM $ 183 $ 47 NM
Income from continuing operations $ 58 $ 10 NM $ 107 $ 15 NM
Net $ 65 $ 470 (86.1 )% $ 118 $ 252 (53.2 )%
income
Net income attributable
to Hillshire Brands:
Continuing operations $ 58 $ 10 NM $ 107 $ 15 NM
Discontinued operations $ 7 $ 459 (98.5 )% $ 11 $ 234 (95.3 )%
Diluted earnings
per share:
Income from continuing operations $ 0.47 $ 0.09 NM $ 0.87 $ 0.13 NM
Net income $ 0.53 $ 3.94 (86.5 )% $ 0.96 $ 2.10 (54.3 )%
Operating margin:
Retail 14.4 % 11.2 % 3.2 % 13.2 % 8.8 % 4.4 %
Foodservice/Other 9.7 9.8 (0.1 ) 9.8 9.2 0.6
Total Hillshire Brands 9.3 % 2.1 % 7.2 % 9.0 % 2.3 % 6.7 %
NM
= Not meaningful
Consolidated
Statements
of Income
For
the
Quarters
and Six
Months
ended Dec.
29,
2012 and
Dec.
31, 2011
(in
millions,
except
per share
data
-
unaudited)
Quarter ended Six Months ended
December 29, December 31, December 29, December 31,
2012 2011 2012 2011
Continuing
operations
Net sales $ 1,060 $ 1,053 $ 2,034 $ 2,040
Cost of 728 755 1,408 1,469
sales
Selling, 224 226 437 444
general
and
administrative
expenses
Net 9 45 6 66
charges
for exit
activities,
asset and
business
dispositions
Impairment - 4 - 14
charges
Operating 99 23 183 47
income
Interest 11 22 22 45
expense
Interest (1 ) (1 ) (3 ) (2 )
income
Income 89 2 164 4
from
continuing
operations
before
income
taxes
Income 31 (8 ) 57 (11 )
tax
expense
Income 58 10 107 15
from
continuing
operations
Discontinued
operations:
Income 7 92 9 (223 )
(loss)
from
discontinued
operations,
net of
tax
expense
(benefit)
of
$(3),
$(8),
$(2)
and $57
Gain on - 368 2 460
sale
of
discontinued
operations,
net
of
tax expense
of nil,
$168, $1
and $338
Net 7 460 11 237
income
from
discontinued
operations
Net 65 470 118 252
income
Less:
Income
from
noncontrolling
interests,
net of
tax
Discontinued - 1 - 3
operations
Net $ 65 $ 469 $ 118 $ 249
Income
attributable
to
Hillshire
Brands
Amounts
attributable
to
Hillshire
Brands:
Net $ 58 $ 10 $ 107 $ 15
income
from
continuing
operations
Net 7 459 11 234
income
from
discontinued
operations
Earnings
per
share
of common
stock:
Basic
Income $ 0.47 $ 0.09 $ 0.88 $ 0.13
from
continuing
operations
Net $ 0.53 $ 3.96 $ 0.97 $ 2.11
income
Average 123 118 122 118
shares
outstanding
Diluted
Income $ 0.47 $ 0.09 $ 0.87 $ 0.13
from
continuing
operations
Net $ 0.53 $ 3.94 $ 0.96 $ 2.10
income
Average 123 119 123 119
shares
outstanding
Cash $ 0.125 $ $ 0.575 $ 0.25 $ 0.575
dividends
declared
per
share of
common
stock
Net Sales Bridge
For the Quarter and Six Months ended December 29, 2012 (unaudited)
The following table illustrates the components of the change in net sales versus the prior year
Second Quarter ended Dec. 29, 2012 Total
Foodservice/ Business
Retail Other Segments
Volume 1.1% 6.6% 2.9%
Mix 0.7 (2.9) (0.4)
Price 0.0 (1.0) (0.3)
Other 0.4 0.1 0.3
Adjusted net sales* change 2.2 2.8 2.5
Dispositions 0.0 (6.5) (1.8)
Total Net Sales Change 2.2% (3.7)% 0.7%
First Six Months ended Dec. 29, 2012 Total
Foodservice/ Business
Retail Other Segments
Volume 1.7% 6.0% 3.1%
Mix 1.0 (4.0) (0.4)
Price (0.4) (1.1) (0.6)
Other 0.3 (0.2) 0.2
Adjusted net sales* change 2.6 0.7 2.3
Dispositions 0.0 (9.0) (2.6)
Total Net Sales Change 2.6% (8.3)% (0.3)%
*Adjusted net sales is a non-GAAP measure that excludes the impact of dispositions.
See detailed explanation of this and other non-GAAP measures in this release.
Condensed Consolidated Balance Sheet Data
At December 29, 2012 and June 30, 2012 (in millions - unaudited)
December 29, June 30,
2012 2012
Assets
Cash and equivalents $ 299 235
Trade accounts receivable, less allowances 229 248
Inventories 292 288
Current deferred income taxes 104 114
Income tax receivable 21 52
Other current assets 46 65
Assets held for sale 39 -
Total current assets 1,030 1,002
Property, net of accumulated depreciation 829 847
of $1,231 and $1,245, respectively
Trademarks and other identifiable intangibles 127 132
Goodwill 348 348
Deferred income taxes 26 36
Other noncurrent assets 79 80
Noncurrent assets held for sale 28 5
$ 2,467 $ 2,450
Liabilities and Equity
Accounts payable $ 266 $ 359
Other accrued liabilities 403 469
Current maturities of long-term debt 10 5
Liabilities held for sale 27 -
Total current liabilities 706 833
Long-term debt 936 939
Pension obligation 157 166
Other liabilities 300 277
Noncurrent liabilities held for sale 1 -
Equity
Hillshire Brands common stockholders' equity 367 235
$ 2,467 $ 2,450
Consolidated Statements of Cash Flows
For the Six Months Ended Dec. 29, 2012 and
Dec. 31, 2011 (in millions - unaudited)
Six Months ended
Dec. 29, Dec. 31,
2012 2011
Operating activities -
Net income/(loss) $ 118 $ 252
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation 78 122
Amortization 8 20
Impairment charges - 417
Net (gain) loss on business dispositions (9 ) (802 )
Pension contributions, net of expense (5 ) (127 )
Increase (decrease) in deferred income taxes 18 113
Other (1 ) 37
Changes in current assets and liabilities,
net of businesses acquired and sold:
Trade accounts receivable 6 8
Inventories (18 ) (113 )
Other current assets 16 (34 )
Accounts payable (57 ) (10 )
Accrued liabilities (57 ) (2 )
Accrued taxes 32 152
Net cash from operating activities 129 33
Investing activities -
Purchases of property and equipment (79 ) (128 )
Purchases of software and other intangibles (3 ) (19 )
Acquisitions of businesses - (29 )
Dispositions of businesses and investments 16 1,451
Cash received from derivative transactions 3 25
Sales of assets 1 1
Net cash received from investing activities (62 ) 1,301
Financing activities -
Issuances of common stock 39 36
Purchases of common stock - -
Borrowings of other debt - 142
Repayments of other debt and derivatives (5 ) (242 )
Net change in financing with - (197 )
less than 90-day maturities
Purchase of noncontrolling interest - (10 )
Payments of dividends (31 ) (135 )
Net cash from ( used in) financing activities 3 (406 )
Effect of changes in foreign - (243 )
exchange rates on cash
Increase in cash and equivalents 70 685
Add: Cash balances of discontinued - 1,992
operations at beginning of year
Less: Cash balances of discontinued (6 ) (2,610 )
operations at end of period
Cash and equivalents at beginning of year 235 74
Cash and equivalents at end of period $ 299 $ 141
Supplemental cash flow data:
Cash paid for restructuring actions $ 48 $ 146
Cash contributions to pension plans 3 121
Cash paid for income taxes 6 120
Operating Results by
Business Segment
For the Quarters ended Dec. 29, 2012 and
Dec. 31, 2011 (in millions - unaudited)
As As
Reported Dispositions Adjusted (1)
Second Quarter
2013
Net sales:
Retail $ 777 $ - $ 777
Foodservice/Other 283 - 283
Intersegment - - -
Total net sales $ 1,060 $ - $ 1,060
Second Quarter
2012
Net sales:
Retail $ 761 $ - $ 761
Foodservice/Other 294 18 276
Intersegment (2 ) - (2 )
Total net sales $ 1,053 $ 18 $ 1,035
Other
Second Quarter As Restructuring Accelerated Impairment Significant As
2013
Reported Dispositions Actions Depreciation Charges Items Adjusted (1)
Operating income:
Retail $ 112 $ - $ - $ - $ - $ - $ 112
Foodservice/Other 28 - - - - - 28
Total operating segment income 140 - - - - - 140
General corporate expenses (36 ) - (15 ) (10 ) - (3 ) (8 )
Mark-to-market derivative gains/(losses) (4 ) - - - - - (4 )
Amortization of trademarks/intangibles (1 ) - - - - - (1 )
Operating income $ 99 $ - $ (15 ) $ (10 ) $ - $ (3 ) $ 127
Operating margin 9.3 % 12.0 %
Second Quarter
2012
Operating income:
Retail $ 85 $ - $ - $ (6 ) $ - $ - $ 91
Foodservice/Other 29 3 (1 ) - - - 27
Total operating segment income 114 3 (1 ) (6 ) - - 118
General corporate expenses (93 ) - (59 ) - (4 ) (11 ) (19 )
Mark-to-market derivative gains/(losses) 3 - - - - - 3
Amortization of trademarks/intangibles (1 ) - - - - - (1 )
Operating income $ 23 $ 3 $ (60 ) $ (6 ) $ (4 ) $ (11 ) $ 101
Operating margin 2.1 % 9.8 %
(1) Represents a non-GAAP financial measure. See detailed explanation
of these and other non-GAAP measures at end of this release
Operating Results by
Business Segment
For the Six Months ended Dec. 29, 2012 and
Dec. 31, 2011 (in millions - unaudited)
As As
Reported Dispositions Adjusted (1)
First Six Months
2013
Net sales:
Retail $ 1,496 $ - $ 1,496
Foodservice/Other 538 - 538
Intersegment - - -
Total net sales $ 2,034 $ - $ 2,034
First Six Months
2012
Net sales:
Retail $ 1,459 $ - $ 1,459
Foodservice/Other 587 52 535
Intersegment (6 ) - (6 )
Total net sales $ 2,040 $ 52 $ 1,988
Other
First Six Months As Restructuring Accelerated Impairment Significant As
2013
Reported Dispositions Actions Depreciation Charges Items Adjusted (1)
Operating income:
Retail $ 198 $ 3 $ - $ (1 ) $ - $ - $ 196
Foodservice/Other 53 2 - (2 ) - - 53
Total operating segment income 251 5 - (3 ) - - 249
General corporate expenses (67 ) - (26 ) (18 ) - (3 ) (20 )
Mark-to-market derivative gains/(losses) 1 - - - - - 1
Amortization of trademarks/intangibles (2 ) - - - - - (2 )
Operating income $ 183 $ 5 $ (26 ) $ (21 ) $ - $ (3 ) $ 228
Operating margin 9.0 % 11.2 %
First Six Months
2012
Operating income:
Retail $ 129 $ - $ (8 ) $ (12 ) $ - $ - $ 149
Foodservice/Other 54 7 (2 ) - - - 49
Total operating segment income 183 7 (10 ) (12 ) - - 198
General corporate expenses (133 ) - (89 ) - (14 ) 7 (37 )
Mark-to-market derivative gains/(losses) (1 ) - - - - - (1 )
Amortization of trademarks/intangibles (2 ) - - - - - (2 )
Operating income $ 47 $ 7 $ (99 ) $ (12 ) $ (14 ) $ 7 $ 158
Operating margin 2.3 % 8.0 %
(1) Represents a non-GAAP financial measure. See detailed explanation
of these and other non-GAAP measures at end of this release
Significant
Items
Quarters ended Dec. 29, 2012 and Dec. 31, 2011 (in
millions, except per share data - unaudited)
Quarter ended Dec. 29, 2012 Quarter ended Dec. 31, 2011
Diluted Diluted
Pretax Net EPS Pretax Net EPS
(In millions except per share data) Impact Income/(loss) Impact (1) Impact Income/(loss) Impact (1)
Continuing Operations:
Restructuring actions:
Severance/ retention costs $ - $ - $ - $ (2 ) $ (2 ) $ (0.01 )
Lease and contractual obligation exit costs (10 ) (6 ) (0.05 ) (44 ) (28 ) (0.23 )
Consulting/advisory and other costs (5 ) (4 ) (0.03 ) (14 ) (10 ) (0.09 )
Accelerated depreciation (10 ) (6 ) (0.05 ) (6 ) (3 ) (0.03 )
Total restructuring actions (25 ) (16 ) (0.13 ) (66 ) (43 ) (0.37 )
Gain on Hanesbrands Inc. tax settlement - - - - 5 0.04
Impairment charges - - - (4 ) (3 ) (0.02 )
Litigation accrual - - - (11 ) (7 ) (0.06 )
Pension settlement/withdrawal/other (3 ) (2 ) (0.01 ) - - -
Tax indemnification accrual adjustment - - - - 2 0.02
Impact of significant items on income from continuing operations (28 ) (18 ) (0.15 ) (81 ) (46 ) (0.39 )
Discontinued operations:
Restructuring actions:
Severance/ retention costs 1 1 - (21 ) (14 ) (0.12 )
Lease and contractual obligation exit costs - - - (32 ) (24 ) (0.20 )
Consulting/advisory costs (2 ) (2 ) (0.01 ) (30 ) (26 ) (0.20 )
Impairment charges - - - (25 ) (17 ) (0.14 )
Gain on the sale of discontinued operations - - - 536 368 3.09
Thailand flood loss - - - (2 ) (1 ) (0.01 )
Pension curtailment/withdrawal/other 1 1 - (3 ) (2 ) (0.01 )
Tax basis difference adjustment - 4 0.03 - 71 0.59
Tax audit settlement/reserve adjustment - - - - (1 ) (0.01 )
Tax valuation allowance adjustment - - - - 2 0.01
Tax on unremitted earnings - - - - (18 ) (0.15 )
Impact of significant items on income/(loss) from discontinued operations - 4 0.03 423 338 2.84
Impact of significant items on net income/(loss) $ (28 ) $ (14 ) $ (0.11 ) $ 342 $ 292 $ 2.45
Impact of significant items on income from continuing operations before income taxes
Cost of sales $ (1 ) $ (5 )
Selling, general and administrative expenses (18 ) (27 )
Exit and business dispositions (9 ) (45 )
Impairment charges - (4 )
Total $ (28 ) $ (81 )
Notes:
(1) EPS amounts are rounded to the nearest $0.01 and may not add to the total.
Significant
Items
Six Months ended Dec. 29, 2012 and Dec. 31, 2011 (in
millions, except per share data - unaudited)
Six Months ended Dec. 29, 2012 Six Months ended Dec. 31, 2011
Diluted Diluted
Pretax Net EPS Pretax Net EPS
(In millions except per share data) Impact Income/(loss) Impact (1) Impact Income/(loss) Impact (1)
Continuing Operations:
Restructuring actions:
Severance/ retention costs $ - $ - $ - $ (18 ) $ (12 ) $ (0.10 )
Lease and contractual obligation exit costs (13 ) (8 ) (0.07 ) (50 ) (32 ) (0.26 )
Consulting/advisory and other costs (13 ) (9 ) (0.07 ) (31 ) (24 ) (0.21 )
Income from asset dispositions 5 3 0.03 - - -
Accelerated depreciation (21 ) (13 ) (0.11 ) (12 ) (7 ) (0.06 )
Total restructuring actions (42 ) (27 ) (0.22 ) (111 ) (75 ) (0.63 )
Gain on Hanesbrands Inc. tax settlement - - - 15 15 0.12
Impairment charges - - - (14 ) (9 ) (0.07 )
Pension settlement/withdrawal/other (3 ) (2 ) (0.02 ) - - -
Litigation accrual - - - (11 ) (7 ) (0.06 )
Tax indemnification accrual adjustment - - - 3 4 0.03
Impact of significant items on income from continuing operations (45 ) (29 ) (0.23 ) (118 ) (72 ) (0.61 )
Discontinued operations:
Restructuring actions:
Severance/ retention costs 1 1 - (34 ) (24 ) (0.20 )
Lease and contractual obligation exit costs - - - (32 ) (24 ) (0.20 )
Consulting/advisory costs (3 ) (2 ) (0.02 ) (54 ) (44 ) (0.36 )
Impairment charges - - - (404 ) (358 ) (3.01 )
Gain on the sale of discontinued operations 3 2 0.02 798 460 3.87
Pension curtailment/withdrawal/other 1 1 - (3 ) (2 ) (0.01 )
Thailand flood loss - - - (2 ) (1 ) (0.01 )
Tax basis difference adjustment - 4 0.04 - 189 1.59
Tax audit settlement/reserve adjustments - - - - 69 0.58
Tax valuation allowance adjustment - - - - (73 ) (0.62 )
Tax on unremitted earnings - - - - (172 ) (1.45 )
Impact of significant items on income from discontinued operations 2 6 0.05 269 20 0.17
Impact of significant items on net income $ (43 ) $ (23 ) $ (0.19 ) $ 151 $ (52 ) $ (0.44 )
Impact of significant items on income from continuing operations before income taxes
Cost of sales $ (4 ) $ (11 )
Selling, general and administrative expenses (35 ) (27 )
Exit and business dispositions (6 ) (66 )
Impairment charges - (14 )
Total $ (45 ) $ (118 )
Notes:
(1) EPS amounts are rounded to the nearest $0.01 and may not add to the total.
EPS Reconciliation - Reported to Adjusted
Quarters ended Dec. 29, 2012 and Dec. 31, 2011 (in
millions, except per share data - unaudited)
Quarter ended Dec. 29, 2012 Quarter ended Dec. 31, 2011
Impact of Impact of
As Significant As Significant
Reported Items Adjusted (1) Reported Items Adjusted (1)
Continuing operations:
Income from continuing operations $ 89 $ (28 ) $ 117 $ 2 $ (81 ) $ 83
before income taxes
Income tax expense (benefit) 31 (10 ) 41 (8 ) (35 ) 27
Income from continuing operations 58 (18 ) 76 10 (46 ) 56
Discontinued operations:
Income from discontinued operations, net of tax 7 4 3 92 (30 ) 122
Gain on sale of discontinued - - - 368 368 -
operations, net of tax
Net income from discontinued operations 7 4 3 460 338 122
Net income 65 (14 ) 79 470 292 178
Less: Income from noncontrolling
interests, net of tax
Discontinued operations - - - 1 - 1
Net income attributable to Hillshire Brands $ 65 $ (14 ) $ 79 $ 469 $ 292 $ 177
Amounts attributable to Hillshire Brands:
Net income from continuing operations $ 58 $ (18 ) $ 76 $ 10 $ (46 ) $ 56
Net income from discontinued operations 7 4 3 459 338 121
Earnings per share of common stock:
Diluted
Income from continuing operations $ 0.47 $ (0.15 ) $ 0.62 $ 0.09 $ (0.39 ) $ 0.48
Net income $ 0.53 $ (0.11 ) $ 0.64 $ 3.94 $ 2.45 $ 1.49
Effective tax rate - continuing operations 34.4 % 34.9 % (420.1 )% 31.9 %
(1) Represents a non-GAAP financial measure. See detailed explanation
of these and other non-GAAP measures at end of this release
EPS Reconciliation - Reported to Adjusted
Six Months ended Dec. 29, 2012 and Dec. 31, 2011 (in
millions, except per share data - unaudited)
Six Months ended Dec. 29, 2012 Six Months ended Dec. 31, 2011
Impact of Impact of
As Significant As Significant
Reported Items Adjusted (1) Reported Items Adjusted (1)
Continuing operations:
Income from continuing operations $ 164 $ (45 ) $ 209 $ 4 $ (118 ) $ 122
before income taxes
Income tax expense (benefit) 57 (16 ) 73 (11 ) (46 ) 35
Income from continuing operations 107 (29 ) 136 15 (72 ) 87
Discontinued operations:
Income from discontinued operations, net of tax 9 4 5 (223 ) (440 ) 217
Gain on sale of discontinued 2 2 - 460 460 -
operations, net of tax
Net income from discontinued operations 11 6 5 237 20 217
Net income 118 (23 ) 141 252 (52 ) 304
Less: Income from noncontrolling
interests, net of tax
Discontinued operations - - - 3 - 3
Net income attributable to Hillshire Brands $ 118 $ (23 ) $ 141 $ 249 $ (52 ) $ 301
Amounts attributable to Hillshire Brands:
Net income from continuing operations $ 107 $ (29 ) $ 136 $ 15 $ (72 ) $ 87
Net income from discontinued operations 11 6 5 234 20 214
Earnings per share of common stock:
Diluted
Income from continuing operations $ 0.87 $ (0.23 ) $ 1.10 $ 0.13 $ (0.61 ) $ 0.74
Net income $ 0.96 $ (0.19 ) $ 1.15 $ 2.10 $ (0.44 ) $ 2.54
Effective tax rate - continuing operations 34.8 % 35.2 % (277.4 )% 28.8 %
(1) Represents a non-GAAP financial measure. See detailed explanation
of these and other non-GAAP measures at end of this release.
Operating
Income
Reconciliation
- Reported to
Adjusted
Quarters ended
Dec. 29, 2012
and Dec. 31,
2011 (in
millions,
except
per share
data
- unaudited)
Quarter ended Dec. 29, 2012
Impact of
As Significant
Reported Items Dispositions Adjusted (1)
Net Sales $ 1,060 $ - $ - $ 1,060
Cost of Sales 728 1 - 727
Gross Profit 332 (1 ) - 333
MAP Expense 42 - - 42
SG&A (excluding 182 18 - 164
MAP)
Net charges 9 9 - -
for exit
activities,
asset and
business
dispositions
Impairment - - - -
charges
Operating $ 99 $ (28 ) $ - $ 127
income
Quarter ended Dec. 31, 2011
Impact of
As Significant
Reported Items Dispositions Adjusted (1)
Net Sales $ 1,053 $ - $ 18 $ 1,035
Cost of Sales 755 5 11 739
Gross Profit 298 (5 ) 7 296
MAP Expense 30 - 1 29
SG&A (excluding 196 27 3 166
MAP)
Net charges 45 45 - -
for exit
activities,
asset and
business
dispositions
Impairment 4 4 - -
charges
Operating $ 23 $ (81 ) $ 3 $ 101
income
(1) Represents
a non-GAAP
financial
measure. See
detailed
explanation
of these and
other
non-GAAP
measures
at end of this
release.
Operating
Income
Reconciliation
- Reported to
Adjusted
Six Months
ended
Dec. 29, 2012
and Dec. 31,
2011 (in
millions,
except
per share
data
- unaudited)
Six Months ended Dec. 29, 2012
Impact of
As Significant
Reported Items Dispositions Adjusted (1)
Net Sales $ 2,034 $ - $ - $ 2,034
Cost of Sales 1,408 4 - 1,404
Gross Profit 626 (4 ) - 630
MAP Expense 88 - - 88
SG&A (excluding 349 35 - 314
MAP)
Net charges 6 6 - -
for exit
activities,
asset and
business
dispositions
Impairment - - - -
charges
Operating $ 183 $ (45 ) $ - $ 228
income
Six Months ended Dec. 31, 2011
Impact of
As Significant
Reported Items Dispositions Adjusted (1)
Net Sales $ 2,040 $ - $ 52 $ 1,988
Cost of Sales 1,469 11 37 1,421
Gross Profit 571 (11 ) 15 567
MAP Expense 77 - 1 76
SG&A (excluding 367 27 7 333
MAP)
Net charges 66 66 - -
for exit
activities,
asset and
business
dispositions
Impairment 14 14 - -
charges
Operating $ 47 $ (118 ) $ 7 $ 158
income
(1) Represents
a non-GAAP
financial
measure. See
detailed
explanation
of these and
other
non-GAAP
measures
at end of this
release.
Explanation of Non-GAAP Financial Measures
Management measures and reports Hillshire Brands' financial
results in accordance with U.S. generally accepted accounting
principles ("GAAP"). In this release, Hillshire Brands highlights
certain items that have significantly impacted the company's
financial results and uses several non-GAAP financial measures to
help investors understand the financial impact of these significant
items. Other companies may calculate these non-GAAP financial
measures differently than Hillshire Brands.
"Significant items" are income or charges (and related tax
impact) that management believes have had or are likely to have a
significant impact on the earnings of the applicable business
segment or on the total company for the period in which the item is
recognized, are not indicative of the company's core operating
results and affect the comparability of underlying results from
period to period. Significant items may include, but are not
limited to: charges for exit activities; consulting and advisory
costs; lease and contractual obligation exit costs; impairment
charges; tax charges on deemed repatriated earnings; tax costs and
benefits resulting from the disposition of a business; impact of
tax law changes; gains on the sale of discontinued operations;
changes in tax valuation allowances; and favorable or unfavorable
resolution of open tax matters based on the finalization of tax
authority examinations or the expiration of statutes of
limitations. Management highlights significant items to provide
greater transparency into the underlying sales or profit trends of
Hillshire Brands or the applicable business segment or discontinued
operations and to enable more meaningful comparability between
financial results from period to period. Additionally, Hillshire
Brands believes that investors desire to understand the impact of
these factors to better project and assess the longer term trends
and future financial performance of the company.
This release contains certain non-GAAP financial measures that
exclude from a financial measure computed in accordance with GAAP
the impact of the significant items and the impact of dispositions.
Management believes that these non-GAAP financial measures reflect
an additional way of viewing aspects of Hillshire Brands' business
that, when viewed together with Hillshire Brands' financial results
computed in accordance with GAAP, provide a more complete
understanding of factors and trends affecting Hillshire Brands'
historical financial performance and projected future operating
results, greater transparency of underlying profit trends and
greater comparability of results across periods. These non-GAAP
financial measures are not intended to be a substitute for the
comparable GAAP measures and should be read only in conjunction
with our consolidated financial statements prepared in accordance
with GAAP.
In addition, investors frequently have requested information
from management regarding the impact of significant items.
Management believes, based on feedback it has received during
earnings calls and discussions with investors, that these non-GAAP
measures enhance investors' ability to assess Hillshire Brands'
historical and projected future financial performance. Management
also uses certain of these non-GAAP financial measures, in
conjunction with the GAAP financial measures, to understand, manage
and evaluate our businesses, in planning for and forecasting
financial results for future periods, and as one factor in
determining achievement of incentive compensation. Two of the five
performance measures under Hillshire Brands' annual incentive plan
are net sales and earnings before interest and taxes (EBIT), which
are the reported amounts as adjusted for significant items and
other items. Many of the significant items will recur in future
periods; however, the amount and frequency of each significant item
varies from period to period.
The following is an explanation of the non-GAAP financial
measures presented in this release.
"Adjusted Diluted EPS" excludes from diluted EPS for continuing
operations the per share impact of significant items.
"Adjusted Net Income" excludes from net income the impact of
significant items related to both continuing and discontinued
operations recognized in the fiscal period presented. It does not
exclude the impact of businesses that have been exited or divested
and does not exclude the impact of businesses acquired after the
start of the fiscal period presented. Results for businesses
acquired are included from the date of acquisition onward.
"Adjusted Net Sales" for continuing operations for all segments
combined or for an indicated business segment excludes from net
sales as reported the impact of businesses that have been exited or
divested for all periods presented but does not exclude the impact
of businesses acquired after the start of the fiscal period
presented. Results for businesses acquired are included from the
date of acquisition onward.
"Adjusted Operating Income" for continuing operations excludes
from operating income the impact of significant items. It also
excludes the results of businesses that have been exited or
divested for all periods presented but does not exclude the impact
of businesses acquired after the start of the fiscal period
presented. Results for businesses acquired are included from the
date of acquisition onward.
"Adjusted Operating Segment Margin" for continuing operations or
an indicated business segment equals adjusted operating segment
income for a business segment divided by adjusted net sales for
that business segment.
"Adjusted Operating Segment Income" for all business segments
combined or for an indicated business segment excludes from the
applicable operating segment income measure the impact of
significant items recognized by that portion of the business during
the fiscal period presented and excludes the results of businesses
that have been exited or divested for all periods presented but
does not exclude the impact of businesses acquired after the start
of the fiscal period presented. Results for businesses acquired are
included from the date of acquisition onward.
"Adjusted Income from Continuing Operations" excludes from
income from continuing operations the impact of significant items
related to continuing operations recognized in the fiscal period
presented. It does not exclude the impact of businesses that have
been exited or divested and does not exclude the impact of
businesses acquired after the start of the fiscal period presented.
Results for businesses acquired are included from the date of
acquisition onward.
The Hillshire Brands CompanyMedia: Jon Harris,
1.312.614.8661Analysts: Melissa Napier, 1.312.614.8739
Hillshire Brd (LSE:HSH)
過去 株価チャート
から 5 2024 まで 6 2024
Hillshire Brd (LSE:HSH)
過去 株価チャート
から 6 2023 まで 6 2024
