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SEC Filings, Earing Reports, Press Releases
The Hershey Company Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 17, 2012 02:42PM
The Hershey Company (HSY) filed Annual Report for the period ended 2011-12-31.
Highlight of Business Operations:Our principal source of liquidity is operating cash flows. Our net income and, consequently, our cash provided from operations are impacted by: sales volume, seasonal sales patterns, timing of new product introductions, profit margins and price changes. Sales are typically higher during the third and fourth quarters of the year due to seasonal and holiday-related sales patterns. Generally, working capital needs peak during the summer months. We meet these needs primarily by utilizing cash on hand or by issuing commercial paper.
The amount of net losses on cash flow hedging derivatives, including foreign exchange forward contracts and options, interest rate swap agreements, commodities futures and options contracts and other commodity derivative instruments, expected to be reclassified into earnings in the next 12 months was approximately $71.3 million after tax as of December 31, 2011. This amount was primarily associated with commodities futures contracts.
In 2011, the actual return on pension plan assets was below our plan assumption and discount rates were lower, which will result in higher non-service related pension costs in 2012. Therefore, we expect non-service related pension expenses of $19 million in 2012, or $0.05 per share-diluted. These expenses include interest on plan participants previously earned account balances, offset by expected earnings on plan assets, actuarial gains or losses caused by interest rate changes and variations in pension asset performance and settlement costs, which accelerate the recognition of actuarial gains and losses when participants withdraw funds from the plans. The Companys defined benefit plans are well funded and have been closed to new entrants since 2007 and 2008. This results in ongoing service costs that are stable and predictable compared to the non-service related expenses which can be very volatile. The Company believes that adjusted net income and earnings per share-diluted which excludes non-service related pension expenses will provide investors with a better understanding of the underlying profitability of the ongoing business and, therefore, will be excluded beginning in 2012. The historical details of these expenses is available on the Companys website within the Investors section.
Stocks Discussed: HSY,