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The Hershey Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 12, 2010 09:16AM
The Hershey Company (HSY) filed Quarterly Report for the period ended 2010-04-04.
Highlight of Business Operations:
Earnings per share-diluted in the first quarter of 2010 increased $0.31 as compared with the first quarter of 2009. Net income was reduced by $10.1 million, or $0.05 per share-diluted, in the first quarter of 2009 as a result of net charges associated with our business realignment initiatives.
Cash provided from operations was sufficient to fund dividend payments of $70.9 million, capital additions and capitalized software expenditures of $35.5 million and the repurchase of Common Stock for $64.2 million.
Net cash provided from operating activities was $181.2 million in 2010 and $277.2 million in 2009. The decrease was primarily the result of the change in cash (used by) provided from other assets and liabilities, partially offset by higher net income in 2010. Cash used by changes in other assets and liabilities was $102.9 million for the first three months of 2010 compared with cash provided of $9.5 million for the same period of 2009. The change in the amount of cash (used by) provided from other assets and liabilities from 2009 to 2010 primarily reflected the effect of hedging transactions. Cash provided from working capital was $40.1 million lower in 2010 due primarily to higher accounts receivable resulting from the higher sales and Easter timing.
Interest paid was $45.0 million during the first three months of 2010 versus $45.8 million for the comparable period of 2009. Income taxes paid were $29.6 million during the first three months of 2010 versus $16.7 million for the comparable period of 2009. The increase in taxes paid in 2010 was primarily related to the higher payment for 2009 income taxes.
Generally, our short-term borrowings are in the form of commercial paper or bank loans with an original maturity of three months or less. However, at the end of the first quarter of 2010, no commercial paper borrowings were outstanding. Our five-year unsecured revolving credit agreement expires in December 2012. The credit limit is $1.1 billion with an option to borrow an additional $400 million with the concurrence of the lenders.
The potential net loss in fair value of interest rate swap agreements of ten percent resulting from a hypothetical near-term adverse change in market rates was $4.8 million as of April 4, 2010 and was $4.9 million as of December 31, 2009. The potential net loss in fair value of foreign exchange forward contracts and options of ten percent resulting from a hypothetical near-term adverse change in market rates was $13.6 million as of April 4, 2010 and was $10.9 million as of December 31, 2009. The market risk resulting from a hypothetical adverse market price movement of ten percent associated with the estimated average fair value of net commodity positions increased from $36.3 million as of December 31, 2009, to $42.7 million as of April 4, 2010. Market risk represents ten percent of the estimated average fair value of net commodity positions at four dates prior to the end of each period.
Stocks Discussed: HSY,