TIDMHSH
The Hillshire Brands Company (NYSE: HSH) today reported earnings
for the third quarter and first nine months of fiscal 2013.
-- On-track executing first year of three-year plan
-- Net sales fell slightly, driven by a decline in the Foodservice/Other
segment
-- Adjusted1 operating income declined 12.9% on planned
increases in MAP and SG&A; reported operating income
increased 18.8%
-- Adjusted diluted EPS of $0.35 better than anticipated and down 14.6%;
reported diluted EPS of $0.34 up 47.8%
-- Fiscal 2013 adjusted diluted EPS expected to be at high end of
previous guidance range of $1.60-$1.70
CEO Perspective
"We continue to make progress in executing our three-year plan,
making strides in brand building, innovation and rigorous cost
management," said Sean Connolly, president and chief executive
officer, The Hillshire Brands Company.
"We saw a strong response where we increased our advertising
investment in the quarter. We also continued to build out our
innovation pipeline. On the cost side, we have now identified
opportunities to exceed the $100 million savings target we
announced at our investor day in June. These initiatives will
provide additional support for our growth strategy and further
strengthen our confidence that we will deliver our mid-term
targets.
"Our efforts to stabilize challenged businesses also progressed,
but clearly our work here is not done. Overall, we are pleased with
our efforts to date. In fact, we now expect full year EPS to be at
the high end of our previous guidance," added Connolly.
Discussion of Third Quarter Continuing Operations Results
Net sales declined slightly, driven by a decline in the
Foodservice/Other segment. MAP investment increased to 4.2% of
revenue versus 3.4% in the prior year's third quarter. Operating
income was also impacted by planned increases in SG&A as
transition service agreements expired and the company approached
targeted staffing levels.
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.
Key Financial Data, Continuing
Operations
$ in millions, except
per share
Third Quarter First Nine Months
2013 2012 % Change 2013 2012 % Change
Adjusted Net $ 924 $ 932 (1.0 )% $ 2,958 $ 2,920 1.3 %
Sales
Reported Net 924 935 (1.3 )% 2,958 2,975 (0.6 )%
Sales
Adj. Operating 72 83 (12.9 )% 300 241 24.6 %
Income
Rep. Operating 65 54 18.8 % 248 101 NM
Income
Adj. Diluted EPS $ 0.35 $ 0.41 (14.6 )% $ 1.46 $ 1.14 28.1 %
Rep. Diluted EPS $ 0.34 $ 0.23 47.8 % $ 1.21 $ 0.36 NM
Retail
Net sales and volume in the Retail segment were flat compared to
the prior year's third quarter. Investments in innovation offset
gains in pricing and mix.
Progress in the meat-centric food portfolio continued as both
volume and sales grew. Jimmy Dean continued its strong performance
behind increased MAP spending which drove growth in breakfast
sandwiches and bowls. Ball Park grew as increased MAP spending
behind Flame Grilled Patties drove sales. The company's artisanal
brands, Aidells and Gallo, continued to grow behind new product
launches. Hillshire Farm lunchmeatdeclined, as anticipated, as the
company pulled back on MAP and merchandising support to accommodate
the supply chain transition to the new lunchmeat package. This
transition to the new packaging was more challenging than expected.
The company will be implementing solutions to address these
challenges in the fourth quarter.
Frozen bakery sales declined in the quarter as a result of
planned product discontinuations of low margin SKUs and pricing
actions.
Adjusted operating segment income decreased by 3.3% behind
planned increases in SG&A and increased investment behind brand
building and innovation.
Foodservice/Other
Adjusted net sales declined 3.9% and reported net sales declined
5.0% from the prior year's third quarter. Increased volumes, driven
by commodity turkey sales, were offset by unfavorable mix and lower
pricing.
While the segment had pockets of growth in the quarter,
including volume growth in its convenience store and upscale
dessert businesses, macroeconomic pressure on our foodservice
customers and continued weak industry trends remain a
challenge.
Adjusted and reported operating segment income declined by 41.5%
and 47.3%, respectively. The decreases are primarily the result of
lower net sales.
Corporate
Excluding significant items, $13 million of corporate expenses
is $1 million higher than the third quarter of fiscal 2012.
Guidance and Outlook
The company expects fiscal 2013 adjusted diluted EPS to be at
the high end of the previous guidance range of $1.60 - $1.70. This
guidance takes into account the expected sales impact and one-time
expenses to resolve the previously discussed challenges with the
Hillshire Farm lunchmeat package transition.
New Cost Savings Initiatives
At the June 2012 Investor Day presentation, the company
announced that it expected to deliver $100 million of savings
between fiscal 2013 and fiscal 2015 in support of mid-term targets.
At that time, initiatives to deliver $65 million of savings had
been identified and are on-track to be realized.
The company has now identified initiatives to deliver the
remaining $35 million of cost savings as well as approximately $45
million of additional savings through fiscal 2016. One-time cash
investments of $80 to $100 million between fiscal 2013 and fiscal
2016 are expected to deliver ongoing savings of $80 million
annually. Non-cash charges may also be taken as the company
implements the initiatives.
These initiatives will unlock efficiencies in revenue
management, supply chain, and support processes to fuel the
company's growth agenda. Additionally, the initiatives will
strengthen capabilities that will further position the company for
sustained growth and profitability.
Webcast
The Hillshire Brands Company's review of its results for the
third quarter and first nine months of fiscal 2013 will be
broadcast live via the Internet today at 9:30 a.m. CDT. 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. CDT on the day of the webcast until November 1, 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 related to execution and
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.
Consolidated
Statements
of Income
For
the
Quarter
and
Nine
Months
ended
March
30,
2013 and
March
31, 2012
(in
millions,
except
per
share
data--unaudited)
Quarter ended Nine Months ended
March 30, March 31, March 30, March 31,
2013 2012 2013 2012
Continuing
Operations
Net sales $ 924 $ 935 $ 2,958 $ 2,975
Cost of 652 675 2,060 2,144
sales
Selling, 205 202 642 646
general
and
administrative
expenses
Net 1 4 7 70
charges
for exit
activities,
asset and
business
dispositions
Impairment 1 -- 1 14
charges
Operating 65 54 248 101
income
Interest 13 22 35 67
expense
Interest (2 ) (2 ) (5 ) (4 )
income
Income 54 34 218 38
from
continuing
operations
before
income
taxes
Income tax 12 7 69 (4 )
expense
(benefit)
Income 42 27 149 42
from
continuing
operations
Discontinued
operations
Income 4 28 13 (195 )
(loss)
from
discontinued
operations,
net of tax
expense
(benefit)
of $(5),
$(29),
$(7)
and $28
Gain 47 (58 ) 49 402
(loss)
on sale
of
discontinued
operations,
net of tax
expense
of
$13, $29,
$14
and $367
Net income 51 (30 ) 62 207
(loss)
from
discontinued
operations
Net income 93 (3 ) 211 249
(loss)
Less:
Income
from
noncontrolling
interests,
net of tax
Discontinued -- -- -- 3
operations
Net income $ 93 $ (3 ) $ 211 $ 246
(loss)
attributable
to
Hillshire
Brands
Amounts
attributable
to
Hillshire
Brands:
Net income $ 42 $ 27 $ 149 $ 42
from
continuing
operations
Net income 51 (30 ) 62 204
(loss)
from
discontinued
operations
Earnings
per
share
of common
stock
Basic
Income $0.34 $0.23 $1.22 $0.36
from
continuing
operations
Net income $0.76 $(0.02 ) $1.72 $2.08
(loss)
Average 123 119 123 118
shares
outstanding
Diluted
Income $0.34 $0.23 $1.21 $0.36
from
continuing
operations
Net income $0.75 $(0.02 ) $1.72 $2.07
(loss)
Average 124 119 123 119
shares
outstanding
Cash $0.125 $0.575 $0.375 $1.150
dividends
declared
per
share of
common
stock
Financial
Summary--As
Adjusted (1)
For
the Quarter
and
Nine Months
ended March
30,
2013 and
March
31, 2012
(in
millions,
except
per
share
data--unaudited)
Quarter ended Nine Months ended
March 30,2013 March 31,2012 % March 30,2013 March 31,2012 %
Change Change
Continuing
operations:
Adjusted net
sales:
Retail $ 692 $ 691 -- % $ 2,188 $ 2,150 1.8 %
Foodservice/Other 232 241 (3.9 ) 770 776 (0.8 )
Intersegment -- -- -- (6 )
Total $ 924 $ 932 (1.0 )% $ 2,958 $ 2,920 1.3 %
adjusted
net sales
Adjusted
operating
income/(loss)
Retail $ 76 $ 79 (3.3 )% $ 272 $ 228 19.7 %
Foodservice/Other 9 16 (41.5 ) 62 65 (3.1 )
Adjusted 85 95 (9.8 )% 334 293 14.6 %
operating
segment
income
General (12 ) (12 ) (32 ) (49 )
corporate
expenses
Mark-to-market -- 1 1 --
derivatives
gains/(losses)
Amortization (1 ) (1 ) (3 ) (3 )
of
trademarks
&
intangibles
Total $ 72 $ 83 (12.9 )% $ 300 $ 241 24.6 %
adjusted
operating
income
Adjusted $ 43 $ 48 (9.5 )% $ 179 $ 135 32.0 %
income
from
continuing
operations
Adjusted net $ 47 $ 119 (59.6 )% $ 188 $ 423 (55.3 )%
income
Adjusted net
income
attributable
to Hillshire
Brands:
Continuing $ 43 $ 48 (9.5 )% $ 179 $ 135 32.0 %
operations
Discontinued $ 4 $ 71 (94.4 )% $ 9 $ 285 (96.7 )%
operations
Adjusted
diluted
earnings
per share:
Income from $ 0.35 $ 0.41 (14.6 )% $ 1.46 $ 1.14 28.1 %
continuing
operations
Net income $ 0.38 $ 0.99 (61.6 )% $ 1.53 $ 3.53 (56.7 )%
Adjusted
operating
margin:
Retail 11.0 % 11.4 % (0.4 )% 12.4 % 10.6 % 1.8 %
Foodservice/Other 4.1 6.7 (2.6 ) 8.1 8.3 (0.2 )
Total 7.8 % 8.8 % (1.0 )% 10.1 % 8.2 % 1.9 %
Hillshire
Brands
(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
Nine Months
ended March
30,
2013 and
March
31, 2012
(in
millions,
except
per
share
data--unaudited)
Quarter ended Nine Months ended
March 30,2013 March 31,2012 % March 30,2013 March 31,2012 %
Change Change
Continuing
operations:
Net sales:
Retail $ 692 $ 691 -- % $ 2,188 $ 2,150 1.8 %
Foodservice/Other 232 244 (5.0 ) 770 831 (7.3 )
Intersegment -- -- -- (6 )
Total net $ 924 $ 935 (1.3 )% $ 2,958 $ 2,975 (0.6 )%
sales
Operating
income/(loss)
Retail $ 74 $ 73 1.9 % $ 272 $ 202 35.0 %
Foodservice/Other 8 16 (47.3 ) 61 70 (12.6 )
Operating 82 89 (7.1 )% 333 272 22.7 %
segment
income
General (16 ) (35 ) (83 ) (168 )
corporate
expenses
Mark-to-market -- 1 1 --
derivatives
gains/(losses)
Amortization (1 ) (1 ) (3 ) (3 )
of
trademarks
&
intangibles
Total $ 65 $ 54 18.8 % $ 248 $ 101 NM
operating
income
Income from $ 42 $ 27 52.2 % $ 149 $ 42 NM
continuing
operations
Net income $ 93 $ (3 ) NM $ 211 $ 249 (15.3 )%
(loss)
Net income
(loss)
attributable
to Hillshire
Brands:
Continuing $ 42 $ 27 52.2 % $ 149 $ 42 NM
operations
Discontinued $ 51 $ (30 ) NM $ 62 $ 204 (69.4 )%
operations
Diluted
earnings
per share:
Income from $ 0.34 $ 0.23 47.8 % $ 1.21 $ 0.36 NM
continuing
operations
Net income $ 0.75 $ (0.02 ) NM $ 1.72 $ 2.07 (16.9 )%
(loss)
Operating
margin:
Retail 10.7 % 10.5 % 0.2 % 12.4 % 9.4 % 3.0 %
Foodservice/Other 3.7 6.7 (3.0 ) 8.0 8.5 (0.5 )
Total 7.0 % 5.8 % 1.2 % 8.4 % 3.4 % 5.0 %
Hillshire
Brands
NM = Not meaningful
Net Sales Bridge
For the Quarter and Nine Months ended March 30, 2013 (unaudited)
The following table illustrates the components of the change in net sales versus the prior year
Third quarter ended March 30, 2013 Retail Foodservice/ Total
Other Business
Segments
Volume -- % 1.3 % 0.4 %
Mix 0.1 (3.2 ) (0.8 )
Price 0.2 (1.3 ) (0.2 )
Other (0.3 ) (0.7 ) (0.4 )
Adjusted net sales* change -- (3.9 ) (1.0 )
Dispositions -- (1.1 ) (0.3 )
Total Net Sales Change -- % (5.0 )% (1.3 )%
First Nine Months ended March 30, 2013 Retail Foodservice/ Total
Other Business
Segments
Volume 1.2 % 4.5 % 2.3 %
Mix 0.7 (3.7 ) (0.5 )
Price (0.2 ) (1.2 ) (0.4 )
Other 0.1 (0.4 ) (0.1 )
Adjusted net sales* change 1.8 (0.8 ) 1.3
Dispositions -- (6.5 ) (1.9 )
Total Net Sales Change 1.8 % (7.3 )% (0.6 )%
* 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 March 30, 2013 and June 30,
2012 (in millions--unaudited)
March 30, 2013 June 30, 2012
Assets
Cash and equivalents $ 416 $ 235
Trade accounts receivable, 206 248
less allowances
Inventories 316 288
Current deferred income taxes 105 114
Income tax receivable 9 52
Other current assets 47 65
Total current assets 1,099 1,002
Property, net of accumulated 824 847
depreciation
of $1,176 and $1,245, respectively
Trademarks and other identifiable 124 132
intangibles
Goodwill 348 348
Deferred income taxes 14 36
Other noncurrent assets 77 80
Noncurrent assets held for sale -- 5
$ 2,486 $ 2,450
Liabilities and Equity
Accounts payable $ 275 $ 359
Accrued liabilities 416 469
Current maturities of long-term debt 19 5
Total current liabilities 710 833
Long-term debt 930 939
Pension obligation 151 166
Other liabilities 273 277
Equity
Hillshire Brands common 422 235
stockholders' equity
$ 2,486 $ 2,450
Consolidated Statements
of Cash Flows
For the Nine Months ended
March 30, 2013 and
March
31,
2012 (in millions--unaudited)
Nine Months ended
March 30, 2013 March 31, 2012
Operating activities -
Net income/(loss) $ 211 $ 249
Adjustments to reconcile
net income to
net cash from operating
activities:
Depreciation 110 197
Amortization 13 35
Impairment charges 1 418
Net (gain) loss on business (69 ) (769 )
dispositions
Pension contributions, (9 ) (196 )
net of expense
Refundable tax on -- (43 )
Senseo payments
Increase (decrease) in 31 147
deferred income taxes
Other (5 ) (41 )
Changes in current assets
and liabilities,
net of businesses
acquired and sold:
Trade accounts receivable 32 43
Inventories (42 ) (76 )
Other current assets 17 34
Accounts payable (72 ) (70 )
Accrued liabilities (76 ) (132 )
Accrued taxes 40 64
Net cash from (used in) 182 (140 )
operating activities
Investing activities--
Purchases of property (103 ) (193 )
and equipment
Purchases of software and (4 ) (178 )
other intangibles
Acquisitions of businesses -- (29 )
Dispositions of businesses 96 2,035
and investments
Cash received from derivative 3 49
transactions
Sales of assets 1 2
Net cash received from (used (7 ) 1,686
in) investing activities
Financing activities--
Issuances of common stock 42 62
Borrowings of other debt -- 173
Repayments of other debt (5 ) (715 )
and derivatives
Net change in financing with -- (109 )
less than 90-day maturities
Purchase of noncontrolling -- (10 )
interest
Payments of dividends (31 ) (203 )
Net cash from (used in) 6 (802 )
financing activities
Effect of changes in foreign -- (155 )
exchange rates on cash
Increase in cash 181 589
and equivalents
Add: Cash balances -- 1,992
of discontinued
operations at beginning
of year
Less: Cash balances -- (2,555 )
of discontinued
operations at end of period
Cash and equivalents 235 74
at beginning of year
Cash and equivalents $ 416 $ 100
at end of period
Supplemental cash flow data:
Cash paid for restructuring $ 69 $ 354
actions
Cash contributions 5 187
to pension plans
Cash paid for income taxes 5 180
Operating Results by Business Segment
For the Quarters ended March 30, 2013 and March 31, 2012 (in millions--unaudited)
As Dispositions As
Reported Adjusted (1)
Third Quarter 2013
Net sales:
Retail $ 692 $ -- $ 692
Foodservice/Other 232 -- 232
Intersegment -- -- --
Total net sales $ 924 $ -- $ 924
Third Quarter 2012
Net sales:
Retail $ 691 $ -- $ 691
Foodservice/Other 244 3 241
Intersegment -- -- --
Total net sales $ 935 $ 3 $ 932
Third Quarter As Dispositions Restructuring Accelerated Impairment Other As
2013 Reported Actions Depreciation Charges Significant Adjusted (1)
Items
Operating income:
Retail $ 74 $ -- $ -- $ (1 ) $ (1 ) $ -- $ 76
Foodservice/Other 8 1 -- (2 ) -- -- 9
Total operating 82 1 -- (3 ) (1 ) -- 85
segment income
General corporate (16 ) -- (10 ) -- -- 6 (12 )
expenses
Mark-to-market -- -- -- -- -- -- --
derivative
gains/(losses)
Amortization (1 ) -- -- -- -- -- (1 )
of
trademarks/intangibles
Operating income $ 65 $ 1 $ (10 ) $ (3 ) $ (1 ) $ 6 $ 72
Operating margin 7.0 % 7.8 %
Third Quarter
2012
Operating income:
Retail $ 73 $ -- $ -- $ (6 ) $ -- $ -- $ 79
Foodservice/Other 16 1 -- (1 ) -- -- 16
Total operating 89 1 -- (7 ) -- -- 95
segment income
General corporate (35 ) -- (13 ) (10 ) -- -- (12 )
expenses
Mark-to-market 1 -- -- -- -- -- 1
derivative
gains/(losses)
Amortization (1 ) -- -- -- -- -- (1 )
of
trademarks/intangibles
Operating income $ 54 $ 1 $ (13 ) $ (17 ) $ -- $ -- $ 83
Operating margin 5.8 % 8.8 %
(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 Nine Months ended March 30, 2013 and March 31, 2012 (in millions--unaudited)
As Dispositions As
Reported Adjusted (1)
First Nine Months of 2013
Net sales:
Retail $ 2,188 $ -- $ 2,188
Foodservice/Other 770 -- 770
Intersegment -- -- --
Total net sales $ 2,958 $ -- $ 2,958
First Nine Months of 2012
Net sales:
Retail $ 2,150 $ -- $ 2,150
Foodservice/Other 831 55 776
Intersegment (6 ) -- (6 )
Total net sales $ 2,975 $ 55 $ 2,920
As Dispositions Restructuring Accelerated Impairment Other As
Reported Actions Depreciation Charges Significant Adjusted (1)
Items
First Nine Months
of 2013
Operating income:
Retail $ 272 $ 3 $ -- $ (2 ) $ (1 ) $ -- $ 272
Foodservice/Other 61 3 -- (4 ) -- -- 62
Total operating 333 6 -- (6 ) (1 ) -- 334
segment income
General corporate (83 ) -- (36 ) (18 ) -- 3 (32 )
expenses
Mark-to-market 1 -- -- -- -- -- 1
derivative
gains/(losses)
Amortization (3 ) -- -- -- -- -- (3 )
of
trademarks/intangibles
Operating income $ 248 $ 6 $ (36 ) $ (24 ) $ (1 ) $ 3 $ 300
Operating margin 8.4 % 10.1 %
First Nine Months
of 2012
Operating income:
Retail $ 202 $ -- $ (8 ) $ (18 ) $ -- $ -- $ 228
Foodservice/Other 70 8 (2 ) (1 ) -- -- 65
Total operating 272 8 (10 ) (19 ) -- -- 293
segment income
General corporate (168 ) -- (102 ) (10 ) (14 ) 7 (49 )
expenses
Mark-to-market -- -- -- -- -- -- --
derivative
gains/(losses)
Amortization (3 ) -- -- -- -- -- (3 )
of
trademarks/intangibles
Operating income $ 101 $ 8 $ (112 ) $ (29 ) $ (14 ) $ 7 $ 241
Operating margin 3.4 % 8.2 %
(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
March 30,
2013 and March
31, 2012
(in millions,
except per
share data--unaudited)
Quarter Ended March 30, 2013 Quarter Ended March 31, 2012
(In millions except Pretax Net DilutedEPSImpact(1) Pretax Net DilutedEPSImpact(1)
per share data) Impact Income/(loss) Impact Income/(loss)
Continuing Operations:
Restructuring actions:
Severance/ retention $ (1 ) $ (1 ) $ -- $ (2 ) $ (1 ) $ (0.01 )
costs
Lease and contractual -- -- -- (3 ) (2 ) (0.02 )
obligation
exit costs
Consulting/advisory (9 ) (5 ) (0.05 ) (8 ) (11 ) (0.09 )
and other costs
Income from asset 1 1 -- -- -- --
dispositions
Accelerated (3 ) (2 ) (0.01 ) (17 ) (11 ) (0.09 )
depreciation
Total restructuring (12 ) (7 ) (0.06 ) (30 ) (25 ) (0.20 )
actions
Impairment charges (1 ) (1 ) (0.01 ) -- -- --
Pension (1 ) (1 ) (0.01 ) -- -- --
settlement/withdrawal/other
Workers' compensation 7 5 0.04 -- -- --
deposit adjustment
Impact of significant (7 ) (4 ) (0.04 ) (30 ) (25 ) (0.20 )
items on
income (loss) from
continuing
operations before
significant
tax matters
Tax -- 3 0.02 -- 4 0.03
audit
settlement/reserve
adjustments
Impact of significant (7 ) (1 ) (0.01 ) (30 ) (21 ) (0.18 )
items on income
(loss) from continuing
operations
Discontinued
operations:
Severance/ retention (1 ) (1 ) -- (10 ) (8 ) (0.07 )
costs
Lease and contractual -- -- -- (74 ) (56 ) (0.47 )
obligation
exit costs
Consulting, advisory -- -- -- (24 ) (8 ) (0.07 )
& other costs
Gain on the sale 60 47 0.38 (29 ) (58 ) (0.48 )
of discontinued
operations
Tax basis difference -- -- -- -- (3 ) (0.03 )
adjustment
Tax -- 1 0.01 -- 36 0.31
audit
settlement/reserve
adjustment
Tax valuation -- -- -- -- 1 0.01
allowance
adjustment
Tax on unremitted -- -- -- -- (5 ) (0.04 )
earnings
Impact of significant 59 47 0.38 (137 ) (101 ) (0.84 )
items
on income/(loss)
from discontinued
operations
Impact of significant $ 52 $ 46 $ 0.37 $ (167 ) $ (122 ) $ (1.01 )
items
on net income/(loss)
attributable to
Hillshire Brands
Impact of significant
items on income from
continuing operations
before income taxes
Cost of sales $ (2 ) $ (7 )
Selling, general and (3 ) (19 )
administrative
expenses
Impairment charges (1 ) --
Exit and business (1 ) (4 )
dispositions
Total $ (7 ) $ (30 )
Notes:
(1) EPS amounts are rounded to the nearest $0.01 and may not add to the total.
Significant Items
Nine Months ended
March 30,
2013 and March 31, 2012
(in millions,
except per
share data--unaudited)
Nine Months Ended March 30, 2013 Nine Months Ended March 31, 2012
(In millions except Pretax Net DilutedEPSImpact(1) Pretax Net DilutedEPSImpact(1)
per share data) Impact Income/ Impact Income/
(loss) (loss)
Continuing Operations:
Restructuring actions:
Severance/ retention $ (1 ) $ (1 ) $ -- $ (20 ) $ (13 ) $ (0.10 )
costs
Lease and contractual (13 ) (8 ) (0.07 ) (53 ) (34 ) (0.28 )
obligation
exit costs
Consulting/advisory (22 ) (14 ) (0.12 ) (39 ) (35 ) (0.29 )
and other costs
Income from asset 6 4 0.03 -- -- --
dispositions
Accelerated (24 ) (15 ) (0.12 ) (29 ) (18 ) (0.16 )
depreciation
Total restructuring (54 ) (34 ) (0.28 ) (141 ) (100 ) (0.84 )
actions
Gain on HBI tax -- -- -- 15 15 0.12
settlement
Impairment charges (1 ) (1 ) (0.01 ) (14 ) (9 ) (0.07 )
Litigation accrual -- -- -- (11 ) (7 ) (0.06 )
Pension (4 ) (3 ) (0.02 ) -- -- --
settlement/withdrawal/other
Tax indemnification -- -- -- 3 4 0.03
accrual adjustment
Workers' compensation 7 5 0.04 -- -- --
deposit adjustment
Impact of significant (52 ) (33 ) (0.27 ) (148 ) (97 ) (0.81 )
items on
income (loss) from
continuing
operations before
significant
tax matters
Tax -- 3 0.02 -- 4 0.03
audit
settlement/reserve
adjustments
Impact of significant (52 ) (30 ) (0.25 ) (148 ) (93 ) (0.78 )
items on income
(loss) from continuing
operations
Discontinued
operations:
Severance/ retention -- -- -- (44 ) (32 ) (0.27 )
costs
Lease and contractual -- -- -- (106 ) (80 ) (0.67 )
obligation
exit costs
Consulting, advisory (3 ) (2 ) (0.02 ) (78 ) (52 ) (0.43 )
& other costs
Impairment charges -- -- -- (404 ) (358 ) (3.01 )
Gain on the sale 63 49 0.40 769 402 3.38
of discontinued
operations
Thailand flood loss -- -- -- (2 ) (1 ) (0.01 )
Pension 1 1 -- (3 ) (2 ) (0.01 )
curtailment/withdrawal/other
Tax basis difference -- 4 0.03 -- 186 1.56
adjustment
Tax -- 1 0.01 -- 105 0.88
audit
settlement/reserve
adjustments
Tax valuation allowance -- -- -- -- (72 ) (0.60 )
adjustment
Tax on unremitted -- -- -- -- (177 ) (1.48 )
earnings
Impact of significant 61 53 0.43 132 (81 ) (0.67 )
items on income
from discontinued
operations
Impact of significant $ 9 $ 23 $ 0.19 $ (16 ) $ (174 ) $ (1.46 )
items on net income
(loss) attributable to
Hillshire Brands
Impact of significant
items on income from
continuing operations
before income taxes
Cost of sales $ (6 ) $ (18 )
Selling, general and (38 ) (46 )
administrative
expenses
Impairment charges (1 ) (14 )
Exit and business (7 ) (70 )
dispositions
Total $ (52 ) $ (148 )
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
March 30,
2013 and March
31, 2012
(in millions,
except per
share
data--unaudited)
Quarter ended March 30, 2013 Quarter ended March 31, 2012
As Impact of Adjusted(1) As Impact of Adjusted(1)
Reported Significant Reported Significant
Items Items
Continuing
operations:
Income from $ 54 $ (7 ) $ 61 $ 34 $ (30 ) $ 64
continuing
operations
before income
taxes
Income tax expense 12 (6 ) 18 7 (9 ) 16
(benefit)
Income from 42 (1 ) 43 27 (21 ) 48
continuing
operations
Discontinued
operations:
Income 4 -- 4 28 (43 ) 71
from discontinued
operations,
net of tax
Gain on sale of 47 47 -- (58 ) (58 ) --
discontinued
operations,
net of tax
Net income (loss) 51 47 4 (30 ) (101 ) 71
from
discontinued
operations
Net income (loss) 93 46 47 (3 ) (122 ) 119
Less: Income from
noncontrolling
interests,
net of tax
Discontinued -- -- -- -- -- --
operations
Net income (loss) $ 93 $ 46 $ 47 $ (3 ) $ (122 ) $ 119
attributable
to Hillshire
Brands
Amounts
attributable
to Hillshire
Brands:
Net income from $ 42 $ (1 ) $ 43 $ 27 $ (21 ) $ 48
continuing
operations
Net income (loss) 51 47 4 (30 ) (101 ) 71
from
discontinued
operations
Earnings per share
of common stock:
Diluted
Income from $ 0.34 $ (0.01 ) $ 0.35 $ 0.23 $ (0.18 ) $ 0.41
continuing
operations
Net income (loss) $ 0.75 $ 0.37 $ 0.38 $ (0.02 ) $ (1.01 ) $ 0.99
Effective 22.3 % 28.3 % 20.0 % 23.4 %
tax
rate--continuing
operations
(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
Nine Months ended
March 30,
2013 and March
31, 2012
(in millions,
except per
share
data--unaudited)
Nine Months ended March 30, 2013 Nine Months ended March 31, 2012
As Impact of Adjusted(1) As Impact of Adjusted(1)
Reported Significant Reported Significant
Items Items
Continuing
operations:
Income from $ 218 $ (52 ) $ 270 $ 38 $ (148 ) $ 186
continuing
operations
before income
taxes
Income tax expense 69 (22 ) 91 (4 ) (55 ) 51
(benefit)
Income from 149 (30 ) 179 42 (93 ) 135
continuing
operations
Discontinued
operations:
Income (loss) from 13 4 9 (195 ) (483 ) 288
discontinued
operations,
net of tax
Gain on sale of 49 49 -- 402 402 --
discontinued
operations,
net of tax
Net income from 62 53 9 207 (81 ) 288
discontinued
operations
Net income 211 23 188 249 (174 ) 423
Less: Income from
noncontrolling
interests,
net of tax
Discontinued -- -- -- 3 -- 3
operations
Net $ 211 $ 23 $ 188 $ 246 $ (174 ) $ 420
income
attributable
to Hillshire
Brands
Amounts
attributable
to Hillshire
Brands:
Net income from $ 149 $ (30 ) $ 179 $ 42 $ (93 ) $ 135
continuing
operations
Net income from 62 53 9 204 (81 ) 285
discontinued
operations
Earnings per share
of common stock:
Diluted
Income from $ 1.21 $ (0.25 ) $ 1.46 $ 0.36 $ (0.78 ) $ 1.14
continuing
operations
Net income $ 1.72 $ 0.19 $ 1.53 $ 2.07 $ (1.46 ) $ 3.53
Effective 31.7 % 33.6 % (11.7 )% 27.0 %
tax
rate--continuing
operations
(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
March 30,
2013 and March
31, 2012
(in millions,
except per
share
data--unaudited)
Quarter ended March 30, 2013
As Impact of Dispositions Adjusted(1)
Reported Significant
Items
Net Sales $ 924 $ -- $ -- $ 924
Cost of Sales 652 2 -- 650
Gross Profit 272 (2 ) -- 274
MAP Expense 39 -- -- 39
SG&A (excluding 166 3 -- 163
MAP)
Net charges 1 1 -- --
for exit
activities,
asset and business
dispositions
Impairment charges 1 1 -- --
Operating income $ 65 $ (7 ) $ -- $ 72
Quarter ended March 31, 2012
As Impact of Dispositions Adjusted(1)
Reported Significant
Items
Net Sales $ 935 $ -- $ 3 $ 932
Cost of Sales 675 7 2 666
Gross Profit 260 (7 ) 1 266
MAP Expense 32 -- 1 31
SG&A (excluding 170 19 (1 ) 152
MAP)
Net charges 4 4 -- --
for exit
activities,
asset and business
dispositions
Impairment charges -- -- -- --
Operating income $ 54 $ (30 ) $ 1 $ 83
(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
Nine Months ended
March 30,
2013 and March
31, 2012
(in millions,
except per
share
data--unaudited)
Nine Months ended March 30, 2013
As Impact of Dispositions Adjusted(1)
Reported Significant
Items
Net Sales $ 2,958 $ -- $ -- $ 2,958
Cost of Sales 2,060 6 -- 2,054
Gross Profit 898 (6 ) -- 904
MAP Expense 127 -- -- 127
SG&A (excluding 515 38 -- 477
MAP)
Net charges 7 7 -- --
for exit
activities,
asset and business
dispositions
Impairment charges 1 1 -- --
Operating income $ 248 $ (52 ) $ -- $ 300
Nine Months ended March 31, 2012
As Impact of Dispositions Adjusted(1)
Reported Significant
Items
Net Sales $ 2,975 $ -- $ 55 $ 2,920
Cost of Sales 2,144 18 39 2,087
Gross Profit 831 (18 ) 16 833
MAP Expense 109 -- 2 107
SG&A (excluding 537 46 6 485
MAP)
Net charges 70 70 -- --
for exit
activities,
asset and business
dispositions
Impairment charges 14 14 -- --
Operating income $ 101 $ (148 ) $ 8 $ 241
(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
This information is provided by Business Wire
Hillshire Brd (LSE:HSH)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
Hillshire Brd (LSE:HSH)
Historical Stock Chart
Von Jun 2023 bis Jun 2024
