Gross profit as a percentage of net sales was 52.6 percent for the first six months of 2010, compared with 53.6 percent for the same period in 2009.
Operating expenses for the six-months ended June 30, 2010, increased to $157.4 million from $133.4 million in the same period last year. Operating income was $160.5 million, compared with $158.6 million in the first six months of 2009.
Net income for the first half of 2010 was $96.4 million, or $1.04 per diluted share, compared with $98.9 million, or $1.04 per diluted share, for the same period last year.
Auction Rate Securities
In March 2010, the Company entered into an agreement relating to $54.2 million in par value auction rate securities, which enables the Company to sell such securities (the "Put Option") in semi-annual or annual installments beginning March 22, 2011 with full sale rights available on or after March 22, 2013. Such auction rate securities, which have been reclassified from available-for-sale to trading securities, will continue to accrue interest until redeemed through the Put Option, or as determined by the auction process or by the terms outlined in their respective prospectuses in the event of auction failure.
At June 30, 2010 the Company held auction rate securities with a face value of $87.3 million ($92.7 million at March 31, 2010) and the Put Option with a fair market value of $4.1 million ($5.1 million at March 31, 2010). The Company determined that an impairment related to its auction rate securities of $6.5 million existed at June 30, 2010, of which $2.4 million was deemed temporary and $4.1 million was deemed other-than- temporary. As a result, a loss of $1.4 million, net of taxes is included as a component of accumulated other comprehensive loss as of June 30, 2010, and we recorded a net non-cash charge to earnings of $0.7 million in respect of our auction rate securities for the second quarter of 2010. The auction rate securities will continue to accrue interest at their contractual rates until their respective auctions succeed or they are redeemed.
Investor Conference Call
The Company will host an investor conference call today, August 5, 2010, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call will be open to all interested investors through a live audio web broadcast via the internet at www.hansens.com and www.opencompany.info. For those who are unable to listen to the live broadcast, the call will be archived for approximately one year on both websites.