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Hillshire Brands Outlines Strategic Growth Priorities At Barclays Conference

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 and other SEC Filings, 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; (iii) impact of the spin-off on Hillshire Brands’ relationships with its employees, major customers and vendors and on Hillshire Brands’ credit ratings and cost of funds; and (iv) potential tax liabilities and other indemnification obligations.
  • The completion of the investigation of the accounting matters in the spun-off Brazilian business and the final nature and scope of the restatement of the company’s historical financial results;
  • 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;
  • Other business decisions, 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 business.

In addition, Hillshire Brands’ results may also be affected by general factors, such as economic conditions, political developments, interest and inflation rates, accounting standards, taxes and laws and regulations in markets where the company competes. Hillshire Brands undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Reconciliation of Diluted EPS, Continuing Operations, to Adjusted EPS
($ in Millions, except EPS) Fiscal Year ended June 30, 2012

Less:Impact ofSignificantItems

Adjusted:Earnings pershare (1)
Op Seg Income 351 (53) 404
Corporate Expenses 277 208 69
Operating Income 74 (261) 335
Interest Expense - net 72 - 72
Debt Extinguishment costs 39 (39) -
Income before Tax (37) (300) 263
Income tax expense/(benefit) (15) (103) 87
Net Income (22) (197) 176
Diluted Shares 120 120 120
Diluted EPS ($0.18) ($1.65) $1.47
(1) Adjusted EPS is a non-GAAP financial measure excluding the impact of Significant Items
Preliminary results pending the filing of the Company's Form 10-K

Reconciliation of Diluted EPS, Continuing Operations, to Adjusted EPS
($ in Millions, except EPS) Fiscal Year ended July 2, 2011

Less:Impact ofSignificantItems

Adjusted:Earnings pershare (1)
Op Seg Income 386 (31) 417
Corporate Expenses 162 60 102
Operating Income 225 (91) 316
Interest Expense - net 87 - 87
Debt Extinguishment costs 55 (55) -
Income before Tax 83 (146) 229
Income tax expense/(benefit) 27 (52) 79
Net Income 56 (94) 150
Diluted Shares 125 125 125
Diluted EPS $0.45 ($0.75) $1.20
(1) Adjusted EPS is a non-GAAP financial measure excluding the impact of Significant Items
Preliminary results pending the filing of the Company's Form 10-K

Explanation of Non-GAAP Financial Measure

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 a non-GAAP financial measure of earnings per share to help investors understand the financial impact of these significant items.

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