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Heinz Reports Double-Digit EPS Growth To $0.90 From Continuing Operations; Reaffirms Previously Announced Fiscal 2013 Full-Year Sales And Profit Outlook

Stocks in this article: HNZ

Fiscal 2013 Second Quarter Sales Variances

The following table illustrates the components of the change in net sales versus the prior year for each of the five reported business segments.

        Second Quarter Ended October 28, 2012
Volume   +   Price   =  

Organic Sales Growth (a)

  +  

Net Acquisitions/ (Divestitures)

  +  

Foreign Exchange

  =  

Total Net Sales Change

Segment:
North American Consumer Products 1.2 % (0.8 )% 0.4 % (0.6 )% 0.3 % 0.1 %
Europe 0.3 % (0.2 )% 0.1 % (0.6 )% (3.8 )% (4.2 )%
Asia/Pacific 1.9 % 2.2 % 4.1 % % (1.9 )% 2.3 %
U.S. Foodservice (0.1 )% 4.1 % 4.1 % % % 4.1 %
Rest of World 6.5 % 13.3 % 19.8 % % (11.3 )% 8.6 %
Consolidated Totals 1.4 % 1.9 % 3.3 % (0.4 )% (2.4 )% 0.5 %
 

Fiscal 2012 Results Excluding Charges for Productivity Initiatives

The following table reconciles the Company's Fiscal 2012 reported results to results excluding charges for productivity initiatives.

(amounts in thousands)         Second Quarter Ended October 26, 2011
Continuing Operations Reported Results  

-

 

Charges for productivity initiatives

  =  

Results excluding charges for productivity initiatives (b)

Sales $ 2,813,964     $     $ 2,813,964
Gross Profit $ 967,619 $ (27,451 ) $ 995,070
Gross Profit Margin 34.4 % (1.0 )% 35.4 %
SG&A excluding marketing $ 500,797 $ 9,866 $ 490,931
Operating Income $ 358,145 $ (37,317 ) $ 395,462
Effective tax rate 18.1 % 31.6 % 19.6 %
Income from continuing operations, net of tax $ 237,277 $ (25,534 ) $ 262,811
Diluted earnings per share from continuing operations $ 0.73 $ (0.08 ) $ 0.81
 
(amounts in thousands) Six Months Ended October 26, 2011
Continuing Operations Reported Results  

-

 

Charges for productivity initiatives

 

=

 

Results excluding charges for productivity initiatives (b)

Operating Income $ 728,683 $ (77,828

)

 

$

806,511
Income from continuing operations, net of tax $ 464,006 $ (53,982

)

 

$

517,988
Diluted earnings per share from continuing operations $ 1.43 $ (0.17

)

 

$

1.60
 

Constant Currency

The following table reconciles the Company's results from continuing operations excluding charges for productivity initiatives in Fiscal 2012 to constant currency results for the current period.

(amounts in thousands, except per share amounts)

         

Results excluding charges for productivity initiatives in FY12

 

-

 

Currency Translation

 

-

 

Currency Translation Hedges

  =  

Constant Currency Results excluding charges for productivity initiatives in FY12

Continuing Operations  
 
Sales
Second Quarter Ended October 28, 2012 $ 2,827,210 (68,664 ) $ 2,895,874 (c)
Second Quarter Ended October 26, 2011 $ 2,813,964   $ 2,813,964  
Change $ 13,246   $ 81,910  
% Change 0.5 % 2.9 %
 
Six Months Ended October 28, 2012 $ 5,618,434 (228,062 ) $ 5,846,496 (c)
Six Months Ended October 26, 2011 $ 5,646,562   $ 5,646,562  
Change $ (28,128 ) $ 199,934  
% Change (0.5 )% 3.5 %
 
Marketing
Second Quarter Ended October 28, 2012 $ 119,553 (3,726 ) $ 123,279 (c)
Second Quarter Ended October 26, 2011 $ 108,677   $ 108,677  
Change $ 10,876   $ 14,602  
% Change 10.0 % 13.4 %
 
Operating Income
Second Quarter Ended October 28, 2012 $ 391,697 (5,775 ) $ 397,472 (c)
Second Quarter Ended October 26, 2011 $ 395,462   (b) $ 395,462   (b)
Change $ (3,765 ) $ 2,010  
% Change (1.0 )% 0.5 %
 

Results excluding charges for productivity initiatives in FY12

-

Currency Translation

-

Currency Translation Hedges

=

Constant Currency Results excluding charges for productivity initiatives in FY12

Operating Income
Six Months Ended October 28, 2012 $ 802,035 (27,366 ) $ 829,401 (c)
Six Months Ended October 26, 2011 $ 806,511   (b) $ 806,511   (b)
Change $ (4,476 ) $ 22,890  
% Change (0.6 )% 2.8 %
 
Earnings per share from continuing operations- Diluted
Second Quarter Ended October 28, 2012 $ 0.90 (0.01 ) (0.01 ) $ 0.92 (c)
Second Quarter Ended October 26, 2011 $ 0.81   (b) $ 0.81   (b)
Change $ 0.09   $ 0.11  
% Change 11.1 % 13.6 %
 
Six Months Ended October 28, 2012 $ 1.76 (0.07 ) $ 1.83 (c)
Six Months Ended October 26, 2011 $ 1.60   (b) $ 1.60   (b)
Change $ 0.16   $ 0.23  
% Change 10.0 % 14.4 %
 
                        Second Quarter Ended October 28, 2012
Organic Sales                

Organic Sales Growth (a)

  +   Foreign Exchange   +  

Acquisitions/ Divestitures

  =  

Total Net Sales Change

Emerging Markets 13.2 % (7.6 )% 4.7 % (d) 10.3 %
Global Ketchup 5.0 % (1.1 )% 3.8 %
Top 15 Brands 4.6 % (2.9 )% 1.7 %
 
Six Months Ended October 28, 2012
Total Company 4.0 % (4.0 )% (0.5 )% (0.5 )%
 

(a) Organic sales growth is a non-GAAP measure that is defined as volume plus price or total sales growth excluding the impact of foreign currency translation rates and acquisitions/divestitures.(b) Excludes costs in Fiscal 2012 associated with targeted workforce reductions, asset write-offs associated with factory closures and other implementation costs in order to increase manufacturing effectiveness and accelerate productivity on a global scale. Other implementation costs primarily include professional fees and relocation costs for the establishment of a European supply chain hub in the Netherlands.(c) Excludes currency translation versus FY12 average rates as well as current year translation hedge.(d) Emerging Markets sales in Fiscal 2013 now include the markets of Papua New Guinea, South Korea and Singapore. Sales in these markets were included in Developed Markets sales in the prior year and therefore, were treated as an acquisition variance when comparing current year sales to the prior year for Emerging Markets.

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