HSY Hershey Company

- Market structure and segmentation to drive targeted innovation and consumer investment - Long-term net sales and earnings per share growth rates of +3-5% and +6-8% established - Outlook reaffirmed for 2008, growth in net sales 3-4%, with earnings per share-diluted from operations expected to be in the $1.85 to $1.90 range HERSHEY, Pa., June 17 /PRNewswire-FirstCall/ -- The Hershey Company (NYSE:HSY) today will announce initiatives designed to deliver its long-term goals for net sales and earnings per share growth. After completing an in-depth market structure and category segmentation review, the Company is targeting key consumer segments that will drive growth. The Company is aligning resources in support of this approach and expects total advertising to increase by at least 20 percent in both 2008 and 2009. The increased support will be focused on core brands that currently generate approximately 60 percent of total U.S. net sales. This targeted allocation and disciplined approach, combined with an increase in U.S. retail coverage, will enable the Company to consistently meet its net sales and earnings objectives in the future. "Our extensive consumer research validates our strategy of increasing advertising and consumer investment behind the core U.S. brands that offer the greatest potential for growth," said David J. West, President and Chief Executive Officer. "We will combine this focused approach with consumer-centric innovation and continued international expansion to achieve our long-term net sales growth rate of 3-5 percent. Longer term, as marketplace trends improve and targeted consumer initiatives are executed, the Company expects to generate earnings per share growth of 6-8 percent." The Company expects full-year 2008 net sales growth of 3-4 percent and earnings per share-diluted from operations of $1.85 to $1.90. A reconciliation of full-year earnings per share-diluted excluding realignment charges to full-year earnings per share-diluted on a GAAP basis is included below. Management will discuss the new strategy and long-term goals during a meeting with analysts and investors this morning. The meeting begins at 8:30 a.m. EDT today and will be web cast live at The Hershey Company web site, http://www.hersheys.com/, or can be accessed via a listen-only conference call at 1-800-990-8039. Please go to the Investor Relations Section of the web site for further details. Note: In this release, Hershey has provided income measures excluding certain items described above, in addition to net income determined in accordance with GAAP. These non-GAAP financial measures are used in evaluating results of operations for internal purposes. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather, the Company believes exclusion of such items provides additional information to investors to facilitate the comparison of past and present operations. The aforementioned items relate to the Global Supply Chain Transformation program announced in February 2007 and the business realignment in Brazil announced in December 2007. The Global Supply Chain Transformation program is expected to result in pre-tax charges and non-recurring project implementation costs of $550 million - $575 million. Total charges include project management and start-up costs of approximately $60 million. In 2007, the Company recorded GAAP charges related to the Global Supply Chain Transformation program of $400.0 million, or $1.10 per share-diluted. Additionally, in the fourth quarter of 2007 the Company recorded business realignment and impairment charges of $12.6 million, or $0.05 per share-diluted, related to its business in Brazil. In 2008, the Company expects to record total GAAP charges of about $135 million - $145 million, or $0.39 - $0.42 per share-diluted. Below is a reconciliation of GAAP and non-GAAP items to the Company's earnings per share-diluted outlook: 2007 2008 Reported / Expected EPS-Diluted $0.93 $1.43 - $1.51 Total Business Realignment and Impairment Charges $1.15 $0.39 - $0.42 EPS-Diluted from Operations* $2.08 -- Expected EPS-Diluted from Operations* $1.85 - $1.90 *From operations, excluding business realignment and impairment charges. Safe Harbor Statement This release contains statements which are forward-looking. These statements are made based upon current expectations which are subject to risk and uncertainty. Actual results may differ materially from those contained in the forward-looking statements. Factors which could cause results to differ materially include, but are not limited to: our ability to implement and generate expected ongoing annual savings from the initiatives to transform our supply chain and advance our value-enhancing strategy; changes in raw material and other costs and selling price increases; our ability to execute our supply chain transformation within the anticipated timeframe in accordance with our cost estimates; the impact of future developments related to the product recall and temporary plant closure in Canada in the fourth quarter of 2006, including our ability to recover costs we incurred for the recall and plant closure from responsible third-parties; the impact of future developments related to the investigation by government regulators of alleged pricing practices by members of the confectionery industry, including risks of subsequent litigation or further government action; pension cost factors, such as actuarial assumptions, market performance and employee retirement decisions; changes in our stock price, and resulting impacts on our expenses for incentive compensation, stock options and certain employee benefits; market demand for our new and existing products; changes in our business environment, including actions of competitors and changes in consumer preferences; changes in governmental laws and regulations, including taxes; risks and uncertainties related to our international operations; and such other matters as discussed in our Annual Report on Form 10-K for 2007. All information in this press release is as of June 17, 2008. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations. DATASOURCE: The Hershey Company CONTACT: Financial: Mark Pogharian, +1-717-534-7556; or Media: Kirk Saville, +1-717-534-7641, both of The Hershey Company Web site: http://www.hersheys.com/

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