HSH: The Hillshire Brands Company: Hillshire Brands Delivers Strong Second Quarter

  HSH: The Hillshire Brands Company: Hillshire Brands Delivers Strong Second
  Quarter

UK Regulatory Announcement

                 Full Year EPS Guidance Raised to $1.60-$1.70

DOWNERS GROVE, Ill.

The Hillshire Brands Company (NYSE: HSH) today reported earnings for the
second quarter and first half of fiscal year 2013.

Second Quarter Highlights (continuing operations)

  *Adjusted^1 diluted EPS increased $0.14 to $0.62; reported diluted EPS
    increased $0.38 to $0.47
  *Adjusted and reported net sales increased by 2.5% and 0.7%, respectively,
    to $1.06 billion
  *Adjusted operating income increased $26 million to $127 million; reported
    operating income increased $76 million to $99 million
  *Full year 2013 guidance raised – new adjusted diluted EPS range of
    $1.60-$1.70

CEO Perspective

“Our business is continuing to perform well and I am very pleased with the
progress we’re making,” said Sean Connolly, president and chief executive
officer, The Hillshire Brands Company. “Our investment in MAP is strengthening
our core brands, our innovation pipeline is becoming more robust, and we
remain highly focused on managing costs. We also clearly benefited from
favorable input costs, an area that we expect to become more challenging in
calendar year 2013. Based on our strong first half results, and taking into
account our outlook for the rest of the year, we are raising full year EPS
guidance.”

Key Financial Data, Continuing Operations
$ in millions, except per share
                  Second Quarter                First Half
                   2013     2012     % Change   2013     2012     % Change
Adjusted Net       $ 1,060   $ 1,035   2.5%       $ 2,034   $ 1,988   2.3%
Sales
Reported Net         1,060     1,053   0.7%         2,034     2,040   (0.3)%
Sales
                                                                      
Adj. Operating       127       101     25.8%        228       158     44.2%
Income
Rep. Operating       99        23      NM           183       47      NM
Income
                                                                      
Adj. Diluted EPS     0.62      0.48    29.2%        1.10      0.74    48.6%
Rep. Diluted EPS     0.47      0.09    NM           0.87      0.13    NM
                                                                      

Discussion of Second Quarter Continuing Operations Results

For the second consecutive quarter, Hillshire Brands posted increases in
adjusted net sales and adjusted operating income versus the prior year
quarter. The business has responded well to increased MAP investment and has
also benefitted from deflationary input costs.

Retail

Net sales in the Retail segment increased 2.2% over the prior year quarter
behind higher volumes and favorable mix. Strong performance in Jimmy Dean
sandwiches, Aidells, and Hillshire Farm lunchmeat fueled the volume gains in
the quarter. Hillshire Farm seasonal items also performed well. Additionally,
Hillshire Farm lunchmeat’s packaging improvements and product quality
enhancements are on track to roll out in the third quarter.

Adjusted operating segment income increased by 23.2% and reported operating
segment income increased by 31.5%. Lower input costs were a significant
contributor to the increased profit. Higher sales also contributed to earnings
growth. In line with the company’s growth strategy, MAP investment for the
quarter was meaningfully increased from the prior year.

Foodservice/Other

The Foodservice/Other segment reported solid results, with increased net sales
of 2.8% behind volume gains in both commodity meats and Foodservice meats. In
Foodservice bakery, volumes declined but showed signs of stabilization.

Adjusted operating segment income increased by 8.5% and reported operating
segment income decreased by 4.1%. The increase in adjusted operating segment
income resulted from higher volume and lower commodity input costs. These
gains were partially offset by negative mix from high commodity meat sales and
higher bakery production costs.

Corporate

Excluding significant items, corporate expenses of $13 million decreased $4 
million versus the second quarter of fiscal 2012 on lower headcount and the
benefit of cost saving initiatives. These reductions were partially offset by
commodity mark-to-market losses of $4 million for the quarter versus $3
million in gains in the previous year.

Guidance and Outlook

After two quarters of strong business results, Hillshire Brands updated its
fiscal 2013 guidance for adjusted diluted EPS to $1.60 - $1.70, with slightly
positive sales growth for the year. This guidance range reflects the first
half results and the company’s strategy to continue to invest in brand
building and capabilities. Additionally, the company expects commodity input
costs to become more challenging as calendar year 2013 progresses.

Webcast and Form 10-Q

The Hillshire BrandsCompany’s review of its results for the second quarter
and first half of fiscal 2013 will be broadcast live via the Internet today at
9:30 a.m.CST. 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. CST on the day
of the webcast until July 31, 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 Gallo Salame. 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 Item1A, 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 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; 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.

^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.

                                                                        
Financial Summary - As Adjusted (1)
For the Quarter and Six Months ended Dec. 29, 2012 and Dec. 31, 2011 (in millions, except
per share data - unaudited)
                                                                                 
                                                                                 
                                                                                 
                                                                                 
                      Quarter ended                      Six Months ended
                                                                                 
                      Dec. 29,    Dec. 31,    %          Dec. 29,    Dec. 31,    %
                      2012        2011        Change     2012        2011        Change
Continuing
operations:
                                                                                 
Adjusted net sales:
                                                                                 
  Retail              $ 777       $ 761       2.2   %    $ 1,496     $ 1,459     2.6   %
  Foodservice/Other     283         276       2.8          538         535       0.7
  Intersegment         -         (2    )              -         (6    )   
  Total adjusted      $ 1,060    $ 1,035    2.5   %    $ 2,034    $ 1,988    2.3   %
  net sales
                                                                                 
                                                                                 
Adjusted operating
income/(loss)
                                                                                 
  Retail              $ 112       $ 91        23.2  %    $ 196       $ 149       31.8  %
  Foodservice/Other    28        27       8.5        53        49       9.6   
  Adjusted
  operating segment     140         118       19.9  %      249         198       26.4  %
  income
                                                                                 
  General corporate     (8    )     (19   )                (20   )     (37   )
  expenses
  Mark-to-market
  derivatives           (4    )     3                      1           (1    )
  gains/(losses)
  Amortization of
  trademarks &         (1    )    (1    )              (2    )    (2    )   
  intangibles
  Total adjusted      $ 127      $ 101      25.8  %    $ 228      $ 158      44.2  %
  operating income
                                                                                 
                                                                                 
  Adjusted income
  from continuing     $ 76       $ 56       33.6  %    $ 136      $ 87       54.9  %
  operations
                                                                                 
Adjusted net income   $ 79       $ 178      (55.7 )%  $ 141      $ 304      (53.7 )%
Adjusted net Income
attributable to
Hillshire Brands:
                                                                                 
  Continuing          $ 76        $ 56        33.6  %    $ 136       $ 87        54.9  %
  operations
  Discontinued        $ 3         $ 121       (97.7 )%   $ 5         $ 214       (97.5 )%
  operations
                                                                                 
                                                                                 
Adjusted diluted
earnings per share:
                                                                                 
  Income from
  continuing          $ 0.62     $ 0.48     29.2  %    $ 1.10     $ 0.74     48.6  %
  operations
                                                                                 
  Net income          $ 0.64     $ 1.49     (57.0 )%  $ 1.15     $ 2.54     (54.7 )%
                                                                                 
Adjusted operating
margin:
                                                                                 
  Retail                14.4  %     11.9  %   2.5   %      13.1  %     10.2  %   2.9   %
  Foodservice/Other     9.9         9.4       0.5          9.9         9.1       0.8
                                                                                 
  Total Hillshire       12.0  %     9.8   %   2.2   %      11.2  %     8.0   %   3.2   %
  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 Six Months ended Dec. 29, 2012 and Dec. 31, 2011 (in millions, except
per share data - unaudited)
                                                                                 
                                                                                 
                                                                                 
                                                                                 
                      Quarter ended                      Six Months ended
                                                                                 
                      Dec. 29,    Dec. 31,    %          Dec. 29,    Dec. 31,    %
                      2012        2011        Change     2012        2011        Change
Continuing
operations:
                                                                                 
Net sales:
                                                                                 
  Retail              $ 777       $ 761       2.2   %    $ 1,496     $ 1,459     2.6   %
  Foodservice/Other     283         294       (3.7  )      538         587       (8.3  )
  Intersegment         -         (2    )              -         (6    )   
  Total net sales     $ 1,060    $ 1,053    0.7   %    $ 2,034    $ 2,040    (0.3  )%
                                                                                 
                                                                                 
Operating
income/(loss)
                                                                                 
  Retail              $ 112       $ 85        31.5  %    $ 198       $ 129       53.6  %
  Foodservice/Other    28        29       (4.1  )     53        54       (2.1  )
  Operating segment     140         114       22.5  %      251         183       37.2  %
  income
                                                                                 
  General corporate     (36   )     (93   )                (67   )     (133  )
  expenses
  Mark-to-market
  derivatives           (4    )     3                      1           (1    )
  gains/(losses)
  Amortization of
  trademarks &         (1    )    (1    )              (2    )    (2    )   
  intangibles
  Total operating     $ 99       $ 23       NM        $ 183      $ 47       NM    
  income
                                                                                 
                                                                                 
  Income from
  continuing          $ 58       $ 10       NM        $ 107      $ 15       NM    
  operations
                                                                                 
Net income            $ 65       $ 470      (86.1 )%   $ 118      $ 252      (53.2 )%
Net income
attributable to
Hillshire Brands:
                                                                                 
  Continuing          $ 58        $ 10        NM         $ 107       $ 15        NM
  operations
  Discontinued        $ 7         $ 459       (98.5 )%   $ 11        $ 234       (95.3 )%
  operations
                                                                                 
                                                                                 
Diluted earnings
per share:
                                                                                 
  Income from
  continuing          $ 0.47     $ 0.09     NM        $ 0.87     $ 0.13     NM    
  operations
                                                                                 
  Net income          $ 0.53     $ 3.94     (86.5 )%   $ 0.96     $ 2.10     (54.3 )%
                                                                                 
  Operating margin:
                                                                                 
  Retail                14.4  %     11.2  %   3.2   %      13.2  %     8.8   %   4.4   %
  Foodservice/Other     9.7         9.8       (0.1  )      9.8         9.2       0.6
                                                                                 
  Total Hillshire       9.3   %     2.1   %   7.2   %      9.0   %     2.3   %   6.7   %
  Brands
                                                                                 
NM = Not meaningful

                    
Consolidated Statements of Income
For the Quarters and Six Months ended Dec. 29, 2012 and Dec. 31, 2011 (in
millions, except per share data - unaudited)
                                                              
                                                                     
                                                                     
                                                                     
                     Quarter ended                 Six Months ended
                     December 29,   December 31,   December 29,   December 31,
                     2012           2011           2012           2011
Continuing
operations
Net sales            $  1,060      $   1,053    $  2,034      $  2,040  
Cost of sales           728              755          1,408          1,469
Selling, general
and administrative      224              226          437            444
expenses
Net charges for
exit activities,        9                45           6              66
asset and business
dispositions
Impairment charges     -             4          -            14     
Operating income        99               23           183            47
Interest expense        11               22           22             45
Interest income        (1     )       (1    )     (3     )      (2     )
Income from
continuing              89               2            164            4
operations before
income taxes
Income tax expense     31            (8    )     57           (11    )
Income from
continuing             58            10         107          15     
operations
                                                                     
Discontinued
operations:
Income (loss) from
discontinued
operations, net of      7                92           9              (223   )
tax expense
(benefit) of $(3),
$(8), $(2) and $57
Gain on sale of
discontinued
operations, net of     -             368        2            460    
tax expense of
nil, $168, $1 and
$338
Net income from
discontinued           7             460        11           237    
operations
                                                                     
Net income              65               470          118            252
                                                                     
Less: Income from
noncontrolling
interests, net of
tax
Discontinued           -             1          -            3      
operations
Net Income
attributable to      $  65         $   469      $  118        $  249    
Hillshire Brands
                                                                     
Amounts
attributable to
Hillshire Brands:
Net income from
continuing           $  58          $    10        $  107         $  15
operations
Net income from
discontinued            7                459          11             234
operations
                                                                     
Earnings per share
of common stock:
Basic
Income from
continuing           $  0.47        $    0.09      $  0.88        $  0.13
operations
Net income           $  0.53        $    3.96      $  0.97        $  2.11
Average shares          123              118          122            118
outstanding
                                                                     
Diluted
Income from
continuing           $  0.47        $    0.09      $  0.87        $  0.13
operations
Net income           $  0.53        $    3.94      $  0.96        $  2.10
Average shares          123              119          123            119
outstanding
                                                                     
                                                                     
Cash dividends
declared per share   $  0.125       $  $ 0.575     $  0.25        $  0.575
of common stock

                                                              
Net Sales Bridge
For the Quarter and Six Months ended December 29, 2012 (unaudited)
                           
                                                                    
                                                                    
  The following table illustrates the components of the change in net sales
  versus the prior year
                                                                    
                                                                    
  Second Quarter ended Dec.                                         Total
  29, 2012
                                                Foodservice/        Business
                                 Retail         Other               Segments
  Volume                         1.1%           6.6%                2.9%
                                                                    
  Mix                            0.7            (2.9)               (0.4)
                                                                    
  Price                          0.0            (1.0)               (0.3)
                                                                    
  Other                          0.4            0.1                 0.3
                                                                  
  Adjusted net sales*            2.2            2.8                 2.5
  change
                                                                    
  Dispositions                   0.0            (6.5)               (1.8)
                                                                  
  Total Net Sales Change         2.2%           (3.7)%              0.7%
                                                                    
                                                                    
  First Six Months ended                                            Total
  Dec. 29, 2012
                                                Foodservice/        Business
                                 Retail         Other               Segments
  Volume                         1.7%           6.0%                3.1%
                                                                    
  Mix                            1.0            (4.0)               (0.4)
                                                                    
  Price                          (0.4)          (1.1)               (0.6)
                                                                    
  Other                          0.3            (0.2)               0.2
                                                                  
  Adjusted net sales*            2.6            0.7                 2.3
  change
                                                                    
  Dispositions                   0.0            (9.0)               (2.6)
                                                                  
  Total Net Sales Change         2.6%           (8.3)%              (0.3)%
                                                                    
                                                                    
  *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 December 29, 2012 and June 30, 2012 (in millions - unaudited)
                                                                      
                                                                      
                                                                      
                                                     December 29,     June 30,
                                                    2012            2012
                                                                      
Assets
Cash and equivalents                               $ 299              235
Trade accounts receivable, less allowances           229              248
Inventories                                          292              288
Current deferred income taxes                        104              114
Income tax receivable                                21               52
Other current assets                                 46               65
Assets held for sale                                39              -
Total current assets                                 1,030            1,002
Property, net of accumulated depreciation of         829              847
$1,231 and $1,245, respectively
Trademarks and other identifiable intangibles        127              132
Goodwill                                             348              348
Deferred income taxes                                26               36
Other noncurrent assets                              79               80
Noncurrent assets held for sale                     28              5
                                                   $ 2,467          $ 2,450
                                                                      
Liabilities and Equity
Accounts payable                                   $ 266            $ 359
Other accrued liabilities                            403              469
Current maturities of long-term debt                 10               5
Liabilities held for sale                           27              -
Total current liabilities                           706             833
Long-term debt                                       936              939
Pension obligation                                   157              166
Other liabilities                                    300              277
Noncurrent liabilities held for sale                 1                -
Equity
Hillshire Brands common stockholders’ equity        367             235
                                                   $ 2,467          $ 2,450

                                                                
Consolidated Statements of Cash Flows
For the Six Months Ended Dec. 29, 2012 and Dec. 31, 2011 (in millions -
unaudited)
                                                                      
                                                                      
                                                                      
                                                       Six Months ended
                                                                      
                                                         Dec. 29,     Dec. 31,
                                                         2012        2011
Operating activities -
Net income/(loss)                                      $ 118        $ 252
                                                                      
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation                                             78           122
Amortization                                             8            20
Impairment charges                                       -            417
Net (gain) loss on business dispositions                 (9    )      (802   )
Pension contributions, net of expense                    (5    )      (127   )
Increase (decrease) in deferred income taxes             18           113
Other                                                    (1    )      37
Changes in current assets and liabilities, net of
businesses acquired and sold:
Trade accounts receivable                                6            8
Inventories                                              (18   )      (113   )
Other current assets                                     16           (34    )
Accounts payable                                         (57   )      (10    )
Accrued liabilities                                      (57   )      (2     )
Accrued taxes                                           32         152    
Net cash from operating activities                      129        33     
                                                                      
Investing activities -
Purchases of property and equipment                      (79   )      (128   )
Purchases of software and other intangibles              (3    )      (19    )
Acquisitions of businesses                               -            (29    )
Dispositions of businesses and investments               16           1,451
Cash received from derivative transactions               3            25
Sales of assets                                         1          1      
Net cash received from investing activities             (62   )     1,301  
                                                                      
Financing activities -
Issuances of common stock                                39           36
Purchases of common stock                                -            -
Borrowings of other debt                                 -            142
Repayments of other debt and derivatives                 (5    )      (242   )
Net change in financing with less than 90-day            -            (197   )
maturities
Purchase of noncontrolling interest                      -            (10    )
Payments of dividends                                   (31   )     (135   )
Net cash from ( used in) financing activities           3          (406   )
                                                                      
Effect of changes in foreign exchange rates on cash     -          (243   )
                                                                      
Increase in cash and equivalents                         70           685
Add: Cash balances of discontinued operations at         -            1,992
beginning of year
Less: Cash balances of discontinued operations at        (6    )      (2,610 )
end of period
Cash and equivalents at beginning of year               235        74     
                                                                      
Cash and equivalents at end of period                  $ 299       $ 141    
                                                                      
Supplemental cash flow data:
                                                                      
Cash paid for restructuring actions                    $ 48         $ 146
Cash contributions to pension plans                      3            121
Cash paid for income taxes                               6            120

                                                                                                                   
Operating Results by Business Segment
For the Quarters ended Dec. 29, 2012 and Dec. 31, 2011 (in millions - unaudited)
                        
                                                                                                                             
                                                                                                                             
                                                                                                                             
                                                                                                                             
                                                                                                                             
                             As                            As
                             Reported     Dispositions     Adjusted (1)
Second Quarter 2013
  Net sales:
  Retail                   $ 777        $ -              $ 777
  Foodservice/Other          283          -                283
  Intersegment              -          -               -         
  Total net sales          $ 1,060     $ -              $ 1,060     
                                                                                                                             
Second Quarter 2012
  Net sales:
  Retail                   $ 761        $ -              $ 761
  Foodservice/Other          294          18               276
  Intersegment              (2     )    -               (2        )
  Total net sales          $ 1,053     $ 18             $ 1,035     
                                                                                                                             
                                                                                                                             
                                                                                                                             
                                                                                                                             
                                                                                                             Other
Second Quarter 2013          As                            Restructuring     Accelerated      Impairment     Significant     As
                             Reported     Dispositions     Actions           Depreciation     Charges        Items           Adjusted
                                                                                                                             (1)
  Operating income:
  Retail                   $ 112        $ -              $ -               $ -              $ -            $ -             $ 112
  Foodservice/Other         28         -               -               -              -            -             28    
  Total operating           140        -               -               -              -            -             140   
  segment income
                                                                                                                             
  General corporate          (36    )     -                (15       )       (10     )        -              (3     )        (8    )
  expenses
  Mark-to-market
  derivative                 (4     )     -                -                 -                -              -               (4    )
  gains/(losses)
  Amortization of           (1     )    -               -               -              -            -             (1    )
  trademarks/intangibles
  Operating income         $ 99        $ -              $ (15       )     $ (10     )      $ -           $ (3     )      $ 127   
                                                                                                                             
  Operating margin           9.3    %                                                                                        12.0  %
                                                                                                                             
Second Quarter 2012
  Operating income:
  Retail                   $ 85         $ -              $ -               $ (6      )      $ -            $ -             $ 91
  Foodservice/Other         29         3               (1        )      -              -            -             27    
  Total operating           114        3               (1        )      (6      )       -            -             118   
  segment income
                                                                                                                             
  General corporate          (93    )     -                (59       )       -                (4    )        (11    )        (19   )
  expenses
  Mark-to-market
  derivative                 3            -                -                 -                -              -               3
  gains/(losses)
  Amortization of           (1     )    -               -               -              -            -             (1    )
  trademarks/intangibles
  Operating income         $ 23        $ 3              $ (60       )     $ (6      )      $ (4    )      $ (11    )      $ 101   
                                                                                                                             
  Operating margin           2.1    %                                                                                        9.8   %
                                                                                                                             
                                                                                                                             
(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 Six Months ended Dec. 29, 2012 and Dec. 31, 2011 (in millions - unaudited)
                        
                                                                                                                             
                                                                                                                             
                                                                                                                             
                                                                                                                             
                                                                                                                             
                             As                            As
                             Reported     Dispositions     Adjusted (1)
First Six Months 2013
  Net sales:
  Retail                   $ 1,496      $ -              $ 1,496
  Foodservice/Other          538          -                538
  Intersegment              -          -               -         
  Total net sales          $ 2,034     $ -              $ 2,034     
                                                                                                                             
First Six Months 2012
  Net sales:
  Retail                   $ 1,459      $ -              $ 1,459
  Foodservice/Other          587          52               535
  Intersegment              (6     )    -               (6        )
  Total net sales          $ 2,040     $ 52             $ 1,988     
                                                                                                                             
                                                                                                                             
                                                                                                                             
                                                                                                                             
                                                                                                             Other
First Six Months 2013        As                            Restructuring     Accelerated      Impairment     Significant     As
                             Reported     Dispositions     Actions           Depreciation     Charges        Items           Adjusted
                                                                                                                             (1)
  Operating income:
  Retail                   $ 198        $ 3              $ -               $ (1      )      $ -            $ -             $ 196
  Foodservice/Other         53         2               -               (2      )       -            -             53    
  Total operating           251        5               -               (3      )       -            -             249   
  segment income
                                                                                                                             
  General corporate          (67    )     -                (26       )       (18     )        -              (3     )        (20   )
  expenses
  Mark-to-market
  derivative                 1            -                -                 -                -              -               1
  gains/(losses)
  Amortization of           (2     )    -               -               -              -            -             (2    )
  trademarks/intangibles
  Operating income         $ 183       $ 5              $ (26       )     $ (21     )      $ -           $ (3     )      $ 228   
                                                                                                                             
  Operating margin           9.0    %                                                                                        11.2  %
                                                                                                                             
First Six Months 2012
  Operating income:
  Retail                   $ 129        $ -              $ (8        )     $ (12     )      $ -            $ -             $ 149
  Foodservice/Other         54         7               (2        )      -              -            -             49    
  Total operating           183        7               (10       )      (12     )       -            -             198   
  segment income
                                                                                                                             
  General corporate          (133   )     -                (89       )       -                (14    )       7               (37   )
  expenses
  Mark-to-market
  derivative                 (1     )     -                -                 -                -              -               (1    )
  gains/(losses)
  Amortization of           (2     )    -               -               -              -            -             (2    )
  trademarks/intangibles
  Operating income         $ 47        $ 7              $ (99       )     $ (12     )      $ (14    )     $ 7            $ 158   
                                                                                                                             
  Operating margin           2.3    %                                                                                        8.0   %
                                                                                                                             
                                                                                                                             
(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 Dec. 29, 2012 and Dec. 31, 2011 (in millions, except per share data - unaudited)

                                                                                                 
                                                                                                 
                                 Quarter ended Dec. 29, 2012           Quarter ended Dec. 31, 2011
                                                           Diluted                               Diluted
                                 Pretax    Net             EPS         Pretax    Net             EPS
  (In millions except per        Impact    Income/(loss)   Impact      Impact    Income/(loss)   Impact
  share data)                                              (1)                                   (1)
                                                                                                 
  Continuing Operations:
  Restructuring actions:
  Severance/ retention costs     $ -       $   -           $ -         $ (2  )   $   (2    )     $ (0.01 )
  Lease and contractual            (10 )       (6    )       (0.05 )     (44 )       (28   )       (0.23 )
  obligation exit costs
  Consulting/advisory and          (5  )       (4    )       (0.03 )     (14 )       (10   )       (0.09 )
  other costs
  Accelerated depreciation        (10 )      (6    )      (0.05 )    (6  )      (3    )      (0.03 )
  Total restructuring actions      (25 )       (16   )       (0.13 )     (66 )       (43   )       (0.37 )
                                                                                                 
  Gain on Hanesbrands Inc. tax     -           -             -           -           5             0.04
  settlement
  Impairment charges               -           -             -           (4  )       (3    )       (0.02 )
  Litigation accrual               -           -             -           (11 )       (7    )       (0.06 )
  Pension                          (3  )       (2    )       (0.01 )     -           -             -
  settlement/withdrawal/other
  Tax indemnification accrual     -         -           -         -         2           0.02  
  adjustment
  Impact of significant items
  on income from continuing       (28 )      (18   )      (0.15 )    (81 )      (46   )      (0.39 )
  operations
                                                                                                 
  Discontinued operations:
  Restructuring actions:
  Severance/ retention costs       1           1             -           (21 )       (14   )       (0.12 )
  Lease and contractual            -           -             -           (32 )       (24   )       (0.20 )
  obligation exit costs
  Consulting/advisory costs        (2  )       (2    )       (0.01 )     (30 )       (26   )       (0.20 )
  Impairment charges               -           -             -           (25 )       (17   )       (0.14 )
  Gain on the sale of              -           -             -           536         368           3.09
  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        -           71            0.59
  adjustment
  Tax audit settlement/reserve     -           -             -           -           (1    )       (0.01 )
  adjustment
  Tax valuation allowance          -           -             -           -           2             0.01
  adjustment
  Tax on unremitted earnings      -         -           -         -         (18   )      (0.15 )
  Impact of significant items
  on income/(loss) from           -         4           0.03      423       338         2.84  
  discontinued operations
  Impact of significant items    $ (28 )   $   (14   )     $ (0.11 )   $ 342    $   292        $ 2.45  
  on net income/(loss)
                                                                                                 
                                                                                                 
  Impact of significant items on income from continuing operations before
  income taxes
                                                                                                 
  Cost of sales                  $ (1  )                               $ (5  )
  Selling, general and             (18 )                                 (27 )
  administrative expenses
  Exit and business                (9  )                                 (45 )
  dispositions
  Impairment charges              -                                   (4  )
  Total                          $ (28 )                               $ (81 )
                                                                                                 
  Notes:
  (1) EPS amounts are rounded to the nearest $0.01 and may not add to the total.

                                                                                          
Significant Items
Six Months ended Dec. 29, 2012 and Dec. 31, 2011 (in millions, except per share data - unaudited)

                                                                                                  
                                                                                                  
                                 Six Months ended Dec. 29, 2012        Six Months ended Dec. 31, 2011
                                                           Diluted                                Diluted
                                 Pretax    Net             EPS         Pretax     Net             EPS
  (In millions except per        Impact    Income/(loss)   Impact      Impact     Income/(loss)   Impact
  share data)                                              (1)                                    (1)
                                                                                                  
  Continuing Operations:
  Restructuring actions:
  Severance/ retention costs     $ -       $   -           $ -         $ (18  )   $   (12    )    $ (0.10 )
  Lease and contractual            (13 )       (8    )       (0.07 )     (50  )       (32    )      (0.26 )
  obligation exit costs
  Consulting/advisory and          (13 )       (9    )       (0.07 )     (31  )       (24    )      (0.21 )
  other costs
  Income from asset                5           3             0.03        -            -             -
  dispositions
  Accelerated depreciation        (21 )      (13   )      (0.11 )    (12  )      (7     )     (0.06 )
  Total restructuring actions      (42 )       (27   )       (0.22 )     (111 )       (75    )      (0.63 )
                                                                                                  
  Gain on Hanesbrands Inc. tax     -           -             -           15           15            0.12
  settlement
  Impairment charges               -           -             -           (14  )       (9     )      (0.07 )
  Pension                          (3  )       (2    )       (0.02 )     -            -             -
  settlement/withdrawal/other
  Litigation accrual               -           -             -           (11  )       (7     )      (0.06 )
  Tax indemnification accrual     -         -           -         3          4           0.03  
  adjustment
  Impact of significant items
  on income from continuing       (45 )      (29   )      (0.23 )    (118 )      (72    )     (0.61 )
  operations
                                                                                                  
  Discontinued operations:
  Restructuring actions:
  Severance/ retention costs       1           1             -           (34  )       (24    )      (0.20 )
  Lease and contractual            -           -             -           (32  )       (24    )      (0.20 )
  obligation exit costs
  Consulting/advisory costs        (3  )       (2    )       (0.02 )     (54  )       (44    )      (0.36 )
  Impairment charges               -           -             -           (404 )       (358   )      (3.01 )
  Gain on the sale of              3           2             0.02        798          460           3.87
  discontinued operations
  Pension                          1           1             -           (3   )       (2     )      (0.01 )
  curtailment/withdrawal/other
  Thailand flood loss              -           -             -           (2   )       (1     )      (0.01 )
  Tax basis difference             -           4             0.04        -            189           1.59
  adjustment
  Tax audit settlement/reserve     -           -             -           -            69            0.58
  adjustments
  Tax valuation allowance          -           -             -           -            (73    )      (0.62 )
  adjustment
  Tax on unremitted earnings      -         -           -         -          (172   )     (1.45 )
  Impact of significant items
  on income from discontinued     2         6           0.05      269        20          0.17  
  operations
  Impact of significant items    $ (43 )   $   (23   )     $ (0.19 )   $ 151     $   (52    )    $ (0.44 )
  on net income
                                                                                                  
                                                                                                  
  Impact of significant items on income from continuing operations before
  income taxes
                                                                                                  
  Cost of sales                  $ (4  )                               $ (11  )
  Selling, general and             (35 )                                 (27  )
  administrative expenses
  Exit and business                (6  )                                 (66  )
  dispositions
  Impairment charges              -                                   (14  )
  Total                          $ (45 )                               $ (118 )
                                                                                                  
  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 Dec. 29, 2012 and Dec. 31, 2011 (in millions, except per share data -
unaudited)
                                                                                    
                                                                                    
                                                                                    
                  Quarter ended Dec. 29, 2012         Quarter ended Dec. 31, 2011
                             Impact of                              Impact of
                  As         Significant              As            Significant
                  Reported   Items         Adjusted   Reported      Items           Adjusted
                                           (1)                                      (1)
Continuing
operations:
                                                                                    
Income from
continuing
operations      $ 89         $  (28    )   $ 117      $ 2           $  (81    )     $ 83
before income
taxes
                                                                                    
Income tax
expense          31          (10    )    41       (8     )      (35    )      27   
(benefit)
                                                                                    
Income from
continuing       58          (18    )    76       10           (46    )      56   
operations
Discontinued
operations:
                                                                                    
Income from
discontinued      7             4            3          92             (30    )       122
operations,
net of tax
Gain on sale
of
discontinued      -           -          -        368          368          -    
operations,
net of tax
                                                                                    
Net income
from              7           4          3        460          338          122  
discontinued
operations
                                                                                    
Net income        65            (14    )     79         470            292            178
                                                                                    
Less: Income
from
noncontrolling
interests, net
of tax
Discontinued      -           -          -        1            -            1    
operations
Net income
attributable    $ 65        $  (14    )   $ 79      $ 469        $  292         $ 177  
to Hillshire
Brands
                                                                                    
Amounts
attributable
to Hillshire
Brands:
Net income
from            $ 58         $  (18    )   $ 76       $ 10          $  (46    )     $ 56
continuing
operations
Net income
from              7             4            3          459            338            121
discontinued
operations
                                                                                    
Earnings per
share of
common stock:
Diluted
Income from
continuing      $ 0.47       $  (0.15  )   $ 0.62     $ 0.09        $  (0.39  )     $ 0.48
operations
Net income      $ 0.53       $  (0.11  )   $ 0.64     $ 3.94        $  2.45         $ 1.49
                                                                                    
Effective tax
rate -            34.4  %                    34.9 %     (420.1 )%                     31.9 %
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
Six Months ended Dec. 29, 2012 and Dec. 31, 2011 (in millions, except per share data -
unaudited)
                                                                                 
                                                                                 
                                                                                 
                  Six Months ended Dec. 29, 2012      Six Months ended Dec. 31, 2011
                             Impact of                           Impact of
                  As         Significant              As         Significant
                  Reported   Items         Adjusted   Reported   Items           Adjusted
                                           (1)                                   (1)
Continuing
operations:
                                                                                 
Income from
continuing
operations      $ 164        $    (45  )   $  209     $ 4        $   (118  )     $  122
before income
taxes
                                                                                 
Income tax
expense          57            (16  )     73      (11  )      (46   )       35  
(benefit)
                                                                                 
Income from
continuing       107           (29  )     136     15         (72   )       87  
operations
Discontinued
operations:
                                                                                 
Income from
discontinued      9               4           5         (223 )       (440  )        217
operations,
net of tax
Gain on sale
of
discontinued     2             2         -       460        460          -   
operations,
net of tax
                                                                                 
Net income
from             11            6         5       237        20           217 
discontinued
operations
                                                                                 
Net income        118             (23  )      141       252          (52   )        304
                                                                                 
Less: Income
from
noncontrolling
int*Story too
large*

[TRUNCATED]
 
Press spacebar to pause and continue. Press esc to stop.