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 either the Put Option, by the auction process, or by the terms outlined in their respective prospectuses in the event of auction failure.

    At September 30, 2010 the Company held auction rate securities with a face value of $81.5 million ($87.3 million at June 30, 2010 and $92.7 million at March 31, 2010) and the Put Option with a fair market value of $3.8 million ($4.1 million at June 30, 2010 and $5.1 million at March 31, 2010).  The Company determined that an impairment related to its auction rate securities of $7.2 million existed at September 30, 2010, of which $2.2 million was deemed temporary and $5.0 million was deemed other-than-temporary.  As a result, a loss of $1.2 million, net of taxes, is included as a component of accumulated other comprehensive loss as of September 30, 2010, and the Company recorded a net non-cash charge to earnings of $0.7 million in respect of our auction rate securities and Put Option for the third 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, November 4, 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.  For those who are not able to listen to the live broadcast, the call will be archived for approximately one year on the website.

Hansen Natural Corporation

    Based in Corona, California, Hansen Natural Corporation markets and distributes Hansen’s® natural sodas, sparkling beverages, apple juice and juice blends, fruit juice smoothies, multi-vitamin juice drinks in aseptic packaging, iced teas, energy drinks, Junior Juice® juices and water beverages, Blue Sky® brand beverages, Monster Energy® brand energy drinks, Nitrous™ Monster Energy® brand energy drinks, Monster Hitman™ energy shooters, Java Monster™ brand non-carbonated coffee + energy drinks, X-Presso Monster™ brand non-carbonated espresso energy drinks, Peace Tea™ iced teas, Lost® Energy™ brand energy drinks, Rumba®, Samba and Tango brand energy juices, Vidration™ brand vitamin enha nced waters, Admiral™ iced teas and Hubert’s™ Lemonades.  For more information visit www.hansens.com and www.monsterenergy.com.

Note Regarding Use of Non-GAAP Measures

    Gross sales, although used internally by management as an indicator of operating performance, should not be considered as an alternative to net sales, which is determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and should not be used alone as an indicator of operating performance in place of net sales.  Additionally, gross sales may not be comparable to similarly titled measures used by other companies as gross sales has been defined by our internal reporting requirements.  However, gross sales are used by management to monitor operating performance including sales performance of particular products, salesperson performance, product growth or declines a nd our overall performance. The use of gross sales allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. Management believes the presentation of gross sales allows a more comprehensive presentation of our operating performance.  Gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from customers.

Caution Concerning Forward-Looking Statements

    Certain statements made in this announcement may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the expectations of management with respect to our future operating results and other future events including revenues and profitability.  Management cautions that these statements are based on management’s current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of the Company, that could cause actual results and events to differ materially from the statements made herein.  Such risks and uncertain ties include, but are not limited to, the following: the current uncertainty and volatility in the national and global economy; changes in consumer preferences; changes in demand due to both domestic and international economic conditions; activities and strategies of competitors, including the introduction of new products and competitive pricing and/or marketing of similar products; potential distribution disruptions and/or decline in sales arising out of the termination and/or appointment of domestic and/or international distributors; changes in the price and/or availability of raw materials; other supply issues, including the availability of products and/or suitable production facilities; product distribution and placement decisions by retailers; changes in governmental regulation; political, legislative or other governmental actions or events in one or more regions in which we operate.  For a more detailed discussion of these and other risks that could affect our operating results, see the Compa ny’s reports filed with the Securities and Exchange Commission. The Company’s actual results could differ materially from those contained in the forward-looking statements.  The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

(tables below)

 

 

 

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATION

FOR THE THREE-AND NINE-MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(In Thousands, Except Per Share Amounts) (Unaudited)

	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2010		2009		2010		2009
Gross sales, net of discounts and returns*	$       438,585		$       355,048		$    1,124,449		$       979,732
Less: Promotional and other allowances**	57,119		47,119		139,172		127,347
Net sales	381,466		307,929		985,277		852,385
Cost of sales	183,540		142,897		469,447		395,345
Gross profit	197,926		165,032		515,830		457,040
Gross profit margin as a percentage of net sales	51.9%		53.6%		52.4%		53.6%
Operating expenses	90,371		72,117		247,813		205,565
Operating expenses as a percentage of net sales	23.7%		23.4%		25.2%		24.1%
Operating income	107,555		92,915		268,017		251,475
Operating income as a percentage of net sales	28.2%		30.2%		27.2%		29.5%
Other income (expense):
Interest and other income, net	541		183		1,983		1,599
Loss on investment and put option, net	(727)		(342)		(864)		(3,880)
Total other income (expense)	(186)		(159)		1,119		(2,281)
Income before provision for income taxes	107,369		92,756		269,136		249,194
Provision for income taxes	40,873		36,251		106,239		93,835
Net income	$         66,496		$         56,505		$       162,897		$       155,359
Net income as a percentage of net sales	17.4%		18.4%		16.5%		18.2%
Net income per common share:
Basic	$             0.75		$             0.63		$             1.84		$             1.72
Diluted	$             0.72		$             0.60		$             1.75		$             1.63
Weighted average number of shares of common      stock and common stock equivalents:
Basic	88,369		90,154		88,434		90,380
Diluted	92,865		94,683		92,915		95,060
Case sales (in thousands) (in 192-ounce case equivalents)	37,856		29,800		97,922		82,524
Average net sales price per case	$           10.08		$           10.33		$           10.06		$           10.33

*Gross sales, although used internally by management as an indicator of operating performance, should not be considered as an alternative to net sales, which is determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and should not be used alone as an indicator of operating performance in place of net sales.  Additionally, gross sales may not be comparable to similarly titled measures used by other companies as gross sales has been defined by our internal reporting requirements. However, gross sales are used by management to monitor operating performance including sales performance of particular products, salesperson performance, product growth or declines and our overall performance. The use of gross sales allows evaluation of sales performance before the effect of any promotional items, which can mask certain perfor mance issues. Management believes the presentation of gross sales allows a more comprehensive presentation of our operating performance. Gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from customers.

** Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform with GAAP presentation requirements. Additionally, the presentation of promotional and other allowances may not be comparable to similar items presented by other companies. The presentation of promotional and other allowances facilitates an evaluation of the impact thereof on the determination of net sales and illustrates the spending levels incurred to secure such sales. Promotional and other allowances constitute a material portion of our marketing activities.

 

 

 

 

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009

(In Thousands, Except Par Value) (Unaudited) 

		September 30, 2010		December 31, 2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$          509,629		$         328,349
Short-term investments		24,203		18,487
Trade accounts receivable, net		130,942		104,206
Distributor receivables		836		4,699
Inventories		148,938		108,143
Prepaid expenses and other current assets		14,974		11,270
Prepaid income taxes		2,661		-
Deferred income taxes		10,350		10,350
Total current assets		842,533		585,504
INVESTMENTS		46,002		80,836
PROPERTY AND EQUIPMENT, net		33,173		33,314
DEFERRED INCOME TAXES		60,948		65,678
INTANGIBLES, net		42,230		33,512
OTHER ASSETS		1,794		1,226
Total Assets		$        1,026,680		$        800,070
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$             91,024		$          48,863
Accrued liabilities		29,365		14,174
Deferred revenue		9,696		9,125
Accrued distributor terminations		2,553		2,977
Accrued compensation		6,895		7,623
Current portion of debt		244		206
Income taxes payable		-		761
Total current liabilities		139,777		83,729
DEFERRED REVENUE		124,929		131,388
STOCKHOLDERS' EQUITY:
Common stock - $0.005 par value; 120,000 shares authorized;    98,312  shares issued and 88,561 outstanding as of September 30, 2010;    97,285 shares issued and 88,159 outstanding as of December 31, 2009		492		486
Additional paid-in capital		170,916		137,040
Retained earnings		833,293		670,396
Accumulated other comprehensive loss		(885)		(4,667)
Common stock in treasury, at cost; 9,751 shares and 9,126 shares as of     September 30, 2010 and December 31, 2009, respectively		(241,842)		(218,302)
Total stockholders' equity		761,974		584,953
Total Liabilities and Stockholders’ Equity		$        1,026,680		$        800,070