The Hain Celestial Group, Inc. (HAIN, NASDAQ)
Industry: Packaged Foods
Annual report, fiscal year 2012


# HAIN
CELESTIAL
OFFERS PRODUCTS
TO HELP
SUPPORT
HEALTH
& NUTRITION
AS PART OF
A HEALTHY
LIFESTYLE.

2012 ANNUAL REPORT



UNITED STATES
$991.6
MILLION

UNITED KINGDOM
$192.4
MILLION

WORLDWIDE
NET SALES OF
$1.378
BILLION






REST OF WORLD
$194.3
MILLION

A HEALTHY WAY OF LIFE
IN HE RT
BODY & MILD.

The Hain Celestial Group is a leading natural and organic products company in North America and Europe. We are a leader in many natural categories with well-known brands. Our mission is to be the leading marketer, manufacturer and seller of natural and organic products by anticipating and exceeding consumer expectations in providing quality, innovation, value and convenience. We are committed to growing our Company while continuing to implement environmentally sound business practices and manufacturing processes.






# FISCAL YEAR 2012
WAS A MILESTONE YEAR FOR
HAIN CELESTIAL
AS WE FINISHED THE YEAR WITH
RECORD SALES,
OPERATING INCOME
AND NET INCOME.
OUR YEAR SAW DOUBLE-DIGIT GROWTH IN
SALES AND EARNINGS WITH SOLID RESULTS
ACROSS ALL OF OUR SEGMENTS
AS CONSUMERS INCREASINGLY FOCUS
ON HEALTH, WELLNESS
AND NUTRITION.



IRWIN D. SIMON
Founder, President, Chief Executive Officer and Chairman of the Board



## Dear Fellow Stockholders:

Fiscal year 2012 was a milestone year for Hain Celestial as we finished the year with record sales, operating income and net income. Our year saw double-digit growth in sales and earnings with solid results across all of our segments as consumers increasingly focus on health, wellness and nutrition.

A Healthy Way of Life \( ^{™} \) . Our recurring theme has been our commitment to A Healthy Way of Life \( ^{™} \) . Devoted to natural and organic, we are a trusted resource for consumers who want to live more healthfully and make sound choices for themselves and their families. From Millennials to Baby Boomers, industry reports cite renewed health and wellness concerns along with transparency and environmental awareness as growth drivers for the natural and organic products industry.

Today the World Health Organization (“WHO”) cites being overweight and or obese as the fifth leading risk for global deaths related to diabetes, ischemic heart disease and cancer. WHO promotes healthy lifestyles by (i) reducing the fat, sugar and salt content of processed foods; (ii) ensuring that healthy and nutritious choices are available and affordable to all consumers; (iii) practicing responsible marketing; and (iv) supporting regular physical activity. These tenets are at the core of Hain Celestial. The four key areas upon which we base our efforts to support A Healthy Way of Life \( ^{™} \)  remain unchanged: Healthier Products, Healthier Packaging, Healthier Environment and Healthier Communities.

Performance Highlights. Sound business fundamentals, the growth of our brands with innovative new products and strategic, accretive acquisitions drove the Company’s strong results despite a challenging economy.

We achieved record net sales of approximately $1.38 billion from continuing operations, an increase of 24.3% from the prior year net sales of approximately $1.1 billion,



reflecting growth across our worldwide portfolio including acquisitions. We increased sales in various channels of distribution and global geographies and drove strong performance in key categories. In addition to acquisitions, we had solid brand contribution from our Earth's Best \( ^{®} \) , Celestial Seasonings \( ^{®} \) , Spectrum \( ^{®} \) , MaraNatha \( ^{®} \) , Garden of Eatin \( ^{®} \) , Sensible Portions \( ^{®} \) , The Greek Gods \( ^{®} \) , Linda McCartney \( ^{®} \) , Alba Botanica \( ^{®} \)  and Avalon Organics \( ^{®} \)  branded products.

The Company earned $79.2 million in net income as compared to $55.0 million, a 44.1% increase from the prior year, or $1.73 earnings per diluted share compared to $1.23 per diluted share in the prior year.



# A HEALTHY HEORT IS SUPPORTED BY NUTRITIOUS NATURAL & ORGANIC PRODUCTS AS PART OF A HEALTHY LIFESTYLE INCLUDING DIET \( ^{*} \)  AND EXCERCISE.



International expansion was driven by our acquisition of the Daniels Group in the United Kingdom, which provided us with a strong base for fresh chilled products, including New Covent Garden Soup Co. \( ^{®} \) , Johnson's Juice Co. \( ^{®} \)  products and Farmhouse Fare \( ^{®} \)  desserts. Hain Daniels was formed from the combination of the Daniels acquisition and our existing United Kingdom operations and further expanded into Ireland with the acquisition of the Cully & Sully \( ^{®} \)  brand and its range of natural fresh chilled soups, savory pies and hot pots. Hain Celestial Canada acquired the Europe's Best \( ^{®} \)  brand of natural frozen fruit and vegetable products. Further, we integrated GG UniqueFiber \( ^{®} \)  crackers from Norway into our United States distribution and Danival \( ^{®} \)  organic products from France into Hain Celestial Europe.

We recently completed an expanded unsecured $850 million bank financing, which should provide us with greater operating flexibility for working capital and provide access to acquisition financing to support our strategic growth. The new agreement includes lower interest rate margins, reflecting the strength of our balance sheet and cash flow performance.



Acquisitions and Divestitures. Our Daniels Group, Cully & Sully and Europe's Best acquisitions contributed to our successful year. Looking forward, in August 2012 we entered into an agreement to acquire market leading brands Hartley's \( ^{®} \)  jams, Sun-Pat \( ^{®} \)  peanut butter and Gale's \( ^{®} \)  honey in the United Kingdom from Premier Foods plc, which will provide us with a platform for ambient grocery products. We expect the acquisition will allow us to leverage Premier's loyal customer base with our existing global brands, including Celestial Seasonings \( ^{®} \) , Earth's Best \( ^{®} \) , Terra \( ^{®} \)  and Sensible Portions \( ^{®} \) , in the marketplace. The acquisition will position our expanded Hain Daniels business in the top 40 of all food and beverage suppliers in the United Kingdom.

We also divested the private label chilled ready meals business which had been acquired in October 2011 with the Daniels Group and signed a letter of intent to dispose of the Daily Bread \( ^{™} \)  brand to a strategic buyer, which is expected to close later this year. Neither of these were core businesses of Hain Daniels, and both were reclassified as discontinued operations during the year.

Marketing and Sales. We launched a strong slate of over 80 new products offering consumers value and innovation. Our new product highlights included numerous brand extensions. Celestial Seasonings \( ^{®} \)  brand introduced Sleepytime Kids \( ^{™} \)  and Sleepytime \( ^{®} \)  Peach herbal teas, and a new holiday blend, Sweet Harvest Pumpkin \( ^{™} \)  black tea. We expanded our Earth's Best \( ^{®} \)  Organic pouch offerings into Fruit & Grain Puree and Greek-Style Yogurt Smoothies and jarred offerings into Wholesome Grains Yogurt Baby Food with DHA, Calcium and Fiber and Super Fruits varieties. Our non-diary brand now includes Dream Blends \( ^{™} \)  Almond, Cashew and Hazelnut non-dairy beverage and Almond Dream \( ^{™} \)  non-dairy yogurt. Other new products include Imagine \( ^{®} \)  Chunky Style Soups and Gluten Free Café \( ^{™} \)  soups. In personal care we introduced a new and expanded line of Earth's Best \( ^{®} \)  baby care products and, building upon last year's successful introduction of Queen Helene \( ^{®} \)  Royal Curl \( ^{®} \)  hair care products, added a full line of Princess Curl \( ^{™} \)  products this year.



The United States represented approximately 72% of our business while international sales represented approximately 28% of our business.

In the United States, our recent sales force reorganization and key account structure has helped drive our strong sales performance. Our key account teams are able to provide customers with a breadth of product and focus in the natural and organic category that only



## STRATEGIC
ACQUISITIONS

DANIELS GROUP

CULLY G SULLY

The Daniels Group is a leading marketer and manufacturer of natural fresh chilled food in the United Kingdom, which extends our presence into one of the fastest-growing healthy food categories and provides a platform for growth. Daniels Group’s product offerings include three leading brands, New Covent Garden Soup Co. \( ^{®} \) , Johnson’s Juice Co. \( ^{®} \)  and Farmhouse Fare \( ^{®} \)  as well as fresh prepared fruit products sold at major supermarkets and select foodservice outlets.

Cully & Sully \( ^{®} \)  brand natural fresh chilled soups, savory pies and hot pots are distributed to all major food retailers in Ireland, complements our existing product offering and we expect will provide us with the opportunity to expand our presence into the Irish marketplace.

Europe’s Best \( ^{®} \)  brand of all natural frozen fruit and vegetable products is sold to major food retailers in Canada, provides us with an entry into a new category and complements our existing product offerings.






# A HEALTHY BODY,
BE IT THROUGH HEALTHY EATING HABITS
LIKE SODIUM- OR CALORIE-REDUCTION CAN HELP MAINTAIN
OVERALL HEALTH AND WELL-BEING.
OUR BRANDS
MEET THE NEEDS
OF OUR YOUNGEST TO OLDEST CONSUMERS,
AS WELL AS THOSE WITH
SPECIAL FOOD REQUIREMENTS INCLUDING ALLERGIES.

Hain Celestial can provide. Our products are sold worldwide across various channels of distribution and classes of trade including natural, grocery, club, mass-market food service and e-tailers. We believe there are still significant distribution opportunities to accelerate our top and bottom line growth.

Management and Governance. We strengthened our management team through acquisitions. In the United Kingdom, Rob Burnett joined us with his management team from the Daniels Group acquisition and was appointed Chief Executive Officer of Hain Daniels. Cullen Allen and Colum O'Sullivan joined us with the Cully & Sully acquisition.

On our Board of Directors we welcomed Scott O'Neil, who most recently served as President of Madison Square Garden Sports, where he was responsible for the business operations of The Garden. Scott brings his marketing expertise, including digital innovation, to the Company. At the same time, I would like to acknowledge the contributions of Barry Alperin and Lewis Schiliro, who will not be standing for re-election this year. Barry's and Lewis's contributions were invaluable to the Company.



# WE ARE COMMITTED TO
A HEALTHY MIND
BY OFFERING PRODUCTS THAT MEET THE DIVERSE NEEDS OF
OUR GLOBAL CONSUMERS
SO THEY CAN MAKE CHOICES THAT FIT THEIR LIFESTYLES.

Corporate and Social Responsibility. The primary focus of our corporate and social responsibility for A Healthy Way of Life™ is to support Healthier Products, Healthier Packaging, Healthier Environment and Healthier Communities. This year our charitable contributions included support of The Bowery Mission in New York City and Feeding the Big Apple, a season-long hunger relief initiative with the New York Mets benefitting City Harvest, Citymeals-on-Wheels and Island Harvest. In addition, we supported Feed the Children throughout the United States. Internationally, Hain Daniels supported the British Heart Foundation with New Covent Garden® Heart Warming Soup, Hain Celestial Europe supported The Protos Project and Hain Celestial Canada supported FoodShare in Toronto and Fresh Choice Kitchens in Vancouver. Additionally, in the United States we continued the support of our long-standing relationship with Sesame Workshop and its Healthy Habits for Life™ Initiative and the sponsorship of PBS Kids.
Looking Ahead. I am proud of our team’s accomplishments this year as our continued focus on our core business and strategic acquisitions is critical for our long-term strategy for sustainable growth. We plan to build upon these accomplishments in the future with the support of our customers, consumers, employees, stockholders and Board of Directors.



## MAY YOU CONTINUE TO LEAD
A HEALTHY WAY OF LIFE™.



IRWIN D. SIMON
Founder, President, Chief Executive Officer and Chairman of the Board

Please refer to the Company’s Annual Report on Form 10-K for the period ended June 30, 2012 for additional information. This letter contains statements that are forward-looking, which involve known and unknown risks.







Wistbrae Natural Organics

ALMOND
DREAM

SOY

YES!

DeBole

RICE

CELESTIAL

DeBole

Vetex

Linda

HAIN

Linda McCartney

CLUB

ALMOND

JASON

Linda

HAIN

1

ALMOND

SUNSTAR

JASON

Linda

a6

Elfinic Gourmet

NEW COVENT GARDEN SUPPLY

Linda McCartney

ORGANIC

SUNSPIRE

JASON

Hollywood

Hollywood

Farhouse

Farhouse

B

B

1

Hollywood

1

Far

OHISONS

OHISONS

Spectrum

THE FACTS OF ORGANIC

CULIY

Roseiro

SP

Linda

Linda McCartney

© 2012 The Hain Celestial Group, Inc.
All Rights Reserved. Product or brand names used in this annual report may be trademarks or registered trademarks of The Hain Celestial Group, Inc.
NASDAQ® is a registered trademark of the NASDAQ Stock Market, Inc.

Healthy Habits for Life™, Sesame Workshop®, Sesame Street® and associated characters, trademarks and design elements are owned and licensed by Sesame Workshop © 2012 Sesame Workshop. All rights reserved.
Linda McCartney® is a registered trademark of Linda Enterprises Limited.

CANDI
CALL
VILIA
HOLLYWOOD

Farnhouse



MIX
Paper from
responsible sources
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CERTIFIED
GREEN

Linda McCartney

The 2012 Hain Celestial Group annual report is printed using vegetable-based inks on chlorine-free paper.

Elfinic Pumint

Executive Photography by Rebecca Weiss Photography

CASBAB

Avalon Organics

Celestial

DANIVAL

CELESTIAL

DANIVAL

DeBole

CASBAB

Avalon Organics

Linda McCartney

Avalon

Celestial

DeBole

Avalon

Celestial

DeBole

Avalon

Celestial

Avalon

Celestial

Avalon

Celestial

Avalon

Celestial

Avalon

Linda McCartney

Avalon

Celestial

Avalon

Celestial

Avalon