Additionally, 2012 results were impacted by acquisition and integration costs related to the Brookside acquisition of $13.4 million, or $0.04 per share-diluted and the aforementioned non-cash goodwill impairment charge of $7.5 million, or $0.03 per share-diluted. Net charges in 2011 also included a pre-tax gain on the sale of non-core trademark licensing rights of $17.0 million, or $0.05 per share-diluted and a $5.8 million, or $0.02 per share-diluted, charge related to the Global Supply Chain Transformation Program. As described in the Note, adjusted net income for each year, which excludes these net charges, was $740,040,000, or $3.24 per share-diluted in 2012, compared with $650,706,000, or $2.83 per share-diluted in 2011, an increase of 14.5 percent in adjusted earnings per share-diluted.
In 2013, the company expects reported earnings per share-diluted of $3.47 to $3.56. This projection, prepared in accordance with GAAP, assumes business realignment charges and NSRPE costs of $0.07 to $0.09 per share-diluted. Charges associated with the Project Next Century program are expected to be $0.03 to $0.05 per share-diluted while NSRPE is expected to be $0.04 per share-diluted. Despite the impact of these charges in 2013, reported gross margin is expected to increase 250 to 270 basis points.
Fourth Quarter Performance
Hershey's fourth quarter net sales increased 11.7 percent. As expected, organic core brand volume trends sequentially improved driven by the U.S. business. Specifically, volume, excluding the Brookside acquisition, was a 7.0 point benefit as everyday and seasonal product volume was more than double the contribution from new products. Net price realization and foreign currency exchange rates were a 2.3 point and 0.3 point benefit, respectively. For the fourth quarter and full year, the Brookside acquisition was a 2.1 point and 1.9 point benefit, respectively.
Hershey’s U.S. candy, mint and gum (CMG) retail takeaway for the 12 weeks and year ended Dec. 29, 2012, in the expanded all outlet combined plus convenience store channels (xAOC+C-store), which accounts for approximately 90 percent of the Company’s U.S. retail business, was up 7.0 percent and 5.7 percent, resulting in market share gains of 1.2 points and 0.6 points, respectively. U.S. CMG volume and unit trends at retail continued to progress in the fourth quarter and that is the expectation for 2013.
Fourth quarter adjusted gross margin increased 140 basis points driven by net price realization and supply chain productivity and cost savings initiatives, partially offset by higher input costs. Selling, marketing and administrative (SM&A) expenses, excluding advertising, increased about 19 percent in the fourth quarter, slightly greater than initial estimates, driven by planned investments in global go-to-market capabilities, selling and marketing costs and other employee-related expenses. As a result, adjusted EBIT increased 7.4 percent generating adjusted EBIT margin of 15.8 percent, a 60 basis point decline versus last year. For the fourth quarter and full year, advertising increased 27 percent and 16 percent, respectively, supporting new product launches as well as core U.S. and international brands.
The company expects 2013 net sales growth of 5 to 7 percent, including the impact of foreign currency exchange rates. Net sales will be driven primarily by core brand volume growth, the U.S. launch of the Brookside product line in the food, drug and mass channels, as well as innovation such as Kit Kat mini’s, Twizzlers Bites, Jolly Rancher Bites and yet to be announced products. In key international markets such as China, the company will extend the portfolio with the introduction of Hershey’s Kisses Deluxe and build on the fourth quarter launch of Hershey’s solid chocolate products in instant consumable and take home pack types. In Brazil, new capacity was installed to support geographic expansion of Hershey’s Mais chocolate.