UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(X) Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 Fee Required
For the fiscal year ended December 31, 1995
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 No Fee Required
For the transition period from ..... to .....
Registrant, State of Incorporation,
Address and Telephone Number
Hershey Foods Corporation
Commission I.R.S. Employer
File No. (a Delaware Corporation) Identification No.
1-183 100 Crystal A Drive 23-0691590
Hershey, Pennsylvania 17033
(717) 534-6799
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, one dollar par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock, one dollar par value
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes (X)
No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ( )
State the aggregate market value of the voting stock held by non-
affiliates of the Registrant as of a specified date within 60 days prior
to the date of filing.
Common Stock, one dollar par value $3,708,702,360, as of March 1,1996.
Class B Common Stock, one dollar par value $6,622,769 as of March 1,1996.
While the Class B Common Stock is not listed for public trading
on any exchange or market system, shares of that class are convertible
into shares of Common Stock at any time on a share-for-share basis.
The market value indicated is calculated based on the closing price of
the Common Stock on the New York Stock Exchange on March 1, 1996.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of the latest practicable date.
Common Stock, one dollar par value 62,093,226 shares, as of March 1,1996.
Class B Common Stock, one dollar par value 15,241,454 shares, as of
March 1, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
The Corporation's Consolidated Financial Statements and Management's
Discussion and Analysis for the year ended December 31, 1995 are
included in the Appendix to the Corporation's Proxy Statement for the
Corporation's 1996 Annual Meeting of Stockholders and are incorporated
by reference into Part II and are filed as Exhibit 13 hereto.
Portions of the Proxy Statement are incorporated by reference herein
into Part III.
Page 1
PART I
Item 1. BUSINESS
Hershey Foods Corporation and its subsidiaries (the "Corporation") are
engaged in the manufacture, distribution and sale of consumer food
products. The Corporation, primarily through its Hershey Chocolate
North America, Hershey Grocery, Hershey International and Hershey Pasta
Group divisions, produces and distributes a broad line of chocolate and
non-chocolate confectionery, grocery and pasta products.
The Corporation was organized under the laws of the State of Delaware
on October 24, 1927, as a successor to a business founded in 1894 by
Milton S. Hershey.
The Corporation's principal product groups include: chocolate and
non-chocolate confectionery products sold in the form of bar goods,
bagged items and boxed items; grocery products in the form of baking
ingredients, chocolate drink mixes, peanut butter, dessert toppings and
beverages; and pasta products sold in a variety of shapes, sizes and
packages. The Corporation believes it is a major factor in these
product groups in North America. Operating profit margins vary
considerably among individual products and brands. Generally, such
margins on chocolate and non-chocolate confectionery products are
greater than those on pasta and other food products.
In North America, the Corporation manufactures chocolate and non-
chocolate confectionery products in a variety of packaged forms and
markets them under more than 50 brands. The different packaged forms
include various arrangements of the same bar products, such as boxes,
trays and bags, as well as a variety of different sizes and weights of
the same bar product, such as snack size, standard, king size, large and
giant bars. Among the principal chocolate and non-chocolate
confectionery products in the United States are: HERSHEY'S COOKIES 'N'
CREME chocolate bars, HERSHEY'S COOKIES 'N' MINT chocolate bars,
HERSHEY'S HUGS chocolates, HERSHEY'S HUGS WITH ALMONDS chocolates,
HERSHEY'S KISSES chocolates, HERSHEY'S KISSES WITH ALMONDS chocolates,
HERSHEY'S milk chocolate bars, HERSHEY'S milk chocolate bars with
almonds, HERSHEY'S MINIATURES chocolate bars, HERSHEY'S NUGGETS
chocolates, AMAZIN' FRUIT gummy bears fruit candy, CADBURY'S CREME EGGS
candy, CARAMELLO candy bars, KIT KAT wafer bars, LUDEN'S throat drops,
MR. GOODBAR milk chocolate bars with peanuts, PETER PAUL ALMOND JOY
candy bars, PETER PAUL MOUNDS candy bars, REESE'S crunchy peanut butter
cups, REESE'S NUTRAGEOUS candy bars, REESE'S peanut butter cups, REESE'S
PIECES candies, ROLO caramels in milk chocolate, SKOR toffee bars,
SYMPHONY milk chocolate bars, TWIZZLERS candy, WHATCHAMACALLIT candy
bars, YORK peppermint pattie candy and 5TH AVENUE candy bars. Principal
products in Canada include CHIPITS chocolate chips, GLOSETTE chocolate-
covered raisins, peanuts and almonds, OH HENRY! candy bars, POT OF GOLD
boxed chocolates, REESE PEANUT BUTTER CUPS candy, and TWIZZLERS candy.
The Corporation also manufactures, imports, markets, sells and
distributes chocolate products in Mexico under the HERSHEY'S brand name.
The Corporation manufactures and markets a line of grocery products in
the baking, beverage, peanut butter and toppings categories. Principal
products in the United States include HERSHEY'S baking chips, HERSHEY'S
drink boxes, HERSHEY'S chocolate milk mix, HERSHEY'S cocoa, HERSHEY'S
CHOCOLATE SHOPPE toppings, HERSHEY'S HOT COCOA COLLECTION cocoa mix,
HERSHEY'S syrup, REESE'S peanut butter and REESE'S peanut butter baking
chips. HERSHEY'S chocolate milk is produced and sold under license by
certain independent dairies throughout the United States, using a
chocolate milk mix manufactured by the Corporation.
The Corporation's chocolate and non-chocolate confectionery and
grocery products are sold primarily to grocery wholesalers, chain
grocery stores, candy distributors, mass merchandisers, chain drug
stores, vending companies, wholesale clubs, convenience stores,
concessionaires and food distributors by full-time sales
representatives, food brokers and part-time retail sales merchandisers
throughout the United States, Canada and Mexico. The Corporation
believes its chocolate and non-chocolate confectionery products are sold
in over 2 million retail outlets in North America. In 1995, sales to
Wal-Mart Stores, Inc. and subsidiaries amounted to approximately 11% of
total net sales.
The Corporation manufactures and markets high-quality assorted
pralines and seasonal chocolate products in Germany under the GUBOR
brand name which are sold directly to retailers. In Italy, the
Corporation manufactures and markets
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various confectionery and grocery products under the SPERLARI and
several other brand names. In Japan, the Corporation imports and
markets selected HERSHEY'S chocolate and non-chocolate confectionery products.
The Corporation also exports chocolate and non-chocolate confectionery products
to over 60 countries worldwide.
The Corporation manufactures and sells quality pasta products
throughout the United States. The Corporation markets its products on
a regional basis under several brand names, including AMERICAN BEAUTY,
IDEAL BY SAN GIORGIO, LIGHT 'N FLUFFY, MRS. WEISS, P&R, RONZONI, SAN
GIORGIO and SKINNER, as well as certain private labels. These products
are sold through chain grocery stores, grocery wholesalers, wholesale
clubs, convenience stores and food distributors.
In June 1995, the Corporation completed the sale of the outstanding
stock of Overspecht B.V. (OZF Jamin), which manufactures and distributes
chocolate and confectionery products, cookies, biscuits and ice cream in
Western Europe. During December 1995, the Corporation completed the
acquisition of Henry Heide, Incorporated, a privately held company
located in New Jersey which manufactures and markets a variety of non-
chocolate confectionery products including JUJYFRUITS candies and
WUNDERBEANS jellybeans. Also during December 1995, the Corporation
entered into definitive agreements to sell the assets of Hershey Canada,
Inc.'s BEECH-NUT cough drop, BREATH SAVERS and LIFE SAVERS hard candy
and PLANTERS nut businesses. These divestitures were completed in
January, 1996.
The Corporation's marketing strategy is based upon the consistently
superior quality of its products, mass distribution and the best
possible consumer value in terms of price and weight. In addition, the
Corporation devotes considerable resources to the identification,
development, testing, manufacturing and marketing of new products. The
Corporation utilizes a variety of promotional programs for customers and
advertising and promotional programs for consumers. The Corporation
employs promotional programs at various times during the year to
stimulate sales of certain products. Chocolate and non-chocolate
confectionery and grocery seasonal and holiday-related sales have
typically been highest during the third and fourth quarters of the year.
The Corporation recognizes that the mass distribution of its consumer
food products is an important element in maintaining sales growth and
providing service to its customers. The Corporation attempts to meet
the changing demands of its customers by planning optimum stock levels
and reasonable delivery times consistent with achievement of
efficiencies in distribution. To achieve these objectives, the
Corporation has developed a distribution network from its manufacturing
plants, distribution centers and field warehouses strategically located
throughout the United States, Canada and Mexico. The Corporation uses
a combination of public and contract carriers to deliver its products
from the distribution points to its customers. In conjunction with
sales and marketing efforts, the distribution system has been
instrumental in the effective promotion of new, as well as established,
products on both national and regional scales.
From time to time the Corporation has changed the prices and weights
of its products to accommodate changes in manufacturing costs, the
competitive environment and profit objectives, while at the same time
maintaining consumer value. As a result of higher raw material and
packaging costs and the cumulative affect of inflation on other costs
since the last standard candy bar price increase in 1991, the
Corporation, in December 1995, implemented a wholesale price increase of
approximately 11% on its standard and king-size candy bars sold in the
United States.
The most significant raw material used in the production of the
Corporation's chocolate products is cocoa beans. This commodity is
imported principally from West African, South American and Far Eastern
equatorial regions. West Africa accounts for approximately 60% of the
world's crop. Cocoa beans are not uniform, and the various grades and
varieties reflect the diverse agricultural practices and natural
conditions found in the many growing areas. The Corporation buys a mix
of cocoa beans to meet its manufacturing requirements.
Page 3
The table below sets forth annual average cocoa prices as well as the
highest and lowest monthly averages for each of the calendar years
indicated. The prices are the monthly average of the quotations at noon
of the three active futures trading contracts closest to maturity on the
New York Coffee, Sugar and Cocoa Exchange. Because of the Corporation's
forward purchasing practices discussed below, and premium prices paid
for certain varieties of cocoa beans, these average futures contract
prices are not necessarily indicative of the Corporation's average cost
of cocoa beans or cocoa products.
Cocoa Futures Contract Prices
(cents per pound)
1991 1992 1993 1994 1995
Annual Average. . . 52.8 47.6 47.3 59.1 61.2
High. . . . . . . . 60.0 56.2 56.7 66.1 64.1
Low . . . . . . . . 45.6 41.3 41.8 51.3 58.3
Source: International Cocoa Organization Quarterly Bulletin of Cocoa
Statistics
The price of sugar, the Corporation's second most important commodity
for its domestic chocolate and non-chocolate confectionery products, is
subject to price supports under farm legislation. Due to import quotas
and duties imposed to support the price of sugar established by that
legislation, sugar prices paid by United States users are currently
substantially higher than prices on the world sugar market. The average
wholesale list price of refined sugar, F.O.B. Northeast, has remained
relatively stable in a range of $.28 to $.32 per pound for the past ten
years.
Other raw materials purchased in substantial quantities for domestic
confectionery manufacturing purposes include milk, peanuts and almonds.
The price of milk is affected by Federal Marketing Orders and the prices
of milk and peanuts are affected by price support programs administered
by the United States Department of Agriculture. The Food, Agriculture,
Conservation, and Trade Act of 1990, which is a five-year extension of
prior farm legislation, was passed by Congress in October 1990. This
legislation has an impact on the prices of sugar, peanuts, and milk
because it sets price support levels for these and other commodities.
This law is currently being reviewed by Congress and the nature of any
new legislation is uncertain at this time.
During the first quarter of 1995, domestic milk prices averaged well
below the prior year's levels, as a result of improved milk production
in Minnesota and Wisconsin. The extreme heat throughout the country
during the summer of 1995 negatively affected milk production and
production of dairy feeds. As a result, prices rose during the fourth
quarter.
Peanut prices were stable throughout the first three quarters of 1995
due to stagnant demand and a favorable 1994 crop. However, prices
increased slightly during the fourth quarter of the year due to a below
average 1995 crop.
Almond prices rose significantly in early 1995 as California
experienced adverse weather during the growing season. As prospects for
a favorable new crop diminished, prices rose again in late summer to an
unprecedented level and remained near this level for the balance of the year.
Pasta is made from semolina milled from durum wheat, a class of hard
wheat grown in the United States and Canada. The Corporation purchases
semolina from commercial mills and is also engaged in a custom milling
agreement to obtain sufficient quantities of semolina. In 1995, the
market price for semolina remained near historic highs. The
exceptionally high cost resulted from short supplies of durum wheat
combined with U.S. Government tariffs on imports of Canadian wheat. The
tariffs expired as scheduled in September 1995 but prices remained high
due to a continued worldwide shortage of durum wheat.
The Corporation attempts to minimize the effect of price fluctuations
related to the purchase of its major raw materials primarily through the
forward purchasing of such commodities to cover future manufacturing
requirements generally for periods ranging from 3 to 24 months. With
regard to cocoa, sugar and corn sweeteners, price risks are also managed
by entering into futures and options contracts. At the present time,
similar futures and options contracts are not available for use in
pricing the Corporation's other major raw materials. Futures contracts
are used in combination with forward purchasing of cocoa, sugar and corn
sweetener requirements principally to take advantage of market
fluctuations which provide more favorable pricing opportunities and to
increase diversity or flexibility in sourcing these raw materials. The
Corporation's commodity procurement practices are intended to reduce the
risk of future price increases, but also may potentially limit the
Corporation's ability to benefit from possible price decreases.
The primary effect on liquidity from using futures contracts is
associated with margin requirements related to cocoa and sugar futures.
Cash outflows and inflows result from original margins which are "good
faith deposits" established by the
Page 4
New York Coffee, Sugar and Cocoa Exchange to ensure that market participants
will meet their contractual financial obligations. Additionally, variation
margin payments and receipts are required when the value of open positions is
adjusted to reflect daily price movements. The magnitude of such cash inflows
and outflows is dependent upon price coverage levels and the volatility of
the market. Historically, cash flows related to margin requirements
have not been material to the Corporation's total working capital
requirements.
The Corporation manages the purchase of forward and futures contracts
by developing and monitoring procurement strategies for each of its
major commodities. These procurement strategies, including the use of
futures contracts to hedge the pricing of cocoa, sugar and corn
sweeteners, are directly linked to the overall planning and management
of the Corporation's business, since the cost of raw materials accounts
for a significant portion of the cost of finished goods. Procurement
strategies with regard to cocoa, sugar and other major raw material
requirements are developed by the analysis of fundamentals, including
weather and crop analysis, and by discussions with market analysts,
brokers and dealers. Procurement strategies are determined, implemented
and monitored on a regular basis by senior management. Procurement
activities for all major commodities are also reported to the Board of
Directors on a regular basis.
The Corporation has license agreements with several companies to
manufacture and/or sell products worldwide. Among the more significant
are agreements with affiliated companies of Cadbury Schweppes p.l.c. to
manufacture and/or market and distribute PETER PAUL ALMOND JOY and PETER
PAUL MOUNDS confectionery products worldwide as well as YORK, CADBURY
and CARAMELLO confectionery products in the United States. The
Corporation's rights under these agreements are extendable on a long-
term basis at the Corporation's option. The license for CADBURY and
CARAMELLO products is subject to a minimum sales requirement which the
Corporation exceeded in 1995. The Corporation also has an agreement
with Societe des Produits Nestle SA, which licenses the Corporation to
manufacture and distribute in the United States KIT KAT and ROLO
confectionery products. The Corporation's rights under this agreement
are extendable on a long-term basis at the Corporation's option, subject
to certain conditions, including minimum unit volume sales. In 1995,
the minimum volume requirements were exceeded.
Competition
Many of the Corporation's brands enjoy wide consumer acceptance and
are among the leading brands sold in the marketplace. However, these
brands are sold in highly competitive markets and compete with many
other multinational, national, regional and local firms, some of which
have resources in excess of those available to the Corporation.
Trademarks
The Corporation owns various registered and unregistered trademarks
and service marks, and has rights under licenses to use various
trademarks which are of material importance to the Corporation's
business.
Backlog of Orders
The Corporation manufactures primarily for stock and fills customer
orders from finished goods inventories. While at any given time there
may be some backlog of orders, such backlog is not material in respect
to total sales, nor are the changes from time to time significant.
Research and Development
The Corporation engages in a variety of research activities. These
principally involve development of new products, improvement in the
quality of existing products, improvement and modernization of
production processes, and the development and implementation of new
technologies to enhance the quality and value of both current and
proposed product lines.
Regulation
The Corporation's domestic plants are subject to inspection by the
Food and Drug Administration and various other governmental agencies,
and its products must comply with regulations under the Federal Food,
Drug and Cosmetic Act and with various comparable state statutes
regulating the manufacturing and marketing of food products.
Environmental Considerations
In the past the Corporation has made investments based on compliance
with environmental laws and regulations. Such expenditures have not
been material with respect to the Corporation's capital expenditures,
earnings or competitive position.
Page 5
Employees
As of December 31, 1995, the Corporation had approximately 13,300
full-time and 1,500 part-time employees, of whom approximately 6,000
were covered by collective bargaining agreements. The Corporation
considers its employee relations to be good.
Financial Information by Geographic Area
Information concerning the Corporation's geographic segments is
contained in Footnote 17 of the Corporation's Consolidated Financial
Statements and Management's Discussion and Analysis included in the
Appendix to the Proxy Statement for its 1996 Annual Meeting of
Stockholders (the "Proxy Statement"), which information is incorporated
herein by reference and filed as Exhibit 13 hereto.
Item 2. PROPERTIES
The following is a list of the Corporation's principal manufacturing
properties. The Corporation owns each of these properties.
UNITED STATES
Hershey, Pennsylvania - confectionery and grocery products
(3 principal plants)
Lancaster, Pennsylvania - confectionery products
Oakdale, California - confectionery and grocery products
Stuarts Draft, Virginia - confectionery products
Winchester, Virginia - pasta products
CANADA
Smiths Falls, Ontario - confectionery products
In addition to the locations indicated above, the Corporation owns or
leases several other properties used for manufacturing chocolate and
non-chocolate confectionery, grocery and pasta products and for sales,
distribution and administrative functions.
The Corporation's plants are efficient and well maintained. These
plants generally have adequate capacity and can accommodate seasonal
demands, changing product mixes and certain additional growth. The
largest plants are located in Hershey, Pennsylvania. Many additions and
improvements have been made to these facilities over the years and the
plants' manufacturing equipment includes equipment of the latest type
and technology.
Item 3. LEGAL PROCEEDINGS
The Corporation has no material pending legal proceedings, other than
ordinary routine litigation incidental to its business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Page 6
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information concerning the principal United States trading market
for, market prices of and dividends on the Corporation's Common Stock
and Class B Common Stock, and the approximate number of stockholders,
may be found in the section "Market Prices and Dividends" on pages A-7
and A-8 of the Corporation's Consolidated Financial Statements and
Management's Discussion and Analysis included in the Appendix to the
Proxy Statement which is deemed to be part of the Annual Report to
Stockholders and which information is incorporated herein by reference
and filed as Exhibit 13 hereto.
Item 6. SELECTED FINANCIAL DATA
The following information, for the five years ended December 31,
1995, found in the section "Eleven-Year Consolidated Financial Summary"
on pages A-29 through A-31 of the Corporation's Consolidated Financial
Statements and Management's Discussion and Analysis included in the
Proxy Statement, is incorporated herein by reference and filed
as Exhibit 13 hereto: Net Sales; Income from Continuing Operations
Before Accounting Changes; Income Per Share from Continuing Operations
Before Accounting Changes (excluding Notes g, h, i and j); Dividends
Paid on Common Stock (and related Per Share amounts); Dividends Paid on
Class B Common Stock (and related Per Share amounts); Long-term Portion
of Debt; and Total Assets.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The section "Management's Discussion and Analysis", found on pages A-
1 through A-8 of the Corporation's Consolidated Financial Statements and
Management's Discussion and Analysis included in the Appendix to the
Proxy Statement, is incorporated herein by reference and filed as
Exhibit 13 hereto.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following audited consolidated financial statements of the
Corporation and its subsidiaries are found at the indicated pages in the
Corporation's Consolidated Financial Statements and Management's
Discussion and Analysis included in the Appendix to the Proxy Statement,
and such financial statements, along with the report of the independent
public accountants thereon, are incorporated herein by reference and
filed as Exhibit 13 hereto.
1. Consolidated Statements of Income for the years ended December
31, 1995, 1994 and 1993.(Page A-9)
2. Consolidated Balance Sheets as of December 31, 1995 and 1994.
(Page A-10)
3. Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993. (Page A-11)
4. Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1995, 1994 and 1993. (Page A-12)
5. Notes to Consolidated Financial Statements (Pages A-13 through
A-26), including "Quarterly Data(Unaudited)." (Page A-26)
6. Report of Independent Public Accountants. (Page A-28)
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Page 7
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages, positions held with the Corporation, periods of
service as a director, principal occupations, business experience and
other directorships of nominees for director of the Corporation are set
forth in the section "Election of Directors" in the Proxy Statement.
This information is incorporated herein by reference.
Executive Officers of the Corporation as of March 1, 1996
Name Age Positions Held During the Last Five Years
CORPORATE
K. L. Wolfe. . . 57 Chairman of the Board and Chief Executive
Officer (1993); President and Chief Operating
Officer (1985)
J. P. Viviano. . 57 President and Chief Operating Officer (1993);
President, Hershey Chocolate U.S.A., now
Hershey Chocolate North America, a division
of Hershey Foods Corporation (1985)
W. F. Christ . . 55 Senior Vice President and Chief Financial
Officer (1994); President, Hershey
International, a division of Hershey Foods
Corporation (1988)
R. E. Bentz. . . 48 Vice President, Information Technology
Integration (1995); Vice President, Finance
and Administration, Hershey Chocolate North
America (1995); Vice President, Finance and
Administration, Hershey Chocolate U.S.A.
(1989)
C. L. Duncan . . 56 Vice President, Research and Development
(1981)
T. C. Fitzgerald . 56 Vice President and Treasurer (1990)
S. A. Lambly . . 55 Vice President, Human Resources (1989)
R. M. Reese . . 46 Vice President, General Counsel and Secretary
(1995); Vice President and General Counsel
(1992); Assistant General Counsel (1987)
D. W. Tacka. . . 42 Corporate Controller and Chief Accounting
Officer (1995); Vice President, Finance and
Administration, Hershey Pasta Group, a
division of Hershey Foods Corporation (1989)
B. L. Zoumas . . 53 Vice President, Science and Technology
(1992); Vice President, Technical, Hershey
Chocolate U.S.A. (1990)
Page 8
Executive Officers of the Corporation (continued)
Name Age Positions Held During The Last Five Years
DIVISION
R. Brace . . . 52 Vice President, Manufacturing, Hershey
Chocolate North America (1995); Vice
President, Manufacturing, Hershey Chocolate
U.S.A. (1987)
J. F. Carr . . 51 President, Hershey International (1994); Vice
President, Marketing, Hershey Chocolate
U.S.A. (1984)
F. Cerminara . . 47 Vice President, Procurement, Hershey
Chocolate North America (1995); Vice
President, Commodities Procurement, Hershey
Chocolate U.S.A. (1994); Vice President,
Corporate Development and Commodities (1988)
D. N. Eshleman . 41 General Manager, Hershey Grocery, a division
of Hershey Foods Corporation (1994);
Director, Marketing, Hershey Chocolate U.S.A.
(1988)
M. H. Holmes . . 51 Vice President and General Manager, Chocolate
Confectionery, Hershey Chocolate U.S.A.
(1994); General Manager, Grocery, Hershey
Chocolate U.S.A. (1989)
M. T. Matthews . 49 Vice President, Sales, Hershey Chocolate
U.S.A. (1989)
R. W. Meyers . . 52 President and General Manager, Hershey Canada
Inc., a subsidiary of Hershey Foods
Corporation (1995); President, Hershey Canada
Inc. (1990)
M. F. Pasquale . 48 President, Hershey Chocolate North America
(1995); President, Hershey Chocolate U.S.A.
(1994); Senior Vice President and Chief
Financial Officer (1988)
C. M. Skinner. . 62 President, Hershey Pasta Group (1984)
__________________
There are no family relationships among any of the above-named
officers of the Corporation.
Corporate Officers and Division Presidents are generally elected
each year at the organization meeting of the Board of Directors
following the Annual Meeting of Stockholders in April.
Reporting of an inadvertent late filing of a Securities and Exchange
Commission Form 4 under Section 16 of the Securities Exchange Act of
1934, as amended, is set forth in the Section "Compliance with Section
16(a) of the Securities Exchange Act of 1934" of the Proxy Statement.
Item 11. EXECUTIVE COMPENSATION
Information concerning compensation of the five most highly-
compensated executive officers, including the Chairman of the Board
and Chief Executive Officer, of the Corporation individually, and
compensation of directors, is set forth in the sections "1995
Executive Compensation" and "Compensation of Directors" in the Proxy
Statement. This information is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information concerning ownership of the Corporation's voting
securities by certain beneficial owners, individual nominees for
directors, and by management, including the five most highly-
compensated executive officers, is set forth in the section "Voting
Securities" in the Proxy Statement. This information is incorporated
herein by reference.
Page 9
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning "Certain Relationships and Related
Transactions" is set forth in the section "Certain Transactions and
Relationships" in the Proxy Statement. This information is
incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Item 14(a)(1): Financial Statements
The audited consolidated financial statements of the Corporation and
its subsidiaries and the Report of Independent Public Accountants
thereon, as required to be filed with this report, are set forth in
Item 8 of this report and are incorporated therein by reference to
specific pages of the Corporation's Consolidated Financial Statements
and Management's Discussion and Analysis included in the Appendix to
the Proxy Statement and filed as Exhibit 13 hereto.
Item 14(a)(2): Financial Statement Schedule
The following consolidated financial statement schedule of the
Corporation and its subsidiaries for the years ended December 31,
1995, 1994 and 1993 is filed herewith on the indicated page in
response to Item 14(d):
Schedule II -- Valuation and Qualifying Accounts (Page 15)
Other schedules have been omitted as not applicable or required, or
because information required is shown in the consolidated financial
statements or notes thereto.
Financial statements of the parent corporation only are omitted
because the Corporation is primarily an operating corporation and
there are no significant restricted net assets of consolidated and
unconsolidated subsidiaries.
Item 14(a)(3): Exhibits
The following items are attached or incorporated by reference in
response to Item 14(c):
(3) Articles of Incorporation and By-laws
The Corporation's Restated Certificate of Incorporation, as
amended, is incorporated by reference from Exhibit 3 to the
Corporation's Quarterly Report on Form 10-Q for the quarter ended
April 3, 1988. The By-laws, as amended on October 3, 1995, are
incorporated by reference from Exhibit 3 to the Corporation's
Report on Form 10-Q for the quarter ended October 1, 1995.
(4) Instruments defining the rights of security holders,
including indentures
The Corporation has issued certain long-term debt instruments, no
one class of which creates indebtedness exceeding 10% of the
total assets of the Corporation and its subsidiaries on a
consolidated basis. These classes consist of the following:
a. 8.45% to 9.92% Medium-Term Notes due 1995-1998
b. 6.7% Notes due 2005
c. 8.8% Debentures due 2021
d. Other Obligations
The Corporation will furnish copies of the above debt instruments
to the Commission upon request.
Page 10
(10) Material contracts
a. Kit Kat and Rolo License Agreement (the "License Agreement")
between Hershey Foods Corporation and Rowntree Mackintosh
Confectionery Limited is incorporated by reference from
Exhibit 10(a) to the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 1980. The License
Agreement was amended in 1988 and the Amendment Agreement is
incorporated by reference from Exhibit 19 to the
Corporation's Quarterly Report on Form 10-Q for the quarter
ended July 3, 1988. The License Agreement was assigned by
Rowntree Mackintosh Confectionery Limited to Societe des
Produits Nestle SA as of January 1, 1990. The Assignment
Agreement is incorporated by reference from Exhibit 19 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990.
b. Peter Paul/York Domestic Trademark & Technology License
Agreement between Hershey Foods Corporation and Cadbury
Schweppes Inc. (now CBI Holdings, Inc.) dated August 25,
1988, is incorporated by reference from Exhibit 2(a) to the
Corporation's Current Report on Form 8-K dated September 8,
1988.
c. Cadbury Trademark & Technology License Agreement among
Hershey Foods Corporation and Cadbury Schweppes Inc. (now CBI
Holdings, Inc.) and Cadbury Limited dated August 25, 1988, is
incorporated by reference from Exhibit 2(a) to the
Corporation's Current Report on Form 8-K dated September 8,
1988.
d. 364-Day Credit Agreement dated as of December 15, 1995 among
Hershey Foods Corporation, the banks, financial institutions
and other institutional lenders listed on the signature pages
thereof, and Citibank, N.A. as administrative agent bank and
Citicorp Securities, Inc. and BA Securities, Inc. as co-
syndication agents, is incorporated by reference from Exhibit
10.1 to the Corporation's Current Report on Form 8-K dated
January 29, 1996.
e. Five-Year Credit Agreement dated as of December 15, 1995
among Hershey Foods Corporation, the banks, financial
institutions and other institutional lenders listed on the
signature pages thereof, and Citibank, N.A. as administrative
agent bank and Citicorp Securities, Inc. and BA Securities,
Inc. as co-syndication agents, is incorporated by reference
from Exhibit 10.2 to the Corporation's Current Report on Form
8-K dated January 29, 1996.
Executive Compensation Plans
f. The 1987 Key Employee Incentive Plan, as amended, is
incorporated by reference from Exhibit 19(i) to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
g. Hershey Foods Corporation's Restated Supplemental Executive
Retirement Plan is incorporated by reference from Exhibit
19(ii) to the Corporation's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994.
h. Hershey Foods Corporation's Non-Management Director
Retirement Plan is incorporated by reference from Exhibit 19
to the Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 29, 1992.
i. Hershey Foods Corporation's Deferral Plan for Non-Management
Directors is incorporated by reference from Exhibit 10 to
the Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.
j. A form of the Benefit Protection Agreements entered into
between the Corporation and certain of its executive officers
is incorporated by reference from Exhibit 10 to the
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
k. Hershey Foods Corporation's Deferred Compensation Plan is
filed as Exhibit 10 hereto.
Page 11
(12) Computation of ratio of earnings to fixed charges statement
A computation of ratio of earnings to fixed charges for the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 is filed as
Exhibit 12 hereto.
(13) Annual report to security holders
The Corporation's Consolidated Financial Statements and
Management's Discussion and Analysis is included in the Appendix
to the Proxy Statement and is filed as Exhibit 13 hereto.
(21) Subsidiaries of the Registrant
A list setting forth subsidiaries of the Corporation is filed
as Exhibit 21 hereto.
Item 14(b): Reports on Form 8-K
A report on Form 8-K was filed on December 4, 1995, reporting that
Hershey Chocolate U.S.A., a division of Hershey Foods Corporation,
increased the wholesale price of its standard and king-size bar
lines by approximately 11% effective December 4, 1995.
Page 12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Corporation has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HERSHEY FOODS CORPORATION
(Registrant)
Date: March 13, 1996 By W. F. CHRIST
(W. F. Christ, Senior Vice President
and Chief Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Corporation and in the capacities and on the date
indicated.
Signature Title Date
K. L. WOLFE Chief Executive Officer
(K. L. Wolfe) and Director March 13, 1996
W. F. CHRIST Chief Financial Officer Mrch 13, 1996
(W. F. Christ)
D. W. TACKA Chief Accounting Officer March 13, 1996
(D.W. Tacka)
J. P. VIVIANO Director March 13, 1996
(J. P. Viviano)
W. H. ALEXANDER Director March 13, 1996
(W. H. Alexander)
H. O. BEAVER, JR. Director March 13, 1996
(H. O. Beaver, Jr.)
R. H. CAMPBELL Director March 13, 1996
(R. H. Campbell)
T. C. GRAHAM Director March 13, 1996
(T. C. Graham)
B. GUITON HILL Director March 13, 1996
(B. Guiton Hill)
Page 13
Signature Title Date
J. C. JAMISON Director March 13, 1996
(J. C. Jamison)
S. C. MOBLEY Director March 13, 1996
(S. C. Mobley)
F. I. NEFF Director March 13, 1996
(F. I. Neff)
J. M. PIETRUSKI Director March 13, 1996
(J. M. Pietruski)
V. A. SARNI Director March 13, 1996
(V. A. Sarni)
Page 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To Hershey Foods Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Hershey
Foods Corporation's Proxy Statement for its 1996 Annual Meeting of
Stockholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated January 25, 1996. Our audit was made
for the purpose of forming an opinion on those statements taken as a
whole. The schedule listed in Item 14(a)(2) on page 9 is the
responsibility of the Corporation's management and is presented for
purposes of complying with the Securities and Exchange Commission's
rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
New York, New York
January 25, 1996
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports dated January 25, 1996, included or
incorporated by reference in this Form 10-K for the year ended
December 31, 1995, into the Corporation's previously filed
Registration Statements on Forms S-8 or S-3, (File No. 33-45431, File
No. 33-45556 and File No. 33-51089).
ARTHUR ANDERSEN LLP
New York, New York
March 13, 1996
Page 15
Schedule II
HERSHEY FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1995, 1994 and 1993
CAPTION
(in thousands of dollars)
Additions
Balance at Charged to Charged Deductions Balance
Beginning Costs and to Other from at End
Description of Period Expenses Accounts(a) Reserves of Period
Year Ended
December 31, 1995:
Reserves deducted
in the balance sheet
from the assets to
which they apply:
Accounts Receivable -Trade. . .$13,972 $1,318 $(432) $(57) $14,801
Year Ended
December 31, 1994:
Reserves deducted
in the balance sheet
from the assets to
which they apply:
Accounts Receivable -Trade. . .$12,479 $3,144 $(1,016) $(635) $13,972
Year Ended
December 31, 1993:
Reserves deducted
in the balance sheet
from the assets to
which they apply:
Accounts Receivable -Trade. . .$10,437 $3,371 $ 107 $(1,436) $12,479
(a) Includes recoveries of amounts previously written off.
Page 16
HERSHEY FOODS CORPORATION ANNUAL REPORT ON FORM 10-K
Index to Exhibits
Exhibit No.
10 -- Deferred Compensation Plan
12 -- Computation of ratio of earnings to fixed charges statement
13 -- Consolidated Financial Statements and Management's Discussion
and Analysis
21 -- Subsidiaries of the Registrant
27 -- Financial Data Schedule for the period ended December 31, 1995
(Required for electronic filing only).