Back to GetFilings.com
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, 1993
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:
Title of each class: Name of each
Common Stock, one dollar par value exchange on
which registered:
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. (X)
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 - $2,591,310,046, as of
March 1, 1994.
Class B Common Stock, one dollar par value - $4,622,517, as of
March 1, 1994. 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, 1994.
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 - 72,113,618 shares, as of
March 1, 1994.
Class B Common Stock, one dollar par value - 15,242,979
shares, as of March 1, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 1993 Annual Report to
Stockholders for the year ended December 31, 1993 are
incorporated by reference into Part II and are reproduced herein
as Exhibit 13. Portions of the Proxy Statement for the
Corporation's 1994 Annual Meeting of Stockholders are
incorporated by reference 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 U.S.A., Hershey Grocery, Hershey
International and Hershey Pasta Group divisions and its
subsidiary Hershey Canada Inc., produces and distributes a broad
line of 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.
In March 1993, the Corporation purchased certain assets of
three Cleveland, Ohio area pasta companies: Ideal Macaroni
Company, Il Pranzo D'oro Corporazoine, Inc. and Weiss Noodle
Company. In September 1993, the Corporation purchased all of
the shares of Sperlari, S.r.l. from Heinz Italia S.p.A.
Sperlari manufactures, markets, sells, and distributes a wide
range of confectionery products in Italy, including sugar
candies and nougat. In October 1993, the Corporation purchased
all of the outstanding shares of Overspecht B.V. Through its
subsidiaries, this company manufactures and sells chocolate and
non-chocolate confectionery products, cookies, biscuits, and ice
cream primarily in the Netherlands and Belgium.
The Corporation's principal product groups include: chocolate
and confectionery products sold in the form of bar goods, bagged
items, boxed items, and throat drops; grocery products in the
form of baking ingredients, chocolate drink mixes, peanut
butter, dessert toppings, and beverages; pasta products sold in
a variety of different shapes, sizes and packages; and
refrigerated puddings. 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 confectionery
products are greater than those on pasta and other food
products.
The Corporation manufactures chocolate and 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 confectionery products in the United States are: 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, AMAZIN' FRUIT gummy bears
fruit candy, BAR NONE candy bars, 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 peanut butter cups, REESE'S PIECES
candies, ROLO caramels in milk chocolate, SKOR toffee bars,
SYMPHONY milk chocolate bars, WHATCHAMACALLIT candy bars, Y&S
TWIZZLERS licorice-type candy, YORK peppermint pattie candy, and
5TH AVENUE candy bars.
The Corporation also markets a line of grocery products in the
baking, beverage, peanut butter, puddings and toppings
categories. Principal products include HERSHEY'S baking
chocolate, HERSHEY'S baking chips, HERSHEY'S chocolate drink,
HERSHEY'S chocolate milk mix, HERSHEY'S cocoa, HERSHEY'S
CHOCOLATE SHOPPE toppings, HERSHEY'S syrup, REESE'S peanut
butter and REESE'S peanut butter chips. Refrigerated HERSHEY'S
chocolate bar flavor puddings are available throughout the
United States. HERSHEY'S chocolate milk is produced and sold
under license by approximately 25 independent dairies throughout
the United States, using a chocolate milk mix manufactured by
the Corporation.
Principal products in Canada include CHIPITS chocolate chips,
GLOSETTE chocolate-covered raisins, peanuts and almonds, LIFE
SAVERS candy, OH HENRY! candy bars, PLANTERS peanuts, POT OF
GOLD boxed chocolates, REESE PEANUT BUTTER CUPS candy, and Y&S
TWIZZLERS licorice-type candy.
Page 2
The Corporation's 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 and Canada. The
Corporation also manufactures, imports, markets, sells and
distributes chocolate products in Mexico under the HERSHEY'S
brand name. These products are sold through chain grocery
stores, food distributors, and wholesale clubs. The Corporation
believes its chocolate and confectionery products are sold in
over 2 million retail outlets in North America. Selected
products in Canada are sold through a network of independent
brokers.
The Corporation manufactures, markets, sells and distributes
high-quality assorted pralines and seasonal chocolate products
in Germany under the GUBOR brand name which are sold directly to
retailers. Additionally, the Corporation imports, markets,
sells and distributes selected HERSHEY'S chocolate and
confectionery products in the Japanese market. In Italy, the
Corporation manufactures, markets, sells, and distributes
various confectionery and nougat products under several brand
names including SPERLARI, DONDI, SCARAMELLINI, FRESH CLUB,
SPRINT, GALATINE, and GNAMMY. In the Netherlands and Belgium,
the Corporation manufactures and sells chocolate and
confectionery products, cookies, biscuits, and ice cream. These
products are sold primarily under private labels, but products
are also marketed and sold under the WIVER and JAMIN brand
names.
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, LIGHT 'N FLUFFY, 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.
The Corporation's marketing strategy for its products 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 certain seasons of the year to stimulate
sales of certain products. 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 economies of
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, Puerto Rico, 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 consumer food products to accommodate changes in
the cost of manufacturing, including the cost of raw materials;
the competitive environment; and profit objectives, while at the
same time maintaining consumer value. The Corporation changes
the weight on portions of its standard bar line periodically,
and selected weight changes were made in 1993. As a result of
higher semolina costs, the Corporation implemented a price
increase averaging 3.5% in November 1993 on its pasta products
and announced a curtailment of certain promotional allowances
effective February 1994.
The most significant raw material used in the production of
the Corporation's chocolate and confectionery 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 objectives.
It attempts to minimize the effect of cocoa bean price
fluctuations by the forward purchasing, from time to time, of
substantial quantities of cocoa beans, chocolate liquor and
cocoa butter, and by the purchase and sale of cocoa futures and
options contracts.
Page 3
The table below sets forth annual cocoa prices 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 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)
1989 1990 1991 1992 1993
Average 54.6 55.5 52.8 47.6 47.3
High 66.8 63.5 60.0 56.2 56.7
Low 42.4 43.6 45.6 41.3 41.8
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 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 cents to 31 cents per pound for the past ten years.
The Corporation utilizes forward purchasing and other procurement
practices, including, from time to time, the purchase and sale
of sugar futures contracts. Therefore, the reported prices of
sugar are not necessarily indicative of the Corporation's actual
costs.
Other raw materials purchased in substantial quantities for
domestic 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. While this
law is not substantially different from the previous farm
legislation, it continues to have an impact on the price of
sugar, peanuts and milk because it sets price support levels for
these and other commodities.
During the first three quarters of 1993, domestic milk prices
averaged well below year earlier levels, reflecting strong milk
production throughout the country. As a result of the wet
weather conditions in the Midwest during the summer, production
in the Minnesota-Wisconsin milkshed dropped significantly below
the prior year levels in the fourth quarter. For the year, milk
prices were not materially different from the 1992 levels.
As a result of an excellent 1992 crop harvest, domestic market
prices for peanuts were relatively stable through the first
three quarters of 1993. However, prices increased modestly
during the fourth quarter due to a lower than average 1993 crop
harvest.
Domestic almond prices began 1993 at moderate levels but
gradually increased during the first and second quarters due to
very low carry-in stocks and lower than average new crop
prospects. Prices rose substantially during the third and
fourth quarters as the below average 1993 crop was harvested and
prices finished the year at a record high.
Pasta is made from semolina milled from durum wheat, a class
of hard wheat grown in the United States, principally in North
Dakota. The Corporation purchases semolina from commercial
millers and also is engaged in custom milling arrangements to
obtain sufficient quantities of high quality semolina. A
decrease in plantings and adverse weather conditions in the
Midwest combined to reduce the quantity and quality of the 1993
durum wheat crop, and resulted in a substantial cost increase
for this raw material. Supplies are expected to remain tight at
least until the harvest of the new crop during the fall of 1994
and prices may remain at elevated levels in the interim.
Page 4
The Corporation has agreements with Cadbury Beverages Inc. and
affiliated companies which license the Corporation 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 substantially
exceeded in 1993.
The Corporation also has an agreement with Societe des
Produits Nestle SA, which licenses the Corporation to
manufacture and distribute in the United States the 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 1993, minimum volume requirements
were substantially exceeded.
The Corporation's products are manufactured and sold in the
Philippines pursuant to a technical assistance and trademark
licensing agreement. The Corporation manufactures and
distributes the SKOR toffee bar in the United States and Canada
under a technology license from Freia Marabou a.s of Oslo, Norway.
The Corporation has license agreements with Snow Brand Milk
Products Co., Ltd. ("Snow Brand") of Sapporo, Japan. Snow Brand
manufactures and sells in Japan certain beverage and ice cream
products under the Corporation's trademarks. The Corporation
has a Technical Assistance and Know-How and Trademark License
Agreement with Hai-Tai Confectionery Co., Ltd. ("Hai-Tai") of
Seoul, South Korea. Pursuant to that agreement, Hai-Tai
manufactures and sells in the South Korean market certain of the
Corporation's chocolate and confectionery products. The
Corporation has a license agreement with Maeil Dairy Industry
Co., Ltd. ("Maeil Dairy") of South Korea. Pursuant to the
agreement, Maeil Dairy manufactures, sells and distributes
HERSHEY'S chocolate drink and chocolate puddings in South Korea.
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 has various registered and unregistered
trademarks, service marks and licenses 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 considerable research activities
which principally involve development of new products,
improvement of the quality of existing products, and improvement
and modernization of production processes. The Corporation also
carries out development and evaluation of new processing
techniques for 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.
Page 5
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.
Employees
As of December 31, 1993, the Corporation had approximately
14,300 full-time and 1,600 part-time employees, of whom
approximately 6,300 were covered by collective bargaining
agreements. The Corporation considers its employee relations to
be good.
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 Products (3
principal plants)
Oakdale, California - Confectionery Products
Stuarts Draft, Virginia - Confectionery Products
Winchester, Virginia - Pasta Products
CANADA
Smiths Falls, Ontario - Confectionery and Snack Nut
Products
In addition to the locations indicated above, the Corporation
owns or leases several other less significant properties used
for manufacturing confectionery and pasta products, 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 plant is located in Hershey,
Pennsylvania. Many additions and improvements have been made to
this facility over the years and the plant's 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 18 and 19 of the Corporation's
1993 Annual Report to Stockholders, which information is
incorporated herein by reference and reproduced herein as
Exhibit 13.
Item 6. SELECTED FINANCIAL DATA
The following information, for the five years ended December
31, 1993, found in the section "Eleven-Year Consolidated
Financial Summary" on page 40 of the Corporation's 1993 Annual
Report to Stockholders, is incorporated herein by reference and
reproduced herein as Exhibit 13: Net Sales; Income from
Continuing Operations before accounting changes; Income Per
Share from Continuing Operations before accounting changes
(excluding Notes g and h); 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 16 through 19, 21, 23, and 25 of the Corporation's 1993
Annual Report to Stockholders, is incorporated herein by
reference and reproduced herein as Exhibit 13.
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 1993 Annual Report to Stockholders,
and such financial statements, along with the report of the
independent public accountants thereon, are incorporated herein
by reference and reproduced herein as Exhibit 13.
1. Consolidated Statements of Income for the years ended
December 31, 1993, 1992 and 1991. (Page 20)
2. Consolidated Statements of Cash Flows for the years ended
December 31, 1993, 1992 and 1991. (Page 22)
3. Consolidated Balance Sheets as of December 31, 1993 and
1992. (Page 24)
4. Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1993, 1992 and 1991. (Page 26)
5. Notes to Consolidated Financial Statements (Pages 27
through 37), including "Quarterly Data (Unaudited)."
(Page 37)
6. Report of Independent Public Accountants. (Page 38)
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 Corporation's Proxy Statement for its 1994
Annual Meeting of Stockholders. This information is
incorporated herein by reference.
Executive Officers of the Corporation as of March 1, 1994
Name Age Positions Held During the Last Five
Years
CORPORATE
K. L. Wolfe 55 Chairman of the Board and Chief
Executive Officer (1993); President and
Chief Operating Officer (1985)
R. A. Zimmerman(1) 61 Retired Chairman of the Board and Chief
Executive Officer (1993); Chairman of
the Board and Chief Executive Officer
(1985)
J. P. Viviano 55 President and Chief Operating Officer
(1993); President, Hershey Chocolate
U.S.A., a division of Hershey Foods
Corporation (1985)
W. F. Christ 53 Senior Vice President and Chief
Financial Officer (1994); President,
Hershey International, a division of
Hershey Foods Corporation (1988)
C. L. Duncan 54 Vice President, Research and
Development (1981)
T. C. Fitzgerald 54 Vice President and Treasurer (1990);
Treasurer (1985)
S. A. Lambly 53 Vice President, Human Resources (1989)
W. Lehr, Jr. 53 Vice President and Secretary (1994);
Senior Vice President and Secretary and
Associate General Counsel (Securities)
(1988)
R. M. Reese 44 Vice President and General Counsel
(1993); Assistant General Counsel
(1987)
J. B. Stiles 42 Vice President and Corporate Controller
(1990); Controller and Chief Accounting
Officer (1987)
B. L. Zoumas 51 Vice President, Science and Technology
(1992); Vice President, Technical,
Hershey Chocolate U.S.A. (1990); Vice
President, Science and Technology
(1981)
DIVISION
J. F. Carr 49 President, Hershey International
(1994); Vice President, Marketing,
Hershey Chocolate U.S.A. (1984)
M. F. Pasquale 46 President, Hershey Chocolate U.S.A.
(1994); Senior Vice President and Chief
Financial Officer (1988)
Page 8
Executive Officers of the Corporation
Name Age Positions Held During the Last Five
Years
R. W. Meyers 50 President, Hershey Canada Inc., a
subsidiary of Hershey Foods
Corporation (1990); Acting President,
Hershey Canada Inc. (1989)
C. M. Skinner 60 President, Hershey Pasta Group, a
division of Hershey Foods Corporation
(1984)
R. Brace 50 Vice President, Manufacturing, Hershey
Chocolate U.S.A. (1987)
F. Cerminara 45 Vice President, Commodities
Procurement, Hershey Chocolate U.S.A.
(1994); Vice President, Corporate
Development and Commodities (1988)
D. N. Eshleman(2) 39 General Manager, Hershey Grocery, a
division of Hershey Foods Corporation
(1994); Director, Marketing, Hershey
Chocolate U.S.A. (1988)
M. H. Holmes(2) 49 Vice President and General Manager,
Chocolate Confection, Hershey Chocolate
U.S.A. (1994); General Manager,
Grocery, Hershey Chocolate U.S.A.
(1989)
M. T. Matthews 47 Vice President, Sales, Hershey
Chocolate U.S.A. (1989)
(1) Mr. Zimmerman retired on December 31, 1993.
(2) Messrs. Eshleman's and Holmes' positions prior to 1994
were not executive officer positions.
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.
Item 11. EXECUTIVE COMPENSATION
Information concerning compensation of the five most highly
compensated executive officers of the Corporation individually,
and compensation of directors, is set forth in the sections
"1993 Executive Compensation" and "Compensation of Directors" in
the Corporation's Proxy Statement for its 1994 Annual Meeting of
Stockholders. 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 Corporation's Proxy Statement for its
1994 Annual Meeting of Stockholders. 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 Corporation's Proxy Statement for its
1994 Annual Meeting of Stockholders. 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 1993 Annual Report to Stockholders and reproduced
herein as Exhibit 13.
Item 14(a)(2): Financial Statement Schedules
The following consolidated financial statement schedules of
the Corporation and its subsidiaries for the years ended
December 31, 1993, 1992 and 1991 are filed herewith on the
indicated pages in response to Item 14(d):
1. Schedule V--Property, Plant and Equipment (Page 15)
2. Schedule VI--Accumulated Depreciation of Property, Plant
and Equipment (Page 16)
3. Schedule VIII--Valuation and Qualifying Accounts (Page 17)
4. Schedule IX--Short-Term Borrowings (Page 18)
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
No. 3 to the Corporation's Quarterly Report on Form 10-Q
for the quarter ended April 3, 1988. The By-laws, as
amended on December 3, 1991, are incorporated by
reference from Exhibit No. 3 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended December
31, 1991.
(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 1994-1998
b. 8.8% Debentures due 2021
Page 10
c. Other Obligations
The Corporation will furnish copies of the above debt
instruments to the Commission upon request.
In 1993 the Corporation called and redeemed its 9.5%
Sinking Fund Debentures due 2009 and its 9.125%
Sinking Fund Debentures due 2016.
(10) Material contracts
a. "After Eight, Kit Kat, and Rolo License Agreement"
(License Agreement) between Hershey Foods
Corporation and Rowntree Mackintosh Confectionery
Limited is incorporated by reference from Exhibit
No. 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 No. 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 No. 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 Cadbury Beverages
Inc.) dated August 25, 1988, is incorporated by
reference from Exhibit No. 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 Cadbury Beverages Inc.) and
Cadbury Limited dated August 25, 1988, is
incorporated by reference from Exhibit No. 2(a) to
the Corporation's Current Report on Form 8-K dated
September 8, 1988.
Executive Compensation Plans:
d. The "1987 Key Employee Incentive Plan" (the "Plan")
is incorporated by reference from Exhibit No. 10(b)
to the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1987. The Plan was
amended in 1991, and the amendment is incorporated
by reference from Exhibit No. 10 to the
Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1991. The Plan was further
amended in 1992, and the amendment is incorporated
by reference from Exhibit No. 19 to the
Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991.
e. Hershey Foods Corporation's "Supplemental Executive
Retirement Plan" is incorporated by reference from
Exhibit No. 10(c) to the Corporation's Annual Report
on Form 10-K for the fiscal year ended December 31,
1982.
f. Hershey Foods Corporation's "Non-Management Director
Retirement Plan" is incorporated by reference from
Exhibit No. 19 to the Corporation's Quarterly Report
on Form 10-Q for the quarter ended March 29, 1992.
g. Hershey Foods Corporation's "Deferral Plan for Non-
Management Directors" is incorporated by reference
from Exhibit No. 10 to the Corporation's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992.
(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, 1993, 1992, 1991, 1990,
and 1989 is attached as Exhibit No. 12.
Page 11
(13) Annual report to security holders
The financial section of the Corporation's 1993 Annual
Report to Stockholders is attached as Exhibit No. 13.
(21) Subsidiaries of the Registrant
A list setting forth subsidiaries of the Corporation is
attached as Exhibit No. 21.
Item 14(b):Reports on Form 8-K
No reports on Form 8-K have been filed during the last
quarter of the period covered by this report.
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 7, 1994 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 March 7, 1994
(K. L. Wolfe) and Director
W. F. CHRIST Chief Financial Officer March 7, 1994
(W. F. Christ)
J. B. STILES Chief Accounting Officer March 7, 1994
(J. B. Stiles)
J. P. VIVIANO Director March 7, 1994
(J. P. Viviano)
H. O. BEAVER, JR. Director March 7, 1994
(H. O. Beaver, Jr.)
T. C. GRAHAM Director March 7, 1994
(T. C. Graham)
B. GUITON Director March 7, 1994
(B. Guiton)
J. C. JAMISON Director March 7, 1994
(J. C. Jamison)
S. C. MOBLEY Director March 7, 1994
(S. C. Mobley)
F. I. NEFF Director March 7, 1994
(F. I. Neff)
Page 13
Signature Title Date
R. J. PERA Director March 7, 1994
(R. J. Pera)
J. M. PIETRUSKI Director March 7, 1994
(J. M. Pietruski)
V. A. SARNI Director March 7, 1994
(V. A. Sarni)
H. R. SHARBAUGH Director March 7, 1994
(H. R. Sharbaugh)
Page 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Hershey Foods Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in
Hershey Foods Corporation's 1993 annual report to stockholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 28, 1994. Our audit was made for
the purpose of forming an opinion on those statements taken as a
whole. The schedules listed in Item 14(a)(2) on page 9 are the
responsibility of the Corporation's management and are presented
for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state 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 & CO.
New York, N.Y.
January 28, 1994
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports dated January 28, 1994, included or
incorporated by reference in this Form 10-K for the year ended
December 31, 1993, into the Corporation's previously filed
Registration Statements on Forms S-8 or S-3 (File No. 33-12718,
File No. 33-35062, File No. 33-45431, File No. 33-45556 and File
No. 33-51089).
ARTHUR ANDERSEN & CO.
New York, N.Y.
March 7, 1994
Page 15
Schedule V
HERSHEY FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For the Years Ended December 31, 1993, 1992 and 1991
(in thousands of dollars)
Balance at Balance at
Beginning Additions Retirements Other End of
Description of Period at Cost or Sales Changes Period
Year Ended December 31, 1993:
Land . . . . . . . . . . . . . . $ 40,163 $ 1,338 $ - $ 6,738 $ 48,239
Buildings . . . . . . . . . . . 385,545 23,061 (879) 22,472 430,199
Machinery and equipment. . . . . 1,371,729 187,222 (29,825) 34,200 1,563,326
Total Property, Plant and
Equipment. . . . . . . . . . $1,797,437 $ 211,621 $(30,704) $ 63,410(a) $ 2,041,764
Year Ended December 31, 1992:
Land . . . . . . . . . . . . . . $ 37,911 $ 2,983 $ - $ (731) $ 40,163
Buildings . . . . . . . . . . . 384,117 6,760 (3,117) (2,215) 385,545
Machinery and equipment. . . . . 1,159,268 240,052 (17,526) (10,065) 1,371,729
Total Property, Plant and
Equipment. . . . . . . . . . $1,581,296 $ 249,795 $(20,643) $ (13,011)(b) $ 1,797,437
Year Ended December 31, 1991:
Land . . . . . . . . . . . . . . $ 31,117 $ 23 $ (442) $ 7,213 $ 37,911
Buildings . . . . . . . . . . . 280,897 102,829 (3,896) 4,287 384,117
Machinery and equipment. . . . . 1,011,629 123,219 (10,841) 35,261 1,159,268
Total Property, Plant and
Equipment. . . . . . . . . . $1,323,643 $ 226,071 $(15,179) $ 46,761 (c) $ 1,581,296
(a) Represents primarily the acquisitions of Sperlari S.r.l. and Overspecht B.V. and the impact of translation of
foreign currency financial statements.
(b) Represents primarily the impact of translation of foreign currency financial statements.
(c) Represents primarily the acquisitions of Gubor Schokoladen GmbH and Gubor Schokoladenfabrik GmbH,
Hershey Mexico, S.A. de C.V., and certain assets of Dairymen, Inc.
Page 16
Schedule VI
HERSHEY FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION
OF PROPERTY, PLANT AND EQUIPMENT
For the Years Ended December 31, 1993, 1992 and 1991
(in thousands of dollars)
Balance at Charged to Balance at
Beginning Costs and Retirements Other End of
Description of Period Expenses or Sales Changes Period
Year Ended December 31, 1993:
Buildings . . . . . . . . . . . . . . . $ 74,417 $ 10,896 $ (262) $ (276) $ 84,775
Machinery and equipment. . . . . . . . . 427,031 89,228 (20,205) 31 496,085
Total Accumulated Depreciation . . . . . $ 501,448 $ 100,124 $(20,467) $ (245) $580,860
Year Ended December 31, 1992:
Buildings . . . . . . . . . . . . . . . $ 68,279 $ 9,048 $ (1,680) $(1,230) $ 74,417
Machinery and equipment. . . . . . . . . 367,351 75,386 (12,615) (3,091) 427,031
Total Accumulated Depreciation . . . . . $ 435,630 $ 84,434 $(14,295) $(4,321) $ 501,448
Year Ended December 31, 1991:
Buildings . . . . . . . . . . . . . . . $ 60,943 $ 7,955 $ (765) $ 146 $ 68,279
Machinery and equipment. . . . . . . . . 310,606 64,780 (8,291) 256 367,351
Total Accumulated Depreciation . . . . . $ 371,549 $ 72,735 $ (9,056) $ 402 $ 435,630
Depreciation and Amortization
The annual provisions for depreciation have been computed principally in accordance with the following ranges of rates:
Buildings and improvements. . . . . . . . . . . 3% to 7%
Machinery and equipment . . . . . . . . . . . . 7% to 33%
Page 17
Schedule VIII
HERSHEY FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1993, 1992 and 1991
1991
(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, 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
Year Ended December 31, 1992:
Reserves deducted in the
balance sheet from the assets
to which they apply:
Accounts Receivable - Trade . . . . . . . . . . . . . $9,476 $4,812 $113 $(3,964) $10,437
Year Ended December 31, 1991:
Reserves deducted in the
balance sheet from the assets
to which they apply:
Accounts Receivable - Trade . . . . . . . . . . . . . $9,553 $1,477 $136 $(1,690) $ 9,476
(a) Includes recoveries of amounts previously written off.
Page 18
Schedule IX
HERSHEY FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
For the Years Ended December 31, 1993, 1992 and 1991
(in thousands of dollars)
Weighted
Maximum Average Average
Weighted Amount Amount Interest
Balance Average Outstanding Outstanding Rate
at End Interest During the During the During the
Category of Short-Term Borrowings of Period Rate Period Period (a) Period (b)
Year Ended December 31, 1993:
Domestic:
Commercial paper . . . . . . . . . . . . . $299,366 3.3% $394,321 $300,259 3.3%
Bank borrowings. . . . . . . . . . . . . . - - 68,464 5,811 3.3
Foreign borrowings . . . . . . . . . . . . . 37,920 7.6 41,604 20,361 8.7
All categories . . . . . . . . . . . . . . $337,286 3.8 $418,935 $326,431 3.6%
Year Ended December 31, 1992:
Domestic:
Commercial paper . . . . . . . . . . . . . $250,895 3.4% $351,216 $231,998 3.6%
Bank borrowings. . . . . . . . . . . . . . - - 82,000 35,399 4.7
Foreign borrowings . . . . . . . . . . . . . 8,150 8.7 17,594 10,754 11.7
All categories . . . . . . . . . . . . . . $259,045 3.7% $443,144 $278,151 4.1%
Year Ended December 31, 1991:
Domestic:
Commercial paper . . . . . . . . . . . . . $ 53,452 5.1% $259,473 $113,268 6.2%
Bank borrowings. . . . . . . . . . . . . . - - 32,000 1,907 6.4
Foreign borrowings . . . . . . . . . . . . . 4,168 8.9 9,055 3,715 7.9
All categories . . . . . . . . . . . . . . $ 57,620 5.4% $263,580 $118,890 6.2%
(a) Average borrowings represent daily averages for domestic borrowings and
month-end averages for foreign borrowings.
(b) The weighted average interest rate was computed by dividing interest
expense by average short-term borrowings for each category.
Page 19
HERSHEY FOODS CORPORATION ANNUAL REPORT ON FORM 10-K
Index to Exhibits
Exhibit No.
12 - Computation of ratio of earnings to
fixed charges statement
13 - Financial section of 1993 Annual Report
to Stockholders
21 - Subsidiaries of the Registrant