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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, 1994
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 $2,443,074,977, as of February
28, 1995.
Class B Common Stock, one dollar par value $4,408,824, as of February
28, 1995. 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
February 28, 1995.
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 71,492,218 shares, as of
February 28, 1995.
Class B Common Stock, one dollar par value 15,242,979 shares,
as of February 28, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 1994 Annual Report to Stockholders for
the year ended December 31, 1994 are incorporated by reference into Part
II and are reproduced herein as Exhibit 13. Portions of the Proxy
Statement for the Corporation's 1995 Annual Meeting of Stockholders are
incorporated by reference into Part III.
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, 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 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
confectionery products are greater than those on pasta and other
food products.
The Corporation manufactures in the United States 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, HERSHEY'S NUGGETS chocolates, 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 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, LIFE
SAVERS candy, OH HENRY! candy bars, PLANTERS nuts, POT OF GOLD
boxed chocolates, REESE PEANUT BUTTER CUPS candy, and TWIZZLERS
candy.
The Corporation also markets in the United States a line of
grocery products in the baking, beverage, peanut butter and
toppings categories. Principal products include HERSHEY'S baking
chocolate, HERSHEY'S baking chips, HERSHEY'S chocolate drink boxes,
HERSHEY'S chocolate milk mix, HERSHEY'S cocoa, HERSHEY'S CHOCOLATE
SHOPPE toppings, HERSHEY'S HOT COCOA COLLECTION hot 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 over 20 independent dairies throughout the United
States, using a chocolate milk mix manufactured by the Corporation.
During the fall of 1994, the Corporation discontinued its line of
HERSHEY'S chocolate bar flavor puddings because the business did
not meet expected profit objectives.
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. In 1994, sales to Wal-Mart Stores, Inc.
and Subsidiaries amounted to approximately 10% of total net sales.
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 DONDI,
FRESH CLUB, GALATINE, GNAMMY, SCARAMELLINI, and SPERLARI. 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 JAMIN brand name.
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.
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, 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,
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. As a result of higher semolina
costs, the Corporation implemented a price increase averaging 4%
during the first quarter of 1994 on its pasta products and curtailed
certain promotional allowances.
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.
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)
1990 1991 1992 1993 1994
Annual Average. . . . . . 55.5 52.8 47.6 47.3 59.1
High. . . . . . . . . . . 63.5 60.0 56.2 56.7 66.1
Low . . . . . . . . . . . 43.6 45.6 41.3 41.8 51.3
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 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 $.31
per pound for the past ten years.
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 quarter of 1994, domestic milk prices averaged
well above the prior year's levels, as a result of significantly
lower milk production in Minnesota and Wisconsin. With more
favorable weather conditions and bumper crops, milk production
began increasing during the second quarter, resulting in lower
prices during the last half of the year.
Peanut prices were moderately higher through the first quarter of
1994 as a result of a lower than average 1993 crop harvest.
However, prices decreased through the last three quarters due to a
declining demand for domestic peanuts, favorable crop forecasts and
an excellent 1994 harvest.
Domestic almond prices during the early part of 1994 remained at
historically high levels due to low stocks and a below average
yield from the 1993 crop. By mid-year, market prices began to
decline as a result of an excellent 1994 harvest.
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 1994, the Corporation's semolina costs per
pound were the highest since 1981. The exceptionally high costs
resulted from short supplies caused by a poor harvest in 1993,
combined with United States Government tariffs on imports of
Canadian wheat. The tariffs are scheduled to end in September
1995, but could be extended by the United States Government.
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 and sugar, price
risks are also managed by entering into futures and options
contracts. At the present time, similar futures and options
contracts are not
4
available for use in pricing the Corporation's other major raw materials.
Futures contracts are used in combination with forward purchasing of cocoa
and sugar 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 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 and sugar, are directly linked to the overall planning and
management of the Corporation's business, since the cost of raw
materials account 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 Cadbury Beverages Inc. and
affiliated companies 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 1994. 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 1994, 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 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.
5
Research and Development
The Corporation engages in considerable 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.
Employees
As of December 31, 1994, the Corporation had approximately 14,000
full-time and 1,600 part-time employees, of whom approximately
6,000 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)
Lancaster, Pennsylvania - Confectionery Products
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.
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 16 and 17 of the Corporation's 1994 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,
1994, found in the section "Eleven-Year Consolidated Financial
Summary" on the inside back cover of the Corporation's 1994 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,
h and i); 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 15 through 17 and 19, 21 and 23 of the Corporation's 1994 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 1994 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, 1994, 1993 and 1992. (Page 18)
2. Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992. (Page 20)
3. Consolidated Balance Sheets as of December 31, 1994 and 1993.
(Page 22)
4. Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1994, 1993 and 1992. (Pages 24 and 25)
5. Notes to Consolidated Financial Statements (Pages 26 through
36), including "Quarterly Data (Unaudited)." (Page 36)
6. Report of Independent Public Accountants. (Page 37)
7
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
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 1995 Annual Meeting of
Stockholders. 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 of the Securities Exchange Act"
of the Corporation's Proxy Statement for its 1995 Annual Meeting of
Stockholders. All of the above information is incorporated herein
by reference.
Executive Officers of the Corporation as of February 28, 1995
Name Age Positions Held During the Last
Five Years
CORPORATE
K. L. Wolfe 56 Chairman of the Board and Chief
Executive Officer (1993);
President and Chief Operating
Officer (1985)
J. P. Viviano 56 President and Chief Operating
Officer (1993); President,
Hershey Chocolate U.S.A., a
division of Hershey Foods
Corporation (1985)
W. F. Christ 54 Senior Vice President and Chief
Financial Officer (1994);
President, Hershey International,
a division of Hershey Foods
Corporation (1988)
C. L. Duncan 55 Vice President, Research and
Development (1981)
T. C. Fitzgerald 55 Vice President and Treasurer
(1990); Treasurer (1985)
R. M. Garrabrant 42 Controller and Chief Accounting
Officer (1994); Director, Mergers
and Acquisitions (1990);
Director, Corporate Financial
Planning & Analysis (1987)
S. A. Lambly 54 Vice President, Human Resources
(1989)
R. M. Reese 45 Vice President and General
Counsel (1993); Assistant General
Counsel (1987)
B. L. Zoumas 52 Vice President, Science and
Technology (1992); Vice
President, Technical, Hershey
Chocolate U.S.A. (1990); Vice
President, Science and Technology
(1981)
8
Executive Officers of the Corporation
Name Age Positions Held During the Last
Five Years
DIVISION
R. Brace 51 Vice President, Manufacturing,
Hershey Chocolate North America,
a division of Hershey Foods Corporation
(1995); Vice President,
Manufacturing, Hershey Chocolate
U.S.A. (1987)
J. F. Carr 50 President, Hershey International
(1994); Vice President,
Marketing, Hershey Chocolate
U.S.A. (1984)
F. Cerminara 46 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 40 General Manager, Hershey Grocery,
a division of Hershey Foods
Corporation (1994); Director,
Marketing, Hershey Chocolate
U.S.A. (1988)
M. H. Holmes 50 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 48 Vice President, Sales, Hershey
Chocolate U.S.A. (1989)
R. W. Meyers 51 President and General Manager,
Hershey Canada Inc., a subsidiary
of Hershey Foods Corporation
(1995); President, Hershey Canada
Inc. (1990); Acting President,
Hershey Canada Inc. (1989)
M. F. Pasquale 47 President, Hershey Chocolate
North America (1995);
President, Hershey Chocolate
U.S.A. (1994); Senior Vice
President and Chief Financial
Officer (1988)
C. M. Skinner 61 President, Hershey Pasta Group,
a division of Hershey Foods
Corporation (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.
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 "1994
Executive Compensation" and "Compensation of Directors" in the
Corporation's Proxy Statement for its 1995 Annual Meeting of
Stockholders. This information is incorporated herein by
reference.
9
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 1995
Annual Meeting of Stockholders. This information is incorporated
herein by reference.
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 1995
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 1994 Annual Report
to Stockholders and reproduced herein as Exhibit 13.
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,
1994, 1993 and 1992 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 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:
10
a. 8.45% to 9.92% Medium-Term Notes due 1994-1998
b. 8.8% Debentures due 2021
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, as amended, is attached
hereto as Exhibit No. 19(i).
e. Hershey Foods Corporation's Restated Supplemental Executive
Retirement Plan is attached hereto as Exhibit No. 19(ii).
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.
h. A form of the Benefit Protection Agreements entered into
between the Corporation and certain of its executive
officers is attached hereto as Exhibit No. 10.
(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, 1994, 1993, 1992, 1991, and 1990 is
attached as Exhibit No. 12.
11
(13) Annual report to security holders
The financial section of the Corporation's 1994 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.
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 6, 1995 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 6, 1995
(K. L. Wolfe) and Director
W. F. CHRIST Chief Financial Officer March 6, 1995
(W. F. Christ)
R. M. GARRABRANT Chief Accounting Officer March 6, 1995
(R. M. Garrabrant)
J. P. VIVIANO Director March 6, 1995
(J. P. Viviano)
H. O. BEAVER, JR. Director March 6, 1995
(H. O. Beaver, Jr.)
T. C. GRAHAM Director March 6, 1995
(T. C. Graham)
B. GUITON HILL Director March 6, 1995
(B. Guiton Hill)
J. C. JAMISON Director March 6, 1995
(J. C. Jamison)
13
Signature Title Date
S. C. MOBLEY Director March 6, 1995
(S. C. Mobley)
F. I. NEFF Director March 6, 1995
(F. I. Neff)
R. J. PERA Director March 6, 1995
(R. J. Pera)
J. M. PIETRUSKI Director March 6, 1995
(J. M. Pietruski)
V. A. SARNI Director March 6, 1995
(V. A. Sarni)
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 1994 annual report to stockholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 27, 1995. 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, N.Y.
January 27, 1995
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports dated January 27, 1995, included or
incorporated by reference in this Form 10-K for the year ended
December 31, 1994, into the Corporation's previously filed
Registration Statements on Forms S-8 or S-3 (File No. 33-35062,
File No. 33-45431, File No. 33-45556 and File No. 33-51089).
ARTHUR ANDERSEN LLP
New York, N.Y.
March 6, 1995
15
Schedule II
HERSHEY FOODS CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1994, 1993 and 1992
(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, 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
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
(a) Includes recoveries of amounts previously written off.
16
HERSHEY FOODS CORPORATION ANNUAL REPORT ON FORM 10-K
Index to Exhibits
Exhibit No.
10 -- Benefits Protection Agreements
12 -- Computation of ratio of earnings to
fixed charges statement
13 -- Financial section of 1994 Annual Report
to Stockholders
19.i -- The 1987 Key Employee Incentive Plan, as amended
19.ii -- Hershey Foods Corporation's Restated
Supplemental Executive Retirement Plan
21 -- Subsidiaries of the Registrant
27 -- Financial Data Schedule for the period ended
December 31, 1994.
(Required for electronic filing only.)