Hershey Foods At-A-Glance


Hershey Foods Corporation is the leading North American manufacturer of quality chocolate, confectionery and chocolate-related grocery products; is the leading North American producer of branded, dry pasta products, and has a variety of international operations.

Our mission is to be a focused food company in North America and selected international markets and a leader in every aspect of our business. In North America, our goal is to enhance our number one position in confectionery and maintain our Leadership position in pasta and chocolate-related grocery products.

Hershey Chocolate North America

Major Products
The division produces and markets many favorite American brands. Principal brands include Almond Joy and Mounds candy bars, Cadbury Creme Eggs candy, Hershey's Cookies 'n' Creme candy bar, Hershey's milk chocolate and milk chocolate with almond bars, Hershey's Nuggets chocolates, Hershey's Kisses and Hershey's Hugs chocolates, Kit Kat wafer bar, Reese's NutRageous candy bar, Reese's peanut butter cups, Sweet Escapes candy bars, TasteTations candy, Twizzlers candy and York peppermint patties. Additional brands include Jolly Rancher candy, Jujyfruits candy, Milk Duds candy, PayDay peanut caramel bar, Pot of Gold boxed chocolates, Whoppers malted milk balls and Wunderbeans jellybeans. Key Canadian brands include Brown Cow and Strawberry Cow milk modifiers, Chipits chocolate chips, Eat-More candy, Glosette candy, Hershey candy bars, Oh Henry! candy bars, Pot of Gold boxed chocolates, Reese Peanut Butter Cups candy and Twizzlers candy. In Mexico, chocolate products are produced and marketed under the Hershey's brand name. In addition, some of the division's products manufactured in the United States are sold in Mexico.

Market Position Factors
In 1996, Hershey Chocolate North America was the leading confectionery company in North America. The division also continued to hold the leadership position in baking chips and sundae toppings in Canada, and held the number two position in the expanded chocolate bar market in that country as well as the number two position in the chocolate confectionery and flavored milk drink categories in Mexico.

Affecting Growth
The December 1996 acquisition of Leaf North America carried the division to the North American leadership position in the non-chocolate confectionery category and enhanced its leadership position in the chocolate confectionery category. Successful new product introductions, line extensions of core brands, the inclusion of Henry Heide products, the excellent growth in the division's seasonal packaged candy business and the December 1995 price increase on the divisions standard bar line in the United States all contributed to the strong growth in the corporation's largest division.

Hershey Pasta and Grocery Group

Major Products
The division produces a broad array of dry pasta products under eight regional brands: American Beauty, Ideal by San Giorgio, Light 'n Fluffy, P&R, Mrs. Weiss, Ronzoni, San Giorgio and Skinner. Other grocery products include Hershey's and Reese's baking chips, Hershey's baking chocolate, Hershey's chocolate drink, Hershey's chocolate milk mix, Hershey's Chocolate Shoppe ice cream toppings, Hershey's cocoa, Hershey's syrup, Hershey's Hot Cocoa Collection hot cocoa mix and Reese's peanut butter.

Affecting Growth
The division continued to hold the number one share position in the U.S. branded dry pasta category. Its regional approach to marketing has been instrumental in maintaining this leadership position. The division also holds the leadership position in the chocolate syrup and unsweetened cocoa categories in the United States.

Market Position Factors
The U.S. pasta industry experienced a modest volume decline and continued higher durum wheat costs in 1996. The division participated in a successful trade case against illegally subsidized and dumped imported pasta. New chocolate-related grocery product introductions and the licensing of the corporation's trademarks to other grocery manufacturers contributed significantly to the division's growth.

Hershey International

Major Products
The division exports Hershey's branded confectionery and grocery products to over 60 countries worldwide. It markets traditional Hershey's chocolate and grocery products, as well as Hershey's Extra Creamy milk chocolate, designed specifically to meet the preferences of international consumers. Hershey's branded products also are available through licensing agreements with partners in South Korea, Japan, the Philippines and Taiwan.

Affecting Growth
In Japan, Hershey's Kisses milk chocolates are the division's major confectionery product. The division continues to have a strong brand franchise in South Korea, where it is the recognized leader in chocolate beverages. One of Hershey's strongest markets outside of North America is the Philippines, where the division competes favorably in the domestic retail market and duty-free business. Hershey's chocolate products have been introduced in Russia and China.

Market Position Factors
The division continues to focus its efforts in areas where it can achieve profitable growth and a reasonable return on investments. The Far East, Russia and China, as well as licensing and export programs worldwide, provide growth opportunities for the division.

Financial Highlights
In thousands of dollars except per share amounts
1996 1995 Percent
Net Sales $3,989,308; $3,690,667 +8
Income before loss on disposal of businesses and restructuring activites 308,538(b) 279,947(c) +10
Net Income 273,186 281,919 -3
Income per share: (a)
Before loss on disposal of businesses and restructuring activities
2.00(b) 1.69(c) +18
Net Income 1.77 1.70 +4
(a) All per share information has been restated for the two-for-one stock split effective September 13, 1996.
(b) Income for 1996 included a loss on the disposal of the corporation's European businesses, Gubor and Sperlari, of $35.4 million or $.23 per share. There was no tax benefit associated with the loss.
(c) Income for 1995 included a pre-tax restructuring charge of $16.6 million related to a voluntary retirement program offset by a $16.7 million reversal of 1994 accrued restructuring reserves. On an after-tax basis, the combined impact of restructuring activities increased net income by $2.0 million or $.01 per share