1997 also marked the first full year of integrated operations for Hershey Pasta and Grocery Group which became a consolidated division in late 1996. The division significantly improved its profit contribution and returns in both the pasta and grocery product segments of the business. This was accomplished despite continued high durum wheat costs and sluggish category growth in several key segments. During the year, the division retained its market share leadership in the retail dry pasta market and widened the gap with its nearest competitor. Going forward, strategic investments are planned to support profitable growth for this division.

On March 1, 1997, Jay F. Carr, formerly President, Hershey International, became President, Hershey Pasta and Grocery Group, succeeding C. Mickey Skinner. Mickey, who previously had announced his intent to retire from the corporation December 31, 1997, remained active in the pasta and grocery division until his retirement. Mickey joined Hershey 19 years ago when the corporation acquired his family's pasta business, Skinner Macaroni Company. Under his leadership, our pasta business grew from humble beginnings to the number one position in the domestic branded dry pasta category.