UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 5, 1998
---------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------------------------------------
Commission file number 1-183
-------------------------------------------------------
HERSHEY FOODS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 23-0691590
--------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 CRYSTAL A DRIVE
HERSHEY, PENNSYLVANIA 17033
-----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (717) 534-6799
---------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $1 par value - 112,689,152 shares, as of May 4, 1998. Class B
Common Stock, $1 par value - 30,453,908 shares, as of May 4, 1998.
Exhibit Index - Page 16
Page 2
HERSHEY FOODS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED
APRIL 5, MARCH 30,
1998 1997
----------- --------
NET SALES $ 1,098,076 $ 1,002,469
----------- -----------
COSTS AND EXPENSES:
Cost of sales 652,340 589,281
Selling, marketing and administrative 299,370 284,005
----------- -----------
Total costs and expenses 951,710 873,286
----------- -----------
INCOME BEFORE INTEREST AND INCOME TAXES 146,366 129,183
Interest expense, net 22,706 15,682
----------- -----------
INCOME BEFORE INCOME TAXES 123,660 113,501
Provision for income taxes 48,227 44,607
----------- -----------
NET INCOME $ 75,433 $ 68,894
=========== ============
NET INCOME PER SHARE - BASIC $ .53 $ .45
=========== ===========
NET INCOME PER SHARE - DILUTED $ .52 $ .45
=========== ===========
AVERAGE SHARES OUTSTANDING - BASIC 143,376 153,166
=========== ===========
AVERAGE SHARES OUTSTANDING - DILUTED 145,461 154,715
=========== ===========
CASH DIVIDENDS PAID PER SHARE:
Common Stock $ .22 $ .20
=========== ===========
Class B Common Stock $ .20 $ .18
=========== ===========
The accompanying notes are an integral part of these statements.
Page 3
HERSHEY FOODS CORPORATION
CONSOLIDATED BALANCE SHEETS
APRIL 5, 1998 AND DECEMBER 31, 1997
(IN THOUSANDS OF DOLLARS)
ASSETS 1998 1997
----------- --------
CURRENT ASSETS:
Cash and cash equivalents $ 59,617 $ 54,237
Accounts receivable - trade 279,296 360,831
Inventories 532,141 505,525
Deferred income taxes 85,255 84,024
Prepaid expenses and other 42,842 30,197
----------- -----------
Total current assets 999,151 1,034,814
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, AT COST 2,620,832 2,587,230
Less - accumulated depreciation and amortization (971,914) (938,993)
----------- -----------
Net property, plant and equipment 1,648,918 1,648,237
----------- -----------
INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS 547,240 551,849
OTHER ASSETS 61,157 56,336
----------- -----------
Total assets $ 3,256,466 $ 3,291,236
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 131,379 $ 146,932
Accrued liabilities 301,908 371,545
Accrued income taxes 52,087 19,692
Short-term debt 214,910 232,451
Current portion of long-term debt 90 25,095
----------- -----------
Total current liabilities 700,374 795,715
LONG-TERM DEBT 1,029,129 1,029,136
OTHER LONG-TERM LIABILITIES 352,411 346,500
DEFERRED INCOME TAXES 269,491 267,079
----------- -----------
Total liabilities 2,351,405 2,438,430
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred Stock, shares issued:
none in 1998 and 1997 --- ---
Common Stock, shares issued:
149,496,964 in 1998 and 149,484,964 in 1997 149,497 149,485
Class B Common Stock, shares issued:
30,453,908 in 1998 and 30,465,908 in 1997 30,453 30,465
Additional paid-in capital 27,046 33,852
Unearned ESOP compensation (27,943) (28,741)
Retained earnings 2,022,422 1,977,849
Treasury-Common Stock shares at cost:
36,757,826 in 1998 and 37,018,566 in 1997 (1,253,596) (1,267,861)
Accumulated other comprehensive income (42,818) (42,243)
----------- -----------
Total stockholders' equity 905,061 852,806
----------- -----------
Total liabilities and stockholders' equity $ 3,256,466 $ 3,291,236
=========== ===========
The accompanying notes are an integral part of these balance sheets.
Page 4
HERSHEY FOODS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
FOR THE THREE MONTHS ENDED
APRIL 5, MARCH 30,
1998 1997
----------- --------
CASH FLOWS PROVIDED FROM (USED BY) OPERATING ACTIVITIES
Net Income $ 75,433 $ 68,894
Adjustments to Reconcile Net Income to Net Cash
Provided from Operations:
Depreciation and amortization 37,945 40,124
Deferred income taxes 1,181 21,558
Changes in assets and liabilities, net of effects
from business acquisitions and divestitures:
Accounts receivable - trade 81,535 48,955
Inventories (26,616) (72,460)
Accounts payable (15,553) (12,208)
Other assets and liabilities (33,410) 39,594
Other, net --- 594
--------- ---------
Net Cash Flows Provided from Operating Activities 120,515 135,051
--------- ---------
CASH FLOWS PROVIDED FROM (USED BY) INVESTING ACTIVITIES
Capital additions (41,756) (38,017)
Capitalized software additions (7,773) ---
Other, net 9,196 (13,181)
--------- ---------
Net Cash Flows (Used by) Investing Activities (40,333) (51,198)
--------- ---------
CASH FLOWS PROVIDED FROM (USED BY) FINANCING ACTIVITIES
Net (decrease) in short-term debt (17,541) (173,311)
Long-term borrowings --- 150,000
Repayment of long-term debt (25,048) (46)
Cash dividends paid (30,860) (29,952)
Exercise of stock options 10,522 4,104
Incentive plan transactions (11,875) (11,923)
Repurchase of Common Stock --- (6,863)
--------- ---------
Net Cash Flows (Used by) Financing Activities (74,802) (67,991)
--------- ---------
Increase in Cash and Cash Equivalents 5,380 15,862
Cash and Cash Equivalents, beginning of period 54,237 61,422
--------- ---------
Cash and Cash Equivalents, end of period $ 59,617 $ 77,284
========= =========
Interest Paid $ 36,105 $ 12,038
========= =========
Income Taxes Paid $ 2,837 $ 12,592
========= =========
The accompanying notes are an integral part of these statements.
Page 5
HERSHEY FOODS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
ACCUMULATED
CLASS B ADDITIONAL UNEARNED TREASURY OTHER TOTAL
PREFERRED COMMON COMMON PAID-IN ESOP RETAINED COMMON COMPREHENSIVE STOCKHOLDERS'
STOCK STOCK STOCK CAPITAL COMPENSATION EARNINGS STOCK INCOME EQUITY
--------------------------------------------------------------------------------------------------------------
IN THOUSANDS
OF DOLLARS
BALANCE AS OF
DECEMBER 31, 1997 $--- $149,485 $30,465 $33,852 $(28,741) $1,977,849 $(1,267,861) $(42,243) $852,806
--------
Comprehensive income
Net income 75,433 75,433
Other comprehensive
income:
Foreign currency
translation
adjustments (575) (575)
--------
Comprehensive income 74,858
--------
Dividends:
Common Stock, $.22
per share (24,769) (24,769)
Class B Common Stock,
$.20 per share (6,091) (6,091)
Conversion of Class B
Common Stock
into Common Stock 12 (12) ---
Incentive plan
transactions (1,033) (1,033)
Exercise of stock
options (5,902) 14,265 8,363
Employee stock
ownership trust
transactions 129 798 927
---- -------- ------- ------- -------- ---------- ----------- -------- --------
BALANCE AS OF
APRIL 5, 1998 $--- $149,497 $30,453 $27,046 $(27,943) $2,022,422 $(1,253,596) $(42,818) $905,061
==== ======== ======= ======= ======== ========== =========== ======== ========
The accompanying notes are an integral part of these statements.
Page 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of the Corporation and its subsidiaries after elimination of
intercompany accounts and transactions. These statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended April 5,
1998, are not necessarily indicative of the results that may be expected
for the year ending December 31, 1998. For more information, refer to
the consolidated financial statements and footnotes included in the
Corporation's 1997 Annual Report on Form 10-K.
2. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (FAS No. 130). Under FAS No. 130, standards are established
for reporting and display of comprehensive income and its components
in financial statements. Comprehensive income is reported in the
Consolidated Statements of Stockholder's Equity. Other Comprehensive
income represents foreign currency translation adjustments.
3. INTEREST EXPENSE
Interest expense, net consisted of the following:
FOR THE THREE MONTHS ENDED
--------------------------
APRIL 5, 1998 MARCH 30, 1997
------------- --------------
(IN THOUSANDS OF DOLLARS)
Interest expense $ 24,239 $ 16,918
Interest income (933) (1,068)
Capitalized interest (600) (168)
-------- --------
Interest expense, net $ 22,706 $ 15,682
======== ========
Page 7
4. NET INCOME PER SHARE
A total of 36,757,826 shares were held as Treasury Stock as of April 5,
1998.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share" (FAS No. 128). Under FAS No. 128, Basic and Diluted Earnings
per Share are computed based on the weighted average number of
shares of the Common Stock and the Class B Stock outstanding as follows:
INCOME SHARES PER-SHARE
FOR THE THREE MONTHS ENDED APRIL 5, 1998 (NUMERATOR) (DENOMINATOR) AMOUNT
- ------------------------------------------------------------------------------------------
In thousands of dollars except shares and per share amounts
NET INCOME PER SHARE - BASIC
- ----------------------------
Net income $ 75,433 143,375,704 $.53
====
EFFECT OF DILUTIVE SECURITIES
- -----------------------------
Stock options - 2,021,543
Performance stock units - 57,583
Restricted stock units - 5,923
---------- -------------
NET INCOME PER SHARE - DILUTED
- ------------------------------
Net income and assumed conversions $ 75,433 145,460,753 $.52
========== ============= ====
INCOME SHARES PER-SHARE
FOR THE THREE MONTHS ENDED MARCH 30, 1997 (NUMERATOR) (DENOMINATOR) AMOUNT
- ------------------------------------------------------------------------------------------
In thousands of dollars except shares and per share amounts
NET INCOME PER SHARE - BASIC
- ----------------------------
Net income $ 68,894 153,165,527 $.45
====
EFFECT OF DILUTIVE SECURITIES
- -----------------------------
Stock options - 1,471,222
Performance stock units - 75,136
Restricted stock units - 2,935
---------- -------------
NET INCOME PER SHARE - DILUTED
- ------------------------------
Net income and assumed conversions $ 68,894 154,714,820 $.45
========== ============= ====
Page 8
5. INVENTORIES
The majority of inventories are valued under the last-in, first-out
(LIFO) method. The remaining inventories are stated at the lower of
first-in, first-out (FIFO) cost or market. Inventories were as follows:
APRIL 5, 1998 DECEMBER 31, 1997
------------- -----------------
(IN THOUSANDS OF DOLLARS)
Raw materials $ 265,809 $ 223,702
Goods in process 39,474 36,015
Finished goods 341,906 334,639
--------- ---------
Inventories at FIFO 647,189 594,356
Adjustment to LIFO (115,048) (88,831)
--------- ---------
Total inventories $ 532,141 $ 505,525
========= =========
6. LONG-TERM DEBT
In March 1997, the Corporation issued $150 million of 6.95% Notes due
2007 (6.95% Notes) under the November 1993 Form S-3 Registration
Statement. Proceeds from the debt issuance were used to repay a portion
of the commercial paper borrowings associated with the acquisition of
the Leaf North America confectionery operations (Leaf) in December 1996.
In August 1997, the Corporation filed another Form S-3 Registration
Statement under which it could offer, on a delayed or continuous basis,
up to $500 million of additional debt securities. Also in August 1997,
the Corporation issued $150 million of 6.95% Notes due 2012 (Notes) and
$250 million of 7.2% Debentures due 2027 (Debentures) under the November
1993 and August 1997 Registration Statements. Proceeds from the debt
issuance were used to repay short-term borrowings associated with the
purchase of Common Stock from the Hershey Trust Company, as Trustee for
the benefit of Milton Hershey School (Milton Hershey School Trust). As
of April 5, 1998, $250 million of debt securities remained available for
issuance under the August 1997 Registration Statement. As of April 5,
1998 and December 31, 1997, $150.0 million of commercial paper
borrowings were reclassified as long-term debt in accordance with the
Corporation's intent and ability to refinance such obligations on a
long-term basis.
7. FINANCIAL INSTRUMENTS
The contract amounts of financial instruments including cash and cash
equivalents, accounts receivable, accounts payable and short-term debt,
including $150.0 million of commercial paper borrowings reclassified as
long-term debt, approximated fair value as of April 5, 1998 and December
31, 1997, because of the relatively short maturity of these instruments.
The carrying value of long-term debt, including the current portion, was
$879.2 million as of April 5, 1998, compared to a fair value of $956.0
million, based on quoted market prices for the same or similar debt
issues.
Page 9
As of April 5, 1998, the Corporation had foreign exchange forward
contracts maturing in 1998 and 1999 to purchase $10.6 million in foreign
currency, primarily British sterling and Swiss francs, and to sell $12.7
million in foreign currency, primarily Japanese yen and Canadian
dollars, at contracted forward rates. To hedge foreign currency exposure
related to anticipated transactions associated with the purchase of
certain raw materials and finished goods, the Corporation, from time to
time, also purchases foreign exchange options. No options were
outstanding as of April 5, 1998.
The fair value of foreign exchange forward contracts is estimated by
obtaining quotes for future contracts with similar terms, adjusted where
necessary for maturity differences. As of April 5, 1998, the fair value
of foreign exchange forward and options contracts approximated the
contract value. The Corporation does not hold or issue financial
instruments for trading purposes.
In order to minimize its financing costs and to manage interest rate
exposure, the Corporation, from time to time, enters into interest rate
swap agreements to effectively convert a portion of its floating rate
debt to fixed rate debt. As of April 5, 1998, the Corporation had
agreements outstanding with an aggregate notional amount of $150.0
million, with maturities through 1999. As of April 5, 1998, interest
rates payable were at a weighted average fixed rate of 6.3%, and the
interest rate receivable was floating based on the 30-day commercial
paper composite rate which was 5.5% as of April 5, 1998. Any interest
rate differential on interest rate swaps is recognized as an adjustment
to interest expense over the term of each agreement. The Corporation's
risk related to swap agreements is limited to the cost of replacing such
agreements at prevailing market rates.
Page 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS - FIRST QUARTER 1998 VS. FIRST QUARTER 1997
Consolidated net sales for the first quarter rose from $1,002.5 million in 1997
to $1,098.1 million in 1998, an increase of 10% from the prior year. The higher
sales primarily reflected increased sales of core confectionery brands,
incremental sales from the introduction of new confectionery products, and
increased sales of pasta and grocery products, offset somewhat by lower
international sales in the Far East.
The consolidated gross margin decreased from 41.2% in 1997 to 40.6% in 1998. The
decrease reflected increased costs associated with seasonal items, higher costs
for certain major raw materials, primarily cocoa and semolina, and lower
profitability resulting from the mix of non-chocolate and chocolate
confectionery items sold in 1998 compared to sales in the first quarter of 1997.
These unfavorable variances were partially offset by improved manufacturing
efficiencies and increased profitability from the acquired Leaf brands. Selling,
marketing and administrative expenses increased by 5%, reflecting higher
marketing expenses associated with the introduction of new products.
Net interest expense in the first quarter of 1998 was $7.0 million above the
comparable period of 1997 primarily as a result of increased borrowings
associated with the purchase of Common Stock from the Milton Hershey School
Trust.
The first quarter effective income tax rate decreased from 39.3% in 1997
to 39.0% in 1998 primarily due to changes in the mix of the Corporation's
income among various tax jurisdictions.
FINANCIAL CONDITION
Historically, the Corporation's major source of financing has been cash
generated from operations. Domestic seasonal working capital needs, which
typically peak during the summer, generally have been met by issuing commercial
paper. During the first three months of 1998, the Corporation's cash and cash
equivalents increased by $5.4 million. Cash provided from operations was
sufficient to finance capital additions of $41.8 million, pay cash dividends of
$30.9 million and to repay $25.0 million of long-term debt and $17.5 million of
short-term borrowings.
The ratio of current assets to current liabilities was 1.4:1 as of April 5,
1998, and 1.3:1 as of December 31, 1997. The Corporation's capitalization ratio
(total short-term and long-term debt as a percent of stockholders' equity,
short-term and long-term debt) was 58% as of April 5, 1998, and 60% as of
December 31, 1997.
As of April 5, 1998, the Corporation maintained committed credit facility
agreements with a syndicate of banks in the amount of $600 million which could
be borrowed directly or used to support the issuance of commercial paper. The
Corporation has options to increase the credit facility by $1.0 billion with the
concurrence of the banks. As of April 5, 1998, and March 30, 1997, the
Corporation also had lines of credit with domestic and international commercial
banks in the amount of approximately $25 million and $20 million, respectively.
Page 11
In March 1997, the Corporation issued $150 million of 6.95% Notes under a
November 1993 Registration Statement. In August 1997, the Corporation issued
$150 million of Notes and $250 million of Debentures under the November 1993 and
August 1997 Registration Statements. As of April 5, 1998, $250 million of debt
securities remained available for issuance under the August 1997 Registration
Statement. Proceeds from any offering of the $250 million of debt securities
available under the shelf registration may be used for general corporate
requirements, which include reducing existing commercial paper borrowings,
financing capital additions, and funding future business acquisitions and
working capital requirements.
As of April 5, 1998, the Corporation's principal capital commitments included
manufacturing capacity expansion and modernization. The Corporation anticipates
that capital expenditures will be in the range of $175 million to $200 million
per annum during the next several years as a result of continued modernization
of existing facilities and capacity expansion to support new products and line
extensions.
In late 1996, the Corporation approved a project to implement an enterprise-wide
integrated information system to replace most of the transaction systems and
applications currently supporting operations of the Corporation. Total
commitments for this system are expected to be in the range of $75 million to
$85 million. This system is Year 2000 compliant and will replace a large portion
of the Corporation's legacy information systems. Legacy systems not being
replaced by the new integrated information system are being upgraded to be Year
2000 compliant and, as of April 5, 1998, the costs are not expected to be
material to the Corporation's business, operations, or financial condition.
Progress toward compliance with Year 2000 issues by the Corporation's major
business partners is being reviewed for the most significant operations and
business activities. The extent of Year 2000 compliance efforts by major
partners and suppliers and the possible effect on the Corporation's business of
their failure to comply continues to be evaluated, but a final determination of
the potential impact cannot be made at this time. The remediation of Year 2000
issues involving the Corporation's information systems is expected to be
completed in time to prevent any material adverse consequences to the
Corporation's business, operations or financial condition.
The potential loss in fair value of foreign exchange forward contracts and
interest rate swaps resulting from a hypothetical near-term adverse change in
market rates of ten percent was not material as of April 5, 1998. The market
risk resulting from a hypothetical adverse market price movement of ten percent
associated with the estimated average fair value of net commodity positions
declined from $9.6 million as of December 31, 1997, to $7.3 million as of April
5, 1998. Market risk represents 10% of the estimated average fair value of net
commodity positions at four dates prior to the end of each period. The decrease
in average market risk was primarily related to changes in the excess of futures
contracts held over unpriced physical forward contracts in 1998 compared to
1997.
Page 12
SAFE HARBOR STATEMENT
The nature of the Corporation's operations and the environment in which it
operates subject it to changing economic, competitive, regulatory and
technological conditions, risks and uncertainties. In connection with the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Corporation notes the following factors which, among others, could cause future
results to differ materially from the forward-looking statements, expectations
and assumptions expressed or implied herein. Forward looking statements
contained in this document include, but are not limited to Year 2000 issues
(particularly with regard to the Corporation's business partners and suppliers),
the impact of the use of derivative instruments, the amount of future capital
expenditures and the possible uses of proceeds from any future borrowings under
the Corporation's currently effective credit facility or August 1997
Registration Statement. Factors which could cause results to differ include, but
are not limited to: changes in the confectionery and pasta business environment,
including actions of competitors and changes in consumer preferences; changes in
governmental laws and regulations, including income taxes; market demand for new
and existing products; and raw material pricing.
Page 13
PART II
Items 1 through 3 and 5 have been omitted as not applicable.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Hershey Foods Corporation's Annual Meeting of Stockholders was held on April 28,
1998. The following directors were elected by the holders of Common Stock and
Class B Common Stock, voting together without regard to class:
NAME VOTES FOR VOTES WITHHELD
---- --------- --------------
William H. Alexander 402,336,618 993,901
Robert H. Campbell 402,650,807 679,712
C. McCollister Evarts 402,288,572 1,041,947
Bonnie Guiton Hill 402,599,830 730,689
John C. Jamison 402,653,029 677,490
John M. Pietruski 402,625,959 704,560
Joseph P. Viviano 402,575,430 755,089
Kenneth L. Wolfe 402,617,029 713,490
The following directors were elected by the holders of the Common Stock voting
as a class:
NAME VOTES FOR VOTES WITHHELD
---- --------- --------------
Mackey J. McDonald 99,577,164 692,935
Vincent A. Sarni 99,553,669 716,430
Holders of the Common Stock and the Class B Common Stock voting together
approved the appointment of Arthur Andersen LLP as the independent public
accountants for 1998. Stockholders cast 402,729,249 votes FOR the appointment,
330,658 votes AGAINST the appointment and ABSTAINED from casting 270,612 votes
on the appointment of accountants.
No other matters were submitted for stockholder action.
Page 14
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
The following items are attached and incorporated herein by reference:
Exhibit 12 - Statement showing computation of ratio of earnings to
fixed charges for the quarters ended April 5, 1998 and
March 30, 1997.
Exhibit 27 - Financial Data Schedule for the period ended April 5, 1998
(required for electronic filing only).
b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the three-month period ended
April 5, 1998.
Page 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HERSHEY FOODS CORPORATION
(Registrant)
Date MAY 13, 1998 /S/ WILLIAM F. CHRIST
------------ -----------------------------
William F. Christ
Senior Vice President,
Chief Financial Officer
and Treasurer
Date MAY 13, 1998 /S/ DAVID W. TACKA
------------ ----------------------------
David W. Tacka
Corporate Controller and
Chief Accounting Officer
Page 16
EXHIBIT INDEX
Exhibit 12 - Computation of Ratio of Earnings to Fixed
Charges
Exhibit 27 - Financial Data Schedule for the period
ended April 5, 1998 (required for electronic
filing only)
EXHIBIT 12
HERSHEY FOODS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands of dollars except for ratios)
(Unaudited)
For the Three Months Ended
--------------------------
April 5, March 30,
1998 1997
------- --------
Earnings:
Income before income taxes $ 123,660 $ 113,501
Add (deduct):
Interest on indebtedness 23,639 16,750
Portion of rents representative of the
interest factor (a) 3,296 2,781
Amortization of debt expense 152 67
Amortization of capitalized interest 885 895
---------- ----------
Earnings as adjusted $ 151,632 $ 133,994
========== ==========
Fixed Charges:
Interest on indebtedness $ 23,639 $ 16,750
Portion of rents representative of the
interest factor (a) 3,296 2,781
Amortization of debt expense 152 67
Capitalized interest 600 168
---------- ----------
Total fixed charges $ 27,687 $ 19,766
========== ==========
Ratio of earnings to fixed charges 5.48 6.78
========== ==========
NOTE:
(a) Portion of rents representative of the interest factor consists of one-third of rental
expense for operating leases.
5
1,000
3-MOS
DEC-31-1998
APR-05-1998
59,617
0
279,296
0
532,141
999,151
2,620,832
971,914
3,256,466
700,374
1,029,129
0
0
179,950
725,111
3,256,466
1,098,076
1,098,076
652,340
951,710
0
0
22,706
123,660
48,227
75,433
0
0
0
75,433
.53
.52
BALANCE IS NET OF RESERVES FOR DOUBTFUL ACCOUNTS AND CASH DISCOUNTS.
