March 7, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Hershey Foods Corporation
Registration Statement on Form S-3
File No. 33-51089
-----------------
Dear Sirs:
In accordance with Regulation C, Rule 424(b)(5) of the Securities Act of
1933, as amended, attached is a Prospectus Supplement dated March 6, 1997 to the
Prospectus dated March 6, 1997.
Very truly yours,
HERSHEY FOODS CORPORATION
/s/ Mark E. Kimmel
Senior Counsel
Rule 424(b)(5)
Registration No. 33-51089
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MARCH 6, 1997
$150,000,000
[LOGO OF HERSHEY FOODS CORPORATION APPEARS HERE]
6.95% NOTES DUE MARCH 1, 2007
----------------
Interest on the Notes is payable on March 1 and September 1 of each year,
commencing September 1, 1997. The Notes will not be redeemable prior to
maturity and do not provide for any sinking fund. The Notes will be
represented by one or more global Notes registered in the name of the nominee
of The Depository Trust Company. Beneficial interests in the global Notes will
be shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as described herein, Notes in
definitive form will not be issued. The Notes will be issued only in
denominations of $1,000 and integral multiples thereof. The Notes will trade
in DTC's Same-Day Funds Settlement System until maturity, and secondary market
trading activity for the Notes will therefore settle in immediately available
funds. All payments of principal and interest will be made by the Corporation
in immediately available funds. See "Description of Notes--Same-Day Settlement
and Payment".
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) CORPORATION(1)(3)
----------------- ------------ -----------------
Per Note....................... 99.698% 0.650% 99.048%
Total.......................... $149,547,000 $975,000 $148,572,000
- --------
(1) Plus accrued interest, if any, from March 1, 1997.
(2) The Corporation has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting estimated expenses of $150,000 payable by the
Corporation.
----------------
The Notes offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
Notes will be ready for delivery in book-entry form only through the
facilities of DTC in New York, New York, on or about March 11, 1997, against
payment therefor in immediately available funds.
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
----------------
The date of this Prospectus Supplement is March 6, 1997.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
----------------
RECENT DEVELOPMENTS
In December 1996, Hershey Foods Corporation (the "Corporation") acquired
from an affiliate of Huhtamaki Oy ("Huhtamaki"), the international foods
company based in Finland, Huhtamaki's Leaf North America ("Leaf")
confectionery operations for $437.2 million, plus the assumption of $17.0
million in debt. In addition, the parties entered into a trademark and
technology license agreement under which the Corporation will manufacture
and/or market and distribute in North, Central and South America Huhtamaki's
confectionery brands including Good & Plenty, Heath, Jolly Rancher, Milk Duds,
PayDay and Whoppers. Leaf's principal manufacturing facilities are located in
Denver, Colorado, Memphis, Tennessee, and Robinson, Illinois. In December
1996, the Corporation also completed the sale to Huhtamaki of the outstanding
shares of Gubor Holding GmbH and Sperlari S.r.l. for $121.7 million, which
resulted in an after-tax loss of $35.4 million.
USE OF PROCEEDS
The Corporation intends to apply the net proceeds from the sale of the 6.95%
Notes due March 1, 2007 (the "Notes") to repay a portion of the short-term
borrowings of the Corporation associated with the purchase of the Leaf North
America confectionery operations described above under "Recent Developments".
Pending utilization by the Corporation, such proceeds may be invested
temporarily in short-term marketable securities.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the Prospectus as "Offered Securities") supplements,
and to the extent inconsistent therewith replaces, the description of the
general terms and provisions of "Debt Securities" set forth in the Prospectus,
to which description reference is hereby made. Capitalized terms not otherwise
defined herein shall have the meanings given to them in the Prospectus.
GENERAL
The Notes will bear interest from March 1, 1997, payable semiannually on
each March 1 and September 1, beginning September 1, 1997, to the persons in
whose names the Notes are registered at the close of business on the preceding
February 15 and August 15, respectively. The Notes will mature on March 1,
2007.
The Notes offered hereby are in the aggregate principal amount of
$150,000,000 and will be issued only in book-entry form through the facilities
of The Depository Trust Company ("DTC"), and will be in denominations of
$1,000 and integral multiples thereof. Transfers or exchanges of beneficial
interests in Notes in book-entry form may be effected only through a
participating member of DTC. See "Global Securities" below. As described below
under "Global Securities", under certain circumstances Notes may be issued in
certificated form in exchange for the global securities ("Global Securities").
In the event that Notes are issued in certificated form, such Notes may be
transferred or exchanged at the offices described in the immediately following
paragraph.
S-2
Payments on Notes issued in book-entry form will be made to DTC's nominee as
the registered owner of the Global Securities. In the event Notes are issued
in certificated form, principal and interest, if any, will be payable, the
transfer of the Notes will be registrable, and Notes will be exchangeable for
Notes bearing identical terms and provisions at the office of the Trustee in
The City of New York designated for such purpose, provided that payment of
interest may be made at the option of the Corporation by check mailed to the
address of the person entitled thereto as shown on the Securities Register.
The Notes will not be redeemable prior to maturity and do not provide for
any sinking fund.
GLOBAL SECURITIES
The Notes will be issued in whole or in part in the form of one or more
Global Securities deposited with, or on behalf of DTC, and registered in the
name of a nominee of DTC. Owners of beneficial interests in Global Securities
will not be entitled to physical delivery of Notes in certificated form except
if (x) DTC notifies the Corporation that it is unwilling or unable to continue
as depository for such series or at any time ceases to be a clearing agency
registered as such under the Securities Exchange Act of 1934 (the "Exchange
Act"), (y) the Corporation executes and delivers to the Trustee an officers'
certificate providing that the Global Securities shall be so exchangeable or
(z) there shall have occurred and be continuing an Event of Default with
respect to the Notes. Global Securities may not be transferred except as a
whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC or by DTC or any nominee to a successor of DTC or a nominee of
such successor.
DTC has advised the Corporation and the Underwriters as follows: DTC is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC was created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions among its participants
in such securities through electronic computerized book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations, and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to DTC's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly. Persons who are not
participants may beneficially own securities held by DTC only through Direct
Participants. The rules applicable to DTC and its participants are on file
with the Securities and Exchange Commission.
Under the terms of the Indenture, the Company and the Trustee will treat the
persons in whose names the Notes are registered as the owners of such Notes
for the purpose of receiving payment of principal and interest on such Notes
and for all other purposes whatsoever. Therefore, neither the Company nor the
Trustee has any direct responsibility or liability for the payment of
principal or interest on the Notes to owners of beneficial interests in the
Global Securities. DTC has advised the Company and the Trustee that its
current practice is to credit the accounts of the participants with payments
of principal or interest on the date payable in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the Global
Securities as shown in the records of DTC, unless DTC has reason to believe
that it will not receive payment on such date. Payments by participants and
indirect participants to owners of beneficial interests in the Global
Securities will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in
bearer form or registered in "street name" and will be the responsibility of
the participants or indirect participants.
S-3
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by the
Corporation in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
will trade in the Same-Day Funds Settlement System maintained by DTC until
maturity, and secondary market trading activity in the Notes will therefore be
required by DTC to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds
on trading activity in the Notes.
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE YEARS
ENDED DECEMBER 31,
-------------------------------
FOR THE NINE
MONTHS ENDED
SEPTEMBER 29, 1996 1995 1994 1993 1992 1991
------------------ ---- ---- ----- ---- ----
Ratio of earnings to fixed
charges(1)................ 7.83 9.08 7.81(2) 12.80(3) 8.84 8.43
- --------
(1) For purposes of computing these ratios, (a) earnings consist of income
from continuing operations before income taxes, accounting changes and
fixed charges and (b) fixed charges consist of interest expense and one-
third of rental expense deemed to represent the interest factor for
operating leases.
(2) Includes a restructuring charge of $106.1 million.
(3) Includes a gain of $80.6 million on the sale of the Corporation's
investment interest in Freia Marabou a.s.
UNDERWRITING
Subject to the terms and conditions set forth in the Pricing Agreement dated
March 6, 1997 which incorporates the provisions of the Underwriting Agreement
dated September 27, 1995 (the "Underwriting Agreement"), the Corporation has
agreed to sell to each of the Underwriters named below, and each of the
Underwriters has severally agreed to purchase, the principal amount of the
Notes set forth opposite its name below:
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
----------- ------------
Goldman, Sachs & Co............................................ $ 75,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... 75,000,000
------------
Total........................................................ $150,000,000
============
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of 0.400% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to
exceed 0.250% of the principal amount of the Notes to certain brokers and
dealers. After the Notes are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Underwriters.
The Notes are a new issue of securities with no established trading market.
The Corporation has been advised by the Underwriters that they intend to make
a market in the Notes but are not obligated
S-4
to do so and may discontinue market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for the
Notes.
During and after the offering, the Underwriters may purchase and sell Notes
in the open market. These transactions may include overallotment and
stabilizing transactions and purchases to cover short positions created in
connection with the offering. The Underwriters also may impose a penalty bid,
whereby selling concessions allowed to other broker-dealers in respect of the
Notes sold in the offering for their account may be reclaimed by the
Underwriters if such securities are repurchased by the Underwriters in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the Notes which may be higher than the
price that might otherwise prevail in the open market.
Settlement for the Notes will be made in immediately available funds and all
secondary trading in the Notes will settle in immediately available funds. See
"Description of Notes--Same-Day Settlement and Payment".
The Corporation has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
John C. Jamison, a limited partner of Goldman, Sachs & Co., is a director of
the Corporation. Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated have received fees from the Corporation in connection with
providing financial advice and other services to the Corporation from time to
time.
S-5
PROSPECTUS
$500,000,000
[LOGO OF HERSHEY FOODS CORPORATION APPEARS HERE]
DEBT SECURITIES
----------------
Hershey Foods Corporation (the "Corporation") may offer from time to time up
to $500,000,000 (or its equivalent, based on the applicable exchange rate at
the time of offering, in such foreign currencies, or units of two or more
thereof as shall be designated by the Corporation) aggregate principal amount
of its debt securities (the "Debt Securities"), on terms to be determined at
the time of offering. The Debt Securities may be issued in one or more series
with the same or various maturities. The terms of the Debt Securities in
respect of which this Prospectus is being delivered (the "Offered
Securities"), including, where applicable, the specific designation, aggregate
principal amount offered, currency or currencies in which the principal (and
premium, if any) and interest are payable, denominations, maturity, interest
rate (which may be fixed or variable) or method of calculating and time of
payment of interest, if any, terms for redemption at the option of the
Corporation or the holder, terms for sinking fund payments, terms for any
other mandatory redemption, the public offering price, the stock exchanges, if
any, on which the Offered Securities may be listed and any other terms in
connection with the offering and sale of the Offered Securities, will be set
forth in a Prospectus Supplement (the "Prospectus Supplement"). Offered
Securities of a series may be issuable in registered form or in the form of
one or more global securities (each a "Global Security").
The Offered Securities will be sold either to or through underwriters,
agents or dealers, which may include Goldman, Sachs & Co. and Merrill Lynch &
Co. The names of any underwriters, dealers or agents involved in the offering
of any Offered Securities, together with any applicable fee, commission or
discount arrangements, will be set forth in the Prospectus Supplement. See
"Plan of Distribution".
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------
GOLDMAN, SACHS & CO. MERRILL LYNCH & CO.
----------------
The date of this Prospectus is March 6, 1997.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
CORPORATION OR ANY AGENT, UNDERWRITER OR DEALER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
DEBT SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as at the following Regional Offices of
the Commission: Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and Northeast Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials may also be
obtained at prescribed rates from the Public Reference Section of the
Commission at its Washington address and, except as otherwise indicated in the
Prospectus Supplement, may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005. In addition, the
Commission maintains a Web Site on the World Wide Web of the Internet that
contains reports, proxy statements and information statements and other
information regarding registrants which file electronically with the
Commission. The address of such site is http.//www.sec.gov.
The Corporation has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Offered Securities. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. Reference is made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Corporation and the Offered Securities.
DOCUMENTS INCORPORATED BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents filed by the Corporation with the Commission (File No. 1-183):
(a) The Corporation's most recently filed Annual Report on Form 10-K;
(b) The Corporation's Quarterly Reports on Form 10-Q filed since the end
of the Corporation's fiscal year covered by its most recent Annual Report
on Form 10-K; and
(c) The Corporation's Current Reports on Form 8-K filed since the end of
the Corporation's fiscal year covered by its most recent Annual Report on
Form 10-K.
All documents filed by the Corporation pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of the Debt Securities offered hereunder shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein or
in any Prospectus Supplement modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
2
The Corporation will provide without charge a copy of any or all of the
documents mentioned above (other than exhibits to such documents) to each
person receiving this Prospectus who requests them in writing. Requests for
such copies should be addressed to Secretary, Hershey Foods Corporation, P.O.
Box 810, Hershey, Pennsylvania 17033.
HERSHEY FOODS CORPORATION
The Corporation, through its divisions and subsidiaries, is engaged in the
manufacture, distribution and sale of consumer food products. The Corporation
produces and distributes, primarily through its Hershey Chocolate North
America, Hershey International, and Hershey Pasta and Grocery Group divisions,
a broad line of chocolate and non-chocolate confectionery, grocery and pasta
products, as well as other consumer food products.
The Corporation's principal product groups include: chocolate and non-
chocolate 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; and pasta products sold in a variety of different shapes, sizes and
packages.
In North America, the Corporation manufactures chocolate and non-chocolate
confectionery products in a variety of packaged forms and markets them under
more than 50 brands. The principal chocolate and non-chocolate confectionery
products sold in the United States are: AMAZIN' FRUIT gummy bears, HERSHEY'S
COOKIES 'N' CREME chocolate bars, CADBURY'S CREME EGGS candy, CARAMELLO candy
bars, 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, 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 NUTRAGEOUS candy bars, REESE'S peanut butter cups,
REESE'S PIECES candies, ROLO caramels in milk chocolate, SKOR toffee bars,
WHATCHAMACALLIT candy bars, TWIZZLERS candy, 5th AVENUE candy bars, SYMPHONY
milk chocolate bars, SWEET ESCAPES candy bars, TASTETATIONS candy and YORK
peppermint pattie candy. The Corporation's principal products sold in Canada
include CHIPITS baking chips, GLOSETTE chocolate-covered raisins and peanuts,
OH HENRY! candy bars, REESE PEANUT BUTTER CUPS candy, TWIZZLERS candy and POT
OF GOLD boxed chocolates.
The Corporation also markets a line of grocery products in the baking,
beverage, peanut butter and dessert toppings categories. Its 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 HOT COCOA COLLECTION hot cocoa mix,
HERSHEY'S syrup, REESE'S peanut butter and REESE'S peanut butter baking chips.
The Corporation's chocolate and non-chocolate confectionery 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, Canada and Mexico.
The Corporation also manufactures and sells quality pasta products
throughout the United States. These products are sold through chain grocery
stores, grocery wholesalers, wholesale clubs, convenience stores and food
distributors. The Corporation markets its products on a regional basis under
several brand names, including SAN GIORGIO, SKINNER, RONZONI, P&R, LIGHT 'N
FLUFFY, IDEAL BY SAN GIORGIO, MRS. WEISS, and AMERICAN BEAUTY, as well as
certain private labels.
3
The Corporation's principal operations outside North America are in the Far
East. These operations are conducted through a variety of forms including
wholly-owned subsidiaries, license and distribution agreements and export
sales of North American produced products throughout the world.
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. Its principal executive offices are located at 100 Crystal A Drive,
Hershey, Pennsylvania 17033, and its telephone number is (717) 534-6799.
RATIO OF EARNINGS TO FIXED CHARGES
FOR THE YEARS
FOR THE NINE ENDED DECEMBER 31,
MONTHS ENDED -------------------------------
SEPTEMBER 29, 1996 1995 1994 1993 1992 1991
------------------ ---- ---- ----- ---- ----
Ratio of earnings to fixed
charges (1)............... 7.83 9.08 7.81(2) 12.80(3) 8.84 8.43
- --------
(1) For purposes of computing these ratios, (a) earnings consist of income
from continuing operations before income taxes, accounting changes and
fixed charges and (b) fixed charges consist of interest expense and one-
third of rental expense deemed to represent the interest factor for
operating leases.
(2) Includes a restructuring charge of $106.1 million.
(3) Includes a gain of $80.6 million on the sale of the Corporation's
investment interest in Freia Marabou a.s.
USE OF PROCEEDS
Except as may be otherwise set forth in a Prospectus Supplement accompanying
this Prospectus, the net proceeds from the sale of the Debt Securities will be
added to the general funds of the Corporation to meet capital additions and
working capital requirements, to refund outstanding debt, to fund the
repurchase of shares of the Corporation's Common Stock and/or to fund
acquisitions which may be made by the Corporation from time to time. Pending
utilization by the Corporation, such proceeds may be invested temporarily in
short-term marketable securities.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby will be issuable in one or more series
under an Indenture dated as of February 1, 1991 (the "Indenture") between the
Corporation and Citibank, N.A., as Trustee (the "Trustee"). The following
statements are subject to the detailed provisions of the Indenture, which is
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. Wherever references are made to particular provisions of the
Indenture or terms defined therein are referred to, such provisions or
definitions are incorporated by reference as a part of the statements made and
such statements are qualified in their entirety by such references.
GENERAL
The Indenture does not limit the amount of debt securities which may be
issued thereunder. Except as described in "Covenants" below and as otherwise
provided in the Prospectus Supplement relating to a particular series of Debt
Securities, the Indenture does not limit the amount of other debt, secured or
unsecured, which may be issued by the Corporation. The Debt Securities may be
issued in one or more series, as may be authorized from time to time by the
Corporation (Section 2.5).
Reference is made to the Prospectus Supplement relating to the Offered
Securities for the following terms, where applicable, of the Offered
Securities: (1) the designation, the aggregate principal amount and the
authorized denominations of the Offered Securities; (2) the percentage of
4
their principal amount at which the Offered Securities will be issued; (3) the
currency or currencies (including composite currencies) in which the principal
of and interest, if any, on the Offered Securities will be payable; (4) the
date or dates on which the Offered Securities will mature; (5) the rate or
rates at which the Offered Securities will bear interest, if any, or the
method by which such rate or rates will be determined and the date or dates
from which such interest will accrue; (6) the dates on which and places at
which interest, if any, will be payable and the record dates for payment of
such interest; (7) the terms of any mandatory or optional repayment or
redemption (including any sinking fund); and (8) any other terms of the
Offered Securities (Section 2.5). The Indenture provides that Debt Securities
of a single series may be issued at various times, with different maturity
dates and may bear interest at different rates (Section 2.5).
The Offered Securities will be unsecured, unsubordinated indebtedness of the
Corporation and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Corporation.
Debt Securities of a series may be issued in fully registered form or in the
form of one or more Global Securities and, with regard to each series of Debt
Securities in respect of which this Prospectus is being delivered, in the
denominations set forth in the Prospectus Supplement relating to such series.
With regard to each series of Debt Securities, the Corporation will maintain
in the Borough of Manhattan, The City of New York and in such other place or
places, if any, specified in the Prospectus Supplement relating to such
series, an office or agency where the Debt Securities of such series may be
transferred or exchanged and may be presented for payment of principal,
premium, if any, and interest; provided that if such securities are not Global
Securities, at the option of the Corporation, payment of interest may be made
by check mailed to the address of the Person entitled thereto as it appears in
the register for the Debt Securities (Section 3.2). No service charge will be
made for any transfer or exchange of the Debt Securities, but the Corporation
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 2.10).
Some of the Debt Securities may be issued as discounted Debt Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) to be sold at a substantial discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the Prospectus Supplement relating thereto.
DEFINITIONS
"Attributable Debt" is defined, in brief, to mean, as to any lease under
which any person is at the time liable, at any date as of which the amount
thereof is to be determined, the total net amount of rent required to be paid
by such person under such lease during the remaining term thereof (including
in respect of contingent rents amounts based on the amount thereof, if any,
being paid on the date of determination and excluding amounts on account of
maintenance and repairs, insurance, taxes, assessments, water rates and
similar charges), discounted from the respective due dates thereof at the
weighted average of the rates of interest (and Yields to Maturity, in the case
of Original Issue Discount Securities) borne by the Debt Securities then
Outstanding, compounded annually (Section 1.1).
"Consolidated Net Tangible Assets" is defined to mean the aggregate amount
of assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities (excluding any portion thereof
constituting Funded Debt by reason of being renewable or extendible) and (b)
all goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, all as set forth on the most recent
consolidated balance sheet of the Corporation and its Domestic Subsidiaries,
prepared in accordance with generally accepted accounting principles (Section
1.1).
5
"Debt" is defined to mean any notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed and does not include Attributable
Debt (Section 1.1).
"Domestic Subsidiary" is defined to mean a subsidiary of the Corporation
except a subsidiary (a) which neither transacts any substantial portion of its
business nor regularly maintains any substantial portion of its fixed assets
within the States of the United States, or (b) the principal purpose of which
is to engage in financing the operations of the Corporation or its
subsidiaries, or both, outside the States of the United States (Section 1.1).
"Funded Debt" is defined to mean all indebtedness for money borrowed having
a maturity of more than 12 months from the date as of which the amount thereof
is to be determined or having a maturity of less than 12 months but by its
terms being renewable or extendible beyond 12 months from such date at the
option of the borrower (Section 1.1).
"Government Obligations" is defined to mean either (i) direct obligations of
the United States of America for the payment of which its full faith and
credit is pledged or (ii) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States of America,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation of the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof (Section 13.1).
"Mortgage" is defined to mean any pledge, mortgage, lien, encumbrance or
security interest (Section 1.1).
"Principal Domestic Operating Property" is defined, in brief, to mean any
land or any facility (together with the land on which it is erected and
fixtures comprising a part thereof) located in the United States used
primarily for manufacturing, processing or production, owned or leased by the
Corporation or any subsidiary of the Corporation and having a gross book value
in excess of 2% of Consolidated Net Tangible Assets of the Corporation and its
Domestic Subsidiaries other than any such land, facility or portion thereof
which in the opinion of the Board of Directors of the Corporation, is not of
material importance to the total business conducted by the Corporation and its
subsidiaries as an entity (Section 1.1).
"Subsidiary of the Corporation" is defined to mean a corporation a majority
of the outstanding voting stock (as defined) of which is owned, directly or
indirectly, by the Corporation or by one or more subsidiaries of the
Corporation (Section 1.1).
Other capitalized terms used in this "Description of Debt Securities" have
the meanings given them in the Indenture, unless otherwise indicated or unless
the context otherwise requires.
COVENANTS
Limitation on Liens
If the Corporation or any Domestic Subsidiary shall incur, issue, assume or
guarantee any Debt secured by a Mortgage on any Principal Domestic Operating
Property or on any shares of stock or Debt, held by the Corporation or any
Domestic Subsidiary, of any Domestic Subsidiary, the Corporation will secure,
or cause such Domestic Subsidiary to secure, the Debt Securities equally and
ratably with (or prior to) such Debt, unless after giving effect thereto the
aggregate amount of all such Debt so secured together with all Attributable
Debt in respect of sale and leaseback transactions involving Principal
Domestic Operating Properties would not exceed 10% of the Consolidated Net
Tangible Assets of the Corporation and its Domestic Subsidiaries. This
restriction will not apply to, and there shall be excluded in computing
secured Debt for the purpose of such restriction, Debt secured by (a)
Mortgages on property of, or on any shares of stock or Debt of, any
corporation existing at the
6
time such corporation becomes a Domestic Subsidiary, (b) Mortgages in favor of
the Corporation or any Domestic Subsidiary, (c) Mortgages in favor of U.S.
governmental bodies to secure progress, advance or other payments pursuant to
any contract or provision of any statute, (d) Mortgages on property, shares of
stock or Debt existing at the time of acquisition thereof (including
acquisition through merger or consolidation), purchase money Mortgages and
construction cost Mortgages, and (e) any extension, renewal or refunding of
any Mortgage referred to in the foregoing clauses (a) through (d), inclusive
(Section 3.4). The Indenture will not restrict the incurrence of unsecured
debt by the Corporation or its subsidiaries.
Merger and Consolidation
The Indenture will provide that no consolidation or merger of the
Corporation with or into any other corporation and no sale or conveyance of
its property as an entirety, or substantially as an entirety, may be made to
another corporation if, as a result thereof, any Principal Domestic Operating
Property or any shares of stock or Debt, held by the Corporation or any
Domestic Subsidiary, of a Domestic Subsidiary would become subject to a
Mortgage, unless either (i) the Debt Securities shall be equally and ratably
secured with (or prior to) the Debt secured by such Mortgage or (ii) such
Mortgage could be created pursuant to Section 3.4 (See "Limitation on Liens"
above) without equally and ratably securing the Debt Securities (Section 9.3).
In addition, as a result of the consolidation, merger or conveyance, either
the Corporation shall be the continuing corporation or the successor
corporation shall be a corporation organized and existing under the laws of
the United States or a state thereof and the successor corporation shall
expressly assume the due and punctual payment of principal of (and premium, if
any) and interest on all Debt Securities and the Corporation's obligations
under the Indenture in a supplemental indenture satisfactory to the Trustee
(Section 9.1).
Limitations on Sales and Leasebacks
Neither the Corporation nor any Domestic Subsidiary may enter into any sale
and leaseback transaction involving any Principal Domestic Operating Property,
completion of construction and commencement of full operation of which has
occurred more than 120 days prior thereto, unless (a) the Corporation or such
Domestic Subsidiary could mortgage such property pursuant to Section 3.4 (see
"Limitation on Liens" above) in an amount equal to the Attributable Debt with
respect to the sale and leaseback transaction without equally and ratably
securing the Debt Securities or (b) the Corporation, within 120 days after
completion of the sale and leaseback transaction, applies to the retirement of
its Funded Debt an amount (subject to credits for certain voluntary
retirements of Funded Debt) not less than the greater of (i) the net proceeds
of the sale of the Principal Domestic Operating Property so leased or (ii) the
fair market value of the Principal Domestic Operating Property so leased. This
restriction will not apply to any sale and leaseback transaction (a) between
the Corporation and a Domestic Subsidiary or between Domestic Subsidiaries or
(b) involving the taking back of a lease for a period of not more than three
years (Section 3.5).
Unless otherwise indicated in a Prospectus Supplement, certain of the
covenants described above would not necessarily afford holders of the Debt
Securities protection in the event of a highly leveraged transaction involving
the Corporation, such as a leveraged buyout. In this regard, however, it
should be noted that voting control of the Corporation is held by Hershey
Trust Company, as Trustee for Milton Hershey School (the "Hershey Trust"),
which holds approximately 76.5 percent of the combined voting power of both
classes of the Corporation's outstanding common stock. The Hershey Trust has
maintained voting control of the Corporation since 1918 and has stated that it
has no interest in selling its controlling shares in the Corporation.
EVENTS OF DEFAULT, WAIVER AND NOTICE
Except as may otherwise be provided in the Prospectus Supplement, as to any
series of Debt Securities, an Event of Default is defined in the Indenture as
(a) default in the payment of any
7
installment of interest, if any, on the Debt Securities of such series when
due and the continuance of such default for a period of 30 days; (b) default
in payment of the principal of (and premium, if any, on) any of the Debt
Securities of such series when due, whether at maturity, upon redemption, by
declaration or otherwise; (c) default in the payment of a sinking fund
installment, if any, on the Debt Securities of such series when due; (d)
default by the Corporation in the performance of any other covenant or
agreement contained in the Indenture, other than a covenant expressly included
in the Indenture solely for the benefit of series of Debt Securities other
than such series, and the continuance of such default for a period of 60 days
after appropriate notice; (e) certain events of bankruptcy, insolvency and
reorganization of the Corporation; and (f) any other Event of Default
established with respect to Debt Securities of that series (Sections 2.5 and
5.1).
An Event of Default with respect to a particular series of Debt Securities
issued under the Indenture does not necessarily constitute an Event of Default
with respect to any other series of Debt Securities issued thereunder.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default with respect to Debt Securities of any series, give
all the holders of Debt Securities of such series then outstanding notice of
all uncured defaults known to it (the term default to mean the events
specified above, not including grace periods); provided that, except in the
case of a default in the payment of principal of (and premium, if any) or
interest, if any, on any Debt Security of any series, or in the payment of any
sinking fund installment with respect to Debt Securities of any series, the
Trustee shall be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the interest of all the
holders of Debt Securities of such series then outstanding (Section 5.11).
The Indenture provides that if an Event of Default with respect to any
series of Debt Securities shall have occurred and be continuing, either the
Trustee or the holders of at least 25% in principal amount (calculated as
provided in the Indenture) of the Debt Securities of such series then
outstanding may declare the principal (or, in the case of Original Issue
Discount Securities, the portion thereof as may be specified in the Prospectus
Supplement relating to such series) of all of the Debt Securities of such
series and the interest accrued thereon, if any, to be due and payable
immediately (Section 5.1).
Upon certain conditions such declarations of acceleration with respect to
Debt Securities of any series may be annulled and past defaults (except for
defaults in the payment of principal (or premium, if any) or interest, if any,
on such Debt Securities not theretofore cured or in respect of a covenant or
provision of the Indenture which cannot be amended or modified without the
consent of the holder of each outstanding Debt Security of that series
affected) may be waived with respect to such series by the holders of not less
than a majority in principal amount (calculated as provided in the Indenture)
of the Debt Securities of such series then outstanding (Section 5.10).
The Indenture requires that the Corporation file with the Trustee annually a
written statement as to the presence or absence of certain defaults under the
terms thereof and as to performance and fulfillment of certain covenants or
agreements therein (Section 3.6).
The Indenture provides that the holders of not less than a majority in
principal amount (calculated as provided in the Indenture) of the Debt
Securities of any series then outstanding shall have the right to direct the
time, method and place of conducting any proceeding or remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee by the
Indenture with respect to defaults or Events of Default with respect to Debt
Securities of such series (Section 5.9).
The Indenture provides that the Trustee shall be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, to exercise any of the rights or powers vested in it by the
Indenture at the direction of the holders of Debt Securities unless such
holders shall have offered to the Trustee reasonable security or indemnity
against expenses and liabilities (Section 6.2).
8
DEFEASANCE
The Indenture provides that the Corporation may terminate its obligations
under Sections 3.4, 3.5 and 9.3 of the Indenture (being the restrictions
described under "Covenants--Limitation on Liens" and "--Limitations on Sales
and Leasebacks" and the first sentence under "Covenants--Merger and
Consolidation" above) with respect to the Debt Securities of any series, on
the terms and subject to the conditions contained in the Indenture, by
depositing in trust with the Trustee money or Government Obligations
sufficient to pay the principal of (and premium, if any) and interest on the
Debt Securities of such series and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor. Such deposit and
termination is conditioned upon, among other things, the Corporation's
delivery of an opinion of counsel that the holders of the Debt Securities of
such series will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit and termination and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case had such deposit and termination not
occurred. Such termination will not relieve the Corporation of its obligation
to pay when due the principal of or interest on the Debt Securities of such
series if the Debt Securities of such series are not paid from the money or
Government Obligations held by the Trustee for the payment thereof (Section
13.1).
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Corporation and the
Trustee, with the consent of the holders of not less than 66 2/3% in principal
amount (calculated as provided in the Indenture) of the outstanding Debt
Securities of each series affected by such modification, to modify the
Indenture or any supplemental indenture or the rights of the holders of the
Debt Securities of any series; provided that no such modification shall,
without the consent of the holders of each Debt Security affected thereby,
extend the maturity of any Debt Security, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or reduce the portion of the principal amount of an Original Issue Discount
Security due and payable upon acceleration of the maturity thereof or the
portion of the principal amount thereof provable in bankruptcy, or reduce any
amount payable upon redemption of any Debt Security, or reduce the overdue
rate thereof, or impair any right of repayment at the option of the holder of
any Debt Security or change the currency of payment of principal or interest
on any Debt Security or reduce the percentage in principal amount of
Outstanding Debt Securities of any series the consent of the holders of which
is required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults (Section 8.2).
The holders of 66 2/3% in principal amount of the Outstanding Debt
Securities of any series may on behalf of the holders of all Debt Securities
of such series waive, insofar as that series is concerned, compliance by the
Corporation with certain restrictive provisions (Limitation on Liens and
Limitations on Sales and Leasebacks) of the Indenture (Section 3.8).
The Indenture also permits the Corporation and the Trustee to amend the
Indenture in certain circumstances without the consent of the holders of any
Debt Securities to evidence the merger of the Corporation or the replacement
of the Trustee and for certain other purposes (Section 8.1).
REGARDING THE TRUSTEE
The Trustee extends credit facilities to the Corporation and the Corporation
maintains bank accounts, borrows money and has other customary banking
relationships with the Trustee, all in the ordinary course of business.
PLAN OF DISTRIBUTION
The Corporation may sell Debt Securities to or through underwriters, and
also may sell Debt Securities directly to other purchasers or through agents.
Such underwriters may include Goldman, Sachs & Co. and/or Merrill Lynch,
Pierce, Fenner & Smith Incorporated, or a group of underwriters represented by
firms including one or both of such firms. Such firms may also act as agents.
9
The distribution of Debt Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Corporation or from purchasers of Debt Securities for
whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters may sell Debt Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of Debt Securities may be deemed to be underwriters, and
any discounts or commissions received by them from the Corporation and any
profit on the resale of Debt Securities by them may be deemed to be
underwriting discounts and commissions under the Securities Act. Any such
underwriter or agent will be identified, and any such compensation received
from the Corporation will be described in the Prospectus Supplement.
Under agreements which may be entered into by the Corporation, underwriters
and agents who participate in the distribution of Debt Securities may be
entitled to indemnification by the Corporation against certain liabilities,
including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Corporation will authorize
underwriters or other persons acting as the Corporation's agents to solicit
offers by certain institutions to purchase Debt Securities from the
Corporation pursuant to contracts providing for payment and delivery on a
future date. Institutions with which such contracts may be made include
commercial savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all
cases such institutions must be approved by the Corporation. The obligations
of any purchaser under any such contract will be subject to the condition that
the purchase of the Offered Securities shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is
subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
VALIDITY OF OFFERED SECURITIES
Certain legal matters with respect to the Offered Securities will be passed
upon for the Corporation by Robert M. Reese, Vice President and General
Counsel of the Corporation. Certain legal matters in connection with this
offering will be passed upon for the underwriters by Milbank, Tweed, Hadley &
McCloy, 1 Chase Manhattan Plaza, New York, New York 10005. Mr. Reese, as of
February 28, 1997, was the beneficial owner of 34,805 shares of the
Corporation's Common Stock and held options to purchase 59,600 additional
shares.
EXPERTS
The consolidated financial statements and schedules of Hershey Foods
Corporation and its subsidiaries as of December 31, 1995 and 1994, and for
each of the three years in the period ended December 31, 1995 incorporated by
reference in this Prospectus and elsewhere in the Registration Statement, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
10
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUP-
PLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURI-
TIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEI-
THER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLI-
CATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
-----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Recent Developments........................................................ S-2
Use of Proceeds............................................................ S-2
Description of Notes....................................................... S-2
Ratio of Earnings to Fixed Charges......................................... S-4
Underwriting............................................................... S-4
PROSPECTUS
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 2
Hershey Foods Corporation.................................................. 3
Ratio of Earnings to Fixed Charges......................................... 4
Use of Proceeds............................................................ 4
Description of Debt Securities............................................. 4
Plan of Distribution....................................................... 9
Validity of Offered Securities............................................. 10
Experts.................................................................... 10
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$150,000,000
[LOGO OF HERSHEY FOODS CORPORATION APPEARS HERE]
6.95% NOTES DUE MARCH 1, 2007
-----------------
PROSPECTUS SUPPLEMENT
-----------------
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
