HERSHEY FOODS COMPANY STEPHANIE BLAINE ACG2021.080

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HERSHEY FOODS COMPANYSTEPHANIE BLAINE
ACG2021.080
Annual Report
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Executive Summary

• Chocolate sales are doing well. Hershey is in a
  good position globally. Hershey Food sales will
  be going up in the future. Cash is flowing
  properly.

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Introduction

• Richard H. Lenny Chief Executive Officer
• Hershey, Pennsylvania
• DECEMBER 31, 2003
• Hersheys ChocolateAlmond JoyMoundsCadbury
  Crème EggsHersheys Kisses ReesesWhoppersHugsK
  it KatJolly Rancher
• WORLDWIDE

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Audit Report

• Independent Auditors
• KPMG LLP
• 345 Park Avenue
• New York, NY 10017

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Stock Market Information

• Stock price for February 19, 2004 80.09
• Twelve month trading range of the companys
  stock 64.05 (3/03)- 77.40 (11/03)
• Dividends were declared on October 7,2003 and
• February 17,2004 at 0.395 per share.
• Hold on to your investments. The market is
  slowly rising.

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Industry Situation and Company Plans

• Hershey Foods goal is to have the 1 position in
  the North American confectionary market.
• Hershey wants to lead in the United States
  chocolate related grocery products.

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Income Statement
Hershey Foods Corporation uses a single-step
format
2002 2001
Gross Profit
Income from Operations 625,343 706,405
Net Income 403,578 207,156
There has been decreases this year due to
returns, discounts, and allowances, plus customer
bankruptcies and closings
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Balance Sheet
Assets Liabilities SHE
2002 348,0551 2,108,848 1,371,703
2001 3,247,430 2,011,226 1,147,204

• Liabilities have not changed much while
  Stockholders Equity increased a lot, making
  Assets bigger.

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Statement of Cash Flows

• Cash flows from operations are more than net
  income for the past two years.
• The company is growing through investing
  activities, like new software programs.
• What is the companys primary source of financing
  is through stock sales.
• Overall, has cash decreased over the past year,
  while 2001 increased from 2000.

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Accounting Policies

• Principles of Consolidation
• Use of Estimates
• Revenue Recognition
• Cash Equivalents
• Commodities Futures Contracts
• Property, Plant and Equipment

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Financial AnalysisLiquidity Ratios

• For the past two years 2002 2001
• Working Capital 716,772 561,097
• Current Ratio 2.31 1.925
• Receivable turnover 445 times 230 times
• Average days sales uncollected 8 158
• Inventory turnover 387 times 40times
• Average days inventory on hand 94 912.5

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Financial AnalysisProfitability Ratios

• For the past two years 2002 2001
• Profit margin (on every dollar) 0.097 0.056
• Asset turnover 1.18 1.28
• Return on assets .116 .064
• Return on equity .294 .181

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Financial AnalysisSolvency Ratio

• For the past two years 2002 2001
• Debt to equity 1.537 1.831

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Financial AnalysisMarket Strength Ratios

• For the past two years 2002 2001
• Price/earnings per share 2.96 1.52
• Dividend yield 2.93 1.50