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HSY » Topics » Accrued Liabilities

These excerpts taken from the HSY 10-K filed Feb 19, 2010.

Accrued Liabilities

Accrued liabilities requiring the most difficult or subjective judgments include liabilities associated with marketing promotion programs and potentially unsaleable products.

Liabilities associated with marketing promotion programs

We recognize the costs of marketing promotion programs as a reduction to net sales along with a corresponding accrued liability based on estimates at the time of revenue recognition.

Information on our promotional costs and assumptions is as follows:

 

For the years ended December 31,

    2009    2008    2007
In millions of dollars               

Promotional costs

    $ 721.5    $ 766.6    $ 702.1

 

  •  

We determine the amount of the accrued liability by:

 

  •  

Analysis of programs offered;

 

  •  

Historical trends;

 

  •  

Expectations regarding customer and consumer participation;

 

  •  

Sales and payment trends; and

 

  •  

Experience with payment patterns associated with similar, previously offered programs.

 

  •  

The estimated costs of these programs are reasonably likely to change in the future due to changes in trends with regard to customer and consumer participation, particularly for new programs and for programs related to the introduction of new products.

 

  •  

Reasonably possible near-term changes in the most material assumptions regarding the cost of promotional programs could result in changes within the following range:

 

  •  

A reduction in costs of approximately $13.1 million; and

 

  •  

An increase in costs of approximately $5.6 million.

 

  •  

Changes in these assumptions would affect net sales and income before income taxes.

 

  •  

Over the three-year period ended December 31, 2009, actual promotion costs have not deviated from the estimated amounts by more than 2%.

 

  •  

Changes in estimates related to the cost of promotional programs would not have a material impact on our liquidity or capital resources.

Liabilities associated with potentially unsaleable products

 

  •  

At the time of sale, we estimate a cost for the possibility that products will become aged or unsaleable in the future. The estimated cost is included as a reduction to net sales.

 

  •  

A related accrued liability is determined using statistical analysis that incorporates historical sales trends, seasonal timing and sales patterns, and product movement at retail.

 

42

  •  

Estimates for costs associated with unsaleable products may change as a result of inventory levels in the distribution channel, current economic trends, changes in consumer demand, the introduction of new products and changes in trends of seasonal sales in response to promotional programs.

 

  •  

Over the three-year period ended December 31, 2009, costs associated with aged or unsaleable products have amounted to approximately 2% of gross sales.

 

  •  

Reasonably possible near-term changes in the most material assumptions regarding the estimates of such costs would have increased or decreased net sales and income before income taxes in a range from $1.0 million to $2.0 million.

 

  •  

Over the three-year period ended December 31, 2009, actual costs have not deviated from our estimates by more than approximately 1%.

 

  •  

Reasonably possible near-term changes in the estimates of costs associated with unsaleable products would not have a material impact on our liquidity or capital resources.

Accrued Liabilities

Accrued liabilities were as follows:

 

December 31,

    2009    2008
In thousands of dollars          

Payroll, compensation and benefits

    $ 213,715    $ 198,710

Advertising and promotion

      202,547      182,227

Other

      130,200      123,128
             

Total accrued liabilities

    $ 546,462    $ 504,065
             
These excerpts taken from the HSY 10-K filed Feb 20, 2009.

Accrued Liabilities

Accrued liabilities requiring the most difficult or subjective judgments include liabilities associated with marketing promotion programs and potentially unsaleable products.

Liabilities associated with marketing promotion programs

We recognize the costs of marketing promotion programs as a reduction to net sales along with a corresponding accrued liability based on estimates at the time of revenue recognition.

Information on our promotional costs and assumptions is as follows:

 

For the years ended December 31,

    2008    2007    2006
In millions of dollars               

Promotional costs

    $ 766.6    $ 702.1    $ 631.7

 

  •  

We determine the amount of the accrued liability by:

 

  •  

Analysis of programs offered;

 

  •  

Historical trends;

 

  •  

Expectations regarding customer and consumer participation;

 

  •  

Sales and payment trends; and

 

41

Table of Contents
  •  

Experience with payment patterns associated with similar, previously offered programs.

 

  •  

The estimated costs of these programs are reasonably likely to change in the future due to changes in trends with regard to customer and consumer participation, particularly for new programs and for programs related to the introduction of new products.

 

  •  

Reasonably possible near-term changes in the most material assumptions regarding the cost of promotional programs could result in changes within the following range:

 

  •  

A reduction in costs of approximately $14.5 million

 

  •  

An increase in costs of approximately $6.0 million

 

  •  

Changes in these assumptions would affect net sales and income before income taxes.

 

  •  

Over the three-year period ended December 31, 2008, actual promotion costs have not deviated from the estimated amounts by more than 4%.

 

  •  

Changes in estimates related to the cost of promotional programs would not have a material impact on our liquidity or capital resources.

Liabilities associated with potentially unsaleable products

 

  •  

At the time of sale, we estimate a cost for the possibility that products will become aged or unsaleable in the future. The estimated cost is included as a reduction to net sales.

 

  •  

A related accrued liability is determined using statistical analysis that incorporates historical sales trends, seasonal timing and sales patterns, and product movement at retail.

 

  •  

Estimates for costs associated with unsaleable products may change as a result of inventory levels in the distribution channel, current economic trends, changes in consumer demand, the introduction of new products and changes in trends of seasonal sales in response to promotional programs.

 

  •  

Over the three-year period ended December 31, 2008, costs associated with aged or unsaleable products have amounted to approximately 2% of gross sales.

 

  •  

Reasonably possible near-term changes in the most material assumptions regarding the estimates of such costs would have increased or decreased net sales and income before income taxes in a range from $.9 million to $1.8 million.

 

  •  

Over the three-year period ended December 31, 2008, actual costs have not deviated from our estimates by more than approximately 1%.

 

  •  

Reasonably possible near-term changes in the estimates of costs associated with unsaleable products would not have a material impact on our liquidity or capital resources.

Accrued Liabilities

SIZE="2">Accrued liabilities requiring the most difficult or subjective judgments include liabilities associated with marketing promotion programs and potentially unsaleable products.

STYLE="margin-top:18px;margin-bottom:0px; margin-left:2%">Liabilities associated with marketing promotion programs

FACE="Times New Roman" SIZE="2">We recognize the costs of marketing promotion programs as a reduction to net sales along with a corresponding accrued liability based on estimates at the time of revenue recognition.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">Information on our promotional costs and assumptions is as follows:

 















































For the years ended December 31,

  2008  2007  2006
In millions of dollars         

Promotional costs

  $766.6  $702.1  $631.7

 







 • 

We determine the amount of the accrued liability by:

 







 • 

Analysis of programs offered;

 







 • 

Historical trends;

 







 • 

Expectations regarding customer and consumer participation;

 







 • 

Sales and payment trends; and

 


41






Table of Contents








 • 

Experience with payment patterns associated with similar, previously offered programs.

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







 • 

The estimated costs of these programs are reasonably likely to change in the future due to changes in trends with regard to customer and consumer participation,
particularly for new programs and for programs related to the introduction of new products.

 







 • 

Reasonably possible near-term changes in the most material assumptions regarding the cost of promotional programs could result in changes within the following
range:

 







 • 

A reduction in costs of approximately $14.5 million

 







 • 

An increase in costs of approximately $6.0 million

 







 • 

Changes in these assumptions would affect net sales and income before income taxes.

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







 • 

Over the three-year period ended December 31, 2008, actual promotion costs have not deviated from the estimated amounts by more than 4%.

 







 • 

Changes in estimates related to the cost of promotional programs would not have a material impact on our liquidity or capital resources.

Liabilities associated with potentially unsaleable products

STYLE="font-size:6px;margin-top:0px;margin-bottom:0px"> 







 • 

At the time of sale, we estimate a cost for the possibility that products will become aged or unsaleable in the future. The estimated cost is included as a
reduction to net sales.

 







 • 

A related accrued liability is determined using statistical analysis that incorporates historical sales trends, seasonal timing and sales patterns, and product
movement at retail.

 







 • 

Estimates for costs associated with unsaleable products may change as a result of inventory levels in the distribution channel, current economic trends, changes in
consumer demand, the introduction of new products and changes in trends of seasonal sales in response to promotional programs.

 







 • 

Over the three-year period ended December 31, 2008, costs associated with aged or unsaleable products have amounted to approximately 2% of gross sales.

 







 • 

Reasonably possible near-term changes in the most material assumptions regarding the estimates of such costs would have increased or decreased net sales and income
before income taxes in a range from $.9 million to $1.8 million.

 







 • 

Over the three-year period ended December 31, 2008, actual costs have not deviated from our estimates by more than approximately 1%.

 







 • 

Reasonably possible near-term changes in the estimates of costs associated with unsaleable products would not have a material impact on our liquidity or capital
resources.

Accrued Liabilities

Accrued liabilities were as follows:

 

December 31,

    2008    2007
In thousands of dollars          

Payroll, compensation and benefits

    $ 198,710    $ 187,605

Advertising and promotion

      182,227      196,598

Other

      123,128      154,783
             

Total accrued liabilities

    $ 504,065    $ 538,986
             

Accrued Liabilities

FACE="Times New Roman" SIZE="2">Accrued liabilities were as follows:

 












































































December 31,

  2008  2007
In thousands of dollars      

Payroll, compensation and benefits

  $198,710  $187,605

Advertising and promotion

   182,227   196,598

Other

   123,128   154,783
        

Total accrued liabilities

  $504,065  $538,986
        
These excerpts taken from the HSY 10-K filed Feb 19, 2008.

Accrued Liabilities

Accrued liabilities were as follows:

 

December 31,

    2007    2006
In thousands of dollars          

Payroll, compensation and benefits

    $ 187,605    $ 158,952

Advertising and promotion

      196,598      187,494

Other

      154,783      107,577
             

Total accrued liabilities

    $ 538,986    $ 454,023
             

Accrued Liabilities

FACE="Times New Roman" SIZE="2">Accrued liabilities were as follows:

 












































































December 31,

  2007  2006
In thousands of dollars      

Payroll, compensation and benefits

  $187,605  $158,952

Advertising and promotion

   196,598   187,494

Other

   154,783   107,577
        

Total accrued liabilities

  $538,986  $454,023
        
This excerpt taken from the HSY 10-K filed Feb 23, 2007.

Accrued Liabilities

Accrued liabilities were as follows:

 

December 31,

    2006    2005
In thousands of dollars          

Payroll, compensation and benefits

    $ 158,952    $ 172,529

Advertising and promotion

      187,494      193,018

Other

      107,577      121,285
             

Total accrued liabilities

    $ 454,023    $ 486,832
             

 

90

THE HERSHEY COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

 

This excerpt taken from the HSY 10-K filed Mar 7, 2005.

Accrued Liabilities

Accrued liabilities were as follows:

December 31,
   
 2004
    
 2003
In thousands of dollars
 		         
 		     
 
Payroll, compensation and benefits
                  $ 146,515           $ 127,222   
Advertising and promotion
                     218,376              191,382   
Other
                     107,205              97,577   
Total accrued liabilities
                  $ 472,096           $ 416,181   
 

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Feb 19, 2010
10-K (4 sections)
Feb 20, 2009
10-K (2 sections)
Feb 19, 2008
10-K
Feb 23, 2007
10-K
Mar 7, 2005

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