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Hershey Foods (HSY)
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HSY » Topics » 2007 compared with 2006

These excerpts taken from the HSY 10-K filed Feb 20, 2009.

2007 compared with 2006

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Net sales for 2007 were essentially even with 2006. Sales increased for our international businesses, primarily exports to Asia and Latin America, as well
as sales in Canada and Mexico. The acquisition of Godrej Hershey Ltd. increased net sales by $46.5 million, or 0.9%, in 2007. Favorable foreign currency exchange rates also had a positive impact on sales. These increases were substantially offset by
lower sales volume for existing products in the U.S., reflecting increased competitive activity and reduced retail velocity. Decreased price realization from higher rates of promotional spending and higher allowances for slow-moving products at
retail more than offset increases in list prices contributing to the sales decline in the U.S.

2007 compared with 2006

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Business realignment charges of $123.1 million were included in cost of sales in 2007, compared with a credit of $3.2 million included in cost of sales in
2006. The remainder of the cost of sales increase was primarily associated with significantly higher input costs, particularly for dairy products and certain other raw materials, and the Godrej Hershey Ltd. business acquired in May 2007, offset
somewhat by favorable supply chain productivity.

The gross margin decline was primarily attributable to the impact of business realignment
initiatives recorded in 2007 compared with 2006, resulting in a reduction of 2.6 percentage points. The rest of the decline reflected substantially higher costs for raw materials, offset somewhat by improved supply chain productivity. Also
contributing to the decrease was lower net price realization due to higher promotional costs.

2007 compared with 2006

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Selling, marketing and administrative expenses increased primarily as a result of higher administrative and advertising expenses, partially offset by
lower consumer promotional expenses. Project implementation costs related to our 2007 business realignment initiatives contributed $12.6 million to the increase. Higher administrative costs were principally associated with employee-related expenses
from the expansion of our international businesses, including the impact of the acquisition of Godrej Hershey Ltd.

 


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2007 compared with 2006

SIZE="2">EBIT decreased in 2007 compared with 2006, principally as a result of higher net business realignment and impairment charges recorded in 2007. Net pre-tax business realignment and impairment charges of $412.6 million were recorded in 2007
compared with $11.6 million recorded in 2006, an increase of $400.9 million. The remainder of the decrease in EBIT was attributable to lower gross profit resulting primarily from higher input costs and higher selling, marketing and administrative
expenses.

EBIT margin declined from 20.1% in 2006 to 9.3% in 2007. Net business realignment and impairment charges reduced EBIT margin by
8.3 percentage points in 2007. Net business realignment charges reduced EBIT margin by 0.2 percentage points in 2006. The remainder of the decrease primarily resulted from the lower gross margin, in addition to higher selling, marketing and
administrative expense as a percentage of sales.

2007 compared with 2006

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Net interest expense was higher in 2007 than in 2006 primarily reflecting increased borrowings partially offset by lower interest rates.

STYLE="margin-top:18px;margin-bottom:0px">Income Taxes and Effective Tax Rate

2008 compared with 2007

Our effective income tax rate was 36.7% in 2008, and was increased by 0.7 percentage points as a result of the effective tax rate
associated with business realignment charges recorded during the year.

 


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2007 compared with 2006

FACE="Times New Roman" SIZE="2">Our effective income tax rate was 37.1% for 2007 and 36.2% for 2006. The impact of tax rates associated with business realignment and impairment charges increased the effective income tax rate for 2007 by 1.1
percentage points.

This excerpt taken from the HSY 10-K filed Feb 19, 2008.

2007 compared with 2006

STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%">Net income in 2007 was reduced by $267.7 million, or $1.15 per share-diluted, and in 2006 was reduced by $7.6 million, or $.03 per share-diluted, as a
result of net business realignment and impairment charges. Excluding the impact of these charges, earnings per share-diluted in 2007 decreased by $.29 as compared with 2006 as a result of lower EBIT, offset somewhat by reduced interest expense and
the impact of lower weighted-average shares outstanding in 2007.

EXCERPTS ON THIS PAGE:

10-K (6 sections)
Feb 20, 2009
10-K
Feb 19, 2008

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