THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31,
2011
2010
2009
In thousands of dollars except per share
amounts
Net Sales
$6,080,788
$5,671,009 $5,298,668
Costs and Expenses:
Cost of sales
3,548,896
3,255,801
3,245,531
Selling, marketing and administrative
1,477,750
1,426,477
1,208,672
Business realignment and impairment (credits)
(886)
83,433
82,875
charges, net
Total costs and expenses
5,025,760
4,765,711
4,537,078
Income before Interest and Income Taxes
1,055,028
905,298
761,590
Interest expense, net
92,183
96,434
90,459
Income before Income Taxes
962,845
808,864
671,131
Provision for income taxes
333,883
299,065
235,137
Net Income
$628,962
$509,799
$435,994
Net Income Per Share—Basic—Class B
$2.58
$2.08
$1.77
Common Stock
Net Income Per Share—Diluted—Class B
$2.56
$2.07
$1.77
Common Stock
Net Income Per Share—Basic—Common
$2.85
$2.29
$1.97
Stock
Net Income Per Share—Diluted—Common
$2.74
$2.21
$1.90
Stock
Cash Dividends Paid Per Share:
Common Stock
$1.3800
$1.2800
$1.1900
Class B Common Stock
1.2500
1.1600
1.0712
The notes to consolidated financial statements are an integral part of these statements and
are included in the Hershey's 2011 Annual Report, available at
www.thehersheycompany.com.
THE HERSHEY COMPANY
CONSOLIDATED BALANCE SHEETS
December 31,
In thousands of dollars
ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable—trade
Inventories
Deferred income taxes
Prepaid expenses and other
Total current assets
Property, Plant and Equipment, Net
Goodwill
Other Intangibles
Deferred Income Taxes
Other Assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
Accrued liabilities
Accrued income taxes
2011
2010
$693,686
399,499
648,953
136,861
167,559
2,046,558
1,559,717
516,745
111,913
38,544
138,722
$4,412,199
$884,642
390,061
533,622
55,760
141,132
2,005,217
1,437,702
524,134
123,080
21,387
161,212
$4,272,732
$420,017
612,186
1,899
$410,655
593,308
9,402
Short-term debt
Current portion of long-term debt
Total current liabilities
Long-term Debt
Other Long-term Liabilities
Total liabilities
Commitments and Contingencies
Stockholders’ Equity:
The Hershey Company Stockholders’ Equity
Preferred Stock, shares issued: none in 2011 and 2010
Common Stock, shares issued: 299,269,702 in 2011 and
299,195,325 in 2010
Class B Common Stock, shares issued: 60,632,042 in 2011
and 60,706,419 in 2010
Additional paid-in capital
Retained earnings
Treasury—Common Stock shares, at cost: 134,695,826 in
2011 and 132,871,512 in 2010
Accumulated other comprehensive loss
The Hershey Company stockholders’ equity
Noncontrolling interests in subsidiaries
Total stockholders’ equity
Total liabilities and stockholders’equity
42,080
97,593
1,173,775
1,748,500
617,276
3,539,551
—
24,088
261,392
1,298,845
1,541,825
494,461
3,335,131
—
—
—
299,269
299,195
60,632
60,706
490,817
4,699,597
434,865
4,374,718
(4,258,962)
(4,052,101)
(442,331)
849,022
23,626
872,648
$4,412,199
(215,067)
902,316
35,285
937,601
$4,272,732
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
2011
2010
In thousands of dollars
Cash Flows Provided from (Used by) Operating
Activities
Net income
$628,962
$509,799
Adjustments to reconcile net income to net cash
provided from operations:
Depreciation and amortization
215,763
197,116
Stock-based compensation expense, net of tax of
28,341
32,055
$15,127, $17,413 and $19,223, respectively
Excess tax benefits from stock-based
(13,997)
(1,385)
compensation
Deferred income taxes
33,611
(18,654)
Gain on sale of trademark licensing rights, net of
(11,072)
—
tax of $5,962
Business realignment and impairment charges,
net of tax of $18,333, $20,635 and $38,308,
30,838
77,935
respectively
Contributions to pension plans
(8,861)
(6,073)
Changes in assets and liabilities, net of effects
from business acquisitions and divestitures:
Accounts receivable—trade
(9,438)
20,329
Inventories
(115,331)
(13,910)
Accounts payable
7,860
90,434
Other assets and liabilities
(205,809)
13,777
Net Cash Provided from Operating Activities
580,867
901,423
Cash Flows Provided from (Used by) Investing
Activities
Capital additions
(323,961) (179,538)
Capitalized software additions
(23,606)
(21,949)
Proceeds from sales of property, plant and
312
2,201
equipment
2009
$435,994
182,411
34,927
(4,455)
(40,578)
—
60,823
(54,457)
46,584
74,000
37,228
293,272
1,065,749
(126,324)
(19,146)
10,364
Proceeds from sales of trademark licensing rights
Business acquisitions
Net Cash (Used by) Investing Activities
Cash Flows Provided from (Used by) Financing
Activities
Net change in short-term borrowings
Long-term borrowings
Repayment of long-term debt
Proceeds from lease financing agreement
Cash dividends paid
Exercise of stock options
Excess tax benefits from stock-based
compensation
Contributions from noncontrolling interests in
subsidiaries
Repurchase of Common Stock
Net Cash (Used by) Financing Activities
(Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents as of January 1
Cash and Cash Equivalents as of December 31
Interest Paid
Income Taxes Paid
20,000
(5,750)
(333,005)
—
—
(199,286)
—
(15,220)
(150,326)
10,834
249,126
(256,189)
47,601
(304,083)
184,411
1,156
348,208
(71,548)
—
(283,434)
92,033
(458,047)
—
(8,252)
—
(263,403)
28,318
13,997
1,385
4,455
—
10,199
7,322
(384,515)
(438,818)
(190,956)
884,642
$693,686
$97,892
292,315
(169,099)
(71,100)
631,037
253,605
$884,642
$97,932
350,948
(9,314)
(698,921)
216,502
37,103
$253,605
$91,623
252,230
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per
share data)
For the year ended December 31,
2011
2010
2009
Net product sales
$528,369
$517,149
$495,592
Rental and royalty revenue
4,136
4,299
3,739
Total revenue
532,505
521,448
499,331
Product cost of goods sold
365,225
349,334
319,775
Rental and royalty cost
1,038
1,088
852
Total costs
366,263
350,422
320,627
Product gross margin
163,144
167,815
175,817
Rental and royalty gross margin
3,098
3,211
2,887
Total gross margin
166,242
171,026
178,704
Selling, marketing and administrative expenses
108,276
106,316
103,755
Impairment charges
—
—
14,000
Earnings from operations
57,966
64,710
60,949
Other income (expense), net
2,946
8,358
2,100
Earnings before income taxes
60,912
73,068
63,049
Provision for income taxes
16,974
20,005
9,892
Net earnings
$43,938
$53,063
$53,157
Net earnings
Other comprehensive earnings (loss)
Comprehensive earnings
Retained earnings at beginning of year.
Net earnings
Cash dividends
Stock dividends
Retained earnings at end of year
$43,938
(8,740)
$35,198
$135,866
43,938
(18,360)
(47,175)
$114,269
$53,063
1,183
$54,246
$53,157
2,845
$56,002
$147,687
53,063
(18,078)
(46,806)
$135,866
$144,949
53,157
(17,790)
(32,629)
$147,687
Earnings per share
$0.76
$0.90
Average Common and Class B Common shares
57,892
58,685
outstanding
(The accompanying notes are an integral part of these statements.)
$0.89
59,425
CONSOLIDATED STATEMENTS OF
Financial Position
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per
share data)
Assets
December 31,
2011
2010
CURRENT ASSETS:
Cash and cash equivalents
$78,612
$115,976
Investments
10,895
7,996
Accounts receivable trade, less allowances of $1,731 and
41,895
37,394
$1,531
Other receivables
3,391
9,961
Inventories:
Finished goods and work-in-process
42,676
35,416
Raw materials and supplies
29,084
21,236
Prepaid expenses
5,070
6,499
Deferred income taxes
578
689
Total current assets
212,201
235,167
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land
21,939
21,696
Buildings
107,567
102,934
Machinery and equipment
322,993
307,178
Construction in progress
2,598
9,243
455,097
440,974
Less—Accumulated depreciation
242,935
225,482
Net property, plant and equipment
212,162
215,492
OTHER ASSETS:
Goodwill
73,237
73,237
Trademarks
175,024
175,024
Investments
96,161
64,461
Split dollar officer life insurance
74,209
74,441
Prepaid expenses
3,212
6,680
Equity method investment
3,935
4,254
Deferred income taxes
7,715
9,203
Total other assets
433,493
407,300
Total assets
$857,856
$857,959
Liabilities and Shareholders’ Equity
December 31,
2011
2010
CURRENT LIABILITIES:
Accounts payable
$10,683
$9,791
Dividends payable
4,603
4,529
Accrued liabilities
43,069
44,185
Total current liabilities
58,355
58,505
NONCURRENT LIABILITES:
Deferred income taxes
43,521
47,865
Postretirement health care and life insurance benefits
26,108
20,689
Industrial development bonds
7,500
7,500
Liability for uncertain tax positions
8,345
9,835
Deferred compensation and other liabilities
48,092
46,157
Total noncurrent liabilities
133,566
132,046
SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value—120,000 shares
authorized—36,479 and 36,057 respectively, issued
Class B common stock, $.69-4/9 par value—40,000 shares
authorized—21,025 and 20,466 respectively, issued
Capital in excess of par value
Retained earnings, per accompanying statement
Accumulated other comprehensive loss
Treasury stock (at cost)—71 shares and 69 shares, respectively
Total shareholders’ equity
Total liabilities and shareholders’ equity
25,333
25,040
14,601
14,212
533,677
114,269
(19,953)
(1,992)
665,935
$857,856
505,495
135,866
(11,213)
(1,992)
667,408
$857,959
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Cash Flows (in thousands)
For the year ended December
31,
2011
2010
2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
$43,938
$53,063
$53,157
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation
19,229
18,279
17,862
Impairment charges
—
—
14,000
Impairment of equity method investment
—
—
4,400
Loss from equity method investment
194
342
233
Amortization of marketable security premiums
1,267
522
320
Changes in operating assets and liabilities:
Accounts receivable
(5,448)
717
(5,899)
Other receivables
3,963
(2,373)
(2,088)
Inventories
(15,631)
(1,447)
455
Prepaid expenses and other assets
5,106
4,936
5,203
Accounts payable and accrued liabilities
84
2,180
(2,755)
Income taxes payable and deferred
(5,772)
2,322
(12,543)
Postretirement health care and life insurance
2,022
1,429
1,384
benefits
Deferred compensation and other liabilities
2,146
2,525
2,960
Others
(708)
310
305
Net cash provided by operating activities
50,390
82,805
76,994
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(16,351)
(12,813)
(20,831)
Net purchase of trading securities
(3,234)
(2,902)
(1,713)
Purchase of available for sale securities
(39,252)
(9,301)
(11,331)
Sale and maturity of available for sale securities
7,680
8,208
17,511
Net cash used in investing activities
(51,157)
(16,808)
(16,364)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares repurchased and retired
(18,190)
(22,881)
(20,723)
Dividends paid in cash
(18,407)
(18,130)
(17,825)
Net cash used in financing activities
(36,597)
(41,011)
(38,548)
Increase (decrease) in cash and cash equivalents
(37,364)
24,986
Cash and cash equivalents at beginning of year
115,976
90,990
Cash and cash equivalents at end of year
$78,612
$115,976
Supplemental cash flow information
Income taxes paid
$16,906
$20,586
Interest paid
$38
$49
Stock dividend issued
$47,053
$46,683
(The accompanying notes are an integral part of these statements.)
22,082
68,908
$90,990
$22,364
$182
$32,538
Based on the information contained in these financial statements, compute the following
2011 values for each company. (Round answers to 1 decimal place, e.g. 15.2.)
(1)
Accounts receivable turnover. (For Tootsie Roll, use “Net product sales.” Assume all sales
were credit sales.)
(2) Average collection period for accounts receivable.
Tootsie Roll
Hershey Company
Accounts receivable turnover
times
times
Average collection period
days
days