Stock Price Update

9/20: $48.13
9/21: $47.96
9/22: $47.81
9/23: $47.56
9/24: $48.12

Strengths & Weaknesses

Strengths: 
Strong brand image
Diversified products
Strong customer relationships

Weaknesses: 
Strong dependence on US market
High level of borrowing

Facebook/Twitter

Hershey's Facebook page can be found at http://www.facebook.com/HERSHEYS
As of today, there are 1,072,147 who like this page.

Their Twitter page can be found at http://twitter.com/hersheys

Press Release: Hershey issues first Corporate Responsibility Report

On 9/15/10, The Hershey Company issued its first Corporate Social Responsibility (CSR) Report. The report was launched on the anniversary of Milton S. Hershey's birthday, in commemoration of the company's legacy of responsible operation and of its commitment to continued progress. The CSR Report, outlines the company's priorities and sets goals for improvement in key areas.

"Our belief in the importance of CSR dates to the founding of our company more than 100 years ago," said David J. West, President and Chief Executive Officer, The Hershey Company. "Today, CSR is an integral part of our global business strategy. Our CSR efforts stretch from our headquarters and manufacturing facilities in Hershey, Pennsylvania, to our operations in countries such as Mexico and India, to the cocoa farming villages of West Africa. While we are proud of our accomplishments, including the contributions we make to children in need, we understand that much remains to be done."

Hershey's CSR Report outlines the company's priorities and programs in four areas:

• Marketplace, which includes the company's commitment to fair and ethical business dealings;
• Environment, which includes Hershey's environmental stewardship;
• Workplace, which describes efforts to create a desirable workplace for Hershey's employees who contribute to Hershey's success; and
• Community, which outlines Hershey's focus on making a positive difference in communities around the world.

Hershey's CSR Report outlines the company's accomplishments in these areas and sets measurable goals for future progress. For example, the company has decreased energy consumption by nearly 10 percent in its manufacturing and distribution facilities since 2008. Hershey, along with others in the industry working through the World Cocoa Foundation, has taken a proactive leadership role in promoting sustainable cocoa farming practices and increasing incomes for cocoa farming families. These programs have made a positive difference in the lives of 500,000 farming families over the past decade.
In developing its CSR report, Hershey applied the Global Reporting Initiative (GRI) G3 Sustainability Reporting Guidelines, a widely used standard that provides a framework for reporting and, most importantly, tracking progress.  To read Hershey's Corporate Social Responsibility Report, go to http://www.thehersheycompany.com/social-responsibility

http://www.thehersheycompany.com/news/release.asp?releaseID=1470232

Financial Situation

Taken from Hershey’s 2009 form 10-K

FINANCIAL CONDITION

Our financial condition remained strong during 2009. Solid cash flow from operations and our liquidity, leverage and capital structure contributed to our continued investment grade credit rating by recognized rating agencies.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS-EXECUTIVE OVERVIEW

Our results for the year ended December 31, 2009 demonstrated excellent progress in a difficult economic environment. We exceeded net sales targets, while implementing price increases and operational efficiency improvements necessary to offset significant increases in input and employee benefits costs. We have essentially completed the global supply chain transformation program and have achieved our objectives. We increased advertising investment in our core brands in North America and in certain of our key international markets, while also achieving strong growth in adjusted earnings per share-diluted. We generated strong cash flow from operations and our financial position remains solid.

Net sales increased 3.2%, which was within our long-term growth target. The increase was driven by price realization, as sales volumes declined at less than expected rates due to pricing elasticity. Earnings per share growth exceeded our long-term objective and our North American market share increased during the year.

Our financial results and marketplace performance for the year indicate that our consumer-driven approach to core brand investment along with necessary pricing actions enable us to continue to meet our long-term financial goals. Our efforts will remain focused toward implementing our major strategic initiatives to deliver sustainable long-term growth in the evolving marketplace.

The Numbers:

                                            Common Stock

                                               Price Range

2009                       High           Low

Q1                          $38.23        $30.27

Q2                          $37.83        $33.70

Q3                          $42.25        $35.78

Q4                          $41.62        $35.05

Test	2009	2008	2007
Gross Profit Margin	38.70%	34.20%	33.00%
Return(loss) on Assets	21.20%	(24.10%)	7.10%
Earnings per Share	$1.90	$1.36	$0.93
Current Ratio	1.52	1.06	no data
Debt-to-Asset Ratio	0.79	0.90	no data

These financial tests all indicate the the company’s financial trends are moving in the right direction.  It does not appear that the company has excessive debt.

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzczOTEyfENoaWxkSUQ9MzcxODQyfFR5cGU9MQ==&t=1

Hershey Company Profile

Mission Statement:
Bringing sweet moments of Hershey happiness to the world every day.
To our stakeholders, this means:
Consumers – Delivering quality consumer-driven confectionery experiences for all occasions
Employees – Winning with an aligned and empowered organization … while having fun
Business Partners – Building collaborative relationships for profitable growth with our customers, suppliers and partners
Shareholders – Creating sustainable value
Communities – Honoring our heritage through continued commitment to making a positive difference

Values:
 Hershey's Values, "One Hershey," tell a powerful story: A global and diverse team, operating with integrity, working together, determined to make a difference.

Open to Possibilities

We are Open to Possibilities by embracing diversity, seeking new approaches and striving for continuous improvement.

Growing Together

We are Growing Together by sharing knowledge and unwrapping human potential in an environment of mutual respect.

Making a Difference

We are Making a Difference by leading with integrity and determination to have a positive impact on everything we do.

One Hershey

We are One Hershey, winning together while accepting individual responsibility for our results.

http://www.thehersheycompany.com/about/profile.asp

Stock Prices

Update on Stock Prices:

9/7:  $46.43
9/8:  $46.43
9/9:  $46.33
9/10: $45.94

9/13: $45.75
9/14: $45.49
9/15: $45.69
9/16: $47.26
9/17: $47.37

Virtual Chocolate Milk? And you're fighting over it?

I heard about this on the news this morning.  Here is the short version:

Hershey filed a preemptive complaint earlier this summer for a court to determine if they infringed on a copyright held by Las Vegas-based software developer Hottrix LLC.  On Monday, Hottrix filed a counter complaint alleging that Hershey cost them over $12 million in lost profits and damage to their brand. 

Both companies developed a similar iPhone app which allows the user to make virtual chocolate milk.  Hottrix's app came first and includes plain milk and strawberry milk.  Users have to tip the phone to "drink" from it.  Hershey's claims its app, which was released in October, is much different.  It includes the use of a red & white straw to drink milk from the screen.

I have to admit...I don't own a smart phone so maybe I just don't get it.  But seriously!  Who sits around making virtual chocolate drinks and pretending to drink them?

On a serious note, it does seem to be a very similar app that Hershey released.  I will be interested to see how the court weighs in on this one.

http://www.msnbc.msn.com/id/39156799?gt1=43001&utm_source=twitterfeed&utm_medium=twitter

Not your "typical" boarding school!

The Milton Hershey School (MHS) is a truly unique learning environment.  They state that they are "devoted to helping students in Pre-K through 12th grade develop academically, behaviorally, physically, socially, and spiritually, with an emphasis on preparing students to lead fulfilling and productive lives after graduation from MHS."  The school is structured in three levels: Elementary Division, Middle Division, and Senior Division.  Programming is designed around the developmental needs of students in each division and provides a nurturing environment for students as they transition through each grade level.  Additionally, three centralized program areas integrate the work of the divisions and ensure consistency of support throughout students' MHS experience:  Applied & Integrated Learning (curriculum development, visual & performing arts, etc), Student Health Services (medical, dental, psychological, behavioral, and social work services), and Student Character & Leadership (community service, recreational activities, religious programs, etc.).  Working in conjunction with the academic curriculum, these three areas help ensure that students have a combination of learning and life experiences, along with a focus on developing social, emotional, spiritual, and physical health throughout their years at MHS.

One of the things I find most unique about this school is the living environment.  Students are not stuck in your typical "dorm"-like living quarters.  Children live in family-like homes.  Each home consists of 10-14 students from the same division (e.g. Elementary).  These homes are each overseen by a married couple who are the houseparents for the home.  They take an active interest in each MHS students' development and well-being.  They support students in the daily lives and serve as the primary contact for the children in their care, but they also work in partnership with the natural parent/guardian.  Just like any parent, they teach the children responsible life values and provide structure and guidance.  Students are required to do their chores and study just like any child living at home.  Students live and learn with each other and become each other's second family.  The houses are well-equipped with normal living quarters plus a recreation room and computer lab.  The houseparents have their own private area that is separated from the students but still in the same home.  Because of limited space, houseparents cannot have more than 2 dependent children of their own living with them.  There is also a transitional living program from senior year students where they learn to live on their own in apartment style settings (with supervising adults living on-site in their own apartments).  Students are taught to cook, shop, and budget on their own.  Each of them is provided a debit card with a set dollar amount for each week with which they must buy groceries and household necessities.

The school offers more than just your typical school functions.  They have:

12 varsity athletic teams

6 choral groups and 20 different musical instrument choices

Animal clubs and 4H

Theater productions

Boy Scouts, Girl Scouts, and service organizations

Internships and part-time jobs at local businesses (for high school students)

Ice skating, swimming, biking, ice hockey, dance, and more

The school's policy is for each student to be "plainly, neatly, and comfortably clothed, without distinctive dress." Students are issued uniforms for school and are free to wear their own clothes during leisure time.  If a parent or sponsor cannot afford to provide leisure wear for a student, it is the policy of the School to provide all such clothing at no expense to either the student or his/her family.

Of course, a setting like this requires some pretty strict safety measures.  The secure neighborhood community is closely monitored by the Safety & Security Department that patrols the campus and student homes 24 hours daily, seven days a week. In addition, all MHS students and staff wear photo identification badges, and all student homes are equipped with electronic security systems.

What does it take to get in?  To be considered for enrollment, the child must:

• Come from a family of low income, limited resources, and social need.
• Be from the ages of 4-15 years old.
• Have the ability to learn.
• Be free of serious emotional and behavioral problems that disrupt life in the classroom or the home.
• Be able to take part in the School's program. Be born in the United States.

Some statistics on current enrollment (Sep 2009):

Total number of students: 1,818
Male students: 873
Female students: 945

Number of students by Division
Elementary Division: 307
Middle Division: 644
Senior Division: 867

Ethnic composition of student body
Caucasian: 44 percent
African-American: 27 percent
Hispanic: 15 percent
Asian: 1 percent
Other: 13 percent

Geographic residence of student body (sponsor's residence)
Tri-county area (Lebanon, Dauphin and Lancaster counties in Pennsylvania): 31 percent
Other counties in Pennsylvania: 49 percent
Other states (34 other states including DC): 20 percent

While this post might be pretty long, it is only a brief overview of the Milton Hershey School.  Check out the school's website for more info.    http://www.mhs-pa.org/

Mr. Hershey died a poor man!

Milton Hershey was a philanthropist before it became a competitive strategy in business.  At his death, his will was only three paragraphs long. What he personally owned amounted to only $20,000 because he donated virtually his entire personal fortune to The Hershey Trust Company to administer Milton Hershey School. To date, the Hershey Trust Company is still The Hershey Company's largest shareholder. 

I plan to post more about the Hershey School soon! 

Hershey's Track and Field Games

The Hershey Company has sponsored HERSHEY'S Track & Field Games for more than 30 years. This program has introduced more than 10 million children in 3,000 communities across the U.S. and Canada to the fun and rewards of physical fitness. Children ages 9-14 compete in various track and field events, starting at the local level and progressing to state meets and the selection of regional finalists. HERSHEY'S Track & Field Games culminate in the North American Final, held in Hershey, Pennsylvania. Each year, finalists from each region receive an all-expense-paid trip to Hershey to participate in the North American Final.

http://www.thehersheycompany.com/social-responsibility/commitment.asp

HSY Stock Price Updates

Last Week's Prices:

9/3/10:    $47.14
9/2/10:    $46.99
9/1/10:    $47.17
8/31/10:  $46.47
8/30/10:  $45.78

The relationship between Hershey and Mars....

Ever notice how a once harmonious relationship (marriage for example) can turn into a bitter rivalry when that partnership is severed?  Well, that's what happened to Hershey and Mars!  Just like any breakup, the word on the street varies a bit from one story to the next, but the basic facts remain the same.

Bill Murrie was President of Hershey from 1908-1947.  He had a son named Bruce.  Frank Mars was the founder of Mars.  He had a son named Forrest. 

Either Bruce or Forrest (the story differs), saw soldiers during the Spanish Civil War eating pieces of chocolate covered with a hard sugary coating. The coating preventing the candy from melting in the hot sun.  The two teamed up to create M&Ms.  (Mars and Murrie, get it?)  Hershey made the chocolate inside, and Mars made the candy coating.

Though the elder Murrie stopped serving as Sales Manager in 1908, he retained responsibility for major industrial customers....one of which was Mars. His relationship with Mars resulted in a new relationship between the companies during the pre-World War II years. Hershey had a contract to supply chocolate to the soldiers, and the industry anticipated a chocolate shortage developing during the pending war.  After wartime quotas ended in 1948, Forrest Mars maneuvered Bruce out of the partnership and went on to become Hershey's largest competitor.

Some external factors affecting Hershey....

With the big "health kick" that the United States and many other countries has gotten on, experts are raving about the benefits of dark chocolate.  This is a big opportunity for Hershey.  While they have had limited dark chocolate options in the past, they are now offering a full line of dark chocolate bars.  Some even have cranberries and almonds so they must be healthy!  (note the sarcasm here)  Taken directly from their website "It's a fact!  Dark chocolate is a natural source of flavanol antioxidants.  So now there's even more reason to enjoy these rich, delicious HERSHEY'S Dark Chocolates." 

Another opportunity for Hershey is the increased importance placed on holidays.  Can you really think of a holiday that chocolate is not appropriate for?!  You give it for birthdays, anniversaries, Valentine's Day, Christmas, Easter, Halloween, Saint Patrick's Day...... 

While Hershey is trying to put an opportunistic spin on the increased concern with health, they can't escape the fact that you can only make candy healthy to a certain point.  After all, it is still candy!  Obesity rates are increasing exponentially in the United States.  Doctors, TV show hosts, diet gurus, trainers at the gym, the weird lady two doors down with the goat living on her front porch, and even your mother are telling you to cut back on the fried foods and.....sweets!   

Another place that is hitting Hershey hard is costs associated with manufacturing and delivering.  Have you bought a gallon of milk lately?  What about gas?  The increasing costs of these are quite a threat for Hershey.  It costs more to get the ingredients to the manufacturing facility and more to get it back out to the end consumer than ever before.