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<SEC-DOCUMENT>0000047111-01-500079.txt : 20010316
<SEC-HEADER>0000047111-01-500079.hdr.sgml : 20010316
ACCESSION NUMBER: 0000047111-01-500079
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 10
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010315
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: HERSHEY FOODS CORP
CENTRAL INDEX KEY: 0000047111
STANDARD INDUSTRIAL CLASSIFICATION: SUGAR & CONFECTIONERY PRODUCTS [2060]
IRS NUMBER: 230691590
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-00183
FILM NUMBER: 1569338
BUSINESS ADDRESS:
STREET 1: 100 CRYSTAL A DR
STREET 2: P O BOX 810
CITY: HERSHEY
STATE: PA
ZIP: 17033-0810
BUSINESS PHONE: 7175346799
MAIL ADDRESS:
STREET 1: P O BOX 810
STREET 2: 100 CRYSTAL A DIRVE
CITY: HERSHEY
STATE: PA
ZIP: 17033-0810
FORMER COMPANY:
FORMER CONFORMED NAME: HERSHEY CHOCOLATE CORP
DATE OF NAME CHANGE: 19680401
</SEC-HEADER>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>1
<FILENAME>ex12.txt
<DESCRIPTION>COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TEXT>
EXHIBIT 12
HERSHEY FOODS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Years Ended December 31, 2000, 1999, 1998, 1997 and 1996,
(in thousands of dollars except for ratios)
(Unaudited)
<TABLE>
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Earnings:
<S> <C> <C> <C> <C> <C>
Income from continuing operations before income taxes...... $ 546,639 $727,874(a) $ 557,006 $ 553,955 $479,737(b)
Add (Deduct):
Interest on indebtedness................................. 80,956 77,300 88,648 79,138 52,036
Portion of rents representative of the interest factor(c) 13,585 15,162 13,197 10,592 8,618
Amortization of debt expense............................. 489 486 462 412 234
Amortization of capitalized interest..................... 325 3,884 3,856 3,496 3,359
---------- --------- ---------- ---------- ----------
Earnings as adjusted................................... $ 641,994 $ 824,706 $ 663,169 $ 647,593 $ 543,984
========== ========= ========== ========== ==========
Fixed Charges:
Interest on indebtedness................................... $ 80,956 $ 77,300 $ 88,648 $ 79,138 $ 52,036
Portion of rents representative of the interest factor(c).. 13,585 15,162 13,197 10,592 8,618
Amortization of debt expense............................... 489 486 462 412 234
Capitalized interest....................................... 145 1,214 2,547 1,883 1,534
---------- --------- ---------- ---------- ----------
Total fixed charges.................................... $ 95,175 $ 94,162 $ 104,854 $ 92,025 $ 62,422
========== ========= ========== ========== ==========
Ratio of earnings to fixed charges.............................. 6.75 8.76 6.32 7.04 8.71
========== ========= ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
NOTES:
(a) Includes a gain on the disposal of pasta business of $243.8 million.
(b) Includes a loss on the disposal of businesses of $35.4 million.
(c) Portion of rents representative of the interest factor consists of
one-third of rental expense for operating leases.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>2
<FILENAME>ex23.htm
<DESCRIPTION>CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
<TEXT>
<BR>
<BR>
<BR>
<p align="right"><FONT size="2">EXHIBIT 23</FONT>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS</FONT></H1>
<p align="left"><FONT size="2">
As independent public accountants, we hereby consent to the incorporation
of our reports dated January 26, 2001, included or incorporated by reference in
this Form 10-K for the year ended December 31, 2000, into the Corporation's
previously filed Registration Statements on Forms S-8 and S-3, (File No.
333-25853, File No. 333-33507, File No. 33-45431, File No. 33-45556, and File
No. 333-52509).
<P align="center"> ARTHUR ANDERSEN LLP
<P align="left">New York, New York
<DIV align="left">March 12, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>3
<FILENAME>ex21b.htm
<DESCRIPTION>SUBSIDIARIES
<TEXT>
<BR>
<BR>
<BR>
<P align=right><FONT size=2>
EXHIBIT 21
<P align=center><B> SUBSIDIARIES OF REGISTRANT</B>
<P align="left"><FONT size="2">
The following is a listing of Subsidiaries of the Corporation, their
jurisdictions of incorporation, and the name under which they do business. Each
is wholly owned. Certain subsidiaries are not listed since, considered in the
aggregate as a single subsidiary, they would not constitute a significant
subsidiary as of December 31, 2000.
<BR>
<BR>
<TABLE width=90% align=center cellpadding=0 cellspacing=0 border=0>
<tr>
<TD width=25%></td>
<td width=1%></td>
<td width=1%></td>
</tr>
<tr>
<td></td>
<td align=center nowrap colspan=2><font size=2><u>Name of Subsidiary</U>
</font></td>
<td align=center nowrap colspan=2><font size=2>Jurisdiction of<br><u>
Incorporation</U><BR></font></td>
</tr>
<BR>
<BR>
<tr>
<td></TD>
<td align=left nowrap colspan=2><font size=2>Hershey Chocolate &
Confectionery Corporation</font></td>
<td align=center nowrapcolspan=3><font size=2>Delaware</font></td>
</tr>
<tr>
<td></TD>
<td align=left nowrap colspan=2><font size=2>Hershey Chocolate of
Virginia, Inc.</font></td>
<td align=center nowrap colspan=3><font size=2>Delaware</font></td>
</tr>
<tr>
<td></TD>
<td align=left nowrap colspan=2><font size=2>Hershey Canada, Inc.
</font></td>
<td align=center nowrap colspan=3><font size=2>Canada</font></td>
</tr>
[/TABLE]
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex101_keip.txt
<DESCRIPTION>KEY EMPLOYEE INCENTIVE PLAN
<TEXT>
Exhibit 10.1
HERSHEY FOODS CORPORATION
KEY EMPLOYEE INCENTIVE PLAN
1. ESTABLISHMENT AND PURPOSE
Hershey Foods Corporation (the "Corporation") hereby establishes the Key
Employee Incentive Plan (the "Plan"). The purpose of the Plan is to provide
to selected key employees of the Corporation and its subsidiaries (as
defined below), upon whose efforts the Corporation is dependent for the
successful conduct of its business, further incentive to continue and
increase their efforts as employees and to remain in the employ of the
Corporation and its subsidiaries.
The Plan continues the Annual Incentive Program ("AIP"), with certain
modifications, as in effect under the Corporation's Management Incentive
Plan ("MIP") established in 1975 and as amended thereafter, pursuant to
which participants are entitled to receive cash awards based on achievement
of performance goals during annual performance cycles. The Plan also
continues the Long-Term Incentive Program ("LTIP") portion of the MIP with
certain modifications. In addition to performance stock units ("Performance
Stock Units"), the LTIP portion now also includes nonqualified stock
options for the purchase of Common Stock ("Options"); stock appreciation
rights ("SARs"); and restricted stock units ("Restricted Stock Units").
As used herein, (i) the term "Subsidiary Corporation" shall mean any
present or future corporation which is or would be a "subsidiary
corporation" of the Corporation as defined in Section 424 of the Internal
Revenue Code of 1986 (the "Code"), and (ii) the term "Corporation" defined
above shall refer collectively to Hershey Foods Corporation and its
Subsidiary Corporations unless the context indicates otherwise.
2. STOCK SUBJECT TO THE PLAN
The aggregate number of shares of the Corporation's Common Stock, $1.00 Par
Value (the "Common Stock"), which may be covered by Performance Stock
Units, Options, SARs and Restricted Stock Units granted pursuant to the
LTIP portion of the Plan will be established by the Board of Directors and
will be subject to adjustment in accordance with Section 12 below. The
shares issued under this Plan may be either authorized but unissued shares,
treasury shares held by the Corporation or any direct or indirect
subsidiary thereof or shares acquired by the Corporation through open
market purchases (whether made before or after any exercise of Options(s)
or the granting of stock compensation hereunder) or otherwise. In addition
to shares of Common Stock actually issued or distributed under the Plan,
there shall be deemed to have been issued a number of shares equal to (i)
the number of shares of Common Stock in respect of which optionees utilize
the manner of exercise of, and payment for, Options as provided in
Paragraph 7II(g) of this Plan, and
1
<PAGE>
(ii) the number of shares of Common
Stock which is equivalent in value to any cash amounts distributed upon
payment of Performance Stock Units, SARs or Restricted Stock Units. For
purposes of determining the charge to be made pursuant to subpart (ii)
against the shares of Common Stock subject to the Plan, the value of a
share of Common Stock shall be its Fair Market Value as defined in
Paragraph 4 when awards are made with respect to Performance Stock Units,
upon exercise of SARs, and upon expiration of the applicable restriction
period of Restricted Stock Units. Any shares subject under the Plan to
Performance Stock Units, Options, SARs or Restricted Stock Units which, for
any reason, expire or terminate or are forfeited or surrendered shall again
be available for issuance under the Plan.
3. ADMINISTRATION
The Plan shall be administered by the Compensation and Executive
Organization Committee (the "Committee"), or any successor committee,
appointed by and consisting solely of members of the Board of Directors
(the "Board") of the Corporation, each of whom qualifies as both a
"nonemployee director" within the meaning of Rule 16b-3 or its successor
under the Securities Exchange Act of 1934 (the "Exchange Act") and an
"outside director" within the meaning of Section 162(m) of the Code.
Committee members shall not be eligible to participate in the Plan. The
Board may from time to time remove and appoint members of the Committee in
substitution for, or in addition to, members previously appointed and may
fill vacancies, however caused, in the Committee. The Committee may adopt
such rules and regulations as it deems useful in governing its affairs. Any
action of the Committee with respect to the administration of the Plan
shall be taken by majority vote at a Committee meeting or written consent
of all Committee members.
Subject to the terms and conditions of the Plan, the Committee shall have
authority: (i) to construe and interpret Plan provisions; (ii) to define
the terms used in the Plan; (iii) to prescribe, amend and rescind rules and
regulations relating to the Plan; (iv) to select particular employees to
participate in the Plan, (v) to determine the terms, conditions, form and
amount of grants, distributions or payments made to each participant,
including conditions upon and provisions for vesting, exercise and
acceleration of any grants, distributions or payments; (vi) upon the
request of a participant in the Plan, to approve and determine the duration
of leaves of absence which may be granted to the participant without
constituting a termination of his or her employment for purposes of the
Plan; and (vii) to make all other determinations necessary or advisable for
the administration and operation of the Plan. The Committee shall have the
right to impose varying terms and conditions with respect to each grant or
award. All determinations and interpretations made by the Committee shall
be final, binding and conclusive on all participants and on their legal
representatives and beneficiaries.
4. FAIR MARKET VALUE
As used in the Plan (unless a different method of calculation is required
by applicable law, and except as otherwise specifically provided in any
Plan provision), "Fair Market Value" on or as of any date shall mean (i)
the closing price of the Common Stock as reported in the New
2
<PAGE>
York Stock Exchange Composite Transactions Report (or any other
consolidated transactions reporting system which subsequently may replace
such Composite Transactions Report) for the New York Stock Exchange trading
day immediately preceding such date, or if there are no sales on such date,
on the next preceding day on which there were sales, or (ii) in the event
that the Common Stock is no longer listed for trading on the New York Stock
Exchange, an amount determined in accordance with standards adopted by the
Committee.
5. ELIGIBILITY AND PARTICIPATION
Key employees of the Corporation or of any of its Subsidiary Corporations,
including officers and directors who are regular employees but not members
of the Committee, who in the opinion of the Committee are in a position to
contribute significantly to the success of the Corporation or any
Subsidiary Corporation, division or operating unit thereof, shall be
eligible for selection to participate in the Plan. In making this selection
and in determining the form and amount of grants, distributions and
payments under the Plan, the Committee shall take into account the duties
of the respective employees, their present and potential contributions to
the success of the Corporation or any Subsidiary Corporation, division or
operating unit thereof, and such other factors as the Committee may deem
relevant in connection with accomplishing the purposes of the Plan. An
employee who has been selected to participate may, if he or she is
otherwise eligible, receive more than one grant from time to time, and may
be granted any combination of contingent target grants under the AIP or
under the LTIP components of the Plan, as the Committee shall determine.
6. ANNUAL INCENTIVE PROGRAM
The Committee may from time to time, subject to the provisions of the Plan
and such other terms and conditions as the Committee may determine,
establish contingent target grants for those eligible employees it selects
to participate in the AIP. Each such contingent grant may be, but need not
be, evidenced by a written instrument, and shall be determined in relation
to the participant's level of responsibility in the Corporation and the
competitive compensation practices of other major businesses, and such
other factors as are deemed appropriate by the Committee.
(a) Awards actually earned by and paid to AIP participants ("AIP Awards")
will be based primarily upon achievement of performance goals over a
one-year performance cycle as approved by the Committee.
(b) The Committee, within the limits of the Plan, shall have full authority
and discretion to determine the time or times of establishing
contingent target grants; to select from among those eligible the
employees to receive awards; to review and certify the achievement of
performance goals; to designate levels of awards to be earned in
relation to levels of achievement of performance goals; to adopt such
financial and nonfinancial performance or other criteria for the
payment of awards as it may determine from time to time; to make
awards; and to establish such other measures as may be necessary to
achieve the objectives of the Plan. The financial or non-financial
performance goals established by the Committee may be based upon one or
more of the following: earnings per share, return on net assets, market
3
<PAGE>
share, control of costs, net sales, cash flow, economic value-added
measures, sales growth, earnings growth, stock price, return on equity,
improvements in financial ratings, regulatory compliance, achievement
of balance sheet or income statement objectives, or any other objective
goals established by the Committee (the "Performance Factors").
(c) Aggregate annual AIP Awards shall not exceed six (6%) percent of the
excess of Before-Tax Income (defined for these purposes as Net Income
plus provision for Federal, state and local income taxes and interest
expense on long-term debt, but after consideration of the cost of the
Plan) over sixteen (16%) percent of Total Invested Capital (defined for
these purposes as Stockholders' Equity plus Long-Term Debt plus
Deferred Income Taxes) determined as the average of such Total Invested
Capital at the beginning of the year and the end of each calendar
quarter of such year. The maximum amount any participant can receive as
an AIP Award for any calendar year shall not exceed $2,100,000.
(d) AIP Awards as earned under the terms of the Plan shall be paid in cash
and may exceed or be less than the contingent target grants, provided
that payments do not exceed the maximum permitted cost of the AIP
calculated pursuant to subparagraph (c) above. Payment shall normally
be made as soon as possible following the close of the year, but
payment of all or any portion may be deferred by participants with the
approval of the Committee.
7. LONG-TERM INCENTIVE PROGRAM
The LTIP consists of the following four components:
I. PERFORMANCE STOCK UNITS
The Committee may, subject to the provisions of the Plan and such other
terms and conditions as the Committee may determine, grant Performance
Stock Units to reflect the value of contingent target grants
established for each eligible employee selected for participation. Each
grant of Performance Stock Units may be, but need not be, evidenced by
a written instrument. Such contingent target grants shall be determined
in relation to the employee's level of responsibility in the
Corporation or any Subsidiary Corporation, division or operating unit
thereof, and the competitive compensation practices of other major
businesses.
(a) Awards actually earned by and paid to holders of Performance Stock
Units ("PSU Awards") will be based upon achievement of performance
goals over performance cycles as approved by the Committee. Such
performance cycles each shall cover such period of time, not
exceeding five years, as the Committee from time to time shall
determine.
(b) The Committee, within the limits of the Plan, shall have full
authority and discretion to determine the time or times of
establishing contingent target grants and the granting of
4
<PAGE>
Performance Stock Units; to select from among those eligible the
employees to receive PSU Awards; to review and certify the
achievement of performance goals; to designate levels of awards to
be earned in relation to levels of achievement of performance
goals; to adopt such financial and nonfinancial performance or
other criteria for the payment of PSU Awards as it may determine
from time to time; to make awards; and to establish such other
measures as may be necessary to the objectives of the Plan. The
performance goals established by the Committee may be based on one
or more of the Performance Factors.
(c) Payments of PSU Awards shall be made in shares of Common Stock or
partly in cash as the Committee in its sole discretion shall
determine and shall be charged against the shares available under
the LTIP portion of the Plan as provided in Paragraph 2; provided,
however, that no fractional shares shall be issued and any such
fraction will be eliminated by rounding downward to the nearest
whole share. In any case in which actual payment of a PSU Award is
deferred as provided below, a charge will be made against the
available shares for the number of shares equivalent to the dollar
amount of the deferred PSU Award.
(d) PSU Awards as earned under the terms of the Plan may exceed or be
less than the contingent target grants. Payment shall normally be
made as soon as possible following the close of the year, but
payment of all or any portion may be deferred by participants with
the approval of the Committee.
(e) The maximum amount a participant can receive as a PSU Award in any
calendar year is $2,430,000.
II. STOCK OPTIONS
The Committee may, from time to time, subject to the provisions of the
Plan and such other terms and conditions as it may determine, grant
nonqualified Options to purchase shares of Common Stock of the
Corporation to employees eligible to participate in the Plan. Each
grant of an Option shall be on such terms and conditions and be in such
form as the Committee may from time to time approve, subject to the
following:
(a) The exercise price per share with respect to each Option shall be
determined by the Committee in its sole discretion, but shall not
be less than 100% of the Fair Market Value of the Common Stock as
of the date of the grant of the Option.
(b) Options granted under the Plan shall be exercisable, in such
installments and for such periods, as shall be provided by the
Committee at the time of granting, but in no event shall any
Option granted extend for a period in excess of ten years from the
date of grant.
(c) The maximum number of shares of Common Stock covered by Options
granted to a participant for any calendar year shall not exceed
250,000.
5
<PAGE>
(d) Among other conditions that may be imposed by the Committee, if
deemed appropriate, are those relating to (i) the period or
periods and the conditions of exercisability of any Option; (ii)
the minimum periods during which grantees of Options must be
employed, or must hold Options before they may be exercised; (iii)
the minimum periods during which shares acquired upon exercise
must be held before sale or transfer shall be permitted; (iv)
conditions under which such Options or shares may be subject to
forfeiture; and (v) the frequency of exercise or the minimum or
maximum number of shares that may be acquired at any one time.
(e) Exercise of an Option shall be by written notice stating the
election to exercise in the form and manner determined by the
Committee.
(f) The purchase price upon exercise of any Option shall be paid in
full by making payment (i) in cash; (ii) in whole or in part by
the delivery of a certificate or certificates of shares of Common
Stock of the Corporation, valued at its then Fair Market Value; or
(iii) by a combination of (i) and (ii).
(g) Notwithstanding subparagraph (e) above, any optionee may make
payment of the Option price through a simultaneous exercise of his
or her Option and sale of the shares thereby acquired pursuant to
a brokerage arrangement approved in advance by the Committee to
assure its conformity with the terms and conditions of the Plan.
(h) The Committee may require the surrender of outstanding Options as
a condition to the grant of new Options.
(i) Notwithstanding any other provision of the Plan or of any Option
agreement between the Corporation and an employee, upon the
occurrence of a Change in Control, each outstanding Option held by
a participant who is an employee of the Corporation or any
Subsidiary Corporation or who retired while employed by the
Corporation or any Subsidiary Corporation shall become fully
vested and exercisable notwithstanding any vesting schedule or
installment schedule relating to the exercisability of such Option
contained in the applicable Option agreement or otherwise
established at the time of grant of the Option.
(j) For purposes of this Plan, a "Change in Control" means:
(1) Individuals who, on June 8, 1999, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at
least a majority of the Board, provided that any person
becoming a director subsequent to June 8, 1999, whose election
or nomination for election was approved by a vote of at least
two-thirds of the Incumbent Directors then on the Board
(either by specific vote or by approval of the proxy statement
of the Corporation in which such person is named as nominee
for director, without written objection to such nomination)
shall be an Incumbent Director; PROVIDED, HOWEVER, that no
individual initially elected or nominated as a director of the
Corporation as a result of an actual or threatened election
contest (as described in Rule 14a-11 under the Exchange Act)
6
<PAGE>
("Election Contest") or other actual or threatened
solicitation of proxies or consents by or on behalf of any
person (as such term is defined in Section 3(a)(9) of the
Exchange Act and as used in Section 13(d)(3) and 14(d)(2) of
the Exchange Act) ("Person") other than the Board ("Proxy
Contest"), including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest, shall
be deemed an Incumbent Director; and PROVIDED FURTHER,
HOWEVER, that a director who has been approved by the Hershey
Trust while it beneficially owns more than 50% of the combined
voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of
directors (the "Outstanding Corporation Voting Power") shall
be deemed to be an Incumbent Director; or
(2) The acquisition or holding by any Person of beneficial
ownership (within the meaning of Section 13(d) under the
Exchange Act and the rules and regulations promulgated
thereunder) of shares of the Common Stock and/or the Class B
Common Stock of the Corporation representing 25% or more of
either (i) the total number of then outstanding shares of both
Common Stock and Class B Common Stock of the Corporation (the
"Outstanding Corporation Stock") or (ii) the Outstanding
Corporation Voting Power; provided that, at the time of such
acquisition or holding of beneficial ownership of any such
shares, the Hershey Trust does not beneficially own more than
50% of the Outstanding Corporation Voting Power; and provided,
further, that any such acquisition or holding of beneficial
ownership of shares of either Common Stock or Class B Common
Stock of the Corporation by any of the following entities
shall not by itself constitute such a Change in Control
hereunder: (i) the Hershey Trust; (ii) any trust established
by the Corporation or by any Subsidiary Corporation for the
benefit of the Corporation and/or its employees or those of a
Subsidiary Corporation or by any Subsidiary Corporation for
the benefit of the Corporation and/or its employees or those
of a Subsidiary Corporation; (iii) any employee benefit plan
(or related trust) sponsored or maintained by the Corporation
or any Subsidiary Corporation; (iv) the Corporation or any
Subsidiary Corporation or (v) any underwriter temporarily
holding securities pursuant to an offering of such securities;
or
7
<PAGE>
(3) The approval by the stockholders of the Corporation of any
merger, reorganization, recapitalization, consolidation or
other form of business combination (a "Business Combination")
if, following consummation of such Business Combination, the
Hershey Trust does not beneficially own more than 50% of the
total voting power of all outstanding voting securities of (x)
the surviving entity or entities (the "Surviving Corporation")
or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of more than
50% of the combined voting power of the then outstanding
voting securities eligible to elect directors of the Surviving
Corporation; or
(4) The approval by the stockholders of the Corporation of (i) any
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation (the
"Acquiring Corporation") if, following consummation of such
sale or other disposition, the Hershey Trust beneficially owns
more than 50% of the total voting power of all outstanding
voting securities eligible to elect directors (x) of the
Acquiring Corporation or (y) if applicable, the ultimate
parent corporation that directly or indirectly has beneficial
ownership of more than 50% of the combined voting power of the
then outstanding voting securities eligible to elect directors
of the Acquiring Corporation, or (ii) a liquidation or
dissolution of the Company.
For purposes of this Plan, "Hershey Trust" means either or both of
(a) the Hershey Trust Company, a Pennsylvania corporation, as
Trustee for the Milton Hershey School, or any successor to the
Hershey Trust Company as such trustee, and (b) the Milton Hershey
School, a Pennsylvania not-for-profit corporation
(k) For purposes of this Plan, a "Potential Change in Control" means:
(1) The Hershey Trust by action of any of the Board of Directors
of Hershey Trust Company; the Board of Managers of Milton
Hershey School; the Investment Committee of the Hershey Trust;
and/or any of the officers of Hershey Trust Company or Milton
Hershey School (acting with authority) undertakes
consideration of any action the taking of which would lead to
a Change in Control as defined herein, including, but not
limited to consideration of (i) an offer made to the Hershey
Trust to purchase any number of its shares in the Corporation
such that if the Hershey Trust accepted such offer and sold
such number of shares in the Corporation the Hershey Trust
would no longer have more than 50% of the Outstanding
Corporation Voting Power, (ii) an offering by the Hershey
Trust of any number of its shares in the Corporation for sale
such that if such sale were consummated the Hershey Trust
would no longer have more than 50% of the Outstanding
Corporation Voting Power or (iii) entering into any agreement
or understanding with a person or entity that would lead to a
Change in Control; or
(2) The Board approves a transaction described in subsection (2),
(3) or (4) of the definition of a Change in Control contained
in subparagraph (j) of Paragraph 7II hereof.
(l) In the event that a transaction which would constitute a Change in
Control if approved by the stockholders of the Corporation is to
be submitted to such stockholders for their approval, each
participant who is an employee and who holds an Option granted
under the Plan at the time scheduled for the taking of such vote,
whether or not then exercisable, shall have the right to receive a
notice at least ten (10) business days prior to the date on which
such vote is to be taken. Such notice shall set forth the date on
which such vote of stockholders is to be taken, a description of
the transaction being proposed to stockholders for such approval,
a description of the provisions of subparagraph (i) of Paragraph
8
<PAGE>
7II of the Plan and a description of the impact thereof on such
participant in the event that such stockholder approval is
obtained. Such notice shall also set forth the manner in which and
price at which all Options then held by each such participant
could be exercised upon the obtaining of such stockholder
approval.
III.STOCK APPRECIATION RIGHTS
The Committee may, from time to time, subject to the provisions of the
Plan and such other terms and conditions as the Committee may
determine, grant SARs to employees eligible to participate in the Plan.
SARs may, but need not be evidenced by an agreement executed by the
Corporation and the holder, and shall be subject to such terms and
conditions consistent with the Plan as the Committee shall impose from
time to time, including the following:
(a) SARs may, but need not, relate to Options granted under the Plan,
as the Committee shall determine from time to time. In no event
shall any SARs granted extend for a period in excess of ten years
from the date of grant.
(b) A holder shall exercise his or her SARs by giving written notice
of such exercise in the form and manner determined by the
Committee, and the date upon which such written notice is received
by the Corporation shall be the exercise date for the SARs.
(c) A holder of SARs shall be entitled to receive upon exercise the
excess of the Fair Market Value of a share of Common Stock at the
time of exercise over the Fair Market Value of a share at the time
the SARs were granted, multiplied by the number of shares with
respect to which the SARs relate.
(d) In the sole discretion of the Committee, the amount payable to the
holder upon exercise of SARs may be paid either in Common Stock or
in cash or in a combination thereof. To the extent paid in Common
Stock, the value of the Common Stock that shall be distributed
shall be the Fair Market Value of a share of Common Stock upon
exercise of the SARs as provided in Paragraph 2; provided,
however, that no fractional shares shall be issued and any such
fraction will be eliminated by rounding downward to the nearest
whole share.
(e) In the sole discretion of the Committee, SARs related to specific
Options may be exercisable only upon surrender of all or a portion
of the related Option, or may be exercisable, in whole or in part,
only at such times and to the extent that the related Option is
exercisable, and the number of shares purchasable pursuant to the
related Option may be reduced to the extent of the number of
shares with respect to which the SARs are exercised.
(f) In lieu of receiving payment at the time of exercise of SARs,
payment of all or any portion may be deferred by the participant
with the approval of the Committee.
9
<PAGE>
(g) The maximum number of SARs granted to a participant during any
calendar year shall not exceed 250,000.
IV. RESTRICTED STOCK UNITS
The Committee may, from time to time, subject to the provisions of the
Plan and such other terms and conditions as it may determine, grant
Restricted Stock Units to employees eligible to participate in the
Plan. Each grant of Restricted Stock Units may be, but need not be
evidenced by a written instrument. The grant of Restricted Stock Units
shall state the number of Restricted Stock Units covered by the grant,
and shall contain such terms and conditions and be in such form as the
Committee may from time to time approve, subject to the following:
(a) Each Restricted Stock Unit shall be equivalent in value to a share
of Common Stock.
(b) Vesting of each grant of Restricted Stock Units shall require the
holder to remain in the employment of the Corporation or a
Subsidiary Corporation for a prescribed period (a "Restriction
Period"). The Committee shall determine the Restriction Period or
Periods which shall apply to the shares of Common Stock covered by
each grant of Restricted Stock Units. Except as otherwise
determined by the Committee and provided in the written instrument
granting the Restricted Stock Units, and except as otherwise
provided in Paragraph 8, all Restricted Stock Units granted to a
participant under the Plan shall terminate upon termination of the
participant's employment with the Corporation or any Subsidiary
Corporation before the end of the Restriction Period or Periods
applicable to such Restricted Stock Units, and in such event the
holder shall not be entitled to receive any payment with respect
to those Restricted Stock Units. The Committee may also, in its
sole discretion, establish other terms and conditions for the
vesting of Restricted Stock Units, including conditioning vesting
on the achievement of one or more of the Performance Factors.
Notwithstanding any other provisions of the Plan or of any written
instrument granting Restricted Stock Units, upon the occurrence of
a Change in Control as defined in subparagraph (j) of Paragraph
7II hereof, all restrictions on Restricted Stock Units held by a
participant who is an employee of the Corporation or any
Subsidiary Corporation shall lapse.
(c) Upon expiration of the Restriction Period or Periods applicable to
each grant of Restricted Stock Units, the holder shall, without
payment on his part, be entitled to receive payment in an amount
equal to the aggregate Fair Market Value of the shares of Common
Stock covered by such grant upon such expiration. Such payment may
be made in cash, in shares of Common Stock equal to the number of
Restricted Stock Units with respect to which such payment is made,
or in any combination thereof, as the Committee in its sole
discretion shall determine. Any payment in cash shall reduce the
number of shares of Common Stock available under the Plan as
provided in Paragraph 2, to the extent of the number of Restricted
Stock Units to which such payment relates. Further upon such
expiration, the holder shall be entitled to receive a cash payment
in an amount equal to each cash dividend the Corporation would
10
<PAGE>
have paid to such holder during the term of those Restricted Stock
Units as if the holder had been the owner of record of the shares
of Common Stock covered by such Restricted Stock Units on the
record date for the payment of such dividend.
(d) In lieu of receiving payment at the time of expiration of the
Restriction Period or Periods, payment of all or any portion may
be deferred by the participant with the approval of the Committee.
(e) The maximum number of shares of Common Stock as to which
Restricted Stock Units may be granted to a participant for any
calendar year shall not exceed 50,000.
8. TERMINATION OF EMPLOYMENT
Upon termination of employment with the Corporation of any participant,
such participant's rights with respect to any contingent target grants
under the AIP, or any Performance Stock Units, Options, SARs or Restricted
Stock Units granted under the LTIP, shall be as follows:
(a) In the event that the participant is terminated or discharged by the
Corporation for any reason, except as and to the extent provided
otherwise by the Committee in writing, the participant's rights and
interests under the Plan shall immediately terminate upon notice of
termination of employment. Upon the occurrence of a Potential Change in
Control (as defined in subparagraph (k) of Paragraph 7II hereof) and
for a period of one year thereafter, and upon the occurrence of a
Change in Control (as defined in subparagraph (j) of Paragraph 7II
hereof), the following special provisions and notice requirements shall
be applicable in the event of the termination of the employment of any
participant holding an Option under the Plan: (i) in no event may a
notice of termination of employment be issued to such a participant
unless at least ten (10) business days prior to the effective date of
such termination the participant is provided with a written notice of
intent to terminate the participant's employment which sets forth in
reasonable detail the reason for such intent to terminate, the date on
which such termination is to be effective, and a description of the
participant's rights under this Plan and under the agreements granting
such Option or Options, including the fact that no such Option may be
exercised after such termination has become effective and the manner,
extent and price at which all Options then held by such participant may
be exercised; and (ii) such notice of intent to terminate a
participant's employment shall not be considered a "notice of
termination of employment" for purposes of the first sentence of this
Paragraph 8 (a). This Paragraph 8 (a) is intended only to provide for a
requirement of notice to terminate upon the occurrence of the events
set forth herein and shall not be construed to create an obligation of
continued employment or a contract of employment in any manner or to
otherwise affect or limit the Corporation's ability to terminate the
employment of any participant holding an Option under the Plan.
(b) If a participant terminates employment with the Corporation as the
result, in the sole judgment of the Committee, of his or her becoming
totally disabled (in which event termination will be deemed to occur on
the date the Committee makes such determination), or if a participant
should die or (except as to Restricted Stock Units) retire while
11
<PAGE>
employed by the Corporation or any of its Subsidiary Corporations, then
the participant or, as the case may be, the person or persons to whom
the participant's interest under the Plan shall pass by will or by the
laws of descent and distribution (the "Estate"), shall have the
following rights:
(i) the grantee of a contingent AIP grant or the Estate shall be
entitled to receive payment of an AIP award as, and to the extent,
determined by the Committee;
(ii) if the holder of Performance Stock Units shall have been employed
for at least two-thirds of the related performance cycle prior to
the date of termination or death, then, except as otherwise
provided in the written instrument (if any) evidencing the
Performance Stock Units, and subject to any further adjustments
the Committee may make in its absolute discretion, the participant
or the Estate shall be entitled to receive payment of a PSU Award
upon the expiration of the related performance cycle, provided
that such award shall be adjusted by multiplying the amount
thereof by a fraction, the numerator of which shall be the number
of full and partial calendar months between the date of the
beginning of each such performance cycle and the date of
termination or death, and the denominator of which shall be the
number of full and partial calendar months from the date of the
beginning of the performance cycle to the end of the said
performance cycle;
(iii)except as otherwise provided in the terms and conditions of the
stock option or SAR grant, the holder or the Estate shall be
entitled to exercise (provided any vesting requirement has been
satisfied as of the date of exercise) any Option or SAR for a
period of five years (three years in the case of options or SARs
granted prior to 1997) from such date of death, total disability
or retirement, or for such longer period as the Committee may
determine in the case of financial hardship or other unusual
circumstances (subject to the maximum exercise period for Options
and SARs specified in Paragraph 7II(b) and 7III(a) hereof,
respectively);
(iv) except as otherwise provided in the written instrument evidencing
the Restricted Stock Units, upon death or termination due to total
disability the holder or the Estate shall be entitled to receive
payment in respect of the Restricted Stock Units, provided that
such Units shall be adjusted by multiplying the amount thereof by
a fraction, the numerator of which shall be the number of full and
partial calendar months between the date of grant of such Units
and the date of death or termination, and the denominator of which
shall be the number of full and partial calendar months from the
date of the grant to the end of the Restriction Period. Upon
retirement, the participant's rights with respect to Restricted
Stock Units shall immediately terminate.
(c) In the event of resignation by the participant, the participant's
rights and interests under the Plan shall immediately terminate upon
such resignation; provided, however, that the Committee shall have the
absolute discretion to review the reasons and circumstances of the
resignation and to determine whether, alternatively, and to what
extent, if any, the participant may continue to hold any rights or
interests under the Plan.
12
<PAGE>
(d) A transfer of a participant's employment without an intervening period
from the Corporation to a Subsidiary Corporation or vice versa, or from
one Subsidiary Corporation to another, shall not be deemed a
termination of employment.
(e) The Committee shall be authorized to make all determinations and
calculations required by this Paragraph 8, including any determinations
necessary to establish the reason for terminations of employment for
purposes of the Plan, which determinations and calculations shall be
conclusive and binding on any affected participants and Estates.
9. ADDITIONAL REQUIREMENTS
No Performance Stock Units, Options, SARs or Restricted Stock Units
(hereinafter collectively an "Interest") granted pursuant to the Plan shall
be exercisable or realized in whole or in part, and the Corporation shall
not be obligated to sell, distribute or issue any shares subject to any
such Interest, if such exercise and sale would, in the opinion of counsel
for the Corporation, violate the Securities Act of 1933, as amended (or
other Federal or state statutes having similar requirements). Each Interest
shall be subject to the further requirement that, if at any time the Board
of Directors shall determine in its discretion that the listing or
qualification of the shares relating or subject to such Interest under any
securities exchange requirements or under any applicable law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such
Interest or the distribution or issue of shares thereunder, such Interest
may not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or obtained
free of any condition not acceptable to the Board of Directors.
Interests may be subject to restrictions as to resale or other disposition
and to such other provisions as may be appropriate to comply with Federal
and state securities laws and stock exchange requirements, and the exercise
of any Interest or entitlement to payment thereunder may be contingent upon
receipt from the holder (or any other person permitted by this Plan to
exercise any Interest or receive any distribution hereunder) of a
representation that at the time of such exercise it is his or her then
present intention to acquire the shares being distributed for investment
and not for resale.
10. NONTRANSFERABILITY
Unless otherwise approved by the Committee, contingent AIP grants,
Performance Stock Units, Options, SARs and Restricted Stock Units granted
under the Plan to an employee shall be nonassignable and shall not be
transferable by him or her otherwise than by will or the laws of descent
and distribution, and shall be exercisable, during the employee's lifetime,
only by the employee or the employee's guardian or legal representative.
13
<PAGE>
11. DISCLAIMER OF RIGHTS
No provision in the Plan or any contingent target AIP grants, Performance
Stock Units, Options, SARs or Restricted Stock Units granted pursuant to
the Plan shall be construed to confer upon the participant any right to be
employed by the Corporation or by any Subsidiary Corporation, or to
interfere in any way with the right and authority of the Corporation or any
Subsidiary Corporation either to increase or decrease the compensation of
the participant at any time, or to terminate any relationship of employment
between the participant and the Corporation or any of its Subsidiary
Corporations.
Participants under the Plan shall have none of the rights of a stockholder
of the Corporation with respect to shares subject to Performance Stock
Units, Options, SARs or Restricted Stock Units unless and until such shares
have been issued to him or her.
12. STOCK ADJUSTMENTS
In the event that the shares of Common Stock, as presently constituted,
shall be changed into or exchanged for a different number or kind of shares
of stock or other securities of the Corporation or of another corporation
(whether by reason of merger, consolidation, recapitalization,
reclassification, stock split, combination of shares or otherwise), or if
the number of such shares of Common Stock shall be increased through the
payment of a stock dividend, or a dividend on the shares of Common Stock of
rights or warrants to purchase securities of the Corporation shall be made,
then there shall be substituted for or added to each share available under
and subject to the Plan as provided in Paragraph 2 hereof, and to the
limitations set forth in Paragraphs 7II (c); 7III (g) and 7IV (e), and each
share theretofore appropriated or thereafter subject or which may become
subject to Performance Stock Units, Options, SARs or Restricted Stock Units
under the Plan, the number and kind of shares of stock or other securities
into which each outstanding share of Common Stock shall be so changed or
for which each such share shall be exchanged or to which each such share
shall be entitled, as the case may be. Outstanding Options and SARs also
shall be appropriately amended as to price and other terms as may be
necessary to reflect the foregoing events. In the event there shall be any
other change in the number or kind of the outstanding shares of Common
Stock, or of any stock or other securities into which the Common Stock
shall have been changed or for which it shall have been exchanged, then if
the Board of Directors shall, in its sole discretion, determine that such
change equitably requires an adjustment in the shares available under and
subject to the Plan, or in any Performance Stock Units, Options, SARs or
Restricted Stock Units theretofore granted or which may be granted under
the Plan, such adjustments shall be made in accordance with such
determination.
No fractional shares of Common Stock or units of other securities shall be
issued pursuant to any such adjustment, and any fractions resulting from
any such adjustment shall be eliminated in each case by rounding downward
to the nearest whole share or unit.
14
<PAGE>
13. TAXES
The Corporation shall be entitled to withhold the amount of any tax
attributable to any amounts payable or shares of Common Stock deliverable
under the Plan. The person entitled to any such delivery, whether due to
the settlement of PSUs, the exercise of an Option or SAR, or the vesting of
Restricted Stock Units, or any other taxable event may, by notice to the
Corporation, elect to have such withholding satisfied by a reduction of the
number of shares otherwise so deliverable (a "Stock Withholding Election"),
or by delivery of shares of Stock already owned by the Participant, with
the amount of shares subject to such reduction or delivery to be calculated
based on the Fair Market Value on the date of such taxable event. Reporting
Persons may make a Stock Withholding Election only in accordance with the
methods then permitted under applicable Securities and Exchange Commission
interpretations.
14. EFFECTIVE DATE AND TERMINATION OF PLAN
The Plan shall become effective upon adoption by the Board of Directors of
the Corporation, provided such adoption is approved by the stockholders,
within twelve months of adoption by the Board of Directors. Contingent
target AIP grants, Performance Stock Units, Options, SARs and Restricted
Stock Units under this Plan, granted before approval of the Plan by the
stockholders, shall be granted subject to such approval and shall not be
exercisable or payable before such approval.
The Board of Directors at any time may terminate the Plan, but such
termination shall not alter or impair any of the rights or obligations
under any contingent target AIP grants, Performance Stock Units, Options,
SARs or Restricted Stock Units theretofore granted under the Plan unless
the affected participant shall so consent.
15. PRIOR PLAN
Effective upon the adoption of this Plan by the Board of Directors, no
additional grants of contingent target grants under the AIP or of
Performance Stock Units shall be made under the MIP; provided, that any
payments of AIP awards or deferrals thereof made with respect to prior
grants of contingent AIP awards, any prior grants of any LTIP Units, and
any payments of LTIP awards or deferrals thereto made with respect to such
prior grants, shall not be affected. Notwithstanding the foregoing, to the
extent the remaining shares reserved for use under the LTIP portion of the
MIP are insufficient for any LTIP awards under performance cycles that
began prior to January 1, 1987, shares available under this Plan may be
used for such purpose.
16. APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of capital stock
pursuant to Options will be used for general corporate purposes.
15
<PAGE>
17. NO OBLIGATION TO EXERCISE OPTION OR SAR
The granting of an Option or SAR shall impose no obligation upon the
optionee to exercise such Option or SAR.
18. AMENDMENT
The Board of Directors by majority vote, at any time and from time to time,
may amend the Plan in such respects as it shall deem advisable, to conform
to any change in any applicable law or in any other respect.
Notwithstanding the foregoing, the Plan may not be terminated or amended in
a manner adverse to the interests of any participant (without the consent
of the participant) either: (a) after a Potential Change in Control occurs
and for one (1) year following the cessation of a Potential Change in
Control, or (b) for a two-year period beginning as of the date of a Change
in Control (the "Coverage Period"). Upon the expiration of the Coverage
Period, subparagraph (l) of Paragraph 7II of the Plan and Paragraph 8 (a)
of the Plan may not be amended in any manner that would adversely affect
any participant without the consent of the participant.
16
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>ex102_serp.txt
<DESCRIPTION>SUPPLEMENTAL EXECUTIVE RETIREEMENT PLAN
<TEXT>
Exhibit 10.2
HERSHEY FOODS CORPORATION
AMENDED AND RESTATED (1999)
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1. PURPOSE OF PLAN. The purpose of the Amended and Restated (1999)
Supplemental Executive Retirement Plan (hereinafter called the "Plan") is to
obtain for Hershey Foods Corporation (hereinafter called the "Corporation") all
of the benefits which flow from maintaining a strong management team by
providing to executive and upper level management employees the means to
continue their attained standard of living during retirement and by offering
benefits that will assist in attracting executive and upper level management
employees of outstanding ability. The Plan is an amendment to and restatement
(as amended) of the Hershey Foods Corporation Amended and Restated Supplemental
Executive Retirement Plan, as amended from time to time which was in effect from
November 1, 1994 to June 8, 1999.
2. DEFINITIONS. The following words and phrases as used in the
Plan shall have the following meanings, unless a different meaning is plainly
required by the context:
a. "Cause" means the willful engaging by an employee of
the Corporation in illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Corporation.
For purposes of this definition, no act or failure to act, on the part
of an employee of the Corporation, shall be considered "willful" unless it is
done, or omitted to be done, by the employee in bad faith and without reasonable
belief that the employee's action or omission was in the best interest of the
Corporation. Any act or failure to act, based upon prior approval given by the
Board or upon the instruction or with the approval of the Chief Executive
Officer or the employee's superior or based upon the advice of counsel for the
Corporation shall be conclusively presumed to be done, or omitted to be done, by
the employee in good faith and in the best interest of the Corporation.
b. "Committee" means the Compensation and Executive
Organization Committee of the Board of Directors of the Corporation (the
"Board").
c. "Deferred Retirement Date" means the first day of the
month following an employee's termination of employment with the Corporation
provided such termination occurs after his Normal Retirement Date.
d. "Disability" or "Disabled", for purposes of this Plan,
shall have the same meaning as provided in Section 1.16 of the Retirement Plan,
as such section may be amended from time to time.
<PAGE>
e. "Early Retirement Date" means the first day of any month
following an employee's termination of employment with the Corporation which is
coincident with or following his fifty-fifth (55th) birthday and prior to his
Normal Retirement Date.
f. "Final Average Compensation" means the sum of (1) the
highest annual average of a Vested Participant's basic salary paid or accrued
over any thirty-six (36) consecutive month period during his last ten (10) years
of employment with the Corporation and (2) the highest annual average of his
annual awards under the Annual Incentive Program (hereinafter called the "AIP")
of the Corporation's Key Employee Incentive Plan ("KEIP") paid or accrued over
any five (5) consecutive calendar years during his last ten (10) years of
employment with the Corporation. If a Vested Participant dies, retires, or
suffers a Disability or if a Participant suffers a Disability during a calendar
year and only a partial AIP award is made for that year, for purposes of the
Plan, his AIP award for such year will be considered to equal the award actually
made divided by the fraction of such year that he was employed by the
Corporation prior to his death, retirement or Disability. If a Vested
Participant otherwise terminates employment with the Corporation during a
calendar year, his AIP award for that year for purposes of the Plan will be
considered to be zero (0), regardless of whether any AIP award is actually made
for that year.
g. "GATT Interest Rate" means, for purposes of this Plan, for
any specific month, the annual interest rate on 30-year Treasury securities as
specified by the Commissioner of the Internal Revenue Service in revenue
rulings, notices or other guidance, published in the Internal Revenue Service
Bulletin, decreased by the percentage applicable to such month as set forth on
Schedule I attached hereto.
h. "Lump Sum Interest Rate" means, as of any specific date:
(x) after January 1, 1998 and prior to January 1,
2000 the sum of one twelfth (1/12th) of each PBGC Interest Rate for the
twelve months preceding such date;
(y) after December 31, 1999 and prior to January 1,
2001, the sum of one-twelfth (1/12th) of each GATT Interest Rate for
November 1999 and each month thereafter to and including the second
month preceding the month during which such date occurs plus, if the
number of months for which a GATT Interest Rate is determined as
described is less than twelve, the sum of one-twelfth (1/12th) of each
PBGC Interest Rate for December 1999 and each preceding month in
reverse chronological order until the total number of months for which
a GATT Interest Rate and/or a PBGC Interest Rate has been determined
equals twelve; and
(z) after December 31, 2000, the sum of one twelfth
(1/12th) of each GATT Interest Rate for the twelve consecutive months
beginning with the thirteenth (13th) month preceding the month during
which such date occurs.
2
<PAGE>
i. "Normal Retirement Date" means, for the purposes of this
Plan, the first day of the month nearest an employee's sixty-fifth (65th)
birthday, except that if his birthday is equally near the first of two calendar
months, the first day of the month prior to his sixty-fifth (65th) birthday
shall be his Normal Retirement Date.
j. "PBGC Interest Rate" means, for any specific month, the
interest rate used by the Pension Benefit Guaranty Corporation for such month
for purposes of valuing immediate annuities for terminating single employer
plans with insufficient assets to pay guaranteed benefits.
k. "Participant" means, as of any specific date, an employee
of the Corporation who, as of such date, is a participant in the performance
share unit portion of the KEIP or who, as of such date, is not then but had been
a participant in the performance share unit portion of the KEIP for at least
five (5) of his last ten (10) years of employment with the Corporation.
l. "Retirement Plan" means the Corporation's Retirement Plan,
amended and restated effective January 1, 1989, as in effect from time to time
and any successor plan thereto.
m. "Vested Participant" means, as of any specific date, a
Participant who, as of such date, satisfies each eligibility requirement set
forth in the first sentence of Section 3 of the Plan.
n. "Years of Service", for purposes of this Plan, shall have
the same meaning as provided in Section 1.56 of the Retirement Plan, as such
section may be amended from time to time.
3. ELIGIBILITY. An employee of the Corporation will be eligible to
receive a benefit pursuant to Section 4 of the Plan if, at the time of his
termination of employment with the Corporation, such employee (i) is at least 55
years of age, (ii) has ten (10) Years of Service, and (iii) has participated in
the performance share unit portion of the KEIP for at least five (5) of his last
ten (10) years of employment with the Corporation. No employee of the
Corporation, regardless of whether he satisfies all the eligibility requirements
to be a Vested Participant, shall be entitled to receive any benefits under the
Plan if his employment with the Corporation is terminated for Cause.
Notwithstanding the above, an employee whose employment is terminated with the
Corporation prior to his Normal Retirement Date for reason of Disability will be
treated as provided for in Section 4.c.
4. RETIREMENT BENEFITS.
a. Normal Retirement Benefit. An employee who qualifies as a
Vested Participant on the date of his termination of employment with the
Corporation, and who retires (or whose employment is otherwise terminated, other
than for Cause) on or after his Normal Retirement Date shall be entitled under
the Plan to receive a normal retirement benefit which shall be an annual
benefit, payable in monthly installments, equal to:
3
<PAGE>
(1) the product of three and two-thirds
percent (3 2/3%) of his Final Average Compensation and his Years of Service not
in excess of fifteen (15) Years of Service;
reduced by:
(2) one hundred percent (100%) of the Vested
Participant's retirement benefit under the Retirement Plan and any
other tax-qualified defined benefit pension plan maintained by the
Corporation or any affiliate thereof or any defined benefit pension
plan maintained by any other entity, payable as a life annuity
commencing at his Normal Retirement Date or his Deferred Retirement
Date if he retires after his Normal Retirement Date, regardless of
whether such benefit payment is in that form or begins at that time;
and
(3) one hundred percent (100%) of the primary social
security benefit to which the Vested Participant would be entitled on
his Normal Retirement Date or his Deferred Retirement Date if he
retires after his Normal Retirement Date regardless of whether he
receives any portion of such primary Social Security benefit on such
date.
Payment of such benefit shall commence on his Normal Retirement Date if
he retires (or otherwise has his employment terminated, other than for Cause) on
such date and on his Deferred Retirement Date if he retires (or otherwise has
his employment terminated, other than for Cause) after his Normal Retirement
Date.
b. Early Retirement Benefit. An employee who qualifies as a
Vested Participant on the date of his termination of employment with the
Corporation, and who retires (or whose employment is otherwise terminated, other
than for Cause) on or after his Early Retirement Date and prior to his Normal
Retirement Date shall be entitled under the Plan to receive an early retirement
benefit which shall be an annual benefit payable in monthly installments, equal
to:
(1) the product of three and two-thirds percent (3 2/3%) of his Final Average
Compensation and his Years of Service not in excess of fifteen (15) Years of
Service;
reduced by:
(2) one hundred percent (100%) of his retirement
benefit under the Retirement Plan and any other tax-qualified defined
benefit pension plan maintained by the Corporation or any affiliate
thereof or any defined benefit pension plan maintained by any other
entity, payable as a life annuity commencing at his Early Retirement
Date or the first date thereafter on which such benefits would be
payable if they are not payable on his Early Retirement Date regardless
of whether such benefit payment is in that form or begins at that time;
and
4
<PAGE>
(3) one hundred percent (100%) of the primary Social
Security benefit to which the Vested Participant would be entitled on
his Early Retirement Date or the first date thereafter on which such
benefits would be payable if they are not payable on his Early
Retirement Date regardless of whether he receives any portion of such
primary Social Security benefit on such date; and
(4) the product of (a) the difference between (1) and
the sum of (2) and (3), (b) five-twelfths of a percent (5/12%), and (c)
the number of complete calendar months by which the Vested
Participant's date of termination of employment precedes his sixtieth
(60th) birthday.
Payment of such benefit shall commence on the first day of the month
coincident with the Vested Participant's retirement or other termination of
employment, other than for Cause.
c. Disability Retirement Benefit. If an employee who is an
active participant in the performance share unit portion of the KEIP suffers a
Disability prior to his Normal Retirement Date and while employed by the
Corporation, the period of his Disability will be recognized as Years of Service
and as years of participation in the performance share unit portion of the KEIP
under the Plan. If such Disability continues to his Normal Retirement Date, for
purposes of the Plan, he will retire on that date and will be entitled to a
normal retirement benefit calculated in accordance with Section 4.a. commencing
on that date. In calculating the benefit under Section 4.a., the Participant's
Final Average Compensation shall be equal to his annual base compensation
immediately prior to his Disability plus the average of his AIP earned during
the three (3) years immediately prior to the commencement of his Disability.
d. Pre-Retirement Death Benefit. If a Participant dies before
his employment by the Corporation terminates and qualifies as a Vested
Participant on his date of death, his designated beneficiary(ies), or his estate
if he has not designated any beneficiary or beneficiaries in accordance with
procedures established by the Committee, shall receive within ten (10) days of
the Vested Participant's death a death benefit equal to the lump sum present
value of one hundred percent (100%) of the retirement benefit that would have
been payable to the Vested Participant under Sections 4.a. or 4.b. (including
the spousal survivor benefit payable pursuant to Section 4.e. with respect to
any Vested Participant survived by a spouse) if he had retired on the date of
his death. The lump sum present value of the retirement benefit shall be
calculated using: (x) for each Vested Participant who was a Vested Participant
on January 1, 1998, (i) the 83 GAM mortality tables; and (ii) an interest rate
equal to the sum of one-twelfth (1/12th) of each PBGC Interest Rate for the
twelve (12) months immediately preceding the date of the Vested Participant's
death; and (y) for each Vested Participant who first became a Vested Participant
after January 1, 1998, (i) the prevailing commissioner's standard mortality
table (described in Section 807(d)(5)(A) of the Internal Revenue Code of 1986,
as amended from time to time) used to determine reserves for group annuity
contracts issued on the date of the Vested Participant's death (without regard
to any other subparagraph for such Section 807(d)(5)) that is prescribed by the
Commissioner of the Internal Revenue Service in revenue rulings, notices, or
other guidance published in the Internal Revenue
5
<PAGE>
Bulletin; and (ii) an interest rate equal to the Lump Sum Interest Rate as of
the date of the Vested Participant's death.
e. Post-Retirement Death Benefit. If a Vested Participant who
is receiving monthly retirement benefits under this Plan following his
termination of employment by the Corporation dies, his surviving spouse, if he
is survived by a spouse, shall be entitled to receive a death benefit which
shall be a monthly payment for the spouse's life, beginning on the first day of
the month following the Vested Participant's death, equal to:
(1) fifty percent (50%) of the monthly
retirement benefit to which the Vested Participant was entitled under the Plan
prior to his death;
reduced by:
(2) the monthly annuity value of any life insurance
provided by the Corporation or any affiliate thereof for retired
employees that is in excess of post-retirement group term life
insurance regularly provided by the Corporation or any affiliate
thereof.
5. ADMINISTRATION OF THE PLAN. The Committee is charged with the
administration of the Plan. It shall have full power and authority to construe
and interpret the Plan. Its decisions shall be final, conclusive and binding on
all parties. Subject to Section 10 of this Plan, the Committee shall also have
the power, in its sole discretion, at any time (i) to waive, in whole or in
part, application of any of the eligibility requirements of Section 3 or of the
benefit reduction factors in Sections 4.a. and 4.b. and (ii) to determine the
timing and form of payment of any benefit under the Plan, in the case of any
individual Participant, Vested Participant or other employee of the Corporation
who has participated in the performance share unit portion of the KEIP.
6. OPTIONAL FORMS OF PAYMENT. In lieu of the monthly retirement benefit
(including the spousal survivor benefit payable pursuant to Section 4.e. hereof)
payable pursuant to Section 4.a. or 4.b. hereof to a Vested Participant (and his
surviving spouse) who retires (or whose employment is terminated other than for
Cause) after August 2, 1994 (such benefit payable to a Vested Participant and/or
his surviving spouse is herein referred to for purposes of this Section 6 as the
"Applicable Retirement Benefit"), such Vested Participant may elect to receive
the following form of benefit payment:
A lump sum cash payment, payable to the Vested Participant within ten
(10) days after the Vested Participant's date of retirement (or the Vested
Participant's date of termination of employment other than for Cause), equal to
the actuarial present value of the Applicable Retirement Benefit, calculated
using: (x) for each Vested Participant who was a Vested Participant on January
1, 1998, (i) the 83 GAM mortality tables; and (ii) an interest rate equal to one
twelfth (1/12th) of each PBGC Interest Rate for the twelve months immediately
preceding the date of the Vested Participant's retirement (or the Vested
Participant's date of termination of employment other than for Cause),
calculated in accordance with the Corporation's practices for determining
retirement benefits; and (y) for each Vested Participant
6
<PAGE>
who first became a Vested Participant after January 1, 1998 (i) the prevailing
commissioner's standard mortality table (described in Section 807(d)(5)(A) of
the Internal Revenue Code of 1986, as amended from time to time) used to
determine reserves for group annuity contracts issued on the date of the Vested
Participant's retirement (or the Vested Participant's date of termination of
employment other than for Cause) (without regard to any other subparagraph for
such Section 807(d)(5)) that is prescribed by the Commissioner of the Internal
Revenue Service in revenue rulings, notices, or other guidance published in the
Internal Revenue Bulletin; and (ii) an interest rate equal to the Lump Sum
Interest Rate as of the date of the Vested Participant's retirement.
Prior to March 1, 1998, any such election must be made at least one hundred
(180) days prior to the date that the Applicable Retirement Benefit payments
would otherwise become payable. After February 28, 1998, any such election must
be made by those Participants designated by the Committee from time to time at
least two (2) years and by all other Participants at least one (1) year prior to
the date that the Applicable Retirement Benefit payments would otherwise become
payable.
7. PAYMENT UPON CHANGE IN CONTROL
a. Any former employee or the surviving spouse of an employee
or former employee who is receiving a benefit under Sections 4.a., 4.b., 4.d. or
4.e. hereof (or pursuant to the terms of any version of this Plan) at the time
of a Change in Control (collectively or individually, "SERP Recipient") shall
receive, in lieu of the future monthly retirement benefit (including the spousal
survivor benefit in the case of a benefit under Section 4.a. or 4.b.) to which
he is entitled (such future benefit payable to the SERP Recipient is herein
referred to for purposes of this Section 7.a as the "Future Retirement
Benefit"), a lump sum cash payment, payable to the SERP Recipient, as
applicable, within ten (10) days after a Change in Control (or such later date
that is forty-five (45) days after the notice required by the following
provisions of this Section 7.a. is provided to the applicable SERP Recipient),
equal to the actuarial present value of his Future Retirement Benefit,
calculated using: (i) the 83 GAM mortality tables; and (ii) an interest rate
equal to the PBGC Interest Rate as of the date of the Change of Control.
Notwithstanding the foregoing, the provisions of this Section
7.a. shall not apply with respect to a SERP Recipient unless such SERP Recipient
consents to the application of this Section 7.a. within thirty (30) days after
the date the SERP Recipient receives written notice of the terms of this Section
7.a., as provided for by the following sentence. The Corporation shall provide
each SERP Recipient, a written notice of the terms of this Section 7.a. and the
consent requirement contained herein not later than five (5) days after the
earliest of (x) the occurrence of a Potential Change in Control, (y) the date
that the Corporation provides notice to its stockholders that a vote on a
transaction which, if consummated, would constitute a Change in Control will be
submitted to the Corporation's stockholders for approval, or (z) the occurrence
of a Change of Control.
7
<PAGE>
b. For purposes of Sections 7 and 10, a "Change in
Control" means:
(1) Individuals who, on June 8, 1999, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a
director subsequent to June 8, 1999, whose election or nomination for
election was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by specific vote or by approval of
the proxy statement of the Corporation in which such person is named as
nominee for director, without written objection to such nomination)
shall be an Incumbent Director; PROVIDED, HOWEVER, that no individual
initially elected or nominated as a director of the Corporation as a
result of an actual or threatened election contest (as described in
Rule 14a-11 under the Exchange Act) ("Election Contest") or other
actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board ("Proxy Contest"), including
by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest, shall be deemed an Incumbent Director; and
PROVIDED FURTHER, HOWEVER, that a director who has been approved by the
Hershey Trust while it beneficially owns more than 50% of the combined
voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors
(the "Outstanding Company Voting Power") shall be deemed to be an
Incumbent Director;
(2) The acquisition or holding by any Person of
beneficial ownership (within the meaning of Section 13(d) under the
Exchange Act and the rules and regulations promulgated thereunder) of
shares of the Common Stock and/or the Class B Common Stock of the
Corporation representing 25% or more of either (i) the total number of
then outstanding shares of both Common Stock and Class B Common Stock
of the Corporation (the "Outstanding Company Stock") or (ii) the
Outstanding Company Voting Power; provided that, at the time of such
acquisition or holding of beneficial ownership of any such shares, the
Hershey Trust does not beneficially own more than 50% of the
Outstanding Company Voting Power; and provided, further, that any such
acquisition or holding of beneficial ownership of shares of either
Common Stock or Class B Common Stock of the Corporation by any of the
following entities shall not by itself constitute such a Change in
Control hereunder: (i) the Hershey Trust; (ii) any trust established by
the Corporation or by any Subsidiary for the benefit of the Corporation
and/or its employees or those of a Subsidiary; (iii) any employee
benefit plan (or related trust) sponsored or maintained by the
Corporation or any Subsidiary; (iv) the Corporation or any Subsidiary
or (v) any underwriter temporarily holding securities pursuant to an
offering of such securities;
(3) The approval by the stockholders of the
Corporation of any merger, reorganization, recapitalization,
consolidation or other form of business combination (a "Business
Combination") if, following consummation of such Business Combination,
the Hershey Trust does not beneficially own more than 50%
8
<PAGE>
of the total voting power of all outstanding voting securities
eligible to elect directors of (x) the surviving entity or entities
(the "Surviving Corporation") or (y) if applicable, the ultimate
parent corporation that directly or indirectly has beneficial
ownership of more than 50% of the combined voting power of the then
outstanding voting securities eligible to elect directors of the
Surviving Corporation; or
(4) The approval by the stockholders of the
Corporation of (i) any sale or other disposition of all or
substantially all of the assets of the Corporation, other than to a
corporation (the "Acquiring Corporation") if, following consummation of
such sale or other disposition, the Hershey Trust beneficially owns
more than 50% of the total voting power of all outstanding voting
securities eligible to elect directors (x) of the Acquiring Corporation
or (y) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of more than 50% of the combined
voting power of the then outstanding voting securities eligible to
elect directors of the Acquiring Corporation, or (ii) a liquidation or
dissolution of the Corporation.
c. For purposes of Sections 7 and 10, a "Potential
Change in Control" means:
(1) The Hershey Trust by action of any of the Board
of Directors of Hershey Trust Company; the Board of Managers of Milton
Hershey School; the Investment Committee of the Hershey Trust; and/or
any of the officers of Hershey Trust Company or Milton Hershey School
(acting with authority) undertakes consideration of any action the
taking of which would lead to a Change in Control as defined herein,
including, but not limited to consideration of (i) an offer made to the
Hershey Trust to purchase any number of its shares in the Corporation
such that if the Hershey Trust accepted such offer and sold such number
of shares in the Corporation the Hershey Trust might no longer have
more than 50% of the Outstanding Company Voting Power, (ii) an offering
by the Hershey Trust of any number of its shares in the Corporation for
sale such that if such sale were consummated the Hershey Trust might no
longer have more than 50% of the Outstanding Company Voting Power or
(iii) entering into any agreement or understanding with a person or
entity that would lead to a Change in Control; or
(2) the Board approves a transaction described in
subsection (2), (3) or (4) of the definition of a Change in Control
contained in Section 7.b.
d. For purposes of this Section 7: (i) "Hershey Trust" means
either or both of (a) the Hershey Trust Company, a Pennsylvania corporation, as
Trustee for the Milton Hershey School, or any successor to the Hershey Trust
Company as such trustee, and (b) the Milton Hershey School, a Pennsylvania
not-for-profit corporation; (ii) "Exchange Act" shall mean the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder; (iii)
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d)(3) and 14(d) thereof; and (iv) "Subsidiary"
shall mean any corporation controlled by the Corporation, directly or
indirectly.
<PAGE>
8. PAYMENT OF BENEFITS. Nothing contained in the Plan and no action
taken pursuant to the provisions of the Plan shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Corporation
and any Participant, Vested Participant, spouse of a Participant or Vested
Participant, or any other person. No person other than the
9
<PAGE>
Corporation shall by virtue of the provisions of the Plan have any interest in
such assets. To the extent that any person acquires a right to receive payments
from the Corporation under the Plan, such right shall be no greater than the
right of any unsecured general creditor of the Corporation. The right of any
Vested Participant or any other person to the payment of benefits under the Plan
shall not be assigned, transferred, pledged or encumbered; such payments and the
right thereto are expressly declared to be non-assignable and nontransferable.
No payments hereunder shall be subject to the claim of the creditors of any
Vested Participant or of any other person entitled to payments hereunder. Any
payments required to be made pursuant to the Plan to a person who is under a
legal disability may be made by the Corporation to or for the benefit of such
person in such of the following ways as the Committee shall determine:
a. directly to such person.
b. to the legal representative of such person.
c. to a near relative of such person to be used for such
person's benefit.
d. directly in payment of expenses of support,
maintenance or education of such person.
The Corporation shall not be required to see to the
application by any third party of any payments made pursuant to the Plan.
9. EFFECTIVE DATE OF PLAN. This Amended and Restated (1999)
Supplemental Executive Retirement Plan shall be effective June 9, 1999 and
Vested Participants who become eligible to retire under the Plan on or after
that date shall be entitled to the benefits provided hereunder.
10. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN. The Board of
Directors of the Corporation may, at any time, suspend or terminate the Plan.
The Board may also from time to time, amend the Plan in such respects as it may
deem advisable in order that benefits provided hereunder may conform to any
change in law or in other respects which the Board deems to be in the best
interest of the Corporation. No such suspension, termination or amendment of the
Plan shall adversely affect any right of any person who is a Vested Participant
at the time of such suspension, termination or amendment or his
beneficiary(ies), estate or surviving spouse, as applicable, to receive benefits
under the Plan in accordance with its provisions in effect immediately prior to
such suspension, termination or amendment without the consent of such Vested
Participant, beneficiary(ies), estate or surviving spouse. Any benefits payable
under the terms of the Plan at the time of any suspension, termination or
amendment of the Plan shall remain in effect according to their original terms,
or such alternate terms as may be in the best interests of both parties and
agreed to by the Vested Participant or his beneficiaries, estate or surviving
spouse, as applicable. Notwithstanding the foregoing, (a) the Plan may not be
terminated or amended in any manner that is adverse to the interests of
10
<PAGE>
a Participant or the surviving spouse of a Participant without the consent of
the Participant or surviving spouse, as applicable, either: (i) after a
Potential Change in Control occurs and for one (1) year following the cessation
of the Potential Change in Control, or (ii) for a two year period beginning on
the date of a Change in Control (the "Coverage Period"); and (b) no termination
of this Plan or amendment hereof in a manner adverse to the interests of any
Participant (without the consent of the Participant or surviving spouse) shall
be effective if such termination or amendment occurs (i) at the request of a
third party who has taken steps reasonably calculated to effect a Change of
Control, or (ii) in connection with or in anticipation of a Change of Control.
After the Coverage Period, the Plan may not be amended or terminated in any
manner that would adversely affect the entitlement of a Participant or his
surviving spouse (without the consent of the Participant or surviving spouse) to
benefits that have accrued hereunder. For purposes of the immediately preceding
two sentences of this Section 10, whether an employee of the Corporation
qualifies as a Participant shall be determined at the time (a) the Coverage
Period commences and any time thereafter or (b) his employment is terminated or
the Plan is amended (i) at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control, or (ii) in connection with
or in anticipation of a Change of Control.
IN WITNESS WHEREOF, Hershey Foods Corporation has caused this Hershey
Foods Corporation Amended and Restated (1999) Supplemental Executive Retirement
Plan to be executed as of this 9th day of June, 1999.
HERSHEY FOODS CORPORATION
By:________________________________
Robert M. Reese
Senior Vice President,
General Counsel
and Secretary
11
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
TO
AMENDED AND RESTATED (1999)
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
<S> <C> <C>
November 1999 1.850%
December 1999 1.811%
January 2000 1.773%
February 2000 1.734%
March 2000 1.696%
April 2000 1.657%
May 2000 1.619%
June 2000 1.580%
July 2000 1.542%
August 2000 1.503%
September 2000 1.465%
October 2000 1.426%
November 2000 1.388%
December 2000 1.349%
January 2001 1.310%
February 2001 1.272%
March 2001 1.233%
April 2001 1.195%
May 2001 1.156%
June 2001 1.118%
July 2001 1.079%
August 2001 1.041%
September 2001 1.002%
October 2001 0.964%
November 2001 0.925%
December 2001 0.887%
January 2002 0.848%
February 2002 0.809%
March 2002 0.771%
April 2002 0.732%
May 2002 0.694%
June 2002 0.655%
July 2002 0.617%
August 2002 0.578%
September 2002 0.540%
October 2002 0.501%
November 2002 0.463%
December 2002 0.424%
January 2003 0.385%
February 2003 0.347%
March 2003 0.308%
April 2003 0.270%
May 2003 0.231%
June 2003 0.193%
July 2003 0.154%
August 2003 0.116%
September 2003 0.077%
October 2003 0.039%
November 2003 and each
succeeding month 0.000%
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>ex103_group3a.txt
<DESCRIPTION>EXECUTIVE BENEFITS PROTECTION PLAN
<TEXT>
Exhibit 10.3
HERSHEY FOODS CORPORATION
EXECUTIVE BENEFITS PROTECTION PLAN
(GROUP 3A)
The Hershey Foods Corporation Executive Benefits Protection Plan (Group
3A), as set forth herein, is intended to help attract and retain qualified
management employees and maintain a stable work environment by making provision
for the protection of covered employees in connection with a Change in Control
as set forth herein.
ARTICLE 1
DEFINITIONS
As hereinafter used, the following words shall have the meanings set
forth below.
1.1 AIP means the Annual Incentive Program under the KEIP.
1.2 ANNUAL BASE SALARY means with respect to an Executive the
higher of:
1.2.1 his highest annual base salary in effect during the
one (1) year period preceding a Change in Control; or
1.2.2 his highest annual base salary in effect during the one
year period preceding his Date of Termination.
For purposes of the foregoing, salary reduction elections pursuant to
Sections 125 and 401(k) of the Code shall not be taken into account.
1.3 ANNUAL BONUS means with respect to an Executive the highest of:
1.3.1 the average of the three highest bonuses paid or
payable, including any bonus or portion thereof which has been earned but
deferred, to him by the Company in respect of the five fiscal years (or such
shorter period during which he has been employed by the Company or eligible to
receive any bonus payment) immediately preceding the fiscal year in which a
Change in Control occurs (annualized for any fiscal year during such period
consisting of less than twelve full months or with respect to which he has been
employed by the Company or eligible to receive a bonus for less than twelve full
months);
1.3.2 the bonus paid or payable (annualized as described
above), including any bonus or portion thereof which has been earned but
deferred, to him by the Company in respect of the most recently completed fiscal
year prior to the Change in Control;
1.3.3 the bonus paid or payable (annualized as described
above), including any bonus or portion thereof which has been earned or
deferred, for the most recently completed fiscal year preceding his Date of
Termination; and
1
<PAGE>
1.3.4 his 100% target bonus award amount for the year
including his Date of Termination.
For purposes herein, only payments under the AIP, as well as payments
under any successor or replacement substitute plan, shall be treated as bonus
payments.
1.4 BASE AMOUNT shall have the meaning ascribed to such term in
Section 280G(b)(3) of the Code.
1.5 BOARD means the Board of Directors of the Company.
1.6 CAUSE means with respect to an Executive:
1.6.1 his willful and continued failure to substantially
perform his duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to him by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has not
substantially performed his duties; or
1.6.2 his willfully engaging in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this Section 1.6, no act or failure to act, on the part
of an Executive, shall be considered willful unless it is done, or omitted to be
done, by him in bad faith and without reasonable belief that his action or
omission was in the best interests of the Company. Any act, or failure to act,
based upon prior approval given by the Board or upon the instruction or with the
approval of the Chief Executive Officer or an Executive's superior or based upon
the advice of counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, by the Executive in good faith and in the best interests
of the Company. The cessation of employment of an Executive shall not be deemed
to be for Cause unless and until there shall have been delivered to him a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to him and
he is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, he is guilty of
the conduct described in Subsection 1.6.1 or 1.6.2 above, and specifying the
particulars thereof in detail.
1.7 CLRP means the Hershey Foods Corporation Compensation Limit
Replacement Plan and any successor or replacement plan thereof.
1.8 CHANGE IN CONTROL means:
1.8.1 individuals who, on June 8, 1999, constitute the Board
(the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any
2
<PAGE>
person becoming a director subsequent to June 8, 1999, whose election or
nomination for election was approved by a vote of at least two-thirds of the
Incumbent Directors then on the Board (either by specific vote or by approval of
the proxy statement of the Company in which such person is named as nominee for
director, without written objection to such nomination) shall be an Incumbent
Director; PROVIDED, HOWEVER, that no individual initially elected or nominated
as a director of the Company as a result of an actual or threatened election
contest (as described in Rule 14a-11 under the Securities Exchange Act of 1934
(the "Exchange Act")) ("Election Contest") or other actual or threatened
solicitation of proxies or consents by or on behalf of any person (as such term
is defined in Section 3(a)(9) of the Exchange Act and as used in Section
13(d)(3) and 14(d)(2) of the Exchange Act) ("Person") other than the Board
("Proxy Contest"), including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest, shall be deemed an Incumbent
Director; and PROVIDED FURTHER, HOWEVER, that a director who has been approved
by the Hershey Trust while it beneficially owns more than 50% of the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Power") shall be deemed to be an Incumbent Director;
1.8.2 the acquisition or holding by any Person of beneficial
ownership (within the meaning of Section 13(d) under the Exchange Act and the
rules and regulations promulgated thereunder) of shares of the Common Stock
and/or the Class B Common Stock of the Company representing 25% or more of
either (i) the total number of then outstanding shares of both Common Stock and
Class B Common Stock of the Company (the "Outstanding Company Stock") or (ii)
the Outstanding Company Voting Power; provided that, at the time of such
acquisition or holding of beneficial ownership of any such shares, the Hershey
Trust does not beneficially own more than 50% of the Outstanding Company Voting
Power; and provided, further, that any such acquisition or holding of beneficial
ownership of shares of either Common Stock or Class B Common Stock of the
Company by any of the following entities shall not by itself constitute such a
Change in Control hereunder: (i) the Hershey Trust; (ii) any trust established
by the Company or by any Subsidiary for the benefit of the Company and/or its
employees or those of a Subsidiary; (iii) any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary; (iv) the
Company or any Subsidiary or (v) any underwriter temporarily holding securities
pursuant to an offering of such securities;
1.8.3 the approval by the stockholders of the Company of any
merger, reorganization, recapitalization, consolidation or other form of
business combination (a "Business Combination") if, following consummation of
such Business Combination, the Hershey Trust does not beneficially own more than
50% of the total voting power of all outstanding voting securities eligible to
elect directors of (x) the surviving entity or entities (the "Surviving
Corporation") or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of more than 50% of the combined
voting power of the then outstanding voting securities eligible to elect
directors of the Surviving Corporation; or
1.8.4 the approval by the stockholders of the Company of (i)
any sale or other disposition of all or substantially all of the assets of the
Company, other than to a corporation (the "Acquiring Corporation") if, following
consummation of such sale or other disposition, the Hershey Trust beneficially
owns more than 50% of the total voting power of all outstanding
3
<PAGE>
voting securities eligible to elect directors (x) of the Acquiring Corporation
or (y) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of more than 50% of the combined voting
power of the then outstanding voting securities eligible to elect directors of
the Acquiring Corporation, or (ii) a liquidation or dissolution of the Company.
1.9 CODE means the Internal Revenue Code of 1986, as amended from
time to time.
1.10 COMPANY means Hershey Foods Corporation, a Delaware
corporation.
1.11 COVERAGE PERIOD means the period commencing on the date on
which a Change in Control occurs and ending on the date which is the second
anniversary thereof.
1.12 DATE OF TERMINATION has the meaning assigned to such term in
Section 4.2 hereof.
1.13 DEFERRAL ELECTION means with respect to an Executive each o
his elections to defer all or any part of any of his AIP or PSU awards as
permitted under the Deferred Compensation Plan or any deferral arrangements in
effect prior to the effective date thereof.
1.14 DEFERRED COMPENSATION PLAN means the Hershey Foods Corporation
Deferred Compensation Plan and any successor or replacement plan thereof.
1.15 DISABILITY means with respect to an Executive his absence from his
duties with the Company on a full-time basis for 180 consecutive business days
as a result of incapacity due to mental or physical illness which is determined
to be total and permanent by a physician selected by the Company or its insurers
and acceptable to the Executive or his legal representative (such agreement as
to acceptability not to be withheld unreasonably), provided that such absence
shall constitute Disability only if the Executive is entitled to long-term
disability benefits for the period of his disability after such 180 day period
at lest equal to 70% of the greater of his base salary as of the first day of
such 180 day period or his Annual Base Salary.
1.16 EFFECTIVE DATE means June 8, 1999.
1.17 EXECUTIVE means each person who is listed on Schedule I hereto, as
it may be amended from time to time pursuant to Article 7 hereof.
1.18 EXCISE TAX means any excise tax imposed under Section 4999 of
the Code.
1.19 GOOD REASON means with respect to an Executive:
1.19.1 the assignment to him of any duties inconsistent in any
respect with his position (including status, offices, titles and reporting
relationships), authority, duties or responsibilities immediately prior to
either the Potential Change in Control which precedes the Change in Control or
the Change in Control or any other action by the Company which results in a
diminution in any respect in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
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1.19.2 a reduction by the Company in his annual base salary as
in effect, as applicable, on the Effective Date or as the same may be increased
from time to time, or on the date he first becomes an Executive if he was not an
Executive on the Effective Date or as the same may be increased from time to
time;
1.19.3 the Company's requiring him to be based at any office
or location that is more than 35 miles from his office or location immediately
prior to either the Potential Change in Control which precedes the Change in
Control or the Change in Control;
1.19.4 the Company's requiring him to travel on Company
business to a substantially greater extent than required immediately prior to
either the Potential Change in Control which precedes the Change in Control or
the Change in Control;
1.19.5 the failure by the Company, without his consent, to pay
to him any portion of his current compensation, or to pay to him any portion of
an installment of deferred compensation under any deferred compensation program
of the Company within seven (7) days of the date such compensation is due;
1.19.6 the failure by the Company to continue in effect any
compensation plan in which he participates immediately prior to either the
Potential Change in Control preceding the Change in Control or the Change in
Control which is material to his total compensation, including but not limited
to the KEIP, the CLRP, and the SERP, as applicable, or any substitute or
alternative plans adopted prior to either such Potential Change in Control or
Change in Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan, or the
failure by the Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the level of his
participation relative to other participants, as existed at the time of such
Potential Change in Control or Change in Control;
1.19.7 the failure by the Company to continue to provide him
with benefits substantially similar to those enjoyed by him under any of the
Company's pension, life insurance, medical, health and accident, disability or
other welfare plans in which he was participating at the time of either the
Potential Change in Control preceding the Change in Control or the Change in
Control, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive him of any material
fringe benefit enjoyed by him at the time of such Potential Change in Control or
Change in Control, or the failure by the Company to provide him with the number
of paid vacation days to which he is entitled on the basis of years of service
with the Company in accordance with the Company's normal vacation policy in
effect at the time of such Potential Change in Control or Change in Control;
1.19.8 any purported termination by the Company of his
employment after a Change in Control otherwise than in accordance with the
termination procedures of Sections 4.1 through 4.4 hereof;
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1.19.9 any material failure by the Company to comply with and
satisfy any of its obligations under this Plan after a Potential Change in
Control that is followed within one (1) year by a Change in Control; or
1.19.10 any material failure by the Company to comply with and
satisfy any of its obligations under any grantor trust established by the
Company to provide itself with a source of funds to assist itself in satisfying
its liabilities under this Plan after (i) a Change in Control described in
Subsection 1.8.1, clause (ii) of Subsection 1.8.4, or clause (i) of Subsection
1.8.4 other than a sale or other disposition to a corporation; (ii) a Change in
Control described in Subsection 1.8.2 if during the Coverage Period, Incumbent
Directors, as described in Subsection 1.8.1, cease for any reason to constitute
at least a majority of the Board; (iii) a Change in Control described in
Subsection 1.8.3 if, at any time during the Coverage Period, Incumbent
Directors, as described in Subsection 1.8.1, do not constitute at least a
majority of the board of directors of the Surviving Corporation; or (iv) a
Change in Control described in clause (i) of Subsection 1.8.4 involving a sale
or other disposition to a corporation if, at any time during the Coverage
Period, Incumbent Directors, as described in Subsection 1.8.1, do not constitute
at least a majority of the board of directors of such corporation.
For purposes of this Plan, any good faith determination of Good Reason
made by the Executive shall be conclusive.
1.20 HERSHEY PENSION PLAN means the Hershey Foods Corporation
Retirement Plan and any successor or replacement plan thereof.
1.21 HERSHEY TRUST means either or both of (a) the Hershey
Trust Company, a Pennsylvania corporation, as Trustee for the Milton Hershey
School, or any successor to the Hershey Trust Company as such trustee, and (b)
the Milton Hershey School, a Pennsylvania not-for-profit corporation.
1.22 HIGHEST PSU AMOUNT means with respect to an Executive the
highest of:
1.22.1 the average of the cash values of the three highest PSU
awards paid or payable, including any PSU award or portion thereof which has
been earned but deferred, to him by the Company in respect of the five fiscal
years (or such shorter period during which he has been employed by the Company
or eligible to receive a PSU award) immediately preceding the fiscal year in
which the Change in Control occurs;
1.22.2 the cash value of the PSU award paid or payable,
including any PSU award or portion thereof which has been earned but deferred,
to him by the Company in respect of the most recently completed fiscal year
prior to the Change in Control;
1.22.3 the cash value of the PSU award paid or payable,
including any PSU award or portion thereof which has been earned but deferred,
to him by the Company for the most recently completed fiscal year preceding his
Date of Termination; and
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1.22.4 the cash value of his 100% target PSU award for the
year including his Date of Termination (each such PSU award being valued at the
higher of (i) the highest closing price of the Company's Common Stock on the New
York Stock Exchange during the period running from sixty (60) days prior to the
Change in Control until the Executive's Date of Termination, and (ii) if the
Change in Control involves a transaction in which an offer is made to purchase
shares of Common Stock from the Company's stockholders, the price at which such
offer is made).
1.23 KEIP means the Hershey Foods Corporation Key Employee
Incentive Plan and any successor or replacement plan thereof.
1.24 NOTICE OF INTENT TO TERMINATE shall have the meaning assigned
to such term in Section 4.1 hereof.
1.25 MANDATORY RETIREMENT AGE means age sixty-five (65) in the
case of an Executive who has served for a minimum of two (2) years at a high
level executive or high policy-making position and who is entitled to a
nonforfeitable, immediate, annual employer-provided retirement benefit from any
source, which is at least equal to a benefit, computed as a life annuity, of at
least $44,000 per year (or such other amount as may be provided by future
legislation). In the case of all other Executives, there shall be no Mandatory
Retirement Age.
1.26 PLAN means the Hershey Foods Corporation Executive
Benefits Protection Plan (Group 3A), as set forth herein, as amended from time
to time.
1.27 PLAN ADMINISTRATOR means the person appointed by the
Company's Chief Executive Officer from time to time to administer the Plan.
1.28 POTENTIAL CHANGE IN CONTROL means the occurrence of any of
the following:
1.28.1 the Hershey Trust by action of any of the Board of
Directors of Hershey Trust Company; the Board of Managers of Milton Hershey
School; the Investment Committee of the Hershey Trust; and/or any of the
officers of Hershey Trust Company or Milton Hershey School (acting with
authority) undertakes consideration of any action the taking of which would lead
to a Change in Control as defined herein, including, but not limited to
consideration of (1) an offer made to the Hershey Trust to purchase any number
of its shares in the Company such that if the Hershey Trust accepted such offer
and sold such number of shares in the Company the Hershey Trust might no longer
have more than 50% of the Outstanding Company Voting Power, (2) an offering by
the Hershey Trust of any number of its shares in the Company for sale such that
if such sale were consummated the Hershey Trust might no longer have more than
50% of the Outstanding Company Voting Power or (3) entering into any agreement
or understanding with a person or entity that would lead to a Change in Control;
or
1.28.2 the Board approves a transaction described in
Subsection 1.8.2, 1.8.3 or 1.8.4 of the definition of a Change in Control
contained herein.
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1.29 SERP means the Hershey Foods Corporation Supplemental
Executive Retirement Plan and any successor or replacement plan thereof.
1.30 SEVERANCE BENEFITS has the meaning assigned to such term in
Section 3.2 hereof.
1.31 SUBSIDIARY means any corporation controlled by the Company,
directly or indirectly.
1.32 VESTED CURRENT BONUS AMOUNT shall have the meaning assigned
to such term in Section 2.1 hereof.
1.33 VESTED CURRENT PSU AMOUNT shall have the meaning assigned to
such term in Section 2.2 hereof.
1.34 VESTED DEFERRED BONUS AMOUNT shall have the meaning assigned
to such term in Section 2.1 hereof.
1.35 VESTED DEFERRED PSU AMOUNT shall have the meaning assigned to
such term in Section 2.2 hereof.
1.36 VESTED PENSION BENEFIT shall have the meaning assigned to
such term in Section 2.3 hereof.
1.37 VESTED PENSION AMOUNT shall have the meaning assigned to such
term in Section 2.3 hereof.
1.38 WELFARE BENEFITS shall have the meaning assigned to such term
in Subsection 3.2.2 hereof.
1.39 SECTION 1.39 TERMINATION OF EMPLOYMENT means:
1.39.1 with respect to an Executive who is the Chief Executive
Officer of the Company on the date on which a Change in Control occurs, the
termination of his employment with the Company by him in his sole and complete
discretion for any reason other than his death or Disability or by the Company
for any reason (a) on or after the later of (i) the first day of the ninth (9th)
calendar month following the date on which the Potential Change in Control (if
any) preceding the Change in Control occurs and (ii) the first day of the sixth
(6th) calendar month of the Coverage Period; and (b) on or before the earlier of
(x) the date the Executive attains his Mandatory Retirement Age, if applicable,
and (y) the last day of the thirteenth (13th) calendar month of the Coverage
Period; and
1.39.2 with respect to an Executive who is not the Chief
Executive Officer of the Company on the date on which a Change in Control
occurs, the termination of his employment with the Company by him in his sole
and complete discretion for any reason other than his death or Disability or by
the Company for any reason at any time during the thirteenth (13th) calendar
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month of the Coverage Period and prior to the date he attains his Mandatory
Retirement Age, if applicable.
For purposes of this Section 1.39, a partial month shall be treated as
a "calendar month."
ARTICLE 2
VESTING OR PAYMENT OF CERTAIN BENEFITS
IN THE EVENT OF A CHANGE IN CONTROL
2.1 VESTING OF AIP BENEFITS; PAYMENT OF BENEFITS. Upon the
occurrence of a Change in Control:
2.1.1 each Executive shall have a vested and nonforfeitable
right hereunder to receive in cash an amount equal to the sum of:
2.1.1.1 the greater of (x) the 100% target award
amount of all then outstanding contingent target AIP grants made to him under
the KEIP, and (y) the amount that would have been payable to him under such
contingent target AIP grants as of the end of the applicable award period
calculated using as the applicable performance factors, his and the Company's
actual performance on an annualized basis as of the date of the Change in
Control (the greater of (x) and (y) is herein referred to as the "Vested Current
Bonus Amount"); and
2.1.1.2 the value of all AIP Awards, as defined
in the KEIP ("AIP Awards") previously earned by him for which payment has been
deferred ("Deferred AIP Awards") (this value, calculated as of the date of
payment to the Executive and taking into account his selection of Investment
Options as defined in the Deferred Compensation Plan and his Deferral Elections
applicable thereto is herein referred to as the "Vested Deferred Bonus Amount");
2.1.2 the Company shall, within five (5) business days
following the Change in Control, pay to each Executive a lump sum cash payment
equal to his Vested Current Bonus Amount; and
2.1.3 the Company shall, on the later of (i) the first day of
January of the year first following the year during which the Change in Control
occurs and (ii) the one hundred twentieth (120th) day following the Change in
Control, pay to each Executive a lump sum cash payment equal to his Vested
Deferred Bonus Amount attributable to his Deferred AIP Awards not previously
paid to him in accordance with any of his applicable Deferral Elections if prior
to the Change in Control, he elects, in his sole discretion, to receive such
lump sum cash payment at such time.
2.2 VESTING OF PSU BENEFITS; PAYMENT OF BENEFITS. Upon the
occurrence of a Change in Control:
2.2.1 each Executive shall have a vested and nonforfeitable
right hereunder to receive in cash an amount equal to the sum of:
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2.2.1.1 the 100% target award amount of the
contingent target Performance Stock Unit ("PSU") grants, if any, made to him
under the KEIP for the cycle ending in the year of the Change in Control valued
at the higher of (i) the highest closing price of the Company's Common Stock on
the New York Stock Exchange during the sixty (60) day period preceding and
including the date of the Change in Control, and (ii) if the Change in Control
involves a transaction in which an offer is made to purchase shares of Common
Stock from the Company's stockholders, the price at which such offer is made
("Vested Current PSU Amount"); and
2.2.1.2 the value of all PSU Awards, as defined
in the KEIP ("PSU Awards"), previously earned by the Executive for which payment
has been deferred ("Deferred PSU Awards"), where, for purposes of calculating
the value of the Executive's Deferred PSU Awards ("Vested Deferred PSU Amount")
as of the date of payment to him (whether in accordance with his election as
described in Subsection 2.2.3, his election as described in Subsection 3.4.3, or
in the absence of any such election in accordance with his applicable Deferral
Elections), all components of his Deferred PSU Awards that are denominated in
shares of the Company's Common Stock shall be valued at the higher of (i) the
highest closing price of the Company's Common Stock on the New York Stock
Exchange during the sixty (60) day period preceding and including the date of
the Change in Control, and (ii) if the Change in Control involves a transaction
in which an offer is made to purchase shares of Common Stock from the Company's
stockholders, the price at which such offer is made and investment credits shall
be applied thereto and to all components of such Deferred PSU Awards that are
not denominated in shares of the Company's Common Stock in accordance with the
provisions of the Deferred Compensation Plan from the date of the Change in
Control to the date of payment to the Executive in accordance with his selection
of Investment Options as defined in the Deferred Compensation Plan.;
2.2.2 the Company shall, within five (5) business days
following the Change in Control, pay to each Executive a lump sum cash payment
equal to his Vested Current PSU Amount; and
2.2.3 the Company shall, on the later of (i) the first day of
January of the year first following the year during which the Change in Control
occurs and (ii) the one hundred twentieth (120th) day following the Change in
Control, pay to each Executive a lump sum cash payment equal to his Vested
Deferred PSU Amount attributable to his Deferred PSU Awards not previously paid
to him in accordance with any of his applicable Deferral Elections if prior to
the Change in Control, he elects, in his sole discretion, to receive such lump
sum cash payment at such time.
2.3 VESTED PENSION AMOUNT. Upon the occurrence of a Change in
Control:
2.3.1 each Executive who either is a participant in the SERP
on the date of the Change in Control or was a participant in the SERP on the
date of the Potential Change in Control preceding the Change in Control shall
have a vested and nonforfeitable right hereunder to receive in cash an amount
equal to the actuarial present value (as determined in accordance with
Subsection 2.3.1.3 hereof) of the monthly retirement benefit (including the
spousal survivor
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benefit) to which he and his spouse would be entitled under Section 4 of the
SERP if he retired as of the date of the Change in Control, taking into account
Subsections 2.3.1.1 and 2.3.1.2 hereof (the amount of such monthly retirement
benefits for him and his spouse being herein referred to as such Executive's
"SERP Benefit", the actuarial present value of such SERP Benefit being herein
referred to as such Executive's "Vested Pension Benefit" and the Vested Pension
Benefit plus all investment credits applied thereto in accordance with the
provisions of Section 2.5 hereof being herein referred to as "Vested Pension
Amount"), where:
2.3.1.1 for purposes of determining such
Executive's SERP Benefit as of the date of a Change in Control, he shall: (i) be
credited for all purposes under the SERP with additional Years of Service (as
defined in the SERP) equal to the lesser of three (3) or the number of years
(including fractions thereof) from the date of the Change in Control until he
would attain Mandatory Retirement Age if applicable to him; (ii) be credited for
purposes of only Section 3 of the SERP (and not for the purposes of any other
provision of the SERP, including but not limited to Section 4(a)(1) and Section
4(b)(1)) with additional Years of Service (as defined in the SERP) equal to the
excess, if any, of ten (10) over his actual number of Years of Service
(including fractions thereof) completed as of the date of the Change in Control;
(iii) be deemed for the purposes of Section 3 of the SERP (and not for the
purposes of any other provision of the SERP) to have five (5) years of
participation in the performance share unit portion of the KEIP during his last
ten (10) years of employment with the Company regardless of his actual years of
participation in the performance share unit portion of the KEIP at the time of
the Change in Control; (iv) be deemed for all purposes under the SERP (including
but not limited to clause (4) of Section 4.b of the SERP) to have his age
increased by three (3) years (or such lesser number of years (including
fractions) until he would attain Mandatory Retirement Age if applicable to him);
and (v) be deemed to have been paid his Annual Base Salary and Annual Bonus for
three (3) additional years (or such lesser number of years (including fractions)
until he would attain Mandatory Retirement Age if applicable to him) for
purposes of calculating "Final Average Compensation" in Section 2.f. of the
SERP;
2.3.1.2 if such Executive has not yet attained
age fifty-five (55) (after increasing his age by three (3) years as provided in
the preceding Subsection 2.3.1.1), he shall upon the occurrence of the Change in
Control be deemed nevertheless to have attained age fifty-five (55), with the
adjustments provided for in Subsection 2.3.1.1 hereof being made on this basis;
2.3.1.3 the actuarial present value of such
Executive's SERP Benefit, as determined in accordance with the foregoing
provisions of this Section 2.3 shall be determined using: (i) the 83 GAM
mortality tables; and (ii) an interest rate equal to 100% of the interest rate
that would be used (as of the date of the Change in Control) by the Pension
Benefit Guaranty Corporation for purposes of determining the present value of a
lump sum distribution on plan termination; and (iii) the date of the Change in
Control as the date on which payment of the Executive's SERP Benefit is to
commence and as the date as of which the actuarial present value of such SERP
Benefit is calculated; and
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2.3.2 each Executive who neither is a participant in the SERP
on the date of the Change in Control nor was a participant in the SERP on the
date of the Potential Change in Control preceding the Change in Control shall
have a vested and nonforfeitable right hereunder to receive in cash an amount
equal to the sum of:
2.3.2.1 a lump sum cash amount equal to the
actuarial equivalent of the excess of (x) the retirement pension (determined as
a straight life annuity commencing at Normal Retirement Age, as defined in the
Hershey Pension Plan) which he would have accrued under the terms of the Hershey
Pension Plan (as in effect immediately prior to the Change in Control),
determined as if he were fully vested thereunder and had accumulated thirty-six
(36) additional months of service credit thereunder during each of which he will
be deemed to have been paid one-twelfth (1/12th) of the sum of his highest
annual rate of compensation as an employee of the Company and his Annual Bonus
(but in no event shall he be deemed to have accumulated additional months of
service credit after he would have attained Mandatory Retirement Age, if
applicable) over (y) the retirement pension (determined as a straight life
annuity commencing at Normal Retirement Age) which he has accrued pursuant to
the terms of the Hershey Pension Plan as of the date of the Change in Control;
and
2.3.2.2 if he is a participant in the CLRP, a lump
sum cash amount ("CLRP Benefit") equal to his Excess Account, as defined in the
CLRP (as in effect immediately prior to the Change in Control) determined as if
he were fully vested thereunder and had accumulated thirty-six (36) additional
months of service credit thereunder during each of which he will be deemed to
have been paid one-twelfth (1/12th) of the sum of his highest annual rate of
compensation as an employee of the Company and his Annual Bonus, but in no event
shall he be deemed to have accumulated additional months of service credit after
he would have attained Mandatory Retirement Age, if applicable (the sum of the
amounts described in Subsections 2.3.2.1 and 2.3.2.2 is herein referred to as
such Executive's "Vested Pension Benefit" and the Vested Pension Benefit plus
all, if any, investment credit applied thereto in accordance with the provisions
of Section 2.5 hereof is herein referred to as such Executive's "Vested Pension
Amount").
For purposes of this Subsection 2.3.2, "actuarial equivalent" amounts
shall be determined using the same methods and assumptions prescribed under the
Hershey Pension Plan immediately prior to the Change in Control.
2.4 PAYMENT OF VESTED PENSION AMOUNT UPON TIMELY ELECTION. The
Company shall, on the later of (i) the first day of January of the year first
following the year during which the Change in Control occurs and (ii) the
one-hundred twentieth (120th) day following the Change in Control, pay to each
Executive a lump sum cash payment equal to his Vested Pension Amount plus
interest thereon at the rate provided in Section 1274(b)(2)(B) of the Code from
the date of the Change in Control to the date of payment if, prior to the Change
in Control, he elects, in his sole discretion, to receive such lump sum cash
payment at such time.
2.5 CONVERSION OF VESTED PENSION BENEFIT TO DEFERRED
COMPENSATION PLAN ACCOUNT IN ABSENCE OF SECTION 2.4 ELECTION. In the event the
Executive makes no election under Section 2.4 hereof, an amount equal to his
Vested Pension Benefit shall be credited to him under
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the Deferred Compensation Plan and subject to the provisions of this Subsection
2.5, the provisions of the Deferred Compensation Plan shall apply thereto as if
such amount were a Deferred AIP Award. Within ten (10) days of the Change in
Control the Executive shall select one or more Investment Options as defined in
the Deferred Compensation Plan to be effective with respect to such amount and
thereafter may change his selection of such Investment Options in accordance
with the provisions of the Deferred Compensation Plan. Investment credits shall
be applied to the amount of his Vested Pension Benefit in accordance with the
provisions of the Deferred Compensation Plan from the date of the Change in
Control to the date of payment to the Executive in accordance with his selection
of such Investment Options. If the Executive makes no election under Section 2.4
hereof and does not select one or more Investment Options as defined in the
Deferred Compensation Plan within ten (10) days of the Change in Control in
accordance with the provisions of the second sentence of this Section 2.5,
investment credits shall be applied to the amount of his Vested Pension Benefit
from the date of the Change in Control to the earlier of the date he makes a
selection of Investment Options with respect thereto in accordance with the
provisions of the Deferred Compensation Plan and the date of payment in
accordance with the latest of his pre-Change in Control selections of Investment
Options relating to his Deferred AIP Awards or Deferred PSU Awards, if any. If
there are no such pre-Change in Control selections of Investment Options, then
investment credits shall be applied in accordance with the provisions of the
immediately preceding sentence by treating the Hershey Fixed Income Fund
Investment Option under the Deferred Compensation Plan as his latest pre-Change
in Control selection of Investment Options. Within ten (10) days of the Change
in Control the Executive shall make a Deferral Election with respect to his
Vested Pension Amount. If the Executive makes no election under Section 2.4
hereof and makes no Deferral Election within ten (10) days of the Change in
Control in accordance with the immediately preceding sentence, then for purposes
hereof he will be considered to have made a Deferral Election under the Deferred
Compensation Plan to have his Vested Pension Amount paid to him, his designated
beneficiaries or his estate, as applicable, in accordance with the latest of his
pre-Change in Control Deferral Elections relating to his Deferred AIP Awards or
Deferred PSU Awards, if any. If there are no such pre-Change in Control Deferral
Elections, then for purposes hereof he will be considered to have made a
Deferral Election under the Deferred Compensation Plan to have his Vested
Pension Amount paid to him, his designated beneficiaries or his estate, as
applicable, on the first day of the month following his termination of
employment by the Company. His Vested Pension Amount shall be paid to him in
accordance with the Deferral Election described in the preceding three
sentences, as applicable, or any subsequent Deferral Election with respect
thereto permitted in accordance with the provisions of the Deferred Compensation
Plan.
2.6 SERP OR CLRP AMENDMENTS. Notwithstanding any provision of
the SERP, CLRP, or Deferred Compensation Plan, none of the SERP, CLRP, or
Deferred Compensation Plan may be terminated or amended in any manner that is
adverse to the interests of any Executive without his consent either: (i) after
a Potential Change in Control occurs and for one (1) year following the
cessation of the Potential Change in Control, or (ii) after a Change in Control.
Any termination or amendment of the SERP, CLRP, or Deferred Compensation Plan in
a manner adverse to the interests of an Executive within one (1) year prior to a
Potential Change in Control shall not be given effect for purposes of Section
2.3 or Section 2.5 hereof.
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ARTICLE 3
EXECUTIVE BENEFITS AND RIGHTS
UPON TERMINATION OF EMPLOYMENT
3.1 GENERAL TERMINATION RIGHTS AND BENEFITS. If an Executive's
employment by the Company is terminated at any time after a Change in Control
for any reason (whether by him or the Company), the Company shall pay to him the
payments described in Subsections 3.1.1 through 3.1.7 below.
3.1.1 PREVIOUSLY EARNED SALARY. The Company shall pay his full
salary to him through his Date of Termination at the highest rate in effect
during the period between the Potential Change in Control preceding the Change
in Control and the date the Notice of Intent to Terminate is given, together
with all compensation and benefits payable to him through the Date of
Termination under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company during such period.
3.1.2 PREVIOUSLY EARNED BENEFITS. The Company shall pay his
normal post-termination compensation and benefits to him as such payments become
due. Such post-termination compensation and benefits shall be determined under,
and paid in accordance with the Company's retirement, insurance, pension,
welfare and other compensation or benefit plans, programs and arrangements.
3.1.3 PAYMENT OF VESTED CURRENT BONUS AMOUNT. Except to the
extent that the Company has previously paid or concurrently pays to him all or a
portion of his Vested Current Bonus Amount pursuant to Section 2.1, Subsection
3.1.1 or Subsection 3.1.2 hereof, the Company shall pay to him a lump sum cash
payment equal to his Vested Current Bonus Amount.
3.1.4 PAYMENT OF VESTED DEFERRED BONUS AMOUNT. Except to the
extent that the Company has previously paid or concurrently pays to him all or a
portion of his Vested Deferred Bonus Amount pursuant to Section 2.1, Subsection
3.1.1 or Subsection 3.1.2 hereof, the Company shall pay to him a lump sum cash
payment equal to his Vested Deferred Bonus Amount.
3.1.5 PAYMENT OF VESTED CURRENT PSU AMOUNTS. Except to the
extent that the Company has previously paid or concurrently pays to him all or a
portion of his Vested Current PSU Amount pursuant to Section 2.2, Subsection
3.1.1 or Subsection 3.1.2 hereof, the Company shall pay to him a lump sum cash
payment equal to his Vested Current PSU Amount.
3.1.6 PAYMENT OF VESTED DEFERRED PSU AMOUNTS. Except to the
extent that the Company has previously paid or concurrently pays to him all or a
portion of his Vested Deferred PSU Amount pursuant to Section 2.2, Subsection
3.1.1 or Subsection 3.1.2 hereof, the Company shall pay to him a lump sum cash
payment equal to his Vested Deferred PSU Amount.
3.1.7 PAYMENT OF VESTED PENSION AMOUNT. Except to the extent
that the Company has previously paid or concurrently pays to him his Vested
Pension Amount, the Company shall pay to him a lump-sum cash payment equal to
his Vested Pension Amount.
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3.2 SEVERANCE BENEFITS. In addition to the payments provided
for by Section 3.1 hereof, the Company shall pay to an Executive the payments
described in Subsections 3.2.1 through 3.2.4 below (the "Severance Benefits") in
accordance with such Subsections upon termination of his employment with the
Company during the Coverage Period, if his termination of employment either (i)
is a Section 1.39 Termination of Employment, or (ii) is (a) not by the Company
for Cause, (b) not by reason of his death or Disability or after his Mandatory
Retirement Age, if applicable, and (c) not by him without Good Reason.
3.2.1 LUMP-SUM SEVERANCE PAYMENT. In lieu of any further
salary payments to him for periods subsequent to the Date of Termination, the
Company shall pay to him a lump sum severance payment, in cash, equal to three
(3) (or, if less, the number of years, including fractions, from the Date of
Termination until he would have reached Mandatory Retirement Age, if applicable)
times the sum of (a), (b) and (c) where (a) equals his Annual Base Salary, (b)
equals his Annual Bonus and (c) equals his Highest PSU Amount.
3.2.2 CONTINUED BENEFITS. For a thirty-six (36) month period
(or, if less, the number of months from the Date of Termination until he would
have reached Mandatory Retirement Age, if applicable) after the Date of
Termination, the Company shall provide him with life insurance, health,
disability and other welfare benefits ("Welfare Benefits") substantially similar
in all respects to those which he was receiving immediately prior to the Notice
of Termination on substantially the same terms and conditions, including
contributions required from him for such benefits (without giving effect to any
reduction in such benefits subsequent to the Potential Change in Control
preceding the Change in Control or the Change in Control, which reduction
constitutes or may constitute Good Reason); provided that if he cannot continue
to participate in the Company plans providing Welfare Benefits, the Company
shall otherwise provide such benefits on the same after-tax basis as if
continued participation had been permitted. The Executive shall be entitled to
elect to change his level of coverage and/or his choice of coverage options
(such as Executive only or family medical coverage) with respect to the Welfare
Benefits to be provided by the Company to him to the same extent that actively
employed executives of the Company are permitted to make such changes; provided,
however, that in the event of any such changes he shall pay the amount of any
cost increase that would actually be paid by an actively employed executive of
the Company by reason of such actively employed executive making the same change
in level of coverage or coverage options. Notwithstanding the foregoing, in the
event that the Executive becomes reemployed with another employer and becomes
eligible to receive welfare benefits form such employer, the Welfare Benefits
described herein shall be secondary to such benefits, but only to the extent
that the Company reimburses him for any increased cost and provides any
additional benefits necessary to give him the Welfare Benefits provided
hereunder.
3.2.3 OUTSTANDING AWARDS. If an Executive's Date of
Termination occurs within the Coverage Period and during any calendar year
following the calendar year during which a Change in Control occurs, he shall be
entitled to a lump sum cash payment with respect to each outstanding contingent
target AIP and PSU grant under the KEIP or any similar types of grants under any
replacement plans or programs equal to the sum of :
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3.2.3.1 the sum of the product of (x) and (y)for
each then outstanding contingent target PSU grant under the KEIP (or similar
types of grants under any replacement plan or program) for the applicable award
period that includes his Date of Termination, where (x) is an amount equal to
the 100% target award amount of such outstanding contingent target PSU grant and
(y) is a fraction the numerator of which is the number of days from and
including the first day of the award period applicable to such outstanding
contingent target PSU grant that includes the Executive's Date of Termination
until (and including) his Date of Termination and the denominator of which is
the number of days in the award period applicable to such outstanding contingent
target PSU grant; and
3.2.3.2 the sum of the product of (x) and (y) for
each then outstanding contingent target AIP grant made to him under the KEIP (or
similar types of grants under any replacement plans or programs) for the
applicable award period that includes his Date of Termination, where (x) is an
amount equal to the greater of (A) the 100% target award amount of such
outstanding contingent target AIP grant, and (B) the amount that would have been
payable to him under such contingent target AIP grant as of the end of the
applicable award period, calculated utilizing as the applicable performance
factors his and the Company's actual performance on an annualized basis as of
his Date of Termination, and (y) is a fraction the numerator of which is the
number of days from and including the first day of the award period applicable
to such outstanding contingent AIP grant that includes his Date of Termination
until (and including) his Date of Termination and the denominator of which is
the number of days in such applicable award period.
Contingent target PSU grants under the KEIP or a similar type of grant under a
replacement plan or program shall be valued at the highest closing price of the
Company's Common Stock on the New York Stock Exchange during the period running
from sixty (60) days prior to the Change in Control until the Executive's Date
of Termination.
3.2.4 RELOCATION ALLOWANCE. In the event that an Executive
relocates following his Date of Termination and during the Coverage Period at
the request of a successor employer, the Company shall pay to him a relocation
allowance of $75,000; provided, however, that any such payment shall be reduced
by any payments received by him from such successor employer for the purpose of
reimbursing him for costs of relocation. The Company shall pay him such
relocation allowance within five (5) business days after delivery of his written
request and may condition the payment of the relocation allowance upon his
agreeing in writing to report to the Company any such payments from any
successor employer and agreeing in writing to reimburse to the Company any
amounts received from the Company pursuant to this Subsection 3.2.4 that should
have been so reduced.
3.3 GROSS-UP PAYMENT. In the event that an Executive becomes
entitled to the Severance Benefits or any other benefits or payments under this
Plan (other than pursuant to this Section 3.3), or the KEIP by reason of the
accelerated vesting of stock options thereunder (together, the "Total
Benefits"), and in the event that any of the Total Benefits will be subject to
the Excise Tax, the Company shall pay to him an additional amount (the "Gross-Up
Payment") such that the net amount retained by him, after deduction of any
Excise Tax on the Total Benefits
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and any federal, state and local income tax, Excise Tax and FICA and Medicare
withholding taxes upon the payment provided for by this Section 3.3, shall be
equal to the Total Benefits.
For purposes of determining whether any of the Total Benefits will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by an Executive in connection
with a Change in Control or his termination of employment (whether pursuant to
the terms of this Plan or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) shall be treated as parachute
payments within the meaning of Section 280G(b)(2) of the Code, and all excess
parachute payments within the meaning of Section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of tax counsel ("Tax Counsel")
selected by the Company's independent auditors and acceptable to the Executive,
such other payments or benefits (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of the Base Amount, or are
otherwise not subject to the Excise Tax, (ii) the amount of the Total Benefits
which shall be treated as subject to the Excise Tax shall be equal to the lesser
of (A) the total amount of the Total Benefits reduced by the amount of such
Total Benefits that in the opinion of Tax Counsel are not parachute payments, or
(B) the amount of excess parachute payments within the meaning of Section
280G(b)(1) (after applying clause (i), above), and (iii) the value of any
non-cash benefits or any deferred payment or benefit shall be determined by the
Company's independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, an Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of his residence on
the Date of Termination, net of the reduction in federal income taxes which
could be obtained from deduction of such state and local taxes (calculated by
assuming that any reduction under Section 68 of the Code in the amount of
itemized deductions allowable to him applies first to reduce the amount of such
state and local income taxes that would otherwise be deductible by him).
In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of an
Executive's employment, he shall repay to the Company, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax, federal, state and local income
taxes and FICA and Medicare withholding taxes imposed on the portion of the
Gross-Up Payment being repaid by him to the extent that such repayment results
in a reduction in Excise Tax, FICA and Medicare withholding taxes and/or
federal, state or local income taxes) plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. The Company
may require an Executive to agree in writing to the repayment obligation imposed
by the preceding sentence as a condition to receiving the Gross-Up Payment. In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of an Executive's employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall
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make an additional Gross-Up Payment, determined as previously described, to him
in respect of such excess (plus any interest, penalties or additions payable by
him with respect to such excess) at the time that the amount of such excess is
finally determined.
3.4 TIMING OF PAYMENTS. The payments provided for:
3.4.1 in Subsections 3.1.1, 3.1.3, 3.1.5, 3.2.1 and 3.2.3, and
in Section 3.3 hereof shall be made to an Executive not later than the fifth
(5th) day following his Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or before such day the
Company shall pay to the Executive on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments and shall pay
the remainder of such payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code from the fifth (5th) day following the Date of
Termination to the payment of such remainder) as soon as the amount thereof can
be determined but in no event later than the thirtieth (30th) day after the Date
of Termination. In the event that the amount of the estimated payments exceeds
the amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on the fifth (5th)
business day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code from the fifth (5th) day following
the Date of Termination to the payment of such remainder);
3.4.2 in Subsection 3.1.4 hereof shall be made to an Executive
on the later of (i) the first day of January of the year first following the
year during which his Date of Termination occurs and (ii) the one hundred
twentieth (120th) day following his Date of Termination if prior to his Date of
Termination he elects, in his sole discretion, to receive his previously unpaid
Deferred AIP Awards at such time. In the event the Executive makes such election
and the amount of the payment described in Subsection 3.1.4 cannot be finally
determined on or before the later of such one hundred twentieth (120th) day or
January 1, as applicable, the Company shall pay to the Executive on such one
hundred twentieth (120th) day or January 1, as applicable, an estimate, as
determined in good faith by the Company, of the minimum amount of such payment
and shall pay the remainder of such payment (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code from such one hundred twentieth
(120th) day or January 1, as applicable, to the payment of such remainder) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after such one hundred twentieth (120th) day or January 1,
as applicable. In the event that the amount of the estimated payment exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Company to the Executive, payable on the fifth (5th) business day
after demand by the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code from the one hundred twentieth (120th) day
following the Date of Termination or January 1, as applicable, to the payment of
such remainder). In the event the Executive makes no such election, his
previously unpaid Deferred AIP Awards shall be paid in accordance with each of
his applicable Deferral Elections;
3.4.3 in Subsection 3.1.6 shall be made to an Executive on the
later of (i) the first day of January of the year first following the year
during which his Date of Termination occurs and (ii) the one hundred twentieth
(120th) day following his Date of Termination if prior
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to his Date of Termination he elects, in his sole discretion, to receive his
previously unpaid Deferred PSU Awards at such time. In the event the Executive
makes such election and the amount of the payment provided for in Subsection
3.1.6 cannot be finally determined on or before the later of such one hundred
twentieth (120th) day or January 1, as applicable, the Company shall pay to the
Executive on such one hundred twentieth (120th) day or January 1, as applicable,
an estimate, as determined in good faith by the Company, of the minimum amount
of such payment and shall pay the remainder of such payment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code from such one
hundred twentieth (120th) day or January 1, as applicable, to the payment of
such remainder) as soon as the amount thereof can be determined but in no event
later than the thirtieth (30th) day after such one hundred twentieth (120th day
or January 1, as applicable. In the event that the amount of the estimated
payment exceeds the amount subsequently determined to have been due, such excess
shall constitute a loan by the Company to the Executive, payable on the fifth
(5th) business day after demand by the Company (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code from the one hundred
twentieth (120th) day following the Date of Termination or January 1, as
applicable, to the payment of such remainder). In the event the Executive makes
no such election, his previously unpaid Deferred PSU Awards shall be paid in
accordance with each of his applicable Deferral Elections; and
3.4.4 in Subsection 3.1.7 shall be made to him on the later of
(i) the first day of January following his Date of Termination and (ii) the one
hundred twentieth (120th) day following his Date of Termination if, prior to his
Date of Termination, he elects, in his sole discretion, to receive such payment
at such time. In the event the Executive makes no such election, then his Vested
Pension Amount shall be paid in accordance with the provisions of Section 2.5.
3.5 REIMBURSEMENT OF LEGAL COSTS. The Company shall pay to an
Executive all legal fees and expenses incurred by him as a result of a
termination of his employment which entitles him to any payments under this Plan
(including all such fees and expenses, if any, incurred in contesting or
disputing any Notice of Intent to Terminate under Section 4.3 hereof or in
seeking to obtain or enforce any right or benefit provided by this Plan or in
connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit provided
hereunder). Such payments shall be made within five (5) business days after
delivery of his respective written requests for payment accompanied by such
evidence of fees and expenses incurred as the Company reasonably may require.
3.6 EXECUTIVES' COVENANT. The Company may condition the payment
of the amounts and provision of the benefits described in Article 3 of the Plan
to an Executive upon his providing to the Company a written agreement that,
subject to the terms and conditions of this Plan, in the event of a Potential
Change in Control, he will remain in the employ of the Company until the
earliest of (a) a date which is nine months after the date of such Potential
Change in Control, (b) the date of a Change in Control, (c) the date of his
termination of his employment for Good Reason (determined by treating the
Potential Change in Control for this purpose as a Change in Control in applying
the definition of Good Reason) or by reason of death or Disability, (d) the
termination by the Company of his employment for any reason or (e) his attaining
age sixty-five (65).
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ARTICLE 4
TERMINATION PROCEDURES AND
COMPENSATION DURING DISPUTE
4.1 NOTICE OF INTENT TO TERMINATE. After a Change in Control,
any purported termination of an Executive's employment (other than by reason of
death) must be preceded by a written Notice of Intent to Terminate from him to
the Company or the Company to him, as applicable, in accordance with Section
8.17 hereof. For purposes of this Plan, a Notice of Intent to Terminate shall
mean a notice which shall indicate the notifying party's opinion regarding the
specific provisions of this Plan that will apply upon such termination and shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for the application of the provisions so indicated. Further, a Notice of
Intent to Terminate for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board which was called and
held for the purpose of considering such termination (after reasonable notice to
the Executive and an opportunity for him, together with his counsel, to be heard
before the Board) finding that, in the good faith opinion of the Board, he was
guilty of conduct set forth in Subsection 1.6.1 or 1.6.2 herein, and specifying
the particulars thereof in detail.
4.2 DATE OF TERMINATION. Date of Termination, with respect to
any purported termination of an Executive's employment after a Change in
Control, shall mean (except as provided in Section 4.3 hereof) (a) if his
employment is terminated by reason of his death, his date of death (b) if his
employment is terminated for Disability, thirty (30) days after Notice of Intent
to Terminate is given (provided that he shall not have returned to the full-time
performance of his duties during such thirty (30) day period), and (c) if his
employment is terminated for any other reason, the date specified in the Notice
of Intent to Terminate (which (i) in the case of a termination by the Company,
shall not be less than thirty (30) days, except in the case of a termination for
Cause in which case it shall not be less than ten (10) days, provided that the
Company may require him to not report to work during such ten (10) day period
and (ii) in the case of a termination by an Executive, shall not be less than
fifteen (15) days nor more than sixty (60) days, respectively, from the date
such Notice of Intent to Terminate is given).
4.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days
after any Notice of Intent to Terminate is given (within eight (8) days in the
case of a termination for Cause by the Company), or, if later, prior to the Date
of Termination (as determined without regard to this Section 4.3), the person
receiving such Notice of Intent to Terminate notifies the person giving such
notice that a dispute exists concerning the termination or the provisions of
this Plan that apply to such termination, the Date of Termination shall be the
date on which the dispute is finally resolved, either by mutual written
agreement of the parties to such dispute or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall be extended by
a notice of dispute only if such notice is given in good faith and the person
giving such notice pursues the resolution of such dispute with reasonable
diligence.
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4.4 COMPENSATION DURING DISPUTE. If a purported termination of
an Executive's employment occurs following a Change in Control and such
termination or the provisions of this Plan that apply upon such termination is
disputed in accordance with Section 4.3 hereof (including a dispute as to the
existence of good faith and/or reasonable diligence thereunder), the Company
shall continue to pay the Executive the full compensation (including, but not
limited to, salary) at his Annual Base Salary and continue his participation in
all compensation plans required to be maintained hereunder and continue to
provide to him the Welfare Benefits provided for in Subsection 3.2.2 hereof
until the dispute is finally resolved in accordance with Section 4.3 hereof.
Amounts paid under this Section 4.4 are in addition to all other amounts due
under this Plan (other than those due under Subsection 3.1.1 hereof) and shall
not be offset against or reduce any other amounts due under this Plan.
ARTICLE 5
PLAN ADMINISTRATION
5.1 AUTHORITY TO PLAN ADMINISTRATOR. The Plan shall be
interpreted, administered and operated by the Plan Administrator, subject to the
express provisions of the Plan.
5.2 DELEGATION OF DUTIES. The Plan Administrator may delegate
any of his duties hereunder to such person or persons from time to time as he
may designate.
5.3 ENGAGEMENT OF THIRD PARTIES. The Plan Administrator is
empowered, on behalf of the Plan, to engage accountants, legal counsel and such
other personnel as he deems necessary or advisable to assist him in the
performance of his duties under the Plan. The functions of any such persons
engaged by the Plan Administrator shall be limited to the specified services and
duties for which they are engaged, and such persons shall have no other duties,
obligations or responsibilities under the Plan. Such persons shall exercise no
discretionary authority or discretionary control respecting the management of
the Plan. All reasonable expenses thereof shall be borne by the Company.
ARTICLE 6
CLAIMS
6.1 CLAIMS PROCEDURE. Claims for benefits under the Plan shall be
filed with the Plan Administrator. If any Executive or other payee claims to be
entitled to a benefit under the Plan and the Plan Administrator determines that
such claim should be denied in whole or in part, the Plan Administrator shall
notify such person of its decision in writing. Such notification will be written
in a manner calculated to be understood by such person and will contain (a)
specific reasons for the denial, (b) specific reference to pertinent Plan
provisions, (c) a description of any additional material or information
necessary for such person to perfect such claim and an explanation of why such
material or information is necessary, and (d) information as to the steps to be
taken if the person wishes to submit a request for review. Such notification
will be given within 90 days after the claim is received by the Plan
Administrator. If such notification is not
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given within such period, the claim will be considered denied as of the last day
of such period and such person may request a review of his claim.
6.2 REVIEW PROCEDURE. Within 60 days after the date on which a
person receives a written notice of a denied claim (or, if applicable, within 60
days after the date on which such denial is considered to have occurred) such
person (or his duly authorized representative) may (a) file a written request
with the Plan Administrator for a review of his denied claim and of pertinent
documents and (b) submit written issues and comments to the Plan Administrator.
The Plan Administrator will notify such person of its decision in writing. Such
notification will be written in a manner calculated to be understood by such
person and will contain specific reasons for the decision as well as specific
references to pertinent Plan provisions. The decision on review will be made
within 60 days after the request for review is received by the Plan
Administrator. If the decision on review is not made within such period, the
claim will be considered denied.
6.3 CLAIMS AND REVIEW PROCEDURES NOT MANDATORY. The claims
procedure and review procedure provided for in this Article 6 are provided for
the use and benefit of Executives who may choose to use such procedures, but
compliance with the provisions of this Article 6 is not mandatory for any
Executive claiming benefits under the Plan. It shall not be necessary for any
Executive to file a claim with the Plan Administrator or to exhaust the
procedures and remedies provided for by this Article 6 prior to bringing any
legal claim or action, or asserting any other demand, for payments or other
benefits to which he claims entitlement hereunder.
ARTICLE 7
PLAN MODIFICATION OR TERMINATION
The Plan may be amended or terminated by resolution of the Board at any
time; provided, however, that: (a) Schedule I hereto may be amended at any time
and in any manner by resolution of the Compensation Committee of the Board upon
recommendation of the Company's Chief Executive Officer; and (b) Schedule I
hereto may be amended at any time by the Company's Chief Executive Officer to
delete any one or more persons therefrom. Notwithstanding the foregoing: (a) the
Plan may not be terminated or amended in a manner adverse to the interests of
any Executive, without his consent (including the amendment of Schedule I hereto
to delete him therefrom) (i) after a Potential Change in Control occurs and for
one (1) year following the cessation of a Potential Change in Control, or (ii)
for the two-year period following consummation of the transaction(s) resulting
from or in the Change in Control; and (b) no termination of this Plan or
amendment hereof in a manner adverse to the interests of any Executive, without
his consent (including the amendment of Schedule I hereto to delete him
therefrom), shall be effective if such termination or amendment occurs (i) at
the request of a third party who has taken steps reasonably calculated to effect
a Change in Control or (ii) in connection with or in anticipation of a Change in
Control or Potential Change in Control. For this purpose, the cessation of a
Potential Change in Control occurs if a Change in Control has not occurred
within one year following the Potential Change in Control. In the event that the
termination of this Plan by the Company or an amendment hereof in a manner
adverse to the interests of any Executive (without his consent) occurs within
six (6) months prior to a Potential
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Change in Control or a Change in Control, there shall be a presumption that the
conditions of subclauses (i) and (ii) of clause (b) of the next preceding
sentence shall have been met. Upon the expiration of the Coverage Period, the
Plan may not be amended in any manner which would adversely affect the rights
which any Executive has at that time to receive any and all payments or benefits
pursuant to Articles 2, 3, and 4 by reason of a Change in Control which has
theretofore occurred or by reason of a termination of his employment during the
Coverage Period, and the Company's obligations to make such payments and provide
such benefits shall survive any termination of the Plan.
ARTICLE 8
MISCELLANEOUS
8.1 TERMINATIONS IN ANTICIPATION OF CHANGE IN CONTROL. An
Executive's employment shall be deemed to have been terminated by the Company
without Cause during the Coverage Period if his employment is terminated by the
Company without Cause prior to a Change in Control or Potential Change in
Control and such termination of employment (a) was at the request of a third
party who had indicated an intention to take or had taken steps reasonably
calculated to effect a Change in Control, or (b) otherwise arose in connection
with or in anticipation of a Change in Control and (c) in either case, a Change
in Control does occur which may involve such third party (or a party competing
with such third party to effectuate a Change in Control). An Executive shall be
deemed to have terminated his employment for Good Reason during the Coverage
Period if he terminates his employment with Good Reason prior to a Change in
Control or Potential Change in Control if the circumstance or event which
constitutes Good Reason (a) occurred at the request of a third party who had
indicated an intention to take or had taken steps reasonably calculated to
effect a Change in Control, or (b) otherwise arose in connection with or in
anticipation of a Change in Control, and (c) in either case, a Change in Control
does occur which may involve such third party (or a party competing with such
third party to effectuate a Change in Control). In the event of a termination of
employment described in this Section 8.1, the Executive shall be entitled to all
payments and other benefits to which he would have been entitled had such
termination occurred during the Coverage Period (other than salary pursuant to
Subsection 3.1.1 hereof for any period after the actual date of termination) and
he shall be entitled to an additional payment in an amount which shall
compensate him to the extent that he was deprived by such termination of the
opportunity prior to termination of employment to exercise any stock options
granted to him under the KEIP (including any such stock options that were not
exercisable at the time of his termination of employment) at the highest market
price of the Company's Common Stock reached in connection with the Change in
Control or Potential Change in Control if a Potential Change in Control shall
occur and not be followed by a Change in Control within twelve (12) months of
the Potential Change in Control. In the event that the termination of employment
of an Executive as described in this Section 8.1 occurs following a Potential
Change in Control or within six (6) months prior to a Change in Control, there
shall be a presumption that clauses (a) and (b) of the first two sentences of
this Section 8.1 shall have been met.
8.2 BURDEN. In any proceeding (regardless of who initiates
such proceeding) in which the payment of Severance Benefits or other
compensation or benefits under this Plan is at issue,
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(i) the burden of proof as to whether Cause exists for purposes of this Plan
shall be upon the Company and (ii) in the event that the last sentence of
Section 8.1 applies, the Company shall have the burden to prove, by clear and
convincing evidence, that a termination of employment has not been made in
anticipation of a Change in Control as contemplated by Section 8.1.
8.3 NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in the Plan
shall be deemed to give any Executive the right to be retained in the employ of
the Company, or to interfere with the right of the Company to discharge him at
any time and for any lawful reason, with or without notice, subject in all cases
to the terms of this Plan.
8.4 NO ASSIGNMENT OF BENEFITS. Except as otherwise provided
herein or by law, no right or interest of any Executive under the Plan shall be
assignable or transferable, in whole or in part, either directly or by operation
of law or otherwise, including without limitation by execution, levy,
garnishment, attachment, pledge or in any manner; no attempted assignment or
transfer thereof shall be effective; and no right or interest of any Executive
under the Plan shall be liable for, or subject to, any obligation or liability
of such Executive.
8.5 DEATH. This Plan shall inure to the benefit of and be
enforceable by an Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If an
Executive shall die while any amount would still be payable to him hereunder
(other than amounts which, by their terms, terminate upon his death) if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Plan to the executors, personal
representatives or administrators of his estate.
8.6 INCOMPETENCY. Any benefit payable to or for the benefit
of an Executive, if legally incompetent or incapable of giving a receipt
therefor, shall be deemed paid when paid to his guardian or to the party
providing or reasonably appearing to provide for his care, and such payment
shall fully discharge the Company, the Plan Administrator and all other parties
with respect thereto.
8.7 REDUCTION OF BENEFITS BY LEGALLY REQUIRED BENEFITS.
Notwithstanding any other provision of this Plan to the contrary, if the Company
is obligated by law or by contract (other than under this Plan) to pay severance
pay, a termination indemnity, notice pay, or the like, to an Executive or if the
Company is obligated by law or by contract to provide advance notice of
separation ("Notice Period") to an Executive, then any Severance Benefits
payable to him hereunder shall be reduced by the amount of any such severance
pay, termination indemnity, notice pay or the like, as applicable, and by the
amount of any pay received during any Notice Period; provided however, that the
period following a Notice of Intent to Terminate shall not be considered a
Notice Period.
8.8 ENFORCEABILITY. If any provision of the Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and the Plan shall be construed and enforced as if
such provisions had not been included.
24
<PAGE>
8.9 EFFECTIVE DATE. The Plan shall be effective as of the
Effective Date and shall remain in effect unless and until terminated by the
Board, subject to the requirements of Article 7 hereof.
8.10 NO MITIGATION. The Company agrees that, if an Executive's
employment by the Company is terminated during the Coverage Period, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to him by the Company pursuant to this Plan. Further,
the amount of any payment or benefit provided for under this Plan (other than to
the extent provided in Subsections 3.2.2 and 3.2.4) shall not be reduced by any
compensation earned by him as a result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by him to
the Company, or otherwise.
8.11 SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company shall be obligated to require any
successor (whether direct or indirect, by purchase, merger, consolidation,
operation of law, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
Company's obligations under this Plan in the same manner and to the same extent
that the Company would be required to perform them if no such succession had
taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall entitle each Executive
to compensation and benefits from the Company in the same amount and on the same
terms as he would be entitled to hereunder if he were to terminate his
employment for Good Reason during the Coverage Period.
8.12 CONSENT TO CANCELLATION OF AWARDS AND REDUCTION OF SERP BENEFIT.
The Company may condition the payment to an Executive of his Vested Current
Bonus Amount, Vested Current PSU Amount, Vested Deferred Bonus Amount and/or
Vested Deferred PSU Amount upon his providing a written consent to the
cancellation of the applicable contingent target AIP and PSU grants and AIP and
PSU Awards for which payment has been deferred on which his Vested Current Bonus
Amount, Vested Current PSU Amount, Vested Deferred Bonus Amount and/or Vested
Deferred PSU Amount is based and in lieu of which such amounts are paid. The
Company may condition the payment to an Executive of his Vested Pension Amount
or the providing of any benefit or payment under Section 2.5 or Subsection 3.4.4
hereof upon his providing a written consent to, as applicable, (i) the reduction
of the benefit to be paid under the SERP (whether in the form of a monthly
payment to him and his surviving spouse or as a lump sum) such reduction to be
in the amount of the SERP Benefit which was used in the calculation of his
Vested Pension Benefit or the amount of any payments or benefits provided under
Subsection 3.4.4, or (ii) the reduction of his Excess Account under the CLRP,
such reduction to be in the amount of the CLRP Benefit which was used in the
calculation of his Vested Pension Benefit.
8.13 EMPLOYMENT BY SUBSIDIARY. For purposes of this Plan, an
Executive who is employed by a Subsidiary shall be treated as if employed by the
Company and his entitlement to benefits hereunder shall be determined as if he
were employed by the Company. For such purpose, the Subsidiary shall be treated
as if it were an unincorporated division of the Company.
25
<PAGE>
8.14 WAIVER. No waiver by an Executive at any time of any breach of
the terms of this Plan, or compliance with, any condition or provision of this
Plan to be performed by the Company shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
8.15 WITHHOLDING TAXES. Any payments to an Executive provided
for hereunder shall be paid net of any applicable withholding required under
federal, state or local law and any additional withholding to which he has
agreed.
8.16 CONSTRUCTION. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan. Neither the gender
nor the number (singular or plural) of any word shall be construed to exclude
another gender or number when a different gender or number would be appropriate.
8.17 NOTICES. Any notice or other communication required or
permitted pursuant to the terms hereof shall be deemed to have been duly given
when delivered or mailed by United States Mail, first class, postage prepaid,
addressed to the intended recipient at his last known address (which in the case
of an Executive shall be the address specified by him in any written notice
provided to the Company in accordance with this Section 8.17).
8.18 STATUTORY CHANGES. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
8.19 GOVERNING LAW. This Plan shall be construed and enforced
according to the laws of the State of Delaware to the extent not preempted by
Federal law, which shall otherwise control.
IN WITNESS WHEREOF, the Company has caused the Plan to be adopted as of
the 8th day of June, 1999.
HERSHEY FOODS CORPORATION
By: _________________________________
Robert M. Reese
Senior Vice President,
General Counsel
and Secretary
26
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>ex104_seperation.txt
<DESCRIPTION>SEPARATION AGREEMENT AND GENERAL RELEASE
<TEXT>
EXHIBIT 10.4
CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE
This Confidential Separation Agreement and General Release
(the "AGREEMENT") is made as of this 11th day of December, 2000 (the "Effective
Date"), by and between Hershey Foods Corporation, a Delaware corporation (the
"COMPANY"), and Michael F. Pasquale ("EMPLOYEE"), and together with the Company,
(the "PARTIES").
WHEREAS, Employee will be retained as an employee of the
Company on paid leave of absence until the Separation Date, as hereinafter
defined, whereupon Employee's employment with the Company shall terminate (the
"SEPARATION");
WHEREAS, the Company and Employee desire voluntarily to enter
into this Agreement in order to set forth the definitive rights and obligations
of the Parties in connection with the Separation; and
WHEREAS, the Parties enter into this Agreement for their
mutual cooperation and benefit:
NOW, THEREFORE, in consideration of the mutual covenants,
commitments and agreements set forth herein, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1. ACKNOWLEDGMENT OF SEPARATION. The Parties acknowledge and agree that the
Separation shall be effective (the "Separation Date") as of the earliest of (i)
the date Employee commences full-time employment with another employer; (ii) in
the event Employee breaches any of his covenants, agreements or obligations
hereunder, the date the Company provides notice of such breach to Employee;
(iii) Employee's date of death; and (iv) June 1, 2002. If Employee commences
full-time employment with another employer prior to June 1, 2002, a
determination of whether an exception or waiver of eligibility requirements
under the SERP (as hereinafter defined) to allow Employee to receive benefits
under the SERP may be made by and in the sole discretion of the Chief Executive
Officer and Board of Directors of the Company, taking into account Section 4.9.
2. RESIGNATION FROM COMPANY BOARD OF DIRECTORS AND COMPANY OFFICES. Effective
immediately, Employee hereby voluntarily resigns from all of his positions and
offices with the Company and its subsidiaries, including, without limitation,
(i) member of the Board of Directors of the Company and of each committee
thereof of which he is a member, (ii) the Board of Directors of any subsidiary
of the Company, (iii) Executive Vice President and Chief Operating Officer, and
(iv) each office he may occupy of any subsidiary of the Company.
3. EMPLOYEE'S ACKNOWLEDGMENT OF CONSIDERATION. Employee specifically
acknowledges and agrees that certain of the obligations created and payments
made to him by the Company under this Agreement are promises and payments to
which he is not otherwise entitled under any law or contract.
4. PAID LEAVE OF ABSENCE. Employee shall be placed on a paid leave of
absence commencing on the Effective Date and continuing until the Separation
Date. This period shall be known as the "Leave of Absence Period". The following
conditions shall apply during the Leave of Absence Period:
4.1. Except as provided for below and in Section 4.2, Employee
shall continue to be eligible to receive the following, and
only the following, employment benefits and participate in or
receive benefits under the following,and only the following,
<PAGE>
programs and benefit plans (in accordance with the terms and
conditions of the programs and benefit plans of the Company,
including, without limitation, such terms and conditions
permitting the Company to amend or terminate such programs
and benefit plans) applicable to Employee immediately
prior to the Effective Date:
4.1.1. his salary, which shall be payable in regular installments in
accordance with the Company's general payroll practices and
shall be subject to customary withholding;
4.1.2. the Company's medical (including dental and vision) benefits
programs, including the retiree medical program if Employee's
Separation Date occurs concurrently with or after he is
eligible to retire;
4.1.3. the Company's life insurance program at one-times his base
salary;
4.1.4. the Hershey Foods Corporation Deferred Compensation Plan
("DCP");
4.1.5. the Hershey Foods Corporation Retirement Plan ("HRA");
4.1.6. the Hershey Foods Corporation Employees Savings Stock
Investment and Ownership Plan ("ESSIOP"); and
4.1.7. the Hershey Foods Corporation Supplemental Executive Retirement
Plan ("SERP").
From and after Employee's Separation Date, he shall not be entitled to
any payments or benefits of any kind from the Company under this Section
4.1, and any vested rights under the DCP, the HRA, the ESSIOP, the SERP,
and the retiree medical program shall be determined by the terms and
conditions of these plans respectively.
4.2. Notwithstanding the foregoing, the parties agree:
4.2.1. Employee shall not be eligible to accrue, earn or participate
in salary adjustments after the Effective Date;
4.2.2. Employee shall not be eligible to receive any employment
benefits or participate in or receive any payments or benefits
under any programs or benefit plans not listed in
Section 4.1 (in particular, Employee shall not, effective
immediately, be eligible for any benefits under any Company
employee benefit protection program, including its Executive
Benefits Protection Plans, whether Group 2, 3 or 3A,and its
Severance Benefits Plan);
4.2.3. Upon the Effective Date, all Employee's coverage under the
Company's short-term and long-term disability plans shall
cease;
4.2.4. Employee will be paid in January 2001 for any unused vacation
days to which he is entitled in 2000 but shall not be entitled
to payment for vacation days accrued for 2001 or any
subsequent year; and
4.2.5. Employee shall not be permitted to contribute to a medical
reimbursement account under the Company's flex benefits plan
for any period after December 31,2000.
2
<PAGE>
4.3. Employee shall not participate in any part of the Long -Term
Incentive Program ("LTIP") of the Company's Key Employee
Incentive Plan ("KEIP") during 2001 or any subsequent year and
any outstanding contingent target grants of Performance Stock
Units granted to Employee prior to December 31, 2000 are
hereby cancelled, except for those granted for the 1998-2000
cycle for pay-out, if any, in February 2001 in accordance with
the terms of LTIP.
4.4. Except as provided in the immediately following sentence,
presentation of a draft of this Agreement to Employee on
December 11, 2000 for his consideration constitutes notice
of termination of employment for purposes of Section 8(a)
of the KEIP. If Employee executes this Agreement on
December 11, 2000, presentation on December 11, 2000 of a
draft of this Agreement to Employee for his consideration
shall not constitute a notice of termination of employment for
purposes of Section 8(a) of the KEIP. Whether Employee
has received a notice of termination of employment for
purposes of Section 8(a) the KEIP can be determined only upon
the occurrence or non-occurrence of certain events
following the presentation of this Agreement to Employee for
his consideration. Employee, therefore, shall not be
permitted to exercise any currently outstanding Options
granted to him previously under the KEIP unless and until
this Agreement becomes effective and enforceable.
If this Agreement becomes effective and enforceable, then
from and after the Effective Date and through and including
his Separation Date, Employee shall be considered to
be an active employee for purposes of any Options granted to
him previously under KEIP during any years prior to 2001
and may exercise in accordance with the provisions of
KEIP any such Options at any time prior to his Separation
Date and thereafter in accordance with the KEIP and
the terms and conditions of the grants of such Options if his
Separation Date occurs concurrently with or after
he is eligible to retire.
4.5. Employee shall be eligible to receive an award, if any, of his
contingent target grant for 2000 under the Annual Incentive
Program ("AIP") of KEIP subject to the terms and conditions of
the KEIP and the contingent target grant. For these purposes
his score for personal objectives will be set at 100%.
Employee shall not be entitled to participate in or receive
any benefits under the Annual Incentive Program of KEIP for
2001 or any subsequent year.
4.6. During the Leave of Absence Period, Employee shall have no
assigned duties and shall perform no services for the Company.
4.7. Except as provided for in Section 6 below, Employee shall be
free to seek and accept other employment after the Effective
Date.
4.8. In the event Employee commences other employment during the
Leaveof Absence Period, and elects to receive health insurance
benefits from another employer, then Employee shall
immediately notify the Company at 100 Crystal A Drive,
Hershey, PA, Attn: Director, Employee Benefits, of his
election in writing and the health insurance provided by
the Company hereunder shall terminate as of the effective
date of such health insurance received from the other
employer. Nothing herein shall obligate Employee to
accept any health insurance benefit associated with any other
employment. Employee shall not, however, accept coverage from
BOTH the Company and a new employer.
4.9. If Employee commences full-time employment with another
employer prior to June 1, 2002, he shall be entitled to a
one-time lump-sum severance payment of
3
<PAGE>
One Million Dollars ($1,000,000), but shall receive no
futher payments or benefits under this Agreement,
in accordance with Section 4.1.
4.10. Employee shall not be subject to the minimum stockholding
requirements for Company executives or KEIP participants.
4.11. The Company will provide for the continuation of comparable
financial advisory services by AYCO for a period of six months
after the Effective Date.
5. SEPARATION AND COBRA RIGHTS. Effective as of the Separation Date, as required
by the continuation coverage provisions of Section 4980B of the U. S. Internal
Revenue Code of 1986, as amended ("THE CODE"), Employee shall be offered the
opportunity to elect continuation coverage under the group medical plan of the
Company ("COBRA COVERAGE"). The Company shall provide Employee with the
appropriate COBRA coverage notice and election form for this purpose. Employee
shall notify the Company within two weeks of any change in his circumstances
that would warrant discontinuation of his COBRA coverage and benefits (including
but not limited to Employee's receipt of group medical and dental benefits from
any other employer). The existence and duration of Employee's rights and/or the
COBRA rights of any of Employee's eligible dependents shall be determined in
accordance with Section 4980B of the Code.
6. CONFIDENTIAL, PROPRIETARY AND PRIVILEGED INFORMATION; NON-COMPETITION. The
parties agree the terms and conditions of that certain Long-Term Incentive
Program Participation Agreement and Mutual Agreement to Arbitrate Claims by and
between the Company and Employee executed by Employee January 27, 1997
("Participation and Arbitration Agreement"), a copy of which is attached hereto,
are incorporated herein by reference and made a part hereof as if fully set
forth herein. Notwithstanding any provisions to the contrary in the
Participation and Arbitration Agreement, the terms and conditions thereof shall
remain in effect for three years after Employee's Separation Date regardless of
whether Employee is eligible or not to receive benefits under the SERP.
7. GENERAL RELEASE AND WAIVER BY EMPLOYEE.
7.1. Employee, for and on behalf of himself and each of his
heirs, executors, administrators, personal representatives,
successors and assigns, hereby acknowledges full and
complete satisfaction of and fully and forever releases,
acquits and discharges the Company, together with its
subsidiaries and affiliates, and each of its and their past
and present direct and indirect stockholders, directors,
members, partners, officers, employees, agents, inside and
outside counsel and representatives and its and their
respective heirs, executors, administrators, personal
representatives, successors and assigns (collectively,
the "Releasees"), from any and all claims, demands, suits,
causes of action, liabilities, obligations, judgments,
orders, debts, liens, contracts, agreements, covenants and
causes of action of every kind and nature, whether known or
unknown, suspected or unsuspected, concealed or hidden,
vested or contingent, in law or equity, existing by statute,
common law, contract or otherwise, which have existed, may
exist or do exist, through and including the execution and
delivery by Employee of this Agreement (but not including the
Parties' performance under this Agreement), including,
without limitation, any of the foregoing arising out of or
in any way related to or based upon:
7.1.1. Employee's application for and employment with the
Company, his being an employee of the Company, or
the Separation;
4
<PAGE>
7.1.2. any and all claims in tort or contract, and any and
all claims alleging breach of an
express or implied, or oral or written, contract,
policy manual or employee handbook;
7.1.3. any alleged misrepresentation, coercion, duress,
defamation, interference with contract,
intentional or negligent infliction of emotional
distress, sexual harassment,negligence
or wrongful discharge; or
7.1.4 any federal, state or local statute, ordinance or
regulation, including but not limited to the Fair
Labor Standards Act, the Equal Pay Act, Title VII of
the Civil Rights Act of 1964, the Americans With
Disabilities Act, the Family and Medical Leave Act,
and the Pennsylvania Human Relations Act.
7.2. Employee acknowledges and agrees that other than to seek the
Company's performance under this Agreement he is waiving all
rights to sue or obtain equitable, remedial or punitive
relief from any or all Releasees of any kind whatsoever,
including, without limitation, reinstatement, back pay,
front pay, attorneys' fees and any form of injunctive relief.
Employee acknowledges and agrees that this waiver
and release is an essential and material term of this
Agreement. Employee further acknowledges and agrees that he
will not assert any breach of any agreement,plan, or right
referred to herein based on any action or inaction of the
Releasees prior to the date hereof.
7.3. Employee understands and intends that this SECTION 7
constitutes a general release, and that no reference therein
to a specific form of claim, statute or type of relief is
intended to limit the scope of such general release and
waiver; provided, however, notwithstanding any other provision
of this Section 7, the provisions of this Section 7 shall not
apply to any rights Employee may have under the Age
Discrimination in Employment Act of 1967, as amended.
7.4. Employee expressly waives all rights afforded by any statute
which limits the effect of a release with respect to unknown
claims. Employee understands the significance of his release
of unknown claims and his waiver of statutory protection
against a release of unknown claims.
7.5. Employee agrees that he will not be entitled to or accept any
benefit from any claim or proceeding within the scope of this
SECTION 7 general release that is filed or instigated by him
or on his behalf with any agency, court or other government
entity.
8. EMPLOYEE'S REPRESENTATIONS AND COVENANTS REGARDING ACTIONS. Employee
represents, warrants and covenants to each of the Releasees that at no time
prior to or contemporaneous with his execution of this Agreement has he filed or
caused or knowingly permitted the filing or maintenance, in any state, federal
or foreign court, or before any local, state, federal or foreign administrative
agency or other tribunal, any charge, claim or action of any kind, nature and
character whatsoever ("CLAIM"), known or unknown, suspected or unsuspected,
which he may now have or has ever had against the Releasees which is based in
whole or in part on any matter referred to in SECTION 7.1. above, and, to the
maximum extent permitted by law Employee is prohibited from filing or
maintaining, or causing or knowingly permitting the filing or maintaining, of
any such Claim in any such forum. Employee hereby grants the Company his
perpetual and irrevocable limited power of attorney with full right, power and
authority to take all actions necessary to dismiss or discharge any such Claim.
Employee further covenants and agrees that he will not encourage any person or
entity, including but not limited to any current or former employee, officer,
director or stockholder of the Company, to institute any Claim against
5
<PAGE>
the Releasees or any of them, and that except as expressly permitted by law or
administrative policy or as required by legally enforceable order he will not
aid or assist any such person or entity in prosecuting such Claim.
9. NO DISPARAGING REMARKS. Employee hereby covenants to each of the Releasees
and agrees that he shall not, directly or indirectly, within or without the
Company, make or solicit or encourage others to make or solicit any disparaging
or negative remarks concerning the Releasees (as defined in SECTION 7 of this
Agreement), or any of their products, services, businesses or activities.
Employee understands that, in addition to the consequences such breach may have
under other provisions of this Agreement, his breach of this SECTION 9 and the
Company's delivery to him of notice of such breach shall result in his
Separation; shall eliminate his entitlement to any subsequent payment or
benefits under this Agreement including, without limitation, to further exercise
any Options under the KEIP and any further participation in or eligibility for
benefits under the SERP; and shall subject him to liability for any damages
arising from such remarks.
10. NO CONFLICT OF INTEREST. Employee hereby covenants and agrees that he shall
not, directly or indirectly, incur any obligation or commitment, or enter into
any contract, agreement or understanding, whether express or implied, and
whether written or oral, which would be in conflict with his obligations,
covenants or agreements hereunder or which could cause any of his
representations or warranties made herein to be untrue or inaccurate.
11. CONFIDENTIALITY. The Company and Employee agree that the terms and
conditions of this Agreement are to be strictly confidential, except that
Employee may disclose the terms and conditions to his family, attorneys,
accountants, tax consultants, state and federal tax authorities or as may
otherwise be required by law. The Company may disclose the terms and conditions
of this Agreement and the circumstances of Employee's separation as the Company
deems necessary or appropriate to its or its affiliates' or representatives'
officers, employees, board of directors, insurers, attorneys, accountants, state
and federal tax authorities, or as otherwise allowed by law. Employee represents
that except as expressly authorized by this SECTION 11 he has not discussed, and
agrees that except as expressly authorized by this SECTION 11 or by the Company
he will not discuss, this Agreement or the circumstances of his Separation, and
that he will take affirmative steps to avoid or absent himself from any such
discussion even if he is not an active participant therein. EMPLOYEE
ACKNOWLEDGES THE SIGNIFICANCE AND MATERIALITY OF THIS PROVISION TO THIS
AGREEMENT, AND HIS UNDERSTANDING THEREOF.
12. RETURN OF CORPORATE PROPERTY; CONVEYANCE OF INFORMATION. Employee hereby
covenants and agrees to immediately return all documents, keys, ID cards, credit
cards (without further use thereof), laptop computer, and all other items which
are the property of the Company and/or which contain confidential information;
and, in the case of documents, to return any and all materials of any kind and
in whatever medium evidenced, including, without limitation, all hard disk drive
data, diskettes, microfiche, photographs, negatives, blueprints, printed
materials, tape recordings and videotapes.
13. REMEDIES. In the event that Employee has breached any of his covenants,
agreements or obligations under this Agreement, the Company shall notify
Employee in writing at his home address as shown in the Company's records of the
reason for such determination. The notice shall be sent via hand delivery or
overnight courier. Employee hereby acknowledges and affirms that in the event of
any breach by Employee of any of his covenants, agreements and obligations
hereunder, Employee's Separation shall be effective as of the day the Company
provides notice thereof. Employee further hereby acknowledges and affirms that
in the event of such breach monetary damages would be inadequate to compensate
the Releasees or any of them. Accordingly, in addition to other remedies which
may be available to the Releasees hereunder or otherwise at law or in equity,
any Releasee shall be entitled to specifically enforce such
6
<PAGE>
covenants, obligations and restrictions through injunctive and/or equitable
relief, in each case without the posting of any bond or other security with
respect thereto. Should any provision hereof be adjudged to any extent invalid
by any court or tribunal of competent jurisdiction, each provision shall be
deemed modified to the minimum extent necessary to render it enforceable.
14. ACKNOWLEDGMENT OF VOLUNTARY AGREEMENT. Employee hereby acknowledges and
affirms that he is entering into this Agreement knowingly and voluntarily,
without coercion or duress of any sort, in order to receive the payments and
other consideration from the Company as set forth herein. Employee acknowledges
and affirms that he has been given adequate opportunity to review and consider
this Agreement.
15. COMPLETE AGREEMENT; INCONSISTENCIES. This Agreement and the Participation
and Arbitration Agreement constitute the complete and entire agreement between
Employee and the Company with respect to the subject matter hereof, and
supersede in their entirety any and all prior understandings, commitments,
obligations and/or agreements, whether written or oral, with respect thereto; it
being understood and agreed that this Agreement and those agreements, including
the mutual covenants, agreements, acknowledgments and affirmations contained
herein and therein, are intended to constitute a complete settlement and
resolution of all matters set forth in SECTION 7 hereof.
16. NO STRICT CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language mutually chosen by the Parties to reflect their
mutual intent, and no doctrine of strict construction shall be applied
against any Party.
17. THIRD PARTY BENEFICIARIES. The Releasees are intended third-party
beneficiaries of this Agreement, and this Agreement may be enforced by each of
them in accordance with the terms hereof in respect of the rights granted to
such Releasees hereunder. Except and to the extent set forth in the preceding
sentence, this Agreement is not intended for the benefit of any person other
than the Parties, and no such other person shall be deemed to be a third party
beneficiary hereof. Without limiting the generality of the foregoing, it is not
the intention of the Company to establish any policy, procedure, course of
dealing or plan of general application for the benefit of or otherwise in
respect of any other employee, officer, director or stockholder, irrespective of
any similarity between any contract, agreement, commitment or understanding
between the Company and such other employee, officer, director or stockholder,
on the one hand, and any contract, agreement, commitment or understanding
between the Company and Employee, on the other hand, and irrespective of any
similarity in facts or circumstances involving such other employee, officer,
director or stockholder, on the one hand, and the Employee, on the other hand.
18. TAX WITHHOLDINGS. Notwithstanding any other provision herein, the
Company shall be entitled to withhold from any amounts otherwise payable
hereunder to Employee any amounts required to be withheld in respect of
federal, state or local taxes.
19. GOVERNING LAW. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by,
and construed in accordance with, the laws of the Commonwealth of Pennsylvania,
without giving effect to any choice of law or conflict of law rules or
provisions (whether of the Commonwealth of Pennsylvania or any other
jurisdiction) that would cause the application hereto of the laws of any
jurisdiction other than the Commonwealth of Pennsylvania. In furtherance of the
foregoing, the internal law of the Commonwealth of Pennsylvania shall control
the interpretation and construction of this Agreement, even though under any
other jurisdiction's choice of law or conflict of law analysis the substantive
law of some other jurisdiction may ordinarily apply.
20. SEVERABILITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall otherwise remain in full
force and effect.
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21. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
22. SUCCESSORS AND ASSIGNS. The Parties' obligations hereunder shall be
binding upon their successors and assigns. The Parties' rights and the
rights of the other Releasees shall inure to the benefit of, and be
enforceable by, any of the Parties' and Releasees' respective successors and
assigns.
23. AMENDMENTS AND WAIVERS. No amendment or waiver shall be binding upon any
party hereto unless consented to in writing by such party.
24. HEADINGS. The headings of the Sections and subsections hereof are for
purposes of convenience only, and shall not be deemed to amend,modify,
expand, limit or in any way affect the meaning of any of the provisions
hereof.
25. WAIVER OF JURY TRIAL. Each of the Parties hereby waives its rights to a jury
trial of any claim or cause of action based upon or arising out of this
Agreement or any dealings between the Parties relating to the subject matter
hereof. Each of the Parties also waives any bond or surety or security upon such
bond which might, but for this waiver, be required of the other party. The scope
of this waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this
Agreement, including, without limitation, contract claims, tort claims, breach
of duty claims, and all other common law and statutory claims. EACH OF THE
PARTIES ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO
THIS AGREEMENT, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO
THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. Each of the Parties further represents and warrants that he or
it knowingly and voluntarily waives his or its jury trial rights. This waiver
may not be modified orally, but only in writing, and the waiver shall apply to
any subsequent amendments, renewals, supplements or modifications to this
agreement. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
* * * * *
IN WITNESS WHEREOF, the Parties have executed this
Confidential Separation Agreement and General Release effective as of the date
of the first signature affixed below or as otherwise provided in this Agreement.
READ CAREFULLY BEFORE SIGNING
I have read this Confidential Separation Agreement and General Release. I
understand that by executing this Confidential Separation Agreement and General
Release I will relinquish any right or demand, other than those created by or
otherwise set forth in this Agreement, I may have against the Releasees or any
of them.
DATED: DECEMBER 11, 2000 By: /S/ MICHAEL F. PASQUALE
------------------ -----------------------
Michael F. Pasquale
HERSHEY FOODS CORPORATION
DATED: DECEMBER 11, 2000 By: /S/ KENNETH L. WOLFE
----------------- --------------------
Kenneth L. Wolfe
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HERSHEY FOODS CORPORATION
LONG-TERM INCENTIVE PROGRAM PARTICIPATION AGREEMENT
The undersigned is an executive employee of Hershey Foods
Corporation or one of its subsidiaries (hereinafter collectively referred to
as "Hershey"). I understand that I have been selected to participate in the
Key Employee Incentive Plan (the "Plan"), including the Long-Term Incentive
Program ("LTIP") under the Plan. I understand, acknowledge and agree that
the purpose of this Agreement is to provide for enhanced confidentiality
requirements, an agreement not to compete with Hershey once I become
eligible for supplemental retirement benefits, and an arbitration program to
be the sole and exclusive method for resolving disputes. I understand and
acknowledge that by this Agreement, both I and Hershey, in order to avoid
delay and expense, are mutually waiving the right of access to a judicial
forum for resolving disputes covered by the arbitration program. I hereby
accept the opportunity to participate in the Plan, including the LTIP, and
in consideration of my selection by Hershey to be a participant in the Plan
and being eligible to receive benefits under the Plan, I agree to the
following:
1. PARTICIPATION.
I understand and agree that participating in the LTIP at any
time is no guarantee I will be selected to participate in the LTIP or any
other aspect of the Plan in any future years. I understand and agree that
participation in the Plan and the LTIP is voluntary; specifically, I
understand that I am under no obligation to participate in the LTIP or any
other aspect of the Plan, and that I may retain my job if I decline to so
participate. I understand and agree that if I elect to participate in the
Plan and the LTIP, then, depending on my job performance, the financial
performance of Hershey and the achievement of certain goals and objectives,
I will be eligible to receive Annual Incentive Program Awards, Performance
Stock Unit Awards and Stock Options, in accordance with the terms of the
Plan, as it may be amended from time to time.
2. CONFIDENTIALITY.
I acknowledge that due to the nature of my employment and the
position of trust that I hold with Hershey, I will have special access to,
learn, be provided with, and in some cases will prepare and create for
Hershey, trade secrets and other confidential and proprietary information
relating to Hershey's business, including, but not limited to, information
about Hershey's manufacturing processes; manuals, recipes and ingredient
percentages; engineering drawings; product and process research and
development; new product information; cost information; supplier data;
strategic business information;
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marketing, financial and business development information, plans,
forecasts, reports and budgets; customer information; new product
strategies, plans and project activities; and acquisition and divestiture
strategies, plans and project activities. I acknowledge and agree that such
information, whether or not in written form,is the exclusive property of
Hershey, that it has been and will continue to be of critical importance
to the business of Hershey, and that the disclosure of it to, or use by,
competitors or others will cause Hershey substantial and irreparable harm.
Accordingly, I will not, either during my employment or at any time after
the termination (whether voluntary or involuntary) of my employment with
Hershey, use, reproduce or disclose any trade secrets or other confidential
information relating to the business of Hershey which is not generally
available to the public, except as may be specially authorized and
necessary in discharging my assigned duties as an employee of Hershey. I
understand and agree that my obligations under this Agreement shall be in
addition to, rather than in lieu of, any obligations I may already have
under any Confidentiality Agreement or other agreement with Hershey
relating to confidential information or under any applicable statute or at
common law.
3. UNFAIR COMPETITION.
I understand and acknowledge that Hershey is engaged in the
business of developing, producing, marketing, selling and distributing
confectionery products, chocolate-related grocery products and pasta
products. I acknowledge that the scope of Hershey's business and operations
is world-wide. I acknowledge that due to the nature of my employment with
Hershey, I have special access to, contact with, and information about,
Hershey's business activities as described above and to its customers,
suppliers, agents, licensees and licensors. I acknowledge that Hershey has
incurred considerable expense and invested considerable time and resources
in developing relationships with customers, suppliers, agents, licensees and
licensors, and that those relationships are critical to the success of
Hershey's business.
Accordingly, both (a) during the term of my employment with
Hershey, and (b) for a period of three (3) years following the termination
of my employment for any reason, provided at the time of such termination I
am eligible to receive benefits under Hershey's Supplemental Executive
Retirement Plan, I shall not, without the prior written consent of Hershey,
directly or indirectly serve or act as an officer, director, employee,
consultant, adviser, agent or representative for the domestic or worldwide
confectionery, chocolate-related grocery or pasta businesses of any entity
or individual that is in competition with Hershey's confectionery,
chocolate-related grocery or pasta businesses.
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<PAGE>
4. SURVIVAL OF OBLIGATIONS.
Both I and Hershey understand and agree that our respective
rights and obligations under, and the terms and conditions of, this Agreement
(and the Mutual Agreement to Arbitrate Claims appended hereto) shall apply and
continue during, and survive the termination (for any reason) of, my employment
with Hershey.
5. ARBITRATION AND MEDIATION.
Both I and Hershey promise to arbitrate any claim covered by
the Mutual Agreement to Arbitrate Claims which is attached hereto and
incorporated in full herein by reference.
Both I and Hershey further agree, before seeking arbitration
of any claim, to engage in good faith efforts to resolve the dispute through
nonbinding mediation. Mediation shall be conducted by, and in accordance with
procedures for the mediation of employment disputes of, one of the American
Arbitration Association, the Judicial Arbitration + Mediation Services, Inc.
(JAMS/Endispute) or the Center for Public Resources (CPR) as Hershey and I may
agree (and if such agreement is not possible, then the mediation procedures of
CPR shall apply), together with any other procedures as may be agreed upon by me
and Hershey.
6. SAVINGS CLAUSE AND SEVERABILITY.
a. All provisions of this Agreement (and of the Mutual
Agreement to Arbitrate Claims appended hereto) are severable, and if
any of them is determined to be invalid or unenforceable for any
reason, the remaining provisions and portions shall be unaffected
thereby and shall remain in full force to the fullest extent permitted
by law.
b. Without limiting the foregoing, I specifically agree that
each of the covenants set forth in Paragraph 3 of this Agreement is
severable; that if any of them is held invalid or unenforceable by
reason of length of time, area covered or activity covered, or any
combination thereof, or for any other reason, the court or arbitrator
shall adjust, reduce or otherwise reform any such covenant to the
extent necessary to cure any invalidity and to protect the interests of
Hershey to the fullest extent of the law; that the area, time period
and scope of activity restricted shall be the maximum area, time period
and scope of activity the court or arbitrator deems valid and
enforceable; and that, as reformed, such covenant shall then be
enforced.
c. Without limiting the foregoing, I also specifically agree
that if any part of the Mutual Agreement to Arbitrate Claims is
determined to be invalid or
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<PAGE>
unenforceable for any reason, then the invalid or unenforceable
portion shall be severed and the agreement to submit any claim to
binding arbitration shall be interpreted and enforced as if the
invalid or unenforceable portion did not appear.
7. MISCELLANEOUS.
a. Any notice to Hershey shall be in writing and shall be sent
by certified mail to Hershey Foods Corporation, 100 Crystal A Drive,
Hershey, PA 17033-0810, Attention: Vice President, Human Resources. Any
notice to me shall be in writing and shall be sent to me by certified
mail at the latest address listed for me in Hershey's employment
records, unless I specifically notify Hershey in writing that notice
shall be delivered to me at a different address. Notice shall be deemed
delivered when personally delivered or a properly addressed notice is
deposited with the U.S. Postal Service for delivery by certified mail.
b. I understand and agree that neither this Agreement nor the
Mutual Agreement to Arbitrate Claims shall be construed in any way as
an agreement or guarantee of employment for any period of time and that
I remain an employee-at-will for all purposes.
c. The rights and obligations under this Agreement and the
Mutual Agreement to Arbitrate Claims shall inure to the benefit of,
shall be binding upon, and may be enforced by and for the benefit of,
Hershey Foods Corporation, any subsidiary or affiliate of Hershey Foods
Corporation, and their successors and assigns.
d. Any waiver by either Hershey or me of any breach, or the
failure to enforce any of the terms or conditions, of this Agreement or
the Mutual Agreement to Arbitrate Claims, shall not in any way affect,
limit, or waive any rights thereafter to enforce, and compel strict
compliance with, every term and condition of this Agreement and the
Mutual Agreement to Arbitrate Claims.
e. This Agreement and the Mutual Agreement to Arbitrate Claims
constitute the entire agreement between Hershey and me with respect to
the matters addressed herein and therein, there being no
representations, warranties, commitments, or other agreements, except
as set forth herein and therein. This Agreement and the Mutual
Agreement to Arbitrate Claims may be amended only by an instrument in
writing executed by me and an authorized officer of Hershey.
f. The substantive law governing this Agreement shall be the
law of the Commonwealth of Pennsylvania. The law of arbitrability shall
be that set forth in the Federal Arbitration Act. If for any reason the
Federal Arbitration Act is inapplicable, then the law of arbitrability
shall be that of the Commonwealth of Pennsylvania.
4
<PAGE>
LONG-TERM INCENTIVE PROGRAM PARTICIPATION AGREEMENT
Mutual Agreement To Arbitrate Claims
I recognize that differences may arise between Hershey Foods
Corporation (the "Company") and me during or following my employment with the
Company, and that those differences may or may not be related to my employment.
I understand and agree that by entering into this Mutual Agreement to Arbitrate
Claims ("Arbitration Agreement"), I anticipate gaining the benefits of a speedy,
impartial dispute-resolution procedure.
I understand that any reference in this Arbitration Agreement
to the Company will be a reference also to all subsidiary and affiliated
entities, all benefit plans, the benefit plans' sponsors, fiduciaries,
administrators, affiliates and agents, and all successors and assigns of any of
them.
A. CLAIMS COVERED BY THE ARBITRATION AGREEMENT.
The Company and I mutually consent to the resolution by
arbitration of all claims or controversies ("claims"), past, present, or future,
whether or not arising out of my employment (or its termination), that the
Company may have against me or that I may have against the Company or against
its officers, directors, employees or agents in their capacity as such. The only
claims that are arbitrable are those that, in the absence of this Arbitration
Agreement, would have been justiciable under applicable state or federal law.
The claims covered by this Arbitration Agreement include, but are not limited
to, claims arising out of, connected with or relating to the Long-Term Incentive
Program Participation Agreement and this Arbitration Agreement; claims for wages
or other compensation due; claims for breach of any contract or covenant
(express or implied); tort claims; claims for discrimination (including, but not
limited to, race, sex, sexual orientation, religion, national origin, age,
marital status, or medical condition, handicap or disability); claims for
benefits (except claims under an employee benefit or pension plan that either
specifies that its claims procedure shall culminate in an arbitration procedure
different from this one or is underwritten by a commercial insurer which decides
claims); and claims for violation of any federal, state, or other governmental
law, statute, regulation, or ordinance, except as otherwise provided in this
Arbitration Agreement.
B. CLAIMS NOT COVERED BY THE ARBITRATION AGREEMENT.
Claims I may have for workers' compensation or unemployment
compensation benefits are not covered by this Agreement.
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<PAGE>
Also not covered are claims by the Company for injunctive
and/or other equitable relief, including but not limited to those for unfair
competition and/or the use and/or unauthorized disclosure of trade secrets or
confidential information, as to which I understand and agree that the Company
may seek and obtain relief from a court of competent jurisdiction. In
such an injunctive/equitable proceeding, I understand and agree that the court
is entitled to and will award to the prevailing party costs and actual
attorneys' fees incurred.
C. REQUIRED NOTICE OF ALL CLAIMS.
The Company and I agree that the aggrieved party must give
written notice of any claim to the other party. Written notice to the Company,
or its officers, directors, employees or agents, shall be sent pursuant to the
notice provision of the Agreement to which this Arbitration Agreement is
appended.
The written notice shall identify and describe the nature of
all claims asserted and the facts upon which such claims are based.
D. REPRESENTATION.
Any party may be represented by an attorney or other
representative selected by the party.
E. DISCOVERY.
Each party shall have the right to take the deposition of one
individual and any expert witness designated by another party. Each party also
shall have the right to make requests for production of documents to any party.
The subpoena right specified below shall be applicable to discovery pursuant to
this paragraph. Additional discovery may be had only where the arbitrator
selected pursuant to this Arbitration Agreement so orders, upon a showing of
substantial need.
F. DESIGNATION OF WITNESSES.
At least 30 days before the arbitration, the parties must
exchange lists of witnesses, including any expert, and copies of all exhibits
intended to be used at the arbitration.
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<PAGE>
G. SUBPOENAS.
Each party shall have the right to subpoena witnesses and
documents for the arbitration.
H. ARBITRATION PROCEDURES.
The arbitration will be held under the auspices of one of the
American Arbitration Association, Judicial Arbitration + Mediation Services,
Inc. or Center for Public Resources, with the designation of such sponsoring
organization to be made by the party that did not initiate the claim.
The arbitration shall be confidential and closed to the
public. Any evidence proffered in the arbitration shall be held in strict
confidence and not disclosed to any third party.
The Company and I agree that, except as provided in this
Agreement, the arbitration shall be in accordance with the then-current dispute
arbitration procedures of the sponsoring organization for the type of claim
involved. The arbitration shall take place in or near the location in which I am
or was last employed by the Company.
The Arbitrator shall be selected as follows. The sponsoring
organization shall give each party a list of 7 arbitrators. Each party may
strike all names on the list it deems unacceptable. If only one common name
remains on the lists of all parties, that individual shall be designated as the
Arbitrator. If more than one common name remains on the lists of all parties,
the parties shall strike names alternately from the list of common names until
only one remains. The party who did not initiate the claim shall strike first.
If no common name exists on the lists of all parties, the sponsoring
organization shall furnish an additional list and the process shall be repeated.
If no arbitrator has been selected after two lists have been distributed, then
the parties shall strike alternately from a third list, with the party
initiating the claim striking first, until only one name remains. That person
shall be designated as the Arbitrator.
The Arbitrator shall apply the substantive law (and the law of
remedies, if applicable) of the Commonwealth of Pennsylvania or federal law, or
both, as applicable to the claim(s) asserted. The Arbitrator is without
jurisdiction to apply any different substantive law, or law of remedies. The
Federal Rules of Evidence shall apply. The Arbitrator, and not any federal,
state, or local court or agency, shall have exclusive authority to resolve any
dispute relating to the interpretation, applicability, enforceability or
formation of this Arbitration Agreement, including but not limited to any claim
that all or any part of this Arbitration Agreement is void or voidable. The
arbitration shall be final and binding upon the parties, except as provided in
this Arbitration Agreement.
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<PAGE>
The Arbitrator shall have jurisdiction to hear and rule on
pre-hearing disputes and is authorized to hold pre-hearing conferences by
telephone or in person, as the Arbitrator deems necessary. The Arbitrator shall
have the authority to entertain a motion to dismiss and/or a motion for summary
judgment by any party and shall apply the standards governing such motions under
the Federal Rules of Civil Procedure.
Either party, at its expense, may arrange for and pay the cost
of a court reporter to provide a stenographic record of proceedings.
Either party, upon request at the close of hearing, shall be
given leave to file a post-hearing brief. The time for filing such a brief shall
be set by the Arbitrator.
The Arbitrator shall render a proposed award and opinion in
the form typically rendered in labor arbitrations.
Either party shall have the right, within 20 days of issuance
of the Arbitrator's proposed award and opinion, to file with the Arbitrator a
motion to reconsider (accompanied by a supporting brief), and the other party
shall have 20 days from the date of the motion to respond. The Arbitrator
thereupon shall reconsider the issues raised by the motion and, promptly, either
confirm or change the decision, which (except as provided by this Arbitration
Agreement) shall then be final and conclusive upon the parties. The costs of
such a motion for reconsideration and written opinion of the Arbitrator shall be
borne by the party prevailing on the motion, unless the Arbitrator orders
otherwise.
I. ARBITRATION FEES AND COSTS.
The Company and I shall equally share the fees and costs of
the Arbitrator; provided, however, that my maximum contribution will be no more
than 20% of the amount at issue. Each party will deposit funds or post other
appropriate security for its share of the Arbitrator's fee, in an amount and
manner determined by the Arbitrator, 10 days before the first day of hearing.
Each party shall pay for its own costs and attorneys' fees, if any. However, if
any party prevails on a statutory claim which affords the prevailing party
attorneys' fees, or if there is a written agreement providing for fees, the
Arbitrator may award fees to the prevailing party as provided by statute or
agreement.
J. EXCLUSIVITY, WAIVER AND BINDING EFFECT.
The procedure set out in this Arbitration Agreement is the
exclusive procedure for resolving claims covered hereunder. The resolution of
any claim covered by this Arbitration Agreement pursuant to the procedure set
out herein shall be final and binding on the parties to the fullest extent
permitted by law. Both I and the Company expressly waive
8
<PAGE>
any right to resolve any claim covered by this Arbitration Agreement through any
other means, including by filing a lawsuit in court for trial by the court or
before a jury. Both I and the Company are precluded from bringing or raising in
court or before another forum any claim which could have been brought or raised
hereunder, unless the right to pursue a statutory claim or remedy is expressly
preserved by law. Neither I nor the Company shall seek to enjoin any proceeding
hereunder on the basis that any award resulting therefrom would not be
enforceable.
K. INTERSTATE COMMERCE.
I understand and agree that the Company is engaged in
transactions involving interstate commerce.
L. CONSIDERATION.
The promises by the Company and by me to arbitrate
differences, rather than litigate them before courts or other bodies, provide
consideration for each other. In addition, my participation in this Long-Term
Incentive Program provides further consideration for this Arbitration Agreement.
9
<PAGE>
IN WITNESS WHEREOF, by signing my name below, I am
acknowledging that I am entering into this Long-Term Incentive Program
Participation Agreement and Mutual Agreement to Arbitrate Claims voluntarily and
with a full understanding of all of their terms and conditions, and, intending
to be legally bound, I am agreeing to such terms and conditions.
Long-Term Incentive Program Participant
/S/ M. F. PASQUALE
-------------------
(Signature)
/S/ M. F. PASQUALE
------------------
Name (Print)
Date: JANUARY 27, 1997
----------------
IN WITNESS WHEREOF, Hershey Foods Corporation and/or its
employing subsidiary, intending to be legally bound, has or have caused this
Agreement to be signed by its or their authorized officer.
R. M. REESE
-----------
Vice President
Date: JANUARY 17, 1997
----------------
10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>8
<FILENAME>ex13_annualreport.htm
<DESCRIPTION>ANNUAL REPORT TO STOCKHOLDERS
<TEXT>
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<TITLE>Exhibit 13</TITLE>
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<H1 ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 13
</FONT></H1>
<BR>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>HERSHEY FOODS
CORPORATION</FONT></H1>
<A NAME="management"></A>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION<BR>AND RESULTS OF OPERATIONS</FONT></H1>
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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>RESULTS OF OPERATIONS</FONT></H2>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Net Sales</FONT></H2>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net sales increased $250.1
million, or 6%, from 1999 to 2000. The higher sales primarily reflected an
increase in sales of core confectionery and grocery products in North America,
incremental sales from the introduction of new confectionery products, increased
international exports and lower product returns, discounts, and allowances. In
2000, certain international distributor allowances were netted against sales
instead of being reported in selling, marketing and administrative expenses as
in 1999 and 1998. These distributor allowances amounted to $18.3 million and
$17.8 million in 1999 and 1998, respectively. Net sales in 1999 included $29.3
million related to the Corporation’s pasta business, which was sold in
January 1999. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net sales decreased $464.7
million, or 10%, from 1998 to 1999. The decrease in sales in 1999 was primarily
a result of the divestiture of the Corporation’s pasta business, which
resulted in a sales reduction of $343.8 million, and sales decreases in the
United States of core confectionery and grocery products. Sales of confectionery
and grocery products declined in the first quarter of 1999 primarily as a result
of the December 1998 buy-in on promotions of regular count and vending items.
Decreases in sales in the third and fourth quarters of 1999 were primarily the
result of problems encountered after the July 1999 start-up of new business
systems and processes. These sales declines were partially offset by incremental
sales from the introduction of new confectionery products, increased export
sales in international markets and sales increases in the Corporation’s
Canadian and Mexican markets. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Gross Margin</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Gross margin increased from
40.7% in 1999 to 41.5% in 2000. The increase in gross margin reflected decreased
costs for certain major raw materials, primarily cocoa, as well as lower product
returns, discounts, and allowances. The impact of these items was offset
partially by higher absorption of fixed manufacturing costs in 2000, primarily
related to decreased finished goods inventory levels in 2000 compared to 1999.
In addition, the sales mix of confectionery items sold in 2000 compared to 1999
contributed to lower profitability, as the growth in sales of the more
profitable standard bars was outpaced by sales of packaged confectionery items.
Also, higher distribution and warehousing costs in 2000 reflected higher
warehouse handling costs, incremental costs associated with expanded warehousing
capacity and one-time start-up costs for new distribution centers located near
Hershey, Pennsylvania and Atlanta, Georgia. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Gross margin in 1999
benefited .3 percentage points from the inclusion in cost of sales of a one-time
$12.5 million gain from revisions to the Corporation’s retiree medical
plan, net of contributions into the Employee Savings Stock Investment and
Ownership Plan (“ESSIOP”). During the first quarter of 1999, the
Corporation changed its retiree medical plan to eliminate coverage for all
eligible hourly employees under age 45, to be replaced by annual contributions
into the ESSIOP. The change applied primarily to U.S. hourly employees working
in Pennsylvania. In addition, gross margin in 1999 would have been .3 percentage
points lower if certain international distributor allowances were reclassified
and reported as discussed above for 2000. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Gross margin decreased from
40.8% in 1998 to 40.7% in 1999. The decrease reflected lower profitability
resulting from the mix of confectionery items sold in 1999 compared with sales
during 1998, primarily related to lower sales of the more profitable standard
bars. Higher freight and distribution costs, reflecting increased costs related
to the implementation of new business systems and processes and distribution
center capacity constraints, and higher depreciation expense as a percent of
sales, also contributed to the lower gross margin. These cost increases were
offset partially by selling price</FONT></P>
<BR>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-1 </FONT></P>
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<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>increases in the Corporation’s Canadian
and Mexican markets and decreased costs for packaging materials and certain raw
materials. Effective December 1998, the Corporation changed its retiree medical
plan to eliminate coverage for all U.S. full-time salaried employees and all
non-union hourly plant employees working outside Hershey, Pennsylvania under age
45, replacing it with annual ESSIOP contributions, resulting in the recognition
of a $13.0 million pre-tax gain in 1998. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Selling,
Marketing and Administrative</FONT></H2>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling, marketing and
administrative expenses increased $69.3 million, or 7%, from 1999 to 2000,
primarily reflecting: increased marketing expenditures for core confectionery
brands, international exports and the introduction of new products; increased
selling and administrative expenses primarily related to higher staffing levels
to support sales and customer service activity in North America and the
international export business; higher incentive compensation expense reflecting
improved operating performance in 2000; and higher software amortization costs.
The impact of these items was offset partially by the inclusion in
administrative expense in 2000 of a one-time gain of $7.3 million arising from
the sale of certain corporate aircraft. Selling, marketing and administrative
costs in 1999 included $10.7 million related to the Corporation’s pasta
business, which was sold in January 1999. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling, marketing and
administrative expenses decreased by $110.1 million, or 9%, from 1998 to 1999,
reflecting lower expenses resulting from the divestiture of the pasta business,
reduced marketing expenses for core confectionery brands and lower
administrative expenses. These decreases were offset partially by increased
spending associated with the introduction of new products and international
exports, in addition to higher amortization expense for capitalized software.
Excluding the divestiture of the pasta business, advertising and promotion
expense was essentially equal to the prior year as a percent of sales. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Interest
Expense, Net</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net interest expense for
2000 was $1.7 million above the prior year, primarily as a result of higher
short-term interest expense related to increased average short-term borrowings
and borrowing rates, and lower capitalized interest. The impact of these items
was offset partially by higher interest income, and lower fixed interest expense
as a result of interest rate swap and forward agreements entered into in October
1999. Net interest expense in 1999 was $11.4 million below the prior year,
primarily as a result of lower short-term interest expense as a portion of the
proceeds from the sale of the pasta business and positive cash flow were used to
reduce short-term borrowings. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Income Taxes</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation’s
effective income tax rate was 38.8%, 36.8% and 38.8% in 1998, 1999 and 2000,
respectively. Excluding the provision for income taxes associated with the gain
on the sale of the Corporation’s pasta business, the effective income tax
rate was 39.0% in 1999. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Net Income</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net income decreased $125.8
million, or 27%, from 1999 to 2000. In the first quarter of 1999, the
Corporation received cash proceeds of $450.0 million, retained a 6% minority
interest and recorded a gain of approximately $243.8 million before tax, $165.0
million or $1.17 per share—diluted after tax, as a result of the sale of
the Corporation’s pasta business. Excluding the gain, net income increased
$39.2 million, or 13%, from 1999 to 2000. The Corporation’s net income
increased $119.4 million, or 35%, from 1998 to 1999, reflecting the gain on the
sale of the pasta business. Excluding the gain, net income decreased $45.6
million, or 13% from 1998 to 1999. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Net income as a percent of
net sales was 7.9% in 2000, 7.4% in 1999, excluding the gain on the sale of the
pasta business, and 7.7% in 1998. </FONT></P>
<BR>
<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-2 </FONT></P>
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<BR>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>FINANCIAL CONDITION</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation’s
financial condition remained strong during 2000. The capitalization ratio (total
short-term and long-term debt as a percent of stockholders’ equity,
short-term and long-term debt) was 49% as of December 31, 2000 and 50% as
of December 31, 1999. The ratio of current assets to current liabilities was
1.7:1 as of December 31, 2000, and 1.8:1 as of December 31, 1999. The lower
ratio of current assets to current liabilities as of December 31, 2000,
primarily reflected increased short-term borrowings to finance stock repurchases
and a business acquisition. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In December 2000, the
Corporation completed the purchase of the intense and breath freshener mints and
gum businesses of Nabisco, Inc. (“Nabisco”). The Corporation paid
$135.0 million to acquire the businesses, including <I>Ice Breakers </I>and
<I>Breath Savers Cool Blasts</I> intense mints, <I>Breath Savers</I> mints, and
<I>Ice Breakers, Carefree, Stick*Free, Bubble Yum </I>and <I>Fruit Stripe</I>
gums. Also included in the purchase were manufacturing machinery and equipment
and a gum-manufacturing plant in Las Piedras, Puerto Rico. These businesses had
sales of approximately $270 million in 1999. The Corporation’s results of
operations for 2000 did not include results of the acquisition, as the
transaction was completed very late in the year. Had the results of the acquired
businesses been included in the consolidated results, the effect would not have
been material. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Assets</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total assets increased
$101.1 million, or 3%, as of December 31, 2000, primarily as a result of higher
accounts receivable, prepaid expenses and other current assets, property, plant
and equipment, and intangibles resulting from business acquisitions,
substantially offset by a decrease in cash and cash equivalents. These increases
were due, in part, to the acquisition of Nabisco’s mint and gum businesses. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Current assets increased by
$15.4 million, or 1%, reflecting increased accounts receivable, inventories,
prepaid expenses and other current assets. An increase in accounts receivable of
$26.9 million reflected higher sales in December 2000. The increase in prepaid
expenses and other current assets was principally associated with hedging
transactions. The decrease in cash and cash equivalents reflected the comparison
to an unusually high balance as of December 31, 1999, as a result of year 2000
(Y2K) liquidity contingency plans. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Property, plant and
equipment was higher than the prior year primarily due to capital additions of
$138.3 million and the acquisition of the Nabisco businesses, partially offset
by depreciation expense of $140.2 million. The increase in intangibles resulting
from business acquisitions primarily reflected preliminary goodwill associated
with the Nabisco acquisition, partly offset by the amortization of intangibles.
The decrease in other non-current assets was primarily associated with the
amortization of capitalized software. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Liabilities</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total liabilities increased
by $24.7 million, or 1%, as of December 31, 2000, primarily reflecting higher
accrued liabilities and an increase in short-term borrowings to finance the
acquisition of the Nabisco businesses and stock repurchases, partially offset by
a decrease in accrued and deferred income taxes. The increase in accrued
liabilities was associated primarily with higher accruals for promotion and
advertising programs and accrued liabilities related to the Nabisco acquisition.
The decrease in accrued income taxes primarily reflected a decrease in the
income tax provision which included accrued income taxes for the gain on sale of
the pasta business as of December 31, 1999, and the decrease in deferred income
taxes was associated with the payment in September 2000 of an assessment related
to a Corporate Owned Life Insurance program discussed further under Liquidity
below. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Capital
Structure</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation has two
classes of stock outstanding, Common Stock and Class B Common Stock
(“Class B Stock”). Holders of the Common Stock and the Class B
Stock generally vote together without regard to class on matters submitted
to stockholders, including the election of directors, with the</FONT></P>
<BR>
<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-3 </FONT></P>
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</TD>
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<BR>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Common Stock
having one vote per share and the Class B Stock having ten votes per share.
However, the Common Stock, voting separately as a class, is entitled to elect
one-sixth of the Board of Directors. With respect to dividend rights, the Common
Stock is entitled to cash dividends 10% higher than those declared and paid on
the Class B Stock. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In December 2000, the
Corporation’s Board of Directors unanimously adopted a Stockholder
Protection Rights Agreement (“Rights Agreement”). The Rights Agreement
was supported by the Corporation’s largest stockholder, Hershey Trust
Company, as trustee for the benefit of Milton Hershey School (“Milton
Hershey School Trust”). This action was not in response to any specific
effort to acquire control of the Corporation. Under the Rights Agreement, the
Corporation’s Board of Directors declared a dividend of one right
(“Right”) for each outstanding share of Common Stock and Class B Stock
payable to stockholders of record at the close of business on December 26, 2000.
The Rights will at no time have voting power or receive dividends. The issuance
of the Rights has no dilutive effect, will not affect reported earnings per
share, is not taxable and will not change the manner in which the
Corporation’s Common Stock is traded. The Rights Agreement is discussed
further in Note 12 to the Consolidated Financial Statements. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>LIQUIDITY</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Historically, the
Corporation’s major source of financing has been cash generated from
operations. The Corporation’s income and, consequently, cash provided from
operations during the year are affected by seasonal sales patterns, the timing
of new product introductions, business acquisitions and divestitures, and price
increases. Chocolate, confectionery and grocery seasonal and holiday-related
sales have typically been highest during the third and fourth quarters of the
year, representing the principal seasonal effect. Generally, seasonal working
capital needs peak during the summer months and have been met by issuing
commercial paper. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Over the past three years,
cash provided from operating activities and proceeds from the sale of the pasta
business exceeded cash requirements for share repurchases, capital expenditures,
capitalized software additions, dividend payments and a business acquisition by
$88.7 million. Total debt, including debt assumed, decreased during the period
by $150.9 million, reflecting reduced short-term borrowings and the repayment of
long-term debt. Cash and cash equivalents decreased by $22.3 million during the
period. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation anticipates
that capital expenditures and capitalized software additions will be in the
range of $150 million to $170 million per annum during the next several
years as a result of continued modernization of existing facilities and capacity
expansion to support new products and line extensions, along with continued
improvement and enhancements of computer software. As of December 31, 2000,
the Corporation’s principal capital commitments included manufacturing
capacity expansion to support new products and line extensions, modernization
and efficiency improvements. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In February 2001, the
Corporation made a $75.0 million contribution to its domestic pension plans to
improve the funded status and reduce future expense. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In December 2000, the
Corporation entered into an operating lease agreement for a warehouse and
distribution facility to be constructed in southern California. The lease term
is approximately ten years and shall begin upon completion of the facility, but
no later than September 1, 2001. The Corporation or its designee has an option
between December 15, 2001 and March 31, 2002 to purchase the facility at
original cost. The estimated cost of the facility, including land, is
approximately $38.0 million. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In October 2000, the
Corporation entered into an operating lease agreement to finance the purchase of
a warehouse and distribution facility near Atlanta, Georgia for $18.2 million.
The lease term is five years, with up to four renewal periods of five years each
with the consent of the lessor. In July 1999, the Corporation entered into an
operating lease agreement to finance the construction of a warehouse and
distribution facility located on land owned by the Corporation near Hershey,
Pennsylvania. Under the agreement, the lessor paid construction costs totaling
$61.7 million. The lease term is six years, including the one-year construction
period, with up to four renewal periods of five years each with the consent of</FONT></P>
<BR>
<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-4 </FONT></P>
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<BR>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the lessor. Both leases provide
for substantial residual guarantees and include
options to purchase the facilities at original cost. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In 1999, the Corporation
implemented the first phase of an enterprise-wide integrated information system
in the United States. The first phase of system implementation included new
business systems and processes related to purchasing, accounts payable, fixed
assets, the general ledger, production reporting, and tracking of plant
inventories. The second phase of system implementation included systems and
processes in the areas of sales order and billing, transportation planning and
management, electronic data interchange communications with warehouses, finished
goods inventories, accounts receivable and tracking of marketing promotions.
Initial implementation costs amounted to approximately $101.0 million of
capitalized software and hardware and $10.6 million of expenses. These
expenditures were financed with cash provided from operations and proceeds from
the sale of the Corporation’s pasta business. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under share repurchase
programs which began in 1993, a total of 17,624,037 shares of Common Stock have
been repurchased for approximately $705.5 million. Of the shares repurchased,
528,000 shares were retired, 1,427,289 shares were reissued to satisfy stock
options obligations, Supplemental Retirement Contributions and employee stock
ownership trust (“ESOP”) obligations and the remaining 15,668,748
shares were held as Treasury Stock as of December 31, 2000. Additionally, the
Corporation has purchased a total of 28,000,536 shares of its Common Stock to be
held as Treasury Stock from the Milton Hershey School Trust for $1.0 billion. As
of December 31, 2000, a total of 43,669,284 shares were held as Treasury Stock
and $124.5 million remained available for repurchases of Common Stock under a
program approved by the Corporation’s Board of Directors in October 1999. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In March 1997, the
Corporation issued $150 million of 6.95% Notes under a November 1993 Form S-3
Registration Statement. In August 1997, the Corporation filed another Form S-3
Registration Statement under which it could offer, on a delayed or continuous
basis, up to $500 million of additional debt securities. Also in August 1997,
the Corporation issued $150 million of 6.95% Notes due 2012 and $250 million of
7.2% Debentures due 2027 under the November 1993 and August 1997 Registration
Statements. Proceeds from the debt issuance were used to repay a portion of the
short-term borrowings associated with the purchase of Common Stock from the
Milton Hershey School Trust. As of December 31, 2000, $250 million of debt
securities remained available for issuance under the August 1997 Registration
Statement. Proceeds from any offering of the $250 million of debt securities
available under the shelf registration may be used for general corporate
requirements, which include reducing existing commercial paper borrowings,
financing capital additions and share repurchases, and funding future business
acquisitions and working capital requirements. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As of December 31, 2000,
the Corporation maintained a committed credit facility agreement with a
syndicate of banks in the amount of $500 million which could be borrowed
directly or used to support the issuance of commercial paper. The Corporation
may increase the credit facility by $1.0 billion with the concurrence of the
banks. In December 2000, the short-term credit facility agreement was renewed
for a total of $200 million and the long-term committed credit facility
agreement remained in effect for $300 million, expiring in December 2002. The
credit facilities may be used to fund general corporate requirements, to support
commercial paper borrowings and, in certain instances, to finance future
business acquisitions. The Corporation also had lines of credit with domestic
and international commercial banks of $27.5 million and $25.0 million as of
December 31, 2000 and 1999, respectively. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In January 1999, the
Corporation received a Notice of Proposed Deficiency (“Notice”) from
the Internal Revenue Service (“IRS”) related to years 1989 through
1996. The Notice pertained to the Corporate Owned Life Insurance
(“COLI”) program which was implemented by the Corporation in 1989. The
IRS disallowed the interest expense deductions associated with the underlying
life insurance policies. The total deficiency of $61.2 million, including
interest, was paid to the IRS in September 2000 to eliminate further accruing of
interest. The Corporation may be subject to additional assessments for federal
taxes and interest for 1997 and 1998 and for state taxes and interest for 1989
through 1998. The Corporation believes that it has fully complied with the tax
law as it relates to its COLI program, has filed for the refund of amounts paid
and will continue to seek favorable resolution of this matter. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-5 </FONT></P>
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<BR>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Cash Flow
Activities</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Over the past three years,
cash from operating activities provided approximately $1.1 billion. Over this
period, cash used by or provided from accounts receivable and inventories has
tended to fluctuate as a result of sales during December and inventory
management practices. The change in cash required for or provided from other
assets and liabilities between the years was primarily related to hedging
transactions, the timing of payments for accrued liabilities, including income
taxes, and variations in the funding status of pension plans. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investing activities
included capital additions, capitalized software additions, a business
acquisition and a business divestiture. Capital additions during the past three
years included the purchase of manufacturing equipment, and expansion and
modernization of existing facilities. Capitalized software additions over the
past three years were associated primarily with the implementation of an
enterprise-wide integrated information system. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The acquisition of
Nabisco’s mint and gum businesses for $135.0 million was completed in 2000
and the Corporation’s pasta business was sold for $450.0 million in 1999. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Financing activities
included debt borrowings and repayments, payments of dividends, the exercise of
stock options, incentive plan transactions, and the repurchase of Common Stock.
During the past three years, short-term borrowings in the form of commercial
paper or bank borrowings were used to purchase Nabisco’s mint and gum
businesses, fund seasonal working capital requirements, and finance share
repurchase programs. During the past three years, a total of 8,013,318 shares of
Common Stock have been repurchased for $434.1 million, including 1,579,779
shares purchased from the Milton Hershey School Trust for $100.0 million. Cash
used for incentive plan transactions of $74.3 million during the past three
years was substantially offset by cash received from the exercise of stock
options of $62.6 million. Cash used by incentive plan transactions reflected
purchases, from time to time, of the Corporation’s Common Stock in the open
market to repurchase treasury stock issued for stock options exercises,
mitigating dilution of weighted-average shares outstanding. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>ACCOUNTING POLICIES AND
MARKET RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS </FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation utilizes
certain derivative instruments, from time to time, including interest rate swaps
and forward agreements, foreign currency forward exchange contracts and
commodity futures contracts, to manage interest rate, currency exchange rate and
commodity market price risk exposures. Interest rate swaps and forward
agreements, and foreign currency contracts are entered into for periods
consistent with related underlying exposures and do not constitute positions
independent of those exposures. Commodity futures contracts are entered into for
varying periods and are intended and effective as hedges of anticipated raw
material purchases. The Corporation does not hold or issue derivative
instruments for trading purposes and is not a party to any instruments with
leverage or prepayment features. In entering into these contracts, the
Corporation has assumed the risk which might arise from the possible inability
of counterparties to meet the terms of their contracts. The Corporation does not
expect any losses as a result of counterparty defaults. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The information below
summarizes the Corporation’s market risks associated with long-term debt
and derivative instruments outstanding as of December 31, 2000. This information
should be read in conjunction with Note 1, Note 5, Note 7 and Note 8 to the
Consolidated Financial Statements. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Long-Term Debt</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The table below presents
the principal cash flows and related interest rates by maturity date for
long-term debt, including the current portion, as of December 31, 2000. The fair
value of long-term debt was determined based upon quoted market prices for the
same or similar debt issues. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-6 </FONT></P>
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<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="14"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Maturity Date </FONT><HR WIDTH=97% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="14"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(In thousands of dollars except for rates)</FONT></TH></TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2001 </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2002 </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2003 </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2004 </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2005 </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">There-<BR>after </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Total </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Fair<BR>Value </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="18%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Long-term Debt</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$529</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$838</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$17,133</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$136</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$202,138</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$657,409</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$878,183</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$920,374</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fixed Rate</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.0</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.0</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4.4</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2.0</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6.7</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7.3</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7.1</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">%</FONT></TD></TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Interest Rate
Swaps and Forward Agreements</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In order to minimize its
financing costs and to manage interest rate exposure, the Corporation, from time
to time, enters into interest rate swaps and forward agreements. In October
1999, the Corporation entered into an interest rate swap agreement to
effectively convert $200 million of 6.7% Notes Due 2005 (“Notes”) to
variable rate debt. In December 2000, the counterparty chose to cancel the
interest rate swap and forward agreements effective April 2, 2001.
Subsequent to this date, the effective interest rate on the Notes will return to
a fixed rate of 6.7%. The potential loss in fair value of interest rate swaps
and forward agreements resulting from a hypothetical near-term adverse change in
market rates of ten percent was not material as of December 31, 2000 and 1999. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Foreign
Exchange Contracts</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation enters into
foreign exchange forward contracts to hedge transactions primarily related to
firm commitments to purchase equipment, certain raw materials and finished goods
denominated in foreign currencies and to hedge payment of intercompany
transactions with its non-domestic subsidiaries. These contracts reduce currency
risk from exchange rate movements. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Foreign exchange forward
contracts are intended to be and are effective as hedges of firm, identifiable,
foreign currency commitments. In accordance with Statement of Financial
Accounting Standards No. 52, <I>“Foreign Currency Translation,”</I>
these contracts meet the conditions for hedge accounting treatment and
accordingly, gains and losses are deferred and accounted for as part of the
underlying transactions. Gains and losses on terminated derivatives designated
as hedges are accounted for as part of the originally hedged transaction. Gains
and losses on derivatives designated as hedges of items which mature, are sold
or terminated, are recorded currently in income. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As of December 31, 2000,
the Corporation had foreign exchange forward contracts maturing in 2001 and 2002
to purchase $36.3 million in foreign currency, primarily British sterling and
euros, and to sell $11.5 million in foreign currency, primarily Japanese yen, at
contracted forward rates. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As of December 31, 1999,
the Corporation had foreign exchange forward contracts maturing in 2000 and 2001
to purchase $18.0 million in foreign currency, primarily euros and British
sterling, and to sell $31.2 million in foreign currency, primarily Canadian
dollars and Japanese yen, at contracted forward rates. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The fair value of foreign
exchange forward contracts was estimated by obtaining quotes for future
contracts with similar terms, adjusted where necessary for maturity differences.
As of December 31, 2000 and 1999, the fair value of foreign exchange forward
contracts approximated the contract value. The potential loss in fair value of
foreign exchange forward contracts resulting from a hypothetical near-term
adverse change in market rates of ten percent was not material as of December
31, 2000 and 1999. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Commodity
Price Risk Management</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation’s most
significant raw material requirements include cocoa, sugar, milk, peanuts and
almonds. The Corporation attempts to minimize the effect of future price
fluctuations related to the purchase of these raw materials primarily through
forward purchasing to cover future manufacturing requirements, generally for
periods from 3 to 24 months. With regard to cocoa, sugar, corn sweeteners,
natural gas and certain dairy products, price risks are also managed by entering
into futures contracts. At the present time, active futures contracts are not
available for use in pricing the Corporation’s other major raw material
requirements. Futures contracts are used in combination with forward purchasing
of cocoa, sugar, corn sweetener, natural gas and certain dairy product
requirements principally to take </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-7 </FONT></P>
<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR NOSHADE SIZE=5>
<BR>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>advantage of market fluctuations which provide
more favorable pricing opportunities and to increase diversity or flexibility in
sourcing these raw materials and energy requirements. The Corporation’s
commodity procurement practices are intended to reduce the risk of future price
increases, but also may potentially limit the ability to benefit from possible
price decreases. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The cost of cocoa beans and
the prices for the related commodity futures contracts historically have been
subject to wide fluctuations attributable to a variety of factors, including the
effect of weather on crop yield, other imbalances between supply and demand,
currency exchange rates, political unrest in producing countries and speculative
influences. Cocoa prices remained near historical lows during most of 2000, as
additional production, spurred by high prices in the mid-1990s, has come on
stream under favorable climatic conditions. Additionally, demand has been
reduced below historical levels as a result of economic difficulties in Eastern
Europe, particularly the former Soviet Union. During 2001, continued improvement
in chocolate consuming economies could result in prices stabilizing and possibly
moving higher. The Corporation’s costs during 2001 will not necessarily
reflect market price fluctuations because of its forward purchasing practices,
premiums and discounts reflective of relative values, varying delivery times,
and supply and demand for specific varieties and grades of cocoa beans. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Commodities
Futures Contracts</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the
purchasing of cocoa, sugar, corn sweeteners, natural gas and certain dairy
products for anticipated manufacturing requirements, the Corporation enters into
commodities futures contracts as deemed appropriate to reduce the effect of
price fluctuations. In accordance with Statement of Financial Accounting
Standards No. 80, <I>“Accounting for Futures Contracts,”</I> these
futures contracts meet the hedge criteria and are accounted for as hedges.
Accordingly, gains and losses are deferred and recognized in cost of sales as
part of the product cost. Gains and losses on futures designated as hedges of
anticipated purchases which are no longer likely to occur are recorded currently
in income. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exchange traded futures
contracts are used to fix the price of physical forward purchase contracts. Cash
transfers reflecting changes in the value of futures contracts are made on a
daily basis and are included in other current assets or accrued liabilities on
the Consolidated Balance Sheets. Such cash transfers will be offset by higher or
lower cash requirements for payment of invoice prices of raw materials and
energy requirements in the future. Futures being held in excess of the amount
required to fix the price of unpriced physical forward contracts are effective
as hedges of anticipated purchases. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following sensitivity
analysis reflects the market risk of the Corporation to a hypothetical adverse
market price movement of ten percent, based on the Corporation’s net
commodity positions at four dates spaced equally throughout the year. The
Corporation’s net commodity positions consist of the excess of futures
contracts held over unpriced physical forward contracts for the same
commodities, relating to cocoa, sugar, corn sweeteners and natural gas.
Inventories, priced forward contracts and estimated anticipated purchases not
yet contracted for were not included in the sensitivity analysis calculations. A
loss is defined, for purposes of determining market risk, as the potential
decrease in fair value or the opportunity cost resulting from the hypothetical
adverse price movement. The fair values of net commodity positions were based
upon quoted market prices or estimated future prices including estimated
carrying costs corresponding with the future delivery period. </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
<TH COLSPAN="2" ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">For the years ended December 31,</FONT></TH>
<TH COLSPAN="4"><FONT FACE="Times New Roman, Times, Serif"><B> <FONT SIZE="1">2000</FONT></B></FONT> </TH>
<TH COLSPAN="4"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1999</FONT></TH></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN="2" ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">In millions of dollars<BR><BR><BR></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="1">Fair<BR>Value</FONT></B></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="1">Market Risk<BR>(Hypothetical<BR>10% Change)</FONT></B></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Fair<BR>Value</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Market Risk<BR>(Hypothetical<BR>10% Change)</FONT></TH></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="35%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Highest long position</FONT></TD>
<TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">$77.6</FONT></B></FONT></TD>
<TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">$7.8</FONT></B></FONT></TD>
<TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$147.7</FONT></TD>
<TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$14.8</FONT></TD>
<TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Lowest long position</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(28.3</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>)</B></FONT></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">2.8</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">54.3</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5.4</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Average position (long)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">30.3</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">3.0</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">111.0</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11.1</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The decrease in fair values
and market risks from 1999 to 2000 primarily reflected a decrease in net
commodity positions and lower commodity futures prices in 2000. The negative
lowest long position in 2000 resulted as commodities futures required to fix the
price of unpriced physical forward contracts exceeded the amount of commodities
futures being held at a point in time during the year. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-8 </FONT></P>
<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD><HR NOSHADE SIZE=5>
<BR>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Sensitivity analysis
disclosures represent forward-looking statements which are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those presently anticipated or projected. The important factors that could
affect the sensitivity analysis disclosures include significant increases or
decreases in market prices reflecting fluctuations attributable to the effect of
weather on crop yield, other imbalances between supply and demand, currency
exchange rates, political unrest in producing countries and speculative
influences in addition to changes in the Corporation’s hedging strategies. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>MARKET PRICES AND
DIVIDENDS</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Cash dividends paid on the
Corporation’s Common Stock and Class B Stock were $144.9 million in 2000
and $136.7 million in 1999. The annual dividend rate on the Common Stock was
$1.12 per share, an increase of 8% over the 1999 rate of $1.04 per share. The
2000 dividend represented the 26th consecutive year of Common Stock dividend
increases. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On February 7, 2001, the
Corporation’s Board of Directors declared a quarterly dividend of $.28 per
share of Common Stock payable on March 15, 2001, to stockholders of record as of
February 23, 2001. It is the Corporation’s 285th consecutive Common Stock
dividend. A quarterly dividend of $.2525 per share of Class B Stock also was
declared. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Hershey Foods
Corporation’s Common Stock is listed and traded principally on the New York
Stock Exchange (“NYSE”) under the ticker symbol “HSY.”
Approximately 138.6 million shares of the Corporation’s Common Stock were
traded during 2000. The Class B Stock is not publicly traded. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The closing price of the
Common Stock on December 31, 2000, was $64 3/8. There were 41,482 stockholders of
record of the Common Stock and the Class B Stock as of December 31, 2000. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following table shows
the dividends paid per share of Common Stock and Class B Stock and the price
range of the Common Stock for each quarter of the past two years: </FONT></P>
<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="4"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Dividends Paid<BR>Per Share </FONT><HR NOSHADE SIZE="1" WIDTH=85%></TH>
<TH COLSPAN="4"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Common Stock<BR>Price Range* </FONT><HR NOSHADE SIZE="1" WIDTH=85%></TH></TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Common<BR>Stock </FONT><HR NOSHADE SIZE="1" WIDTH=75%></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Class B<BR>Stock </FONT><HR NOSHADE SIZE="1" WIDTH=75%></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">High </FONT><HR NOSHADE SIZE="1" WIDTH=75%></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Low </FONT><HR NOSHADE SIZE="1" WIDTH=75%></TH></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="26%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2000</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="8%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 1st Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$ .26</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$.2350</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$50</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><SUP>11</SUP>/<SUB>16</SUB></B></FONT></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$ 37</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><SUP>3</SUP>/<SUB>4</SUB></B></FONT></FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 2nd Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>.26</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>.2350</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>55</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><SUP>13</SUP>/<SUB>16</SUB></B></FONT></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>45</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 3rd Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>.28</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>.2525</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>54</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><SUP>11</SUP>/<SUB>16</SUB></B></FONT></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>41</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><SUP>9</SUP>/<SUB>16</SUB></B></FONT></FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 4th Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>.28</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>.2525</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>66</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><SUP>7</SUP>/<SUB>16</SUB></B></FONT></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>48</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><SUP>7</SUP>/<SUB>16</SUB></B></FONT></FONT></TD></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$1.08</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$.9750</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1999</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 1st Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ .24</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$.2175</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$64</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>7</SUP>/<SUB>8</SUB></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 54</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>1</SUP>/<SUB>8</SUB></FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 2nd Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.24</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.2175</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">59</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>1</SUP>/<SUB>2</SUB></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">48</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>13</SUP>/<SUB>16</SUB></FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 3rd Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.26</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.2350</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">61</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>7</SUP>/<SUB>16</SUB></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">48</FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>1</SUP>/<SUB>2</SUB></FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 4th Quarter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.26</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.2350</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">54</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>3</SUP>/<SUB>16</SUB></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">45</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><SUP>3</SUP>/<SUB>4</SUB></FONT></TD></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$1.00</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$.9050</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="2"></TD></TR>
</TABLE>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>* </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NYSE-Composite
Quotations for Common Stock by calendar quarter. </FONT></TD>
</TR>
</TABLE>
<BR>
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<TD>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-9 </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<BR>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>RETURN MEASURES</FONT></H2>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Operating
Return on Average Stockholders’ Equity</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation’s
operating return on average stockholders’ equity was 29.4% in 2000. Over
the most recent five-year period, the return has ranged from 27.5% in 1996 to
36.0% in 1998. For the purpose of calculating operating return on average
stockholders’ equity, earnings is defined as net income, excluding the
after-tax loss on the disposal of businesses in 1996 and the after-tax gain on
the sale of the pasta business in 1999. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Operating
Return on Average Invested Capital</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation’s
operating return on average invested capital was 16.1% in 2000. Over the most
recent five-year period, the return has ranged from 17.8% in 1996 to 14.8% in
1999. Average invested capital consists of the annual average of beginning and
ending balances of long-term debt, deferred income taxes and stockholders’
equity. For the purpose of calculating operating return on average invested
capital, earnings is defined as net income, excluding the after-tax loss on
disposal of businesses in 1996, the after-tax gain on the sale of the pasta
business in 1999 and the after-tax effect of interest on long-term debt. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>OUTLOOK</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The outlook section
contains a number of forward-looking statements, all of which are based on
current expectations. Actual results may differ materially. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation’s
strategy is to profitably grow its North American confectionery and grocery
business, and to build growing and profitable confectionery businesses in
selected markets outside North America. To implement this strategy, the
Corporation plans to continue to attract and hold customers and consumers with
products and services of consistently superior quality and value. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The total U.S.
confectionery market is anticipated to grow at a rate of three to four percent
in 2001. Over the years, the Corporation’s goal has been to grow at a
faster rate than the overall confectionery category. The Corporation expects to
achieve this goal in 2001 by the integration of recently acquired products,
strong results from new product introductions and the continued volume growth of
confectionery products in North America and selected international markets. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Variability of gross margin
in future periods is affected by various factors, including raw material and
logistics costs, manufacturing efficiencies, and the mix of products sold in any
period. The Corporation expects to improve profitability in 2001. Gross margin
is expected to increase in 2001, as compared to the full year 2000, as the
Corporation anticipates a more profitable sales mix, manufacturing efficiencies,
modest declines in freight and distribution costs as a percent of sales and
relatively stable commodity costs. These profitability improvements are expected
to more than offset anticipated increases in employee benefits and energy costs. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The industry in which the
Corporation operates is characterized by brand recognition. The Corporation will
continue spending to promote its products and to increase the value of its
brands. Planned spending on advertising in 2001 is significantly higher than
2000, while selling and administrative expenses are expected to remain
relatively constant as a percent of sales. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The tax rate is projected
to slightly decrease in 2001, as incremental earnings from the
Corporation’s recent acquisition will be taxed at a more favorable tax
rate. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Corporation expects
continued strong cash flows from operating activities in 2001. Net cash provided
from operating activities is expected to exceed cash requirements for capital
additions, capitalized software additions and anticipated dividend payments.
Additionally, cash provided from operations is expected to be sufficient to
reduce short-term borrowings and/or finance possible business acquisitions and
continued repurchases of the Corporation’s Common Stock. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-10 </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<TD><HR NOSHADE SIZE=5>
<BR>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In May 2000, the Emerging
Issues Task Force (“EITF”) of the Financial Accounting Standards Board
reached consensus on EITF Issue No. 00-14 <I>“Accounting for Coupons,
Rebates and Discounts,”</I> requiring the reporting of certain sales
incentives such as consumer coupon redemption costs and off-invoice allowances
as a reduction of net sales. Effective with the quarter ending June 30, 2001,
consumer coupon redemption costs and off-invoice allowances currently reported
as marketing expense will be reported as a reduction of net sales. The
implementation of EITF Issue No. 00-14, along with other similar pending EITF
issues regarding the classification of certain sales incentives, may result in a
material restatement to reduce net sales, with a corresponding restatement to
reduce selling, marketing and administrative expenses. Upon adoption, all prior
period amounts will be reclassified to conform to the new requirements. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Safe Harbor
Statement</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The nature of the
Corporation’s operations and the environment in which it operates subject
it to changing economic, competitive, regulatory and technological conditions,
risks and uncertainties. In connection with the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995, the
Corporation notes the following factors which, among others, could cause future
results to differ materially from the forward-looking statements, expectations
and assumptions expressed or implied herein. Many of the forward-looking
statements contained in this document may be identified by the use of
forward-looking words such as “believe,” “expect,”
“anticipate,” “should,” “planned,”
“estimated,” and “potential,” among others. Factors which
could cause results to differ include, but are not limited to: changes in the
confectionery and grocery business environment, including actions of competitors
and changes in consumer preferences; changes in governmental laws and
regulations, including income taxes; market demand for new and existing
products; changes in raw material costs; and the Corporation’s ability to
implement improvements and to reduce costs associated with the
Corporation’s customer service, warehousing and order fulfillment processes
and systems. </FONT></P>
<BR><BR>
<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-11 </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<TD><HR NOSHADE SIZE=5>
<BR>
<A NAME="financial_statements"></A>
<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>HERSHEY FOODS
CORPORATION<BR><BR>CONSOLIDATED STATEMENTS OF INCOME</FONT></H1>
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</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
<TH COLSPAN="2" ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">For the years ended December 31,</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1">2000</FONT></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1999</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1998</FONT></TH></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN="4" ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">In thousands of dollars except per share amounts</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="52%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Net Sales</B></FONT></FONT></TD>
<TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$4,220,976</B></FONT></FONT></TD>
<TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$3,970,924</FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$4,435,615</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Costs and Expenses:</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Cost of sales</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>2,471,151</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,354,724</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,625,057</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Selling, marketing and administrative</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>1,127,175</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,057,840</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,167,895</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Gain on sale of business</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>—</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(243,785</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total costs and expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>3,598,326</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,168,779</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,792,952</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Income before Interest and Income Taxes</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>622,650</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">802,145</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">642,663</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Interest expense, net</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>76,011</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">74,271</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">85,657</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Income before Income Taxes</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>546,639</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">727,874</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">557,006</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Provision for income taxes</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>212,096</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">267,564</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">216,118</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Net Income</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$ 334,543</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 460,310</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 340,888</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Net Income Per Share—Basic</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$ 2.44</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 3.29</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 2.38</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Net Income Per Share—Diluted</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$ 2.42</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 3.26</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 2.34</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Cash Dividends Paid Per Share:</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Common Stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>$ 1.08</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 1.00</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ .920</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Class B Common Stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>.975</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.905</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">.835</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
</TABLE>
<BR>
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<TD>
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<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>The notes to
consolidated financial statements are an integral part of these statements. </FONT></P>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-12 </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<TD><HR NOSHADE SIZE=5>
<BR>
<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>HERSHEY
FOODS CORPORATION</FONT></H1>
<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSOLIDATED
BALANCE SHEETS</FONT></H1>
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</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
<TH COLSPAN="2" ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">December 31,</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="1">2000</FONT></B></FONT> </TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1999</FONT></TH></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN="2" ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">In thousands of dollars</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif"><B></B></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="69%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B></B></FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>ASSETS</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Current Assets:</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Cash and cash equivalents</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">$ 31,969</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 118,078</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Accounts receivable—trade</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">379,680</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">352,750</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Inventories</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">605,173</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">602,202</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Deferred income taxes</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">76,136</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">80,303</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Prepaid expenses and other</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">202,390</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">126,647</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total current assets</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">1,295,348</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,279,980</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Property, Plant and Equipment, Net</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">1,585,388</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,510,460</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Intangibles Resulting from Business Acquisitions, Net</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">474,448</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">450,165</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Other Assets</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">92,580</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">106,047</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total assets</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">$3,447,764</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$3,346,652</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>LIABILITIES AND STOCKHOLDERS’ EQUITY</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Current Liabilities:</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Accounts payable</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">$ 149,232</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 136,567</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Accrued liabilities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">358,067</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">292,497</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Accrued income taxes</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">1,479</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">72,159</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Short-term debt</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">257,594</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">209,166</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Current portion of long-term debt</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">529</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,440</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total current liabilities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">766,901</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">712,829</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Long-term Debt</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">877,654</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">878,213</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Other Long-term Liabilities</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">327,674</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">330,938</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Deferred Income Taxes</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">300,499</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">326,045</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total liabilities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">2,272,728</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,248,025</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Stockholders’ Equity:</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Preferred Stock, shares issued: none in 2000 and 1999</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">—</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Common Stock, shares issued: 149,509,014 in 2000 and</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 149,506,964 in 1999</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">149,508</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">149,507</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Class B Common Stock, shares issued: 30,441,858 in 2000 and</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT>
</TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 30,443,908 in 1999</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">30,442</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">30,443</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Additional paid-in capital</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">13,124</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">30,079</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Unearned ESOP compensation</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(19,161</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(22,354</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Retained earnings</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">2,702,927</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,513,275</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Treasury—Common Stock shares, at cost: 43,669,284 in 2000 and</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 
;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 41,491,253 in 1999</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(1,645,088</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,552,708</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Accumulated other comprehensive loss</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(56,716</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(49,615</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total stockholders’ equity</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">1,175,036</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,098,627</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total liabilities and stockholders’ equity</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">$3,447,764</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$3,346,652</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR>
</TABLE>
<BR>
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<TD>
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<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>The notes to
consolidated financial statements are an integral part of these balance sheets. </FONT></P>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-13 </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<TD><HR NOSHADE SIZE=5>
<BR>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>HERSHEY
FOODS CORPORATION</FONT></H1>
<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSOLIDATED
STATEMENTS OF CASH FLOWS</FONT></H1>
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</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
<TH COLSPAN="2" ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">For the years ended December 31,</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="1">2000</FONT></B></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1999</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1998</FONT></TH></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN="4" ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">In thousands of dollars</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="58%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Cash Flows Provided from (Used by)</B></FONT></FONT></TD>
<TD WIDTH="7%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B></B></FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> <B>Operating Activities</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Net income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">$ 334,543</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 460,310</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 340,888</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Adjustments to reconcile net income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> to net cash provided from operations:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Depreciation and amortization</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">175,964</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">163,308</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">158,161</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Deferred income taxes</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(16,400</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8,336</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">82,241</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Gain on sale of business, net of tax of $78,769</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">—</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(165,016</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Changes in assets and liabilities, net of effects</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT>
</TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> from business acquisition and divestiture:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Accounts receivable—trade</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(26,930</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">77,918</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(90,493</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Inventories</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">28,029</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(136,535</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,276</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Accounts payable</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">7,280</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8,742</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,005</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Other assets and liabilities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(90,277</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(64,704</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(137,693</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Other, net</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">—</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">745</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net Cash Provided from Operating Activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">412,209</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">318,203</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">376,130</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Cash Flows Provided from (Used by)</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> <B>Investing Activities</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Capital additions</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(138,333</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(115,448</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(161,328</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Capitalized software additions</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(4,686</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(25,394</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(42,859</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Business acquisition</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(135,000</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Proceeds from divestiture</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">—</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">450,000</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Other, net</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">6,206</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">23,006</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">22,859</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net Cash (Used by) Provided from Investing Activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(271,813</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">332,164</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(181,328</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Cash Flows Provided from (Used by)</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B> Financing Activities</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Net change in short-term borrowings</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">48,428</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(136,742</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(36,543</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Long-term borrowings</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">187</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,696</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Repayment of long-term debt</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(2,815</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(393</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(25,187</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Cash dividends paid</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(144,891</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(136,728</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(129,044</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Exercise of stock options</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">24,376</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18,878</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">19,368</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Incentive plan transactions</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(51,859</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(22,458</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Repurchase of Common Stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(99,931</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(318,024</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(16,151</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net Cash (Used by) Financing Activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(226,505</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(571,313</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(210,015</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Decrease) Increase in Cash and Cash Equivalents</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">(86,109</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">79,054</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(15,213</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash and Cash Equivalents as of January 1</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">118,078</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">39,024</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">54,237</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash and Cash Equivalents as of December 31</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">$ 31,969</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 118,078</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 39,024</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="8"><HR NOSHADE SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Interest Paid</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">$ 81,465</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 77,049</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 89,001</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Income Taxes Paid</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><B><FONT SIZE="2">299,104</FONT></B></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">218,665</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">123,970</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
</TABLE>
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<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>The notes to
consolidated financial statements are an integral part of these statements. </FONT></P>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>A-14 </FONT></P>
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<BR>
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<BR>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>HERSHEY FOODS
CORPORATION<BR>CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY</FONT></H1>
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</TD>
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<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="700">
<TR VALIGN="BOTTOM">
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Preferred<BR>Stock</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Common<BR>Stock</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Class B<BR>Common<BR>Stock</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Additional<BR>Paid-in<BR>Capital</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Unearned<BR>ESOP<BR>Compensation</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Retained<BR>Earnings</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Treasury<BR>Common<BR>Stock</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Accumulated<BR>Other<BR>Compre-<BR>hensive<BR>Income (Loss)</FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Total<BR>Stockholders’<BR>Equity<BR></FONT></TH></TR>
<TR>
<TD COLSPAN="20"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN="2" ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="1">In thousands of dollars</FONT></TH></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="35%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>Balance as of January 1, 1998</B></FONT></FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$ —</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$149,485</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$30,465</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$33,852</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$(28,741</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$1,977,849</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$(1,267,861</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$(42,243</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">$852,806</FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR>
<TD COLSPAN="20"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Comprehensive income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Net income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">340,888</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">340,888</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Other comprehensive income (loss):</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Foreign currency translation adjustments</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT>
</TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(18,073</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(18,073</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Minimum pension liability adjustments, net of <BR> tax benefit</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(4,051</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(4,051</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD></TR>
<TR>
<TD COLSPAN="20"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Comprehensive income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">318,764</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Dividends:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Common Stock, $.92 per share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(103,616</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(103,616</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Class B Common Stock, $.835 per share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT>
</TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(25,428</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(25,428</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Conversion of Class B Common Stock into<BR> Common Stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">18</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(18</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Incentive plan transactions</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(985</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(985</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Exercise of stock options</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(3,375</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">16,590</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">13,215</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Employee stock ownership trust transactions</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">503</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">3,193</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">3,696</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Repurchase of Common Stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(16,151</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(16,151</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD></TR>
<TR>
<TD COLSPAN="20"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>Balance as of December 31, 1998</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">149,503</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">30,447</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">29,995</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(25,548</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2,189,693</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(1,267,422</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(64,367</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1,042,301</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR>
<TD COLSPAN="20"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Comprehensive income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Net income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">460,310</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">460,310</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Other comprehensive income (loss):</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Foreign currency translation adjustments</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT>
</TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">10,701</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">10,701</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Minimum pension liability adjustments,<BR> net of tax provision
</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">4,051</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">4,051</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR>
<TD COLSPAN="20"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Comprehensive income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">475,062</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Dividends:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Common Stock, $1.00 per share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(109,175</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(109,175</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Class B Common Stock, $.905 per share</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT>
</TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(27,553</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(27,553</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Conversion of Class B Common Stock into<BR> Common Stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">4</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(4</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Incentive plan transactions</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Exercise of stock options</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(458</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">32,738</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">32,280</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Employee stock ownership trust/benefits <BR> transactions</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">540</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">3,194</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">3,734</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Repurchase of Common Stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(318,024</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(318,024</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD></TR>
<TR>
<TD COLSPAN="20"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>Balance as of December 31, 1999</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">—</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">149,507</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">30,443</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">30,079</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(22,354</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2,513,275</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(1,552,708</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">(49,615</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1,098,627</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR>
<TD COLSPAN="20"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Comprehensive income (loss)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Net income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>334,543</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>334,543</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Other comprehensive income (loss):</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Foreign currency translation adjustments</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT>
</TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>(6,185</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>)</B></FONT></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>(6,185</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>)</B></FONT></FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> Minimum pension liability adjustments, <BR> net of tax benefit</FONT></TD><TD
ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>(916</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>)</B></FONT></FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>(916</B></FONT></FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>)</B></FONT></FONT></TD></TR>
<TR>
<TD COLSPAN="20"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Comprehensive income</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"> </FONT&g