The (NYSE: HSY) is the largest producer of quality chocolate in North America and a global leader in chocolate and sugar confectionery. Headquartered in Hershey, Pa., The Hershey Company has operations throughout the world and more than 12,000 employees. With revenues of more than $5 billion, Hershey offers such iconic brands as Hershey's, Reese's, Hershey's Kisses, Kit Kat, Twizzlers and Ice Breakers as well as the smooth, creamy indulgence of Hershey's Bliss chocolates. Hershey is a leader in the fast-growing dark and premium chocolate segment, with such brands as Hershey's Special Dark and Hershey's Extra Dark. In addition, Artisan Confections Company, a wholly owned subsidiary of The Hershey Company, markets such premium chocolate offerings as Scharffen Berger and Dagoba. For more than 100 years, The Hershey Company has been a leader in making a positive difference in the communities where we live, work and do business. The Milton Hershey School, established by the company's founder in 1909, provides a nurturing environment, quality education, housing, and medical care at no cost to children in social and financial need. The School is administered by the Hershey Trust Company, Hershey's largest shareholder, making the students of Milton Hershey School direct beneficiaries of Hershey's success

Hershey Company

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

CORPORATE PHILOSOPHYIn seeking to balance our desire for profitable growth with the obligations which we have

to various other constituencies, we shall strive to: Protect and enhance the corporation's high level of ethics and conduct. Maintain a strong "people" orientation and demonstrate care for every employee. Attract and hold customers and consumers with products and services of consistently superior quality and value. Sustain a strong results orientation coupled with a prudent approach to business.

MANAGEMENT TEAMDavid J. West President and Chief Executive Officer Humberto P. Alfonso Senior Vice President, Chief Financial Officer C. Daniel Azzara Vice President, Global Research and Development John P. Bilbrey Senior Vice President, President Hershey North America Charlene H. Binder Senior Vice President, Chief People Officer Michele G. Buck Senior Vice President, Global Chief Marketing Officer George F. Davis Senior Vice President, Chief Information Officer Javier H. Idrovo Senior Vice President, Strategy and Business Development Thaddeus J. Jastrzebski Senior Vice President, President Hershey International Terence L. O'Day Senior Vice President, Global Operations Burton H. Snyder Senior Vice President, General Counsel and Secretary

It all started with a decision.Our company originated with candy-manufacturer Milton Hersheys decision in 1894 to produce sweet chocolate as a coating for his caramels. Located in Lancaster, Pennsylvania, he called his new enterprise the Hershey Chocolate Company. In 1900, the company began producing milk chocolate in bars, wafers and other shapes. With massproduction, Hershey was able to lower the per-unit cost and make milk chocolate, once a luxury item for the wealthy, affordable to all. One early advertising slogan described this new product as a palatable confection and a most nourishing food.

A company on the move.The immediate success of Hersheys low-cost, high-quality milk chocolate soon caused the companys owner to consider increasing his production facilities. He decided to build a new chocolate factory amid the gently rolling farmland of south-central Pennsylvania in Derry Township, where he had been born. Close to the ports of New York and Philadelphia which supplied the imported sugar and cocoa beans needed, surrounded by dairy farms that provided the milk required, and with a local labor supply of honest, hard-

working people, the location was perfect. By the summer of 1905, the new factory was turning out delicious milk chocolate.

New products, hard times.Throughout the next two decades, even more products were added to the companys offerings. These included MR. GOODBAR (1925), HERSHEYS Syrup (1926), chocolate chips (1928) and the KRACKEL bar (1938). Despite the Great Depression of the 1930s, these products helped the newly incorporated Hershey Chocolate Corporation maintain its profitability and avoid any worker layoffs. Nevertheless, supported by the CIO labor union, a group of workers staged a six-day strike that ended with the strikers being forcibly removed by loyal workers and local farmers

A family friend becomes a family member.The post-war period saw the introduction of a host of new products and the acquisition of an old one. Since 1928, H.B. Harry Reeses candy company, also located in Hershey, had been making chocolate-covered peanut butter cups. Given that Hershey Chocolate supplied the coating for REESES penny cups; (the wrapper said, Made in Chocolate Town, So They Must Be Good), it was not surprising that the two companies had a good relationship. As a result, seven years after Reeses death in 1956, the H.B. Reese Candy Company was sold to Hershey Chocolate Corp

FINDING FORMULAWhile his company was successful enough selling sweet chocolate products, Milton Hershey was certain the real market lay in milk chocolate. The problem was in developing a formula for manufacturing it cheaply and efficiently, while still maintaining a high level of quality. Hershey built a milk-processing plant on the family farm in Derry Township in 1896 and spent the next several years developing a viable formulation for milk chocolate. Dressed in hip boots, Hershey worked day and night, going back and forth between the condensing room and the creamery, rarely even stopping for meals. Finally, in 1899, he cracked the recipe and became the first American to manufacture milk chocolate.

GROWING GLOBALLYDespite Milton Hersheys death in 1945, Hershey Chocolate Corporation retained the entrepreneurial values of innovation and risk-taking imprinted on it by its founder. Throughout the post-World War II period, a host of new products were introduced, many of which were successful, some of which were discontinued after only a few years. By the 1960s, the company was ready to enlarge the scope of its operations. One example of this new approach was the purchase in 1963 of the H.B. Reese Candy Co. Another was the companys diversification into pasta manufacturing with the acquisition of San Giorgio Macaroni, Inc. and Delmonico Foods, Inc. The company also expanded

geographically, building new chocolate plants in Ontario, Canada and Oakdale, California

ADVERTISING TO THE NATIONExcept for a TV and billboard campaign in Canada in 1964, the company had never really done advertising on a national scale. In 1968, the newly renamed and reorganized Hershey Foods Corporation announced plans for a nationwide consumer advertising campaign spearheaded by the famous Ogilvy & Mather ad agency. Starting with a Sunday newspaper supplement in July, 1970, followed two months later by television and radio commercials, the campaign was an immediate success. Sales of REESES peanut butter cups and HERSHEYS KISSES Chocolates, in particular, rose dramatically. But while the company today continues to advertise in all media, the quality of our products is still our best form of advertising. Milton Hershey would have liked that.

HERSHEYS GOES INTERNATIONALIn addition to being the leading producer of chocolate and non-chocolate confectionary and other grocery products in North America, The Hershey Company also carries on a significant international presence with operations in more than 90 different countries. Hershey's International division exports HERSHEYS chocolate and grocery products worldwide and maintains licensing agreements with partners in nations such as South Korea, Japan, the Phillippines and Taiwan. We dont believe Milton Hershey would have been at all surprised to learn that his HERSHEYS KISSES Chocolates are especially popular in Japan.

100 Calorie Bars "More Pleasure Less Guilt," HERSHEY'S introduces chocolate indulgence with 100 Calorie Bars.

ALMOND JOY candy bar If "SOMETIMES YOU FEEL LIKE A NUT," grab this classic treat of almonds and sweetened coconut dipped in milk chocolate.

CACAO RESERVE BY HERSHEY'S From the time of the Aztecs, the cacao tree has been cherished for its precious beans. CACAO RESERVE BY HERSHEY'S brings you an indulgent experience made with carefully chosen, slowly roasted cacao beans.

CADBURY chocolates The Hershey Company holds a license to manufacture CADBURY chocolate products in the United States...

5th AVENUE candy bar First introduced in 1936, this chocolate peanut butter bar contributed to the war effort and is still enjoyed today.

HEATH toffee bar Perfected by the Heath brothers in 1928, this milk chocolate English toffee bar is a classic.

HERSHEY'S chocolate bar For years, this chocolate bar has simply been making people happy. Whichever flavor you choose - HERSHEYS milk chocolate, HERSHEYS milk chocolate with almonds, or HERSHEYS COOKIES N CRME - youll be treating yourself to a delicious classic.

HERSHEY'S EXTRA DARK HERSHEY'S EXTRA DARK is available in several indulgent flavors to meet a variety of taste preferences.

HERSHEY'S POT OF GOLD boxed chocolates HERSHEYS POT OF GOLD boxed chocolates is the perfect gift for everyone on your list for any season. Its so good, you might even want to give it to yourself.

HERSHEY'S KISSES brand chocolates HERSHEYS KISSES brand chocolates, with their unique shape and foil wrap, are truly an American favorite.

KIT KAT wafer bar KIT KAT wafer bar is a simple, uncomplicated chocolate candy that lets you live on the light side of life. It has light, crispy wafers in chocolate that complement your lighthearted, positive approach to life.

MAUNA LOA The MAUNA LOA macadamia nut offers a delicious uniqueness that sets it apart from all other nuts.

MILK DUDS candy Bite-size chocolate- covered caramels, MILK DUDS candy is a perfect snack for a night at the movies or anytime!

HERSHEY'S MINIATURES chocolate bars "A LITTLE SOMETHING FOR EVERYONE."

MOUNDS candy bar Nutty or not? If not, grab a MOUNDS candy bar and enjoy the taste of sweet coconut dipped in rich, dark chocolate.

MR. GOODBAR candy bar Will your P.M. snack be salty or sweet? With MR. GOODBAR's combination of crunchy peanuts and chocolate candy, you don't have to decide.

HERSHEY'S NUGGETS chocolates "ONE OF LIFE'S LITTLE REWARDS."

PAYDAY peanut caramel bar

Cant get enough peanuts? Try a PAYDAY peanut caramel bar, with sweet caramel and tons of salty peanuts.

SKOR toffee bar With buttery toffee enrobed in milk chocolate, this bars a distinctively rich treat. Also use it in your holiday recipes for really decadent baked goods.

SPECIAL DARK Our classic SPECIAL DARK mildly sweet dark chocolates are available in a variety of forms and sizes, nearly everywhere HERSHEY'S chocolate is sold.

HERSHEY'S SYMPHONY milk chocolate bar HERSHEYS SYMPHONY milk chocolate will bring music to your mouth with its creamy milk chocolate taste. Indulge yourself.

HERSHEY'S Sandwich Cookies Chocolate cookies layered with milk chocolate and filled with creme in your favorite candy flavorsHERSHEY'S, REESE'S and HEATH.

Perfect for any occasion, HERSHEYS Syrup is a household favorite for flavored milk, ice cream or to make everyday treats extra special.

Hershey's Chewing GumIntroductionHershey Chocolate Company manufactured chewing gum between 1915 and 1924. The gum was first introduced under the name "Easy Chew." Clayton Snavely, Milton Hersheys cousin and the man put in charge of developing the chewing gum business, was interviewed in 1954 and related the story of how Hershey Chocolate got into the chewing gum business. About the third week in January 1915, Clayton Snavely spent the weekend with Mr. and Mrs. Hershey at the Dennis Hotel, in Atlantic City, New Jersey. After breakfast Sunday morning the two men took a walk down the boardwalk. There they saw a large Wrigley Gum advertisement. Mr. Hershey said, "Clayton, Beech Nut Gum has been a phenomenal success. It has gone to their heads, and they think theyre going to put the name Beech Nut on chocolate and put Hershey out of business. Well, theres only one way to meet fire. Its to fight it with fire. Im thinking about doing something in the chewing gum line."

Learning to make gumNothing more was said about it and Snavely headed back to Hershey, Pennsylvania. Three days later Mr. Hershey called him into his office. William Murrie was also there. Murrie had located a man in New York City who owned some chewing gum equipment for sale. Hershey instructed Snavely to travel to New York and purchase the equipment. In addition, Snavely was to learn everything he could about chewing gum manufacture. Mr. Hershey said, "Clayton, theres what I want you to do. I want you to go over and buy that equipment in your own name. We dont want to appear in it in any way. I want you to spend as much time with him as necessary. Get all the information you can, about the formula, the procedure, the making of chewing gum. I want you to find out where you

can buy chicle, which is the basic chewing gum. Get all the information you can. Take as much time as you want. And come back with everything you can tell me." After picking up expense money from the Hershey Trust Company, Snavely caught the afternoon train to New York. The equipment was purchased for $500 cash in order to hide the Hershey name. He spent several days learning the basics of making chewing gum. The seller also introduced him to the wholesale district and helped him buy the original purchase of chicle. The machinery, which had been stored in the basement of a cigar factory on West Broadway, was crated and shipped to Hershey and set up on one of the second floors in the chocolate factory. The purchase included: 1 mixer and attachments 1 set of rolls and attachments 1 chicle chopper 2 scoring machines 36 five-foot drying boards 24 small drying boards 36 chicle dryers 1 marble slab After Snavely returned home, Milton Hershey met again with him and gave him new instructions. He wanted Snavely to visit the Beech Nut plants in New York that offered visitor tours and glean what information he could from observing and talking with the locals. Snavely left town again to follow Mr. Hersheys instructions. Once he got back, gum manufacture experiments began.

Naming the productJoe Snavely, from the printing department, was instructed to print labels for the new product. The question was, what to call the chewing gum? Someone said, Easy Chew. It certainly couldnt be HERSHEY at that stage of the game. So a blue label was designed with a white printed name on it, EASY CHEW, in big letters. They began to make the gum, and it wasnt bad. On the strength of that, they began to sell the penny product around Hershey. They sold it at the Hershey Department Store; Erb & Son, Hockersville; Frank B. Kendig, Annville; and some other local outlets. Mr. Hershey said, "Were on the right track; go ahead." More and larger cooking, sizing, and wrapping machines were bought. Additional help was hired. As the chewing gum production was getting underway, Thomas J. Walton, one of the most experienced men in the chewing gum business, was hired.

Marketing Hershey's Gum: 6 sticks for a nickelWilliam Murrie, always the salesman, conceived the idea of packing six sticks for a nickel instead of five, the industry standard. Mr. Hershey thought it was all right. Unfortunately, the gum wrapping equipment was all set up to pack five sticks. "Well," Mr. Hershey said, "well change it." Changing it meant a long delay and a complete

overhaul of the wrapping equipment. So it was all set up and Hershey started to market its new product. Orders increased and production leapt to keep up with them. More equipment was added and before long there were twenty-four wrapping machines. About a hundred people were working full time, ten-hour days and a half day on Saturday, a 54 hour week. A brand-new chewing gum label was designed, carrying the Hershey name, similar in design and color as the milk chocolate wrapper. The initial success of Hersheys gum business was short lived. Wrigley called the attention of the federal government to the fact that Hershey was selling six sticks of gum in a pack but only paying tax on five sticks. To every twenty pack box, a six-cent war tax stamp had to be affixed. The stamp was applied by special machines. Hershey, with an extra stick in every pack, had one hundred twenty sticks in a box, whereas Wrigley only had a hundred sticks. Wrigley argued that Hershey was not paying his full tax. As a solution, the government slapped an extra four cents on the Hershey box. Hershey was triply penalized: he gave the public the extra stick at the same price of his competitors, he had to pay a four cents tax on each box, and he had to pay for putting on the extra tax stamps by hand, because his present machines could not be adjusted to handle the additional tax.

Production moves to New York CityIn 1919 the factory was moved to New York City. Here, in the ONeil-Adams Building, a six story structure on Sixth Avenue between 21st and 22nd Streets, where they made chocolate coating and some bar goods, they also made chewing gum. Wheat was introduced as an ingredient, in the form of finely ground flour to make the gum more chewy. The flour was ground in the Hershey, Pennsylvania sugar mill and shipped to New York. Production was raised to five thousand boxes a day. Unfortunately, orders did not match production. The first job John Gallagher had when he came to Hershey in 1920 was to cut down chewing gum production to the size of the orders. Gallagher counseled Milton Hershey to drop the chewing gum line. Herbert Hoover, the new Secretary of Commerce in the Harding administration, put restrictions on the importation of raw materials for the manufacture of non-essential products. In 1921, chewing gum was not yet regarded as essential to national morale. As a result, Hershey could not get sugar or chicle for his chewing gum. Production limped on a few more years before being discontinued in 1924