Financial Risk Management at Hersheys
| Case Code: FINA020 Case Length: 13 Pages Period: 2003 Pub Date: 2003 Teaching Note: Not Available |
Price: Rs.300 Organization: Hershey Foods Corporation Industry: Food Countries: US Themes: Banking and Financial Management, Microfinance |
Abstract Case Intro 1 Excerpts
Excerpts
Background Note
Hershey Foods (Hershey) was founded by Milton Hershey, who started Lancaster Caramel Company at the age of 30. In 1893, at the Chicago Exposition, he saw a new chocolate-making machine. In 1900, he sold the caramel operations for $1 million to start a chocolate factory...
Overview of Risk Management
Hershey utilized various derivative instruments, to manage risk. These included interest rate swaps, foreign currency forward contracts and commodities futures contracts...
Market Risk
Foreign Exchange Risk
Hershey entered 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 inter company transactions with its non domestic subsidiaries. Foreign currency risks were hedged generally for periods ranging from three to 24 months...
Exhibits
Exhibit I: Hershey: Principal Cashflows and Related Interest Rates by Maturity date for Long-term Debt
Exhibit II: Hershey: Sensitivity Analysis -Commodity Positions
Exhibit III: Hershey: Comprehensive Income
Exhibit IV: Hershey: Components of Accumulated OCI as Shown in Balance Sheet
Exhibit V: Hershey: Consolidated Balance Sheets
Exhibit VI: Hershey: Consolidated Cashflow Statement
Annexure A: Accounting for Financial Instruments under US GAAP
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