Question

CONSOLIDATED RESULTS OF OPERATIONS Percent Change 2018 vs 2017 2017 vs 2016 2018 2017 2016 S S S 1.0% 7,7911 4,215.7 3,575.4 45.9% 7,515.4 4,060.0 3,455.4 46.0% 3.7% 3.8% 3.5% 9.0% For the years ended December 31, In millions of dollars except per share amounts Net Sales Cost of Sales Gross Profit Gross Margin SM&A Expense SM&A Expense as a percent of ner sales Long-Lived and Intangible Asset Impairment Charges Business Realignment Costs Operating Profit Operating Profit Margin Interest Expense, Net 7,440.2 4.270.6 3,169.6 42.6% 1,891.3 25.4% 4.2 (0.69% (0.3)% 1,885.5 25.1% 208.7 47.8 1,313.4 17.5% 98.3 24.1% 57.7 19.1 1,623.8 20.8% 138.8 18.9 (72.37% (60.00% 23.6% NM 153.3% 4.6% 1,255.2 16.9% 90.2 41.3% 9.0% 59.4% 104.4 354.1 (28.49% (32.5)% (6.79% 74.8 239,0 17.0% 1,171.2 65.6 379.4 34.5% 720.0 31.9% 756.6 54.8 % 5.1 % Other (Income) Expense, Net Provision for Income Taxes Ellective Income Tax Rate Net Income Including Noncontrolling Interest Less: Net Loss Attributable to Noncontrolling Interest Net Income Attributable to The Hershey Company Net Income Per Share-Diluted NM (6,5) 1.177.7 5.58 $ S S (26.4) 783.0 3.66 S S 8.7% NM 50.4% 52.5% 720.0 3.34 9.6% Note: Percentage changes may not compute directly as shown due to rounding of amounts presented above. NM not meaningful. Net Sales 2018 compared with 2017 Net sales increased 3.7% in 2018 compared with 2017, reflecting a benefit from the recent Amplify and Pirate Brands acquisitions of 3.6% and a volume increase of 1.3%, partially offset by unfavorable price realization of 1.0% and an unfavorable impact from foreign currency exchange rates of 0.2%. Excluding the unfavorable impact from foreign currency exchange rates, our net sales increased 3.9%. Consolidated volumes increased due to the acquisitions of Amplify and Pirate Brands, as well as solid performance in select interational markets, which more than offset the volume reduction resulting from the sale of SGM in July 2018. The net increase in volume was partially offset by unfavorable net price realization, which was primarily attributed to incremental trade promotional expense in the North America segment in support of 2018 programıning.

. See Exhibit A below showing analysis for Hershey Company MD&A portion of the Form 10-K.

Horizontal Analysis	12/31/18	12/31/17	Dollar Change	Percentage Change
Sales
Gross Profit

1. Complete this chart using values from the exhibit provided.

2. Which of the following is not addressed in the 2018 vs 2017 comparative analysis of sales provided in this report?

1. Overall, net sales increased year-over-year in 2018 vs 2017.
2. The recent acquisition of Amplify and Pirate Brands increased sales volumes in 2018 as compared to 2017.
3. Decrease in promotional expenses resulted in favorable net price realization in 2018 as compared to 2017.
4. An unfavorable impact from foreign currency exchange rates of 0.2%.

Answer 1

a) Compete the chart using values from exhibit provided :

Horizontal Analysis	12/31/2018	12/31/2017	Dollar Change	Percentage Change
Sales	7,791.10	7,515.40	275.70	3.7%
Gross Profit	3,575.40	3,455.40	120.00	3.5%

b) Which of the following is not addressed in the 2018 vs 2017 comparative analysis of sales provided in the report

Option iii) is the answer.

Option iii -- Decrease in promotional expenses resulted in favorable net price realization in 2018 as compared to 2017

The report in fact says that net increase in volume was partially offset by unfavorable net price realization which was primarily attributed incremental trade promotion expense.