What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-10-28 compared with 2021-07-29 · 174 added, 173 removed, 998 unchanged (26% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Net sales $ 2,359,839 $ 2,219,829 $ 6,645,209 $ 5,964,475

5 unchanged sentences

Long-lived asset impairment charges

— 1,600 — 9,143

Business realignment costs (benefits) 365 — 2,748 ( 475 )

29 unchanged sentences

(in thousands)

For the Three Months Ended For the Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

For the Three Months Ended For the Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount

Net income including noncontrolling interest $ 444,927 $ 447,258 $ 1,143,028 $ 984,083

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments:

Foreign currency translation gains (losses) during period $ 12,996 $ — 12,996 $ 3,052 $ — 3,052 $ 14,194 $ — 14,194 $ ( 48,292 ) $ — ( 48,292 )

Foreign currency translation (losses) gains during period $ ( 11,571 ) $ — ( 11,571 ) $ 7,050 $ — 7,050 $ 2,623 $ — 2,623 $ ( 41,242 ) $ — ( 41,242 )

Reclassification to earnings due to the sale of businesses — — — — — — 5,210 — 5,210 — — —

Pension and post-retirement benefit plans:

Net actuarial gain and service cost 18,481 ( 4,399 ) 14,082 ( 16,685 ) 3,954 ( 12,731 ) 20,705 ( 4,928 ) 15,777 ( 16,685 ) 3,954 ( 12,731 )

Net actuarial (loss) gain and service cost ( 8,793 ) 2,093 ( 6,700 ) 3,204 ( 758 ) 2,446 11,912 ( 2,835 ) 9,077 ( 13,481 ) 3,195 ( 10,286 )

Reclassification to earnings 8,457 ( 671 ) 7,786 4,945 ( 452 ) 4,493 24,246 ( 4,739 ) 19,507 18,242 ( 3,183 ) 15,059

Cash flow hedges:

(Losses) gains on cash flow hedging derivatives ( 6,344 ) ( 446 ) ( 6,790 ) 675 838 1,513 ( 7,979 ) ( 159 ) ( 8,138 ) 6,056 ( 268 ) 5,788

Gains (losses) on cash flow hedging derivatives 5,779 ( 2,153 ) 3,626 ( 807 ) 441 ( 366 ) ( 2,200 ) ( 2,312 ) ( 4,512 ) 5,249 174 5,423

Reclassification to earnings 4,709 ( 119 ) 4,590 2,341 ( 578 ) 1,763 13,527 ( 501 ) 13,026 5,638 ( 2,508 ) 3,130

Total other comprehensive income (loss), net of tax $ 39,750 $ ( 6,888 ) 32,862 $ ( 3,211 ) $ 1,792 ( 1,419 ) $ 56,737 $ ( 9,537 ) 47,200 $ ( 42,327 ) $ ( 975 ) ( 43,302 )

Total other comprehensive (loss) income, net of tax $ ( 1,419 ) $ ( 850 ) ( 2,269 ) $ 16,733 $ ( 1,347 ) 15,386 $ 55,318 $ ( 10,387 ) 44,931 $ ( 25,594 ) $ ( 2,322 ) ( 27,916 )

Total comprehensive income including noncontrolling interest $ 442,658 $ 462,644 $ 1,187,959 $ 956,167

6 unchanged sentences

(in thousands, except share data)

July 4, 2021 December 31, 2020

October 3, 2021 December 31, 2020

Current assets:

27 unchanged sentences

Common stock, shares issued:

160,939,248 at July 4, 2021 and December 31, 2020

160,939,248 at October 3, 2021 and December 31, 2020

160,939 160,939

Class B common stock, shares issued:

60,613,777 at July 4, 2021 and December 31, 2020

60,613,777 at October 3, 2021 and December 31, 2020

60,614 60,614

2 unchanged sentences

Treasury—common stock shares, at cost:

15,528,828 at July 4, 2021 and 13,325,898 at December 31, 2020

15,564,962 at October 3, 2021 and 13,325,898 at December 31, 2020

( 1,200,409 ) ( 768,992 )

9 unchanged sentences

(in thousands)

Six Months Ended

July 4, 2021 June 28, 2020

Nine Months Ended

October 3, 2021 September 27, 2020

Operating Activities

29 unchanged sentences

Exercise of stock options 23,362 19,111

Net cash (used in) provided by financing activities ( 1,041,691 ) 295,858

Net cash used in financing activities ( 1,037,826 ) ( 19,965 )

Effect of exchange rate changes on cash and cash equivalents ( 6,057 ) ( 10,737 )

11 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended July 4, 2021 and June 28, 2020

For the Three Months Ended October 3, 2021 and September 27, 2020

(in thousands)

5 unchanged sentences

Comprehensive

Income (Loss) Noncontrolling

Loss Noncontrolling

Subsidiaries Total

Stockholders’

Balance, April 4, 2021

Balance, July 4, 2021

$ — $ 160,939 $ 60,614 $ 1,218,708 $ 2,301,805 $ ( 1,180,881 ) $ ( 296,136 ) $ 8,844 $ 2,273,893

Net income 444,927 — 444,927

Other comprehensive income (loss) 32,870 ( 8 ) 32,862

Other comprehensive loss ( 2,264 ) ( 5 ) ( 2,269 )

Dividends (including dividend equivalents):

6 unchanged sentences

Repurchase of common stock ( 23,600 ) ( 23,600 )

Balance, July 4, 2021

Balance, October 3, 2021

$ — $ 160,939 $ 60,614 $ 1,240,012 $ 2,565,538 $ ( 1,200,409 ) $ ( 298,400 ) $ 8,839 $ 2,537,133

5 unchanged sentences

Comprehensive

Income (Loss) Noncontrolling

(Loss) Income Noncontrolling

Subsidiaries Total

Stockholders’

Balance, March 29, 2020

Balance, June 28, 2020

$ — $ 160,939 $ 60,614 $ 1,161,878 $ 1,516,543 $ ( 779,176 ) $ ( 367,193 ) $ 2,484 $ 1,756,089

Net income (loss) 447,283 ( 25 ) 447,258

Other comprehensive (loss) income ( 1,452 ) 33 ( 1,419 )

Other comprehensive income 14,886 500 15,386

Dividends (including dividend equivalents):

5 unchanged sentences

Exercise of stock options and incentive-based transactions ( 4,448 ) 6,015 1,567

Repurchase of common stock ( 42,020 ) ( 42,020 )

Balance, June 28, 2020

Balance, September 27, 2020

$ — $ 160,939 $ 60,614 $ 1,169,583 $ 1,800,186 $ ( 773,161 ) $ ( 352,307 ) $ 2,959 $ 2,068,813

3 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months Ended July 4, 2021 and June 28, 2020

For the Nine Months Ended October 3, 2021 and September 27, 2020

(in thousands)

5 unchanged sentences

Comprehensive

Income (Loss) Noncontrolling

(Loss) Income Noncontrolling

Subsidiaries Total

13 unchanged sentences

Divestiture of noncontrolling interest ( 1,013 ) ( 1,013 )

Balance, July 4, 2021

Balance, October 3, 2021

$ — $ 160,939 $ 60,614 $ 1,240,012 $ 2,565,538 $ ( 1,200,409 ) $ ( 298,400 ) $ 8,839 $ 2,537,133

5 unchanged sentences

Comprehensive

Income (Loss) Noncontrolling

Loss Noncontrolling

Subsidiaries Total

3 unchanged sentences

Net income (loss) 987,321 ( 3,238 ) 984,083

Other comprehensive loss ( 43,227 ) ( 75 ) ( 43,302 )

Other comprehensive (loss) income ( 28,341 ) 425 ( 27,916 )

Dividends (including dividend equivalents):

6 unchanged sentences

Repurchase of common stock ( 211,196 ) ( 211,196 )

Balance, June 28, 2020

Balance, September 27, 2020

$ — $ 160,939 $ 60,614 $ 1,169,583 $ 1,800,186 $ ( 773,161 ) $ ( 352,307 ) $ 2,959 $ 2,068,813

14 unchanged sentences

The financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in our opinion, necessary for a fair presentation of the results of operations, financial position, and cash flows for the indicated periods.

Operating results for the quarter ended July 4, 2021 may not be indicative of the results that may be expected for the year ending December 31, 2021 because of seasonal effects on our business.

Operating results for the quarter ended October 3, 2021 may not be indicative of the results that may be expected for the year ending December 31, 2021 because of seasonal effects on our business.

These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020 (our “2020 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.

3 unchanged sentences

Since the onset of COVID-19, there has been minimal disruption to our supply chain network, and all our manufacturing plants are currently open.

We are also working closely with our business units, contract manufacturers, distributors, contractors and other external business partners to minimize the potential impact on our business.

The ultimate impact that COVID-19 will have on our consolidated financial statements remains uncertain and ultimately will be dictated by the length and severity of the pandemic, including COVID-19 variants or potential resurgences, as well as the economic recovery and actions taken in response by local, state and national governments around the world, including the distribution of vaccinations.

We will continue to evaluate the nature and extent of these potential impacts to our business and consolidated financial statements.

However, during the third quarter of 2021, continued strong demand for consumer goods and the effects of COVID-19 mitigation strategies have led to broad-based supply chain disruptions across the United States, including inflation on many consumer products, labor shortages and demand outpacing supply.

We are working closely with our business units, contract manufacturers, distributors, contractors and other external business partners to minimize the potential impact on our business.

The ultimate impact that COVID-19 will have on our consolidated financial statements remains uncertain and ultimately will be dictated by the length and severity of the pandemic, including broad-based supply chain disruptions, COVID-19 variants or resurgences, as well as the economic recovery and actions taken in response by local, state and national governments around the world, including the distribution of vaccinations.

We will continue to evaluate the nature and extent of these potential and evolving impacts to our business and consolidated financial statements.

Recent Accounting Pronouncements

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ASU 2019-12 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted.

An entity that elects early adoption must adopt all the amendments in the same period.

Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

We adopted the

An entity that elects early adoption must adopt all the

The Hershey Company | Q3 2021 Form 10-Q | Page 8

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

provisions of this ASU in the fourth quarter of 2020.

amendments in the same period.

Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

We adopted the provisions of this ASU in the fourth quarter of 2020.

Adoption of the new standard did not have a material impact on our consolidated financial statements.

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Lily’s products include dark and milk chocolate style bars, baking chips, peanut butter cups and other confection products that complement Hershey’s confectionery and confectionery-based portfolio.

The initial cash consideration paid for Lily's totaled $ 418,191 and the Company may be required to pay additional cash consideration if certain defined targets related to net sales and gross margin are exceeded during the period of the closing date through December 31, 2021.

The initial cash consideration paid for Lily’s totaled $ 422,210 and the Company may be required to pay additional cash consideration if certain defined targets related to net sales and gross margin are exceeded during the period from the closing date through December 31, 2021.

As of the acquisition date, the estimated fair value of the contingent consideration obligation was classified as a liability of $ 5,000 and was determined using a scenario-based analysis on forecasted future results.

2 unchanged sentences

The purchase consideration, inclusive of the acquisition date fair value of the contingent consideration, was allocated to assets acquired and liabilities assumed based on their respective fair values as follows:

Initial Allocation (1) Adjustments Updated Allocation

Goodwill $ 174,516 $ 1,310 $ 175,826

4 unchanged sentences

Net assets acquired $ 423,191 $ 4,019 $ 427,210

(1) As reported in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended July 4, 2021.

The purchase price allocation presented above is preliminary.

We are in the process of refining the valuation of acquired assets and liabilities, including goodwill, and expect to finalize the purchase price allocation by the end of 2021.

The measurement period adjustments to the initial allocation are based on more detailed information obtained about the specific assets acquired.

We continue to refine our purchase price allocation, including goodwill, and expect to finalize by the end of 2021.

Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired (including the identifiable intangible assets).

The majority of goodwill derived from this acquisition is expected to be deductible for tax purposes and reflects the value of leveraging our brand building expertise, supply chain capabilities and retail relationships to accelerate growth and access to the portfolio of Lily's products.

The majority of goodwill derived from this acquisition is expected to be deductible

The Hershey Company | Q3 2021 Form 10-Q | Page 9

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

for tax purposes and reflects the value of leveraging our brand building expertise, supply chain capabilities and retail relationships to accelerate growth and access to the portfolio of Lily’s products.

Other intangible assets include trademarks valued at $ 151,600 and customer relationships valued at $ 84,200 .

9 unchanged sentences

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying value of goodwill by reportable segment for the six months ended July 4, 2021 are as follows:

The changes in the carrying value of goodwill by reportable segment for the nine months ended October 3, 2021 are as follows:

North America

5 unchanged sentences

174,516 — 174,516

Measurement period adjustments (see Note 2 )

1,310 — 1,310

Foreign currency translation 937 ( 398 ) 539

Balance at July 4, 2021

Balance at October 3, 2021

$ 2,147,208 $ 17,372 $ 2,164,580

The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset:

July 4, 2021 December 31, 2020

October 3, 2021 December 31, 2020

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

8 unchanged sentences

$ 1,494,106 $ 1,295,214

Total amortization expense for the three months ended July 4, 2021 and June 28, 2020 was $ 11,635 and $ 11,580 , respectively.

Total amortization expense for the six months ended July 4, 2021 and June 28, 2020 was $ 23,256 and $ 23,220 , respectively.

SHORT AND LONG-TERM DEBT

Short-term Debt

As a source of short-term financing, we utilize cash on hand and commercial paper or bank loans with an original maturity of three months or less.

We maintain a $ 1.5 billion unsecured revolving credit facility with the option to

Total amortization expense for the three months ended October 3, 2021 and September 27, 2020 was $ 13,936 and $ 11,618 , respectively.

Total amortization expense for the nine months ended October 3, 2021 and September 27, 2020 was $ 37,192 and $ 34,838 , respectively.

The Hershey Company | Q3 2021 Form 10-Q | Page 10

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

increase borrowings by an additional $ 500 million with the consent of the lenders.

SHORT AND LONG-TERM DEBT

Short-term Debt

As a source of short-term financing, we utilize cash on hand and commercial paper or bank loans with an original maturity of three months or less.

We maintain a $ 1.5 billion unsecured revolving credit facility with the option to increase borrowings by an additional $ 500 million with the consent of the lenders.

This facility is scheduled to expire on July 2, 2024;

1 unchanged sentence

The credit agreement contains certain financial and other covenants, customary representations, warranties and events of default.

As of July 4, 2021, we were in compliance with all covenants pertaining to the credit agreement, and we had no significant compensating balance agreements that legally restricted these funds.

As of October 3, 2021, we were in compliance with all covenants pertaining to the credit agreement, and we had no significant compensating balance agreements that legally restricted these funds.

For more information, refer to the Consolidated Financial Statements included in our 2020 Annual Report on Form 10-K.

2 unchanged sentences

Short-term debt consisted of the following:

July 4, 2021 December 31, 2020

October 3, 2021 December 31, 2020

Short-term foreign bank borrowings against lines of credit $ 65,398 $ 74,041

6 unchanged sentences

Maturity Date

July 4, 2021 December 31, 2020

October 3, 2021 December 31, 2020

8.800 % Debentures (1)

40 unchanged sentences

Net interest expense consists of the following:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Interest expense $ 33,066 $ 39,720 $ 106,597 $ 119,496

16 unchanged sentences

We generally hedge commodity price risks for 3 - to 24 -month periods.

Our open commodity derivative contracts had a notional value of $ 387,871 as of July 4, 2021 and $ 279,843 as of December 31, 2020.

Our open commodity derivative contracts had a notional value of $ 383,928 as of October 3, 2021 and $ 279,843 as of December 31, 2020.

Derivatives used to manage commodity price risk are not designated for hedge accounting treatment.

7 unchanged sentences

The contracts are either designated as cash flow hedges or are undesignated.

The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $ 183,136 at July 4, 2021 and $ 130,131 at December 31, 2020.

The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $ 98,949 at October 3, 2021 and $ 130,131 at December 31, 2020.

The effective portion of the changes in fair value on these contracts is recorded in other comprehensive income and reclassified into earnings in the same period in which the hedged transactions affect earnings.

The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $ 1,775 at July 4, 2021 and $ 2,519 at December 31, 2020.

The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $ 2,747 at October 3, 2021 and $ 2,519 at December 31, 2020.

The change in fair value on these instruments is recorded directly in cost of sales or selling, marketing and administrative expense, depending on the nature of the underlying exposure.

7 unchanged sentences

In December 2020, our fixed-to-floating interest rate swap matured in connection with the repayment of certain long-term debt upon its maturity.

Therefore, as of July 4, 2021 and December 31, 2020, we had no open interest rate swap derivative instruments in a fair value hedging relationship.

Therefore, as of October 3, 2021 and December 31, 2020, we had no open interest rate swap derivative instruments in a fair value hedging relationship.

In order to manage interest rate exposure, in previous years we utilized interest rate swap agreements to protect against unfavorable interest rate changes relating to forecasted debt transactions.

5 unchanged sentences

The change in fair value of these derivatives is recorded in selling, marketing and administrative expense, together with the change in the related liabilities.

The notional amount of the contracts outstanding at July 4, 2021 and December 31, 2020 was $ 22,882 and $ 30,194 , respectively.

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of July 4, 2021 and December 31, 2020:

July 4, 2021 December 31, 2020

The notional amount of the contracts outstanding at October 3, 2021 and December 31, 2020 was $ 24,866 and $ 30,194 , respectively.

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of October 3, 2021 and December 31, 2020:

October 3, 2021 December 31, 2020

Assets (1) Liabilities (1) Assets (1) Liabilities (1)

9 unchanged sentences

Derivative liabilities are classified on our Consolidated Balance Sheets within accrued liabilities and other long-term liabilities.

(2) As of July 4, 2021, amounts reflected on a net basis in liabilities were assets of $ 51,073 and liabilities of $ 54,087 , which are associated with cash transfers receivable or payable on commodities futures contracts reflecting the change in quoted market prices on the last trading day for the period.

(2) As of October 3, 2021, amounts reflected on a net basis in assets were assets of $ 63,132 and liabilities of $ 62,977 , which are associated with cash transfers receivable or payable on commodities futures contracts reflecting the change in quoted market prices on the last trading day for the period.

The comparable amounts reflected on a net basis in assets at December 31, 2020 were assets of $ 32,674 and liabilities of $ 29,376 .

At July 4, 2021 and December 31, 2020, the remaining amount reflected in assets and liabilities related to the fair value of other non-exchange traded derivative instruments, respectively.

At October 3, 2021 and December 31, 2020, the remaining amount reflected in assets and liabilities related to the fair value of other non-exchange traded derivative instruments, respectively.

The Hershey Company | Q3 2021 Form 10-Q | Page 13

3 unchanged sentences

Income Statement Impact of Derivative Instruments

The effect of derivative instruments on the Consolidated Statements of Income for the three months ended July 4, 2021 and June 28, 2020 was as follows:

The effect of derivative instruments on the Consolidated Statements of Income for the three months ended October 3, 2021 and September 27, 2020 was as follows:

Non-designated Hedges Cash Flow Hedges

9 unchanged sentences

$ 33,726 $ 78,120 $ 5,779 $ ( 807 ) $ ( 4,709 ) $ ( 2,341 )

The effect of derivative instruments on the Consolidated Statements of Income for the six months ended July 4, 2021 and June 28, 2020 was as follows:

The effect of derivative instruments on the Consolidated Statements of Income for the nine months ended October 3, 2021 and September 27, 2020 was as follows:

Non-designated Hedges Cash Flow Hedges

13 unchanged sentences

Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense.

The amount of pretax net losses on derivative instruments, including interest rate swap agreements and foreign currency forward exchange contracts expected to be reclassified into earnings in the next 12 months was approximately $ 19,317 as of July 4, 2021.

The amount of pre-tax net losses on derivative instruments, including interest rate swap agreements and foreign currency forward exchange contracts expected to be reclassified into earnings in the next 12 months was approximately $ 11,529 as of October 3, 2021.

This amount is primarily associated with interest rate swap agreements.

Fair Value Hedging Relationships

For the three and six months ended July 4, 2021, we had no interest rate swap derivative instruments in a fair value hedging relationship.

For the three and six months ended June 28, 2020, we recognized a net pretax benefit to interest expense of $ 608 and $ 759 , respectively, relating to our fixed-to-floating interest swap arrangements.

For the three and nine months ended October 3, 2021, we had no interest rate swap derivative instruments in a fair value hedging relationship.

For the three and nine months ended September 27, 2020, we recognized a net pre-tax benefit to interest expense of $ 1,389 and $ 2,148 , respectively, relating to our fixed-to-floating interest swap arrangements.

The Hershey Company | Q3 2021 Form 10-Q | Page 14

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We did no t have any Level 3 financial assets or liabilities, nor were there any transfers between levels during the periods presented.

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of July 4, 2021 and December 31, 2020:

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of October 3, 2021 and December 31, 2020:

Assets (Liabilities)

Level 1 Level 2 Level 3 Total

July 4, 2021:

October 3, 2021:

Derivative Instruments:

19 unchanged sentences

Other Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair values as of July 4, 2021 and December 31, 2020 because of the relatively short maturity of these instruments.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair values as of October 3, 2021 and December 31, 2020 because of the relatively short maturity of these instruments.

The estimated fair value of our long-term debt is based on quoted market prices for similar debt issues and is, therefore, classified as Level 2 within the valuation hierarchy.

1 unchanged sentence

Fair Value Carrying Value

July 4, 2021 December 31, 2020 July 4, 2021 December 31, 2020

October 3, 2021 December 31, 2020 October 3, 2021 December 31, 2020

Current portion of long-term debt $ 2,812 $ 443,215 $ 2,812 $ 438,829

4 unchanged sentences

In connection with the acquisition of Lily’s in the second quarter of 2021, as discussed in Note 2 , we used various valuation techniques to determine fair value, with the primary techniques being discounted cash flow analysis, relief-from-royalty and a form of the multi-period excess earnings, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

During the six months ended July 4, 2021, we recorded no impairment charges.

During the six months ended June 28, 2020, we recorded the following impairment charges, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy:

During the nine months ended October 3, 2021, we recorded no impairment charges.

During the nine months ended September 27, 2020, we recorded the following impairment charges, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy:

Adjustment to disposal group (1) $ 6,200

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Consideration for such contracts are allocated to the lease component and non-lease components based upon relative standalone prices either observable or estimated if observable prices are not readily available.

The components of lease expense for the three months ended July 4, 2021 and June 28, 2020 were as follows:

The components of lease expense for the three months ended October 3, 2021 and September 27, 2020 were as follows:

Three Months Ended

Lease expense Classification July 4, 2021 June 28, 2020

Lease expense Classification October 3, 2021 September 27, 2020

Operating lease cost Cost of sales or SM&A (1) $ 10,764 $ 11,485

3 unchanged sentences

Net lease cost (2) $ 13,835 $ 14,550

The components of lease expense for the six months ended July 4, 2021 and June 28, 2020 were as follows:

Six Months Ended

Lease expense Classification July 4, 2021 June 28, 2020

The components of lease expense for the nine months ended October 3, 2021 and September 27, 2020 were as follows:

Nine Months Ended

Lease expense Classification October 3, 2021 September 27, 2020

Operating lease cost Cost of sales or SM&A (1) $ 33,318 $ 32,702

6 unchanged sentences

Information regarding our lease terms and discount rates were as follows:

July 4, 2021 December 31, 2020

October 3, 2021 December 31, 2020

Weighted-average remaining lease term (years)

9 unchanged sentences

Supplemental balance sheet information related to leases were as follows:

Leases Classification July 4, 2021 December 31, 2020

Leases Classification October 3, 2021 December 31, 2020

Operating lease ROU assets Other non-current assets $ 196,746 $ 224,268

8 unchanged sentences

Total lease liabilities $ 270,229 $ 299,204

The maturity of our lease liabilities as of July 4, 2021 were as follows:

The maturity of our lease liabilities as of October 3, 2021 were as follows:

Operating leases Finance leases Total

8 unchanged sentences

Total lease liabilities $ 191,983 $ 78,246 $ 270,229

As of July 4, 2021, the Company had entered in an additional lease as a lessee, primarily for real estate.

As of October 3, 2021, the Company had entered into an additional lease as a lessee, primarily for real estate.

This lease has not yet commenced and will result in ROU assets and corresponding lease liabilities of approximately $ 22,000 .

This lease is expected to commence during the second half of 2021, with a lease term of approximately 8 years.

This lease is expected to commence during the fourth quarter of 2021, with a lease term of approximately 8 years.

The Hershey Company | Q3 2021 Form 10-Q | Page 18

3 unchanged sentences

Supplemental cash flow and other information related to leases were as follows:

Six Months Ended

July 4, 2021 June 28, 2020

Nine Months Ended

October 3, 2021 September 27, 2020

Cash paid for amounts included in the measurement of lease liabilities:

6 unchanged sentences

INVESTMENTS IN UNCONSOLIDATED AFFILIATES

We invest in partnerships which make equity investments in projects eligible to receive federal historic and renewable energy tax credits.

We invest in partnerships that make equity investments in projects eligible to receive federal historic and renewable energy tax credits.

The tax credits, when realized, are recognized as a reduction of tax expense under the flow-through method, at which time the corresponding equity investment is written-down to reflect the remaining value of the future benefits to be realized.

6 unchanged sentences

We regularly review our investments and adjust accordingly for capital contributions, dividends received and other-than-temporary impairments.

Total investments in unconsolidated affiliates was $ 81,606 and $ 52,351 as of July 4, 2021 and December 31, 2020, respectively.

Total investments in unconsolidated affiliates was $ 77,865 and $ 52,351 as of October 3, 2021 and December 31, 2020, respectively.

BUSINESS REALIGNMENT ACTIVITIES

1 unchanged sentence

Costs associated with business realignment activities are classified in our Consolidated Statements of Income as follows:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Cost of sales $ 213 $ — $ 5,250 $ —

6 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

Costs recorded by program during the six months ended July 4, 2021 and June 28, 2020 related to these activities were as follows:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Costs recorded by program during the nine months ended October 3, 2021 and September 27, 2020 related to these activities were as follows:

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

International Optimization Program:

5 unchanged sentences

Total $ 3,397 $ — $ 13,793 $ 2,170

The following table presents the liability activity for costs qualifying as exit and disposal costs for the six months ended July 4, 2021:

The following table presents the liability activity for costs qualifying as exit and disposal costs for the nine months ended October 3, 2021:

Liability balance at December 31, 2020 (1)

1 unchanged sentence

Cash payments

Liability balance at July 4, 2021 (1)

Liability balance at October 3, 2021 (1)

(1) The liability balances reflected above are reported within accrued liabilities and other long-term liabilities.

6 unchanged sentences

However, segment operating results do not include these business realignment expenses because we evaluate segment performance excluding such costs.

For the three and six months ended July 4, 2021, we recognized total costs associated with the International Optimization Program of $ 3,469 and $ 10,396 , respectively.

For the three and nine months ended October 3, 2021, we recognized total costs associated with the International Optimization Program of $ 3,397 and $ 13,793 , respectively.

These charges predominantly included third-party charges in support of our initiative to transform our China operating model, as well as severance and employee benefit costs.

3 unchanged sentences

This project was completed in mid-2020.

For the three and six months ended June 28, 2020, we recognized total costs associated with the Margin for Growth Program of $ 1,275 and $ 2,170 , respectively.

We recognized total costs of $ 2,170 associated with the Margin for Growth Program for the six months ended June 28, 2020, at which time the program ended.

These charges included employee severance, largely relating to initiatives to improve the cost structure of our corporate operating model as part of optimizing our global supply chain.

In addition, we incurred other program costs, which related primarily to third-party charges in support of our initiative to improve global efficiency and effectiveness.

The Hershey Company | Q3 2021 Form 10-Q | Page 20

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

we incurred other program costs, which related primarily to third-party charges in support of our initiative to improve global efficiency and effectiveness.

The costs and related benefits of the Margin for Growth Program relate approximately 63 % to the North America segment and 37 % to the International and Other segment.

1 unchanged sentence

The majority of our taxable income is generated in the United States and taxed at the United States statutory rate of 21 %.

The effective tax rates for the six months ended July 4, 2021 and June 28, 2020 were 25.1 % and 19.8 %, respectively.

The effective tax rates for the nine months ended October 3, 2021 and September 27, 2020 were 21.4 % and 20.1 %, respectively.

Relative to the statutory rate, the 2021 effective tax rate was impacted by incremental tax reserves incurred as a result of an adverse ruling in connection with a non-U.S.

tax litigation matter as well as state taxes, partially offset by investment tax credits and the benefit of employee share-based payments.

tax litigation matter as well as state taxes, partially offset by investment tax credits and the utilization (during the third quarter of 2021) of previously generated capital losses.

The Company and its subsidiaries file tax returns in the United States, including various state and local returns, and in other foreign jurisdictions.

2 unchanged sentences

If any issues addressed in our tax audits are resolved in a manner not consistent with management’s expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs.

During the second quarter of 2021, we recorded incremental tax reserves as a result of an adverse ruling in connection with a non-U.S.

tax litigation matter.

Based on our current assessments, we believe adequate provision has been made for all income tax uncertainties.

2 unchanged sentences

On March 11, 2021, the American Rescue Plan Act (“ARPA”) was signed into law.

The ARPA strengthens and extends certain federal programs enacted through the CARES Act and other COVID-19 relief measures, and establishes new federal programs, including provisions on taxes, healthcare and unemployment benefits.

The ARPA did not have a material impact on our consolidated financial statements for the six months ended July 4, 2021.

The ARPA strengthens and extends certain federal programs enacted through the Coronavirus Aid, Relief, and Economic Security Act and other COVID-19 relief measures, and establishes new federal programs, including provisions on taxes, healthcare and unemployment benefits.

The ARPA did not have a material impact on our consolidated financial statements for the nine months ended October 3, 2021.

Coronavirus Aid, Relief, and Economic Security Act

1 unchanged sentence

The CARES Act provides a substantial stimulus and assistance package intended to address the impact of the COVID-19 pandemic, including tax relief and government loans, grants and investments.

The CARES Act did not have a material impact on our consolidated financial statements for the six months ended July 4, 2021 and June 28, 2020.

The CARES Act did not have a material impact on our consolidated financial statements for the nine months ended October 3, 2021 and September 27, 2020.

The Hershey Company | Q3 2021 Form 10-Q | Page 21

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Net Periodic Benefit Cost

The components of net periodic benefit cost for the three months ended July 4, 2021 and June 28, 2020 were as follows:

The components of net periodic benefit cost for the three months ended October 3, 2021 and September 27, 2020 were as follows:

Pension Benefits Other Benefits

Three Months Ended Three Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Service cost $ 5,256 $ 5,431 $ 45 $ 39

6 unchanged sentences

Total net periodic benefit cost $ 6,249 $ 4,798 $ 1,009 $ 1,612

We made contributions of $ 325 and $ 4,000 to the pension plans and other benefits plans, respectively, during the second quarter of 2021.

In the second quarter of 2020, we made contributions of $ 248 and $ 3,976 to our pension plans and other benefit plans, respectively.

We made contributions of $ 25,711 and $ 3,527 to the pension plans and other benefits plans, respectively, during the third quarter of 2021.

In the third quarter of 2020, we made contributions of $ 748 and $ 3,157 to our pension plans and other benefit plans, respectively.

The contributions in 2021 and 2020 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans.

The components of net periodic benefit cost for the six months ended July 4, 2021 and June 28, 2020 were as follows:

The components of net periodic benefit cost for the nine months ended October 3, 2021 and September 27, 2020 were as follows:

Pension Benefits Other Benefits

Six Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Nine Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Service cost $ 16,178 $ 16,274 $ 135 $ 119

6 unchanged sentences

Total net periodic benefit cost $ 17,074 $ 16,453 $ 3,028 $ 4,835

We made contributions of $ 1,183 and $ 8,155 to the pension plans and other benefits plans, respectively, during the first six months of 2021.

In the first six months of 2020, we made contributions of $ 1,005 and $ 7,328 to our pension plans and other benefit plans, respectively.

We made contributions of $ 26,894 and $ 11,682 to the pension plans and other benefits plans, respectively, during the first nine months of 2021.

In the first nine months of 2020, we made contributions of $ 1,753 and $ 10,485 to our pension plans and other benefit plans, respectively.

The contributions in 2021 and 2020 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans.

4 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

During the first and second quarters of 2021, we recognized pension settlement charges in our hourly retirement plan due to lump sum withdrawals by employees retiring or leaving the Company.

In addition, we recognized pension settlement charges in our salaried retirement plan during the second quarter of 2021 due to lump sum withdrawals by employees retiring or leaving the Company.

During the first nine months of 2021, we recognized pension settlement charges in our hourly retirement plan and salaried retirement plan due to lump sum withdrawals by employees retiring or leaving the Company.

The non-cash settlement charges, which represent the acceleration of a portion of the respective plan’s accumulated unrecognized actuarial loss, were triggered when the cumulative lump sum distributions exceeded the plan’s anticipated annual service and interest costs.

In connection with the second quarter 2021 settlements, the related plan assets and liabilities were remeasured using a discount rate as of the remeasurement date that was 34 basis points higher than the rate as of December 31, 2020 and an expected rate of return on plan assets of 4.8 %.

In connection with the third quarter 2021 settlements, the related plan assets and liabilities were remeasured using a discount rate as of the remeasurement date that was 39 basis points higher than the rate as of December 31, 2020 and an expected rate of return on plan assets of 4.8 %.

STOCK COMPENSATION PLANS

15 unchanged sentences

For the periods presented, compensation expense for all types of stock-based compensation programs and the related income tax benefit recognized were as follows:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Pre-tax compensation expense

2 unchanged sentences

Compensation expenses for stock compensation plans are primarily included in selling, marketing and administrative expense.

As of July 4, 2021, total stock-based compensation expense related to non-vested awards not yet recognized was $ 101,018 and the weighted-average period over which this amount is expected to be recognized was approximately 2.2 years.

As of October 3, 2021, total stock-based compensation expense related to non-vested awards not yet recognized was $ 93,180 and the weighted-average period over which this amount is expected to be recognized was approximately 2.1 years.

The Hershey Company | Q3 2021 Form 10-Q | Page 23

7 unchanged sentences

Expense for stock options is based on grant date fair value and recognized on a straight-line method over the vesting period, net of estimated forfeitures.

A summary of activity relating to grants of stock options for the period ended July 4, 2021 is as follows:

A summary of activity relating to grants of stock options for the period ended October 3, 2021 is as follows:

Stock Options Shares Weighted-Average

6 unchanged sentences

Forfeited ( 3,009 ) $ 102.58

Outstanding as of July 4, 2021

Outstanding as of October 3, 2021

1,448,437 $ 101.85 4.5 years $ 99,836

Options exercisable as of July 4, 2021

Options exercisable as of October 3, 2021

1,264,140 $ 100.37 4.2 years $ 89,006

The weighted-average fair value of options granted was $ 24.12 and $ 21.31 per share for the periods ended July 4, 2021 and June 28, 2020, respectively.

The weighted-average fair value of options granted was $ 24.12 and $ 21.31 per share for the periods ended October 3, 2021 and September 27, 2020, respectively.

The fair value was estimated on the date of grant using a Black-Scholes option-pricing model and the following weighted-average assumptions:

Six Months Ended

July 4, 2021 June 28, 2020

Nine Months Ended

October 3, 2021 September 27, 2020

Dividend yields

2 unchanged sentences

Expected term in years 6.3 6.7

The total intrinsic value of options exercised was $ 21,453 and $ 23,597 for the periods ended July 4, 2021 and June 28, 2020, respectively.

The total intrinsic value of options exercised was $ 28,416 and $ 27,394 for the periods ended October 3, 2021 and September 27, 2020, respectively.

Performance Stock Units and Restricted Stock Units

Under the EICP, we grant PSUs to selected executives and other key employees.

Under the EICP, we grant PSUs to select executives and other key employees.

Vesting is contingent upon the achievement of certain performance objectives.

We grant PSUs over 3 -year performance cycles.

If we meet targets for financial measures at the end of the applicable 3 -year performance cycle, we award a resulting number of shares of our Common Stock to the participants.

We grant PSUs over three-year performance cycles.

If we meet targets for financial measures at the end of the applicable three-year performance cycle, we award a resulting number of shares of our Common Stock to the participants.

The number of shares may be increased to the maximum or reduced to the minimum threshold based on the results of these performance metrics in accordance with the terms established at the time of the award.

2 unchanged sentences

For performance-based condition components, we estimate the probability that the performance conditions will be achieved each quarter and adjust compensation expenses accordingly.

The performance scores of PSU grants during the six months ended July 4, 2021 and June 28, 2020 can range from 0 % to 250 % of the targeted amounts.

The performance scores of PSU grants during the nine months ended October 3, 2021 and September 27, 2020 can range from 0 % to 250 % of the targeted amounts.

The Hershey Company | Q3 2021 Form 10-Q | Page 24

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

We recognize the compensation expenses associated with PSUs ratably over the 3 -year term.

Compensation expenses is based on the grant date fair value because the grants can only be settled in shares of our Common Stock.

We recognize the compensation expenses associated with PSUs ratably over the three-year term.

Compensation expenses are based on the grant date fair value because the grants can only be settled in shares of our Common Stock.

The grant date fair value of PSUs is determined based on the Monte Carlo simulation model for the market-based total shareholder return component and the closing market price of the Company’s Common Stock on the date of grant for performance-based components.

During the six months ended July 4, 2021 and June 28, 2020, we awarded RSUs to certain executive officers and other key employees under the EICP.

During the nine months ended October 3, 2021 and September 27, 2020, we awarded RSUs to certain executive officers and other key employees under the EICP.

We also awarded RSUs to non-employee directors.

2 unchanged sentences

The compensation expenses associated with non-employee director RSUs is recognized ratably over the vesting period, net of estimated forfeitures.

A summary of activity relating to grants of PSUs and RSUs for the period ended July 4, 2021 is as follows:

A summary of activity relating to grants of PSUs and RSUs for the period ended October 3, 2021 is as follows:

Performance Stock Units and Restricted Stock Units

7 unchanged sentences

( 44,899 ) $ 148.39

Outstanding as of July 4, 2021

Outstanding as of October 3, 2021

1,285,123 $ 146.64

2 unchanged sentences

In addition, the table provides assumptions used to determine the fair value of the market-based total shareholder return component using the Monte Carlo simulation model on the date of grant.

Six Months Ended

July 4, 2021 June 28, 2020

Nine Months Ended

October 3, 2021 September 27, 2020

Units granted

6 unchanged sentences

Expected volatility 26.4 % 17.3 %

The fair value of shares vested totaled $ 46,352 and $ 41,874 for the periods ended July 4, 2021 and June 28, 2020, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 263,269 units as of July 4, 2021.

The fair value of shares vested totaled $ 50,361 and $ 52,181 for the periods ended October 3, 2021 and September 27, 2020, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 263,594 units as of October 3, 2021.

Each unit is equivalent to one share of the Company’s Common Stock.

7 unchanged sentences

As a result, we have defined our operating segments on a geographic basis, as this aligns with how our Chief Operating Decision Maker (“CODM”) manages our business, including resource allocation and performance assessment.

Our North America business, which generates approximately 90 % of our consolidated revenue, is our only reportable segment.

None of our other operating segments meet the quantitative thresholds to qualify as reportable segments;

Our North America business, which generates approximately 90 % of our consolidated revenue, is our only individually reportable segment.

None of our other operating segments individually meet the quantitative thresholds to qualify as reportable segments;

therefore, these operating segments are combined and disclosed below as International and Other.

18 unchanged sentences

Our segment net sales and earnings were as follows:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

North America $ 2,125,627 $ 2,014,152 $ 5,986,692 $ 5,442,760

1 unchanged sentence

Total $ 2,359,839 $ 2,219,829 $ 6,645,209 $ 5,964,475

Segment income (loss):

Segment income:

North America $ 666,089 $ 647,109 $ 1,893,554 $ 1,726,251

4 unchanged sentences

Long-lived asset impairment charges (see Note 6 )

— 1,600 — 9,143

Costs associated with business realignment activities (see Note 9 )

8 unchanged sentences

Activity within the unallocated mark-to-market adjustment for commodity derivatives is as follows:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in income $ ( 33,643 ) $ ( 74,279 ) $ ( 64,199 ) $ 189

1 unchanged sentence

Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses $ ( 18,468 ) $ ( 71,758 ) $ ( 24,137 ) $ 10,483

As of July 4, 2021, the cumulative amount of mark-to-market gains on commodity derivatives that have been recognized in our consolidated cost of sales and not yet allocated to reportable segments was $ 68,207 .

Based on our forecasts of the timing of the recognition of the underlying hedged items, we expect to reclassify net pretax gains on commodity derivatives of $ 52,970 to segment operating results in the next twelve months.

As of October 3, 2021, the cumulative amount of mark-to-market gains on commodity derivatives that have been recognized in our consolidated cost of sales and not yet allocated to reportable segments was $ 86,675 .

Based on our forecasts of the timing of the recognition of the underlying hedged items, we expect to reclassify net pre-tax gains on commodity derivatives of $ 57,391 to segment operating results in the next twelve months.

The Hershey Company | Q3 2021 Form 10-Q | Page 27

3 unchanged sentences

Depreciation and amortization expense included within segment income presented above is as follows:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

North America $ 59,216 $ 56,518 $ 175,238 $ 164,599

3 unchanged sentences

Additional information regarding our net sales disaggregated by geographical region is as follows:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

United States $ 2,017,378 $ 1,914,316 $ 5,681,498 $ 5,185,858

4 unchanged sentences

Additional information regarding our net sales disaggregated by product line is as follows:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Confectionery and confectionery-based portfolio $ 2,190,223 $ 2,078,582 $ 6,183,741 $ 5,578,997

7 unchanged sentences

A summary of our treasury stock activity is as follows:

Six Months Ended July 4, 2021

Nine Months Ended October 3, 2021

Shares Dollars

7 unchanged sentences

In July 2018, our Board of Directors approved a $ 500,000 share repurchase authorization to repurchase shares of our Common Stock.

As of July 4, 2021, $ 109,983 remained available for repurchases of our Common Stock under this program.

As of October 3, 2021, $ 109,983 remained available for repurchases of our Common Stock under this program.

In May 2021, our Board of Directors approved an additional $ 500,000 share repurchase authorization.

13 unchanged sentences

Other comprehensive income - foreign currency translation adjustments 5,249

Balance, July 4, 2021

The remaining noncontrolling interest balance as of July 4, 2021 reflects the portion of sales proceeds attributable to the joint venture partner.

Balance, October 3, 2021

The remaining noncontrolling interest balance as of October 3, 2021 reflects the portion of sales proceeds attributable to the joint venture partner.

The distribution of the sales proceeds will commence upon the completion of certain approvals and other conditions.

12 unchanged sentences

Three Months Ended

July 4, 2021 June 28, 2020

October 3, 2021 September 27, 2020

Common Stock Class B Common Stock Common Stock Class B Common Stock

19 unchanged sentences

Earnings Per Share—diluted $ 2.14 $ 2.01 $ 2.14 $ 2.00

The earnings per share calculations for the three months ended July 4, 2021 and June 28, 2020 excluded 43 and 15 stock options (in thousands), respectively, that would have been antidilutive.

There were no antidilutive stock options for the three months ended October 3, 2021.

The earnings per share calculations for the three months ended September 27, 2020 excluded 15,000 stock options that would have been antidilutive.

The Hershey Company | Q3 2021 Form 10-Q | Page 30

2 unchanged sentences

(amounts in thousands, except share data or if otherwise indicated)

Six Months Ended

July 4, 2021 June 28, 2020

Nine Months Ended

October 3, 2021 September 27, 2020

Common Stock Class B Common Stock Common Stock Class B Common Stock

19 unchanged sentences

Earnings Per Share—diluted $ 5.49 $ 5.14 $ 4.71 $ 4.40

The earnings per share calculations for the six months ended July 4, 2021 and June 28, 2020 excluded 43 and 15 stock options (in thousands), respectively, that would have been antidilutive.

The earnings per share calculations for the nine months ended October 3, 2021 and September 27, 2020 excluded 43,000 and 15,000 stock options, respectively, that would have been antidilutive.

The Hershey Company | Q3 2021 Form 10-Q | Page 31

5 unchanged sentences

A summary of the components of other (income) expense, net is as follows:

Three Months Ended Six Months Ended

July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020

Three Months Ended Nine Months Ended

October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020

Write-down of equity investments in partnerships qualifying for historic and renewable energy tax credits (see Note 8 )

10 unchanged sentences

The components of certain Consolidated Balance Sheet accounts are as follows:

July 4, 2021 December 31, 2020

October 3, 2021 December 31, 2020

Raw materials $ 403,374 $ 388,600

41 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements