What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-04 compared with 2022-07-28 · 215 added, 214 removed, 960 unchanged (31% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Net sales $ 2,728,153 $ 2,359,839 $ 7,766,956 $ 6,645,209

29 unchanged sentences

(in thousands)

For the Three Months Ended For the Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

For the Three Months Ended For the Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

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

19 unchanged sentences

(in thousands, except share data)

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

Current assets:

27 unchanged sentences

Common stock, shares issued:

163,439,248 at July 3, 2022 and 160,939,248 at December 31, 2021

163,439,248 at October 2, 2022 and 160,939,248 at December 31, 2021

163,439 160,939

Class B common stock, shares issued:

58,113,777 at July 3, 2022 and 60,613,777 at December 31, 2021

58,113,777 at October 2, 2022 and 60,613,777 at December 31, 2021

58,114 60,614

2 unchanged sentences

Treasury—common stock shares, at cost:

16,581,634 at July 3, 2022 and 15,444,011 at December 31, 2021

16,484,611 at October 2, 2022 and 15,444,011 at December 31, 2021

( 1,524,083 ) ( 1,195,376 )

7 unchanged sentences

(in thousands)

Six Months Ended

July 3, 2022 July 4, 2021

Nine Months Ended

October 2, 2022 October 3, 2021

Operating Activities

31 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 24,288 ( 6,057 )

Increase (decrease) in cash and cash equivalents, including cash classified as held for sale 10,456 ( 729,220 )

Decrease in cash and cash equivalents, including cash classified as held for sale ( 1,525 ) ( 479,905 )

Increase in cash and cash equivalents classified as held for sale — 11,434

Net increase (decrease) in cash and cash equivalents 10,456 ( 717,786 )

Net decrease in cash and cash equivalents ( 1,525 ) ( 468,471 )

Cash and cash equivalents, beginning of period 329,266 1,143,987

7 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended July 3, 2022 and July 4, 2021

For the Three Months Ended October 2, 2022 and October 3, 2021

(in thousands)

6 unchanged sentences

Stockholders’

Balance, April 3, 2022

Balance, July 3, 2022

$ — $ 163,439 $ 58,114 $ 1,258,091 $ 3,208,598 $ ( 1,528,121 ) $ ( 268,381 ) $ 2,891,740

6 unchanged sentences

( 54,743 ) ( 54,743 )

Conversion of Class B Common Stock into Common Stock 1,500 ( 1,500 ) —

Stock-based compensation 18,132 18,132

Exercise of stock options and incentive-based transactions 4,239 4,038 8,277

Repurchase of common stock ( 151,921 ) ( 151,921 )

Balance, July 3, 2022

Balance, October 2, 2022

$ — $ 163,439 $ 58,114 $ 1,280,462 $ 3,401,198 $ ( 1,524,083 ) $ ( 296,050 ) $ 3,083,080

5 unchanged sentences

Comprehensive

(Loss) Income 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 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

3 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months Ended July 3, 2022 and July 4, 2021

For the Nine Months Ended October 2, 2022 and October 3, 2021

(in thousands)

20 unchanged sentences

Repurchase of common stock ( 355,271 ) ( 355,271 )

Balance, July 3, 2022

Balance, October 2, 2022

$ — $ 163,439 $ 58,114 $ 1,280,462 $ 3,401,198 $ ( 1,524,083 ) $ ( 296,050 ) $ 3,083,080

21 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

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 3, 2022 may not be indicative of the results that may be expected for the year ending December 31, 2022 because of seasonal effects on our business.

Operating results for the quarter ended October 2, 2022 may not be indicative of the results that may be expected for the year ending December 31, 2022 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, 2021 (our “2021 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.

However, beginning in 2021 and continuing into 2022, ongoing strong demand for consumer goods and the effects of COVID-19 mitigation strategies have led to broad-based supply chain disruptions across the U.S.

However, beginning in 2021 and throughout 2022, ongoing strong demand for consumer goods and the effects of COVID-19 mitigation strategies have led to broad-based supply chain disruptions across the U.S.

and globally, including inflation on many consumer products, labor shortages and demand outpacing supply.

24 unchanged sentences

As a result, we intend to adopt the provisions of this ASU in the first quarter of 2023.

In September 2022, the FASB issued ASU No.

2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations .

This ASU requires a buyer in a supplier finance program to disclose qualitative and quantitative information about the program including the program’s nature, activity during the period, changes from period to period and potential magnitude.

ASU 2022-04 is effective for annual periods beginning after December 15, 2022 and interim periods within those annual periods.

A rollforward of obligations during the annual period, including the amount of obligations confirmed and obligations subsequently paid, is effective for annual periods beginning after December 15, 2023 with early adoption permitted.

This ASU should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively.

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

No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures.

7 unchanged sentences

Pretzels provides Hershey deep pretzel category and product expertise and the manufacturing capabilities to support brand growth and future pretzel innovation.

The initial cash consideration paid for Pretzels totaled $ 304,334 and consisted of cash on hand and short-term borrowings.

The cash consideration paid for Pretzels totaled $ 304,334 and consisted of cash on hand and short-term borrowings.

Acquisition-related costs for the Pretzels acquisition were immaterial.

The Hershey Company | Q3 2022 Form 10-Q | Page 9

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The acquisition has been accounted for as a business combination and, accordingly, Pretzels has been included within the North America Salty Snacks segment from the date of acquisition.

The purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values as follows:

Initial Allocation (1) Adjustments Updated Allocation

Initial Allocation (1) Adjustments Final Allocation

Goodwill $ 165,301 $ 890 $ 166,191

8 unchanged sentences

(1) As reported in the Company’s 2021 Annual Report on Form 10-K.

The Hershey Company | Q2 2022 Form 10-Q | Page 9

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The purchase price allocation presented above is preliminary.

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

We are in the process of evaluating additional information necessary to finalize the valuation of assets acquired and liabilities assumed as of the acquisition date including, but not limited to, post-closing adjustments to the working capital acquired including certain holdbacks.

The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation, including other intangible assets, goodwill and the related tax impact of such adjustments.

We expect to finalize the purchase price allocation by the end of the third quarter of 2022.

The purchase price allocation presented above has been finalized as of the third quarter of 2022.

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

A portion 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 Pretzels’ products.

A portion of goodwill derived from this acquisition is 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 Pretzels’ products.

Other intangible assets include trademarks valued at $ 5,700 and customer relationships valued at $ 20,400 .

3 unchanged sentences

Dot’s is the fastest-growing scale brand in the pretzel category and complements Hershey’s snacks portfolio.

The initial cash consideration paid for Dot’s totaled $ 894,166 and consisted of cash on hand and short-term borrowings.

The cash consideration paid for Dot’s totaled $ 891,169 and consisted of cash on hand and short-term borrowings.

Acquisition-related costs for the Dot’s acquisition were immaterial.

The Hershey Company | Q3 2022 Form 10-Q | Page 10

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The acquisition has been accounted for as a business combination and, accordingly, Dot’s has been included within the North America Salty Snacks segment from the date of acquisition.

The purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values as follows:

Initial Allocation (1) Adjustments Updated Allocation

Initial Allocation (1) Adjustments Final Allocation

Goodwill $ 303,345 $ ( 18,918 ) $ 284,427

6 unchanged sentences

(1) As reported in the Company’s 2021 Annual Report on Form 10-K.

The purchase price allocation presented above is preliminary.

The measurement period adjustments, specifically to other intangible assets and resulting impact on the valuation of goodwill, are principally related to the refinement of certain assumptions in the value of customer relationships based on an analysis of historical customer-specific data.

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

The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation, including other intangible assets and goodwill.

We expect to finalize the purchase price allocation by the end of the third quarter of 2022.

The Hershey Company | Q2 2022 Form 10-Q | Page 10

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The purchase price allocation presented above has been finalized as of the third quarter of 2022.

The measurement period adjustments to the initial allocation were based on more detailed information obtained about the specific assets acquired and liabilities assumed, specifically, the refinement of certain assumptions in the value of customer relationships based on an analysis of historical customer-specific data and post-closing adjustments to the working capital acquired including certain holdbacks.

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 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 Dot’s products.

The goodwill derived from this acquisition is 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 Dot’s products.

Other intangible assets include trademarks valued at $ 336,600 and customer relationships valued at $ 206,500 .

8 unchanged sentences

Acquisition-related costs for the Lily’s acquisition were immaterial.

The Hershey Company | Q3 2022 Form 10-Q | Page 11

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The acquisition has been accounted for as a business combination and, accordingly, Lily’s has been included within the North America Confectionery segment from the date of acquisition.

9 unchanged sentences

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 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.

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

3 unchanged sentences

Total proceeds from the divestiture and the impact on our consolidated financial statements were immaterial and were recorded in the SM&A expense caption within the Consolidated Statements of Income.

The Hershey Company | Q2 2022 Form 10-Q | Page 11

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying value of goodwill by reportable segment for the six months ended July 3, 2022 are as follows:

The changes in the carrying value of goodwill by reportable segment for the nine months ended October 2, 2022 are as follows:

North America Confectionery North America Salty Snacks International Total

4 unchanged sentences

Foreign currency translation ( 9,733 ) — ( 524 ) ( 10,257 )

Balance at July 3, 2022

Balance at October 2, 2022

$ 2,016,273 $ 571,770 $ 16,846 $ 2,604,889

The Hershey Company | Q3 2022 Form 10-Q | Page 12

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

8 unchanged sentences

$ 1,985,099 $ 2,037,588

Total amortization expense for the three months ended July 3, 2022 and July 4, 2021 was $ 20,060 and $ 11,635 , respectively.

Total amortization expense for the six months ended July 3, 2022 and July 4, 2021 was $ 39,918 and $ 23,256 , respectively.

Total amortization expense for the three months ended October 2, 2022 and October 3, 2021 was $ 19,909 and $ 13,936 , respectively.

Total amortization expense for the nine months ended October 2, 2022 and October 3, 2021 was $ 59,827 and $ 37,192 , respectively.

In 2022, our amortization expense increased as a result of our 2021 business combination activity (see Note 2 ).

6 unchanged sentences

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

As of July 3, 2022, 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 2, 2022, 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 2021 Annual Report on Form 10-K.

The Hershey Company | Q2 2022 Form 10-Q | Page 12

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

In addition to the revolving credit facility, we maintain lines of credit with domestic and international commercial banks.

1 unchanged sentence

Short-term debt consisted of the following:

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

Short-term foreign bank borrowings against lines of credit $ 130,343 $ 119,038

2 unchanged sentences

Weighted average interest rate on outstanding commercial paper 3.0 % 0.1 %

The Hershey Company | Q3 2022 Form 10-Q | Page 13

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Long-term Debt

2 unchanged sentences

Maturity Date

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

2.625 % Notes

30 unchanged sentences

Net interest expense consists of the following:

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Interest expense $ 38,520 $ 33,066 $ 109,526 $ 106,597

Capitalized interest ( 2,487 ) ( 2,380 ) ( 6,155 ) ( 7,181 )

( 1,833 ) ( 3,084 ) ( 3,668 ) ( 4,801 )

Interest expense

17 unchanged sentences

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

Our open commodity derivative contracts had a notional value of $ 479,441 as of July 3, 2022 and $ 313,200 as of December 31, 2021.

Our open commodity derivative contracts had a notional value of $ 679,205 as of October 2, 2022 and $ 313,200 as of December 31, 2021.

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 $ 111,898 at July 3, 2022 and $ 94,623 at December 31, 2021.

The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $ 33,002 at October 2, 2022 and $ 94,623 at December 31, 2021.

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 $ 358 at July 3, 2022 and $ 2,993 at December 31, 2021.

The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $ 537 at October 2, 2022 and $ 2,993 at December 31, 2021.

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

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 3, 2022 and December 31, 2021 was $ 23,934 and $ 24,975 , respectively.

The notional amount of the contracts outstanding at October 2, 2022 and December 31, 2021 was $ 19,768 and $ 24,975 , respectively.

The Hershey Company | Q3 2022 Form 10-Q | Page 15

2 unchanged sentences

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

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of July 3, 2022 and December 31, 2021:

July 3, 2022 December 31, 2021

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of October 2, 2022 and December 31, 2021:

October 2, 2022 December 31, 2021

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 3, 2022, amounts reflected on a net basis in liabilities were assets of $ 44,546 and liabilities of $ 50,192 , 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 2, 2022, amounts reflected on a net basis in liabilities were assets of $ 44,502 and liabilities of $ 39,740 , 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 liabilities at December 31, 2021 were assets of $ 31,774 and liabilities of $ 32,701 .

At July 3, 2022 and December 31, 2021, the remaining amount reflected in assets and liabilities related to the fair value of other non-exchange traded derivative instruments, respectively.

At October 2, 2022 and December 31, 2021, the remaining amount reflected in assets and liabilities related to the fair value of other non-exchange traded derivative instruments, respectively.

Income Statement Impact of Derivative Instruments

The effect of derivative instruments on the Consolidated Statements of Income for the three months ended July 3, 2022 and July 4, 2021 was as follows:

The effect of derivative instruments on the Consolidated Statements of Income for the three months ended October 2, 2022 and October 3, 2021 was as follows:

Non-designated Hedges Cash Flow Hedges

13 unchanged sentences

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

The effect of derivative instruments on the Consolidated Statements of Income for the six months ended July 3, 2022 and July 4, 2021 was as follows:

The effect of derivative instruments on the Consolidated Statements of Income for the nine months ended October 2, 2022 and October 3, 2021 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 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 $ 8,048 as of July 3, 2022.

This amount is primarily associated with interest rate swap agreements.

9 unchanged sentences

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

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 3, 2022 and December 31, 2021:

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 2, 2022 and December 31, 2021:

Assets (Liabilities)

Level 1 Level 2 Level 3 Total

July 3, 2022:

October 2, 2022:

Derivative Instruments:

14 unchanged sentences

(3) The fair value of commodities futures and options contracts is based on quoted market prices.

The Hershey Company | Q2 2022 Form 10-Q | Page 17

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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 3, 2022 and December 31, 2021 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 2, 2022 and December 31, 2021 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 3, 2022 December 31, 2021 July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021 October 2, 2022 December 31, 2021

Current portion of long-term debt $ 745,579 $ 2,844 $ 752,201 $ 2,844

1 unchanged sentence

Total $ 3,573,553 $ 4,277,148 $ 4,092,872 $ 4,089,471

The Hershey Company | Q3 2022 Form 10-Q | Page 18

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Other Fair Value Measurements

1 unchanged sentence

In connection with the acquisitions of Pretzels, Dot’s and Lily’s during 2021, as discussed in Note 2 , we used various valuation techniques to determine fair value, with the primary techniques being discounted cash flow analysis and the relief-from-royalty, 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 3, 2022 and July 4, 2021, we recorded no impairment charges.

During the nine months ended October 2, 2022 and October 3, 2021, we recorded no impairment charges.

We lease office and retail space, warehouse and distribution facilities, land, vehicles, and equipment.

12 unchanged sentences

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

The Hershey Company | Q2 2022 Form 10-Q | Page 18

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The components of lease expense for the three months ended July 3, 2022 and July 4, 2021 were as follows:

The components of lease expense for the three months ended October 2, 2022 and October 3, 2021 were as follows:

Three Months Ended

Lease expense Classification July 3, 2022 July 4, 2021

Lease expense Classification October 2, 2022 October 3, 2021

Operating lease cost Cost of sales or SM&A (1) $ 11,812 $ 10,764

3 unchanged sentences

Net lease cost (2) $ 14,381 $ 13,835

The components of lease expense for the six months ended July 3, 2022 and July 4, 2021 were as follows:

Six Months Ended

Lease expense Classification July 3, 2022 July 4, 2021

The Hershey Company | Q3 2022 Form 10-Q | Page 19

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The components of lease expense for the nine months ended October 2, 2022 and October 3, 2021 were as follows:

Nine Months Ended

Lease expense Classification October 2, 2022 October 3, 2021

Operating lease cost Cost of sales or SM&A (1) $ 37,309 $ 33,318

6 unchanged sentences

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

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases 6.1 % 6.1 %

The Hershey Company | Q2 2022 Form 10-Q | Page 19

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Supplemental balance sheet information related to leases were as follows:

Leases Classification July 3, 2022 December 31, 2021

Leases Classification October 2, 2022 December 31, 2021

Operating lease ROU assets Other non-current assets $ 328,098 $ 351,712

8 unchanged sentences

Total lease liabilities $ 396,828 $ 416,337

The maturity of our lease liabilities as of July 3, 2022 were as follows:

The Hershey Company | Q3 2022 Form 10-Q | Page 20

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The maturity of our lease liabilities as of October 2, 2022 were as follows:

Operating leases Finance leases Total

9 unchanged sentences

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

Six Months Ended

July 3, 2022 July 4, 2021

Nine Months Ended

October 2, 2022 October 3, 2021

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

5 unchanged sentences

Finance leases 4,192 436

The Hershey Company | Q2 2022 Form 10-Q | Page 20

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

INVESTMENTS IN UNCONSOLIDATED AFFILIATES

8 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 were $ 139,731 and $ 93,089 as of July 3, 2022 and December 31, 2021, respectively.

Total investments in unconsolidated affiliates were $ 132,226 and $ 93,089 as of October 2, 2022 and December 31, 2021, respectively.

The Hershey Company | Q3 2022 Form 10-Q | Page 21

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Cost of sales $ ( 1 ) $ 213 $ 3 $ 5,250

2 unchanged sentences

Costs associated with business realignment activities $ 393 $ 3,397 $ 2,373 $ 13,793

Costs recorded by program during the three and six months ended July 3, 2022 and July 4, 2021 related to these activities were as follows:

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Costs recorded by program during the three and nine months ended October 2, 2022 and October 3, 2021 related to these activities were as follows:

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

International Optimization Program:

2 unchanged sentences

Total $ 393 $ 3,397 $ 2,373 $ 13,793

Amounts classified as liabilities qualifying as exit and disposal costs primarily represent employee-related and certain third-party service provider charges, however, such amounts at July 3, 2022 are not significant.

2020 International Optimization Program

In the fourth quarter of 2020, we commenced a program (“International Optimization Program”) to streamline resources and investments in select international markets, including the optimization of our China operating model that will improve our operational efficiency and provide for a strong, sustainable and simplified base going forward.

The International Optimization Program is expected to be completed in early 2023, with total pre-tax costs anticipated to be $ 50,000 to $ 75,000 .

The International Optimization Program is expected to be completed by the end of 2023, with total pre-tax costs anticipated to be $ 50,000 to $ 75,000 .

Cash costs are expected to be $ 40,000 to $ 65,000 , primarily related to workforce reductions of approximately 350 positions outside of the United States, costs to consolidate and relocate production, and third-party costs incurred to execute these activities.

The costs and related benefits of the International Optimization

The costs and related benefits of the International Optimization Program relate to the International segment.

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

For the nine months ended October 2, 2022 and October 3, 2021, we recognized total costs associated with the International Optimization Program of $ 2,373 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.

Since inception, we have incurred pre-tax charges to execute the program totaling $ 48,315 .

The Hershey Company | Q3 2022 Form 10-Q | Page 22

2 unchanged sentences

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

Program relate to the International segment.

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

For the six months ended July 3, 2022 and July 4, 2021, we recognized total costs associated with the International Optimization Program of $ 1,980 and $ 10,396 , 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.

Since inception, we have incurred pre-tax charges to execute the program totaling $ 47,922 .

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 3, 2022 and July 4, 2021 were 21.4 % and 25.1 %, respectively.

Relative to the statutory rate, the 2022 effective tax rate was impacted by state taxes, tax reserves and unfavorable foreign rate differential, partially offset by investment tax credits and the benefit of employee share-based payments.

The effective tax rates for the nine months ended October 2, 2022 and October 3, 2021 were 19.7 % and 21.4 %, respectively.

Relative to the statutory rate, the 2022 effective tax rate was impacted by investment tax credits, partially offset by state taxes.

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

4 unchanged sentences

We reasonably expect reductions in the liability for unrecognized tax benefits of approximately $ 15,220 within the next 12 months because of the expiration of statutes of limitations and settlements of tax audits.

Inflation Reduction Act

On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law.

The IRA enacted a 15% corporate minimum tax on certain corporations and an excise tax on share repurchases after December 31, 2022, and created and extended certain energy-related tax credits and incentives.

We currently do not expect the tax-related provisions of the IRA to have a material impact on our consolidated financial statements, including our annual effective tax rate, or on our liquidity.

We will continue to monitor and assess the impact the IRA may have on our business and financial results.

American Rescue Plan Act

1 unchanged sentence

The ARPA strengthens and extends certain federal programs enacted through the Coronavirus Aid, Relief, and Economic Security (“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 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.

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

The Hershey Company | Q3 2022 Form 10-Q | Page 23

4 unchanged sentences

Net Periodic Benefit Cost

The components of net periodic benefit cost for the three months ended July 3, 2022 and July 4, 2021 were as follows:

The components of net periodic benefit cost for the three months ended October 2, 2022 and October 3, 2021 were as follows:

Pension Benefits Other Benefits

Three Months Ended Three Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Service cost $ 4,028 $ 5,256 $ 80 $ 45

5 unchanged sentences

Total net periodic benefit cost $ 7,743 $ 6,249 $ 1,260 $ 1,009

We made contributions of $ 289 and $ 5,584 to the pension plans and other benefits plans, respectively, during the second quarter of 2022.

In the second quarter of 2021, we made contributions of $ 325 and $ 4,000 to our pension plans and other benefit plans, respectively.

We made contributions of $ 824 and $ 1,484 to the pension plans and other benefits plans, respectively, during the third quarter of 2022.

In the third quarter of 2021, we made contributions of $ 25,711 and $ 3,527 to our pension plans and other benefit plans, respectively.

The contributions in 2022 and 2021 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 3, 2022 and July 4, 2021 were as follows:

The components of net periodic benefit cost for the nine months ended October 2, 2022 and October 3, 2021 were as follows:

Pension Benefits Other Benefits

Six Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Nine Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Service cost $ 13,639 $ 16,178 $ 238 $ 135

5 unchanged sentences

Total net periodic benefit cost $ 17,557 $ 17,074 $ 3,782 $ 3,028

We made contributions of $ 3,756 and $ 10,575 to the pension plans and other benefits plans, respectively, during the first six months of 2022.

In the first six months of 2021, we made contributions of $ 1,183 and $ 8,155 to our pension plans and other benefit plans, respectively.

We made contributions of $ 4,580 and $ 12,059 to the pension plans and other benefits plans, respectively, during the first nine months of 2022.

In the first nine months of 2021, we made contributions of $ 26,894 and $ 11,682 to our pension plans and other benefit plans, respectively.

The contributions in 2022 and 2021 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans.

The non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans is reflected within other (income) expense, net in the Consolidated Statements of Income (see Note 17 ).

During the first six months of 2022, 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 2022 settlements, the related plan assets and liabilities were remeasured using a discount rate as of the remeasurement date that was 204 basis points higher than the rate as of December 31, 2021 and an expected rate of return on plan assets of 5.8 %.

The Hershey Company | Q3 2022 Form 10-Q | Page 24

2 unchanged sentences

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

During the first nine months of 2022, 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.

In connection with the third quarter 2022 settlements, the related plan assets and liabilities were remeasured using a discount rate as of the remeasurement date that was 288 basis points higher than the rate as of December 31, 2021 and an expected rate of return on plan assets of 5.8 %.

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 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

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 3, 2022, total stock-based compensation expense related to non-vested awards not yet recognized was $ 102,149 and the weighted-average period over which this amount is expected to be recognized was approximately 2.0 years.

As of October 2, 2022, total stock-based compensation expense related to non-vested awards not yet recognized was $ 93,265 and the weighted-average period over which this amount is expected to be recognized was approximately 1.8 years.

The Hershey Company | Q3 2022 Form 10-Q | Page 25

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Stock Options

3 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.

The Hershey Company | Q2 2022 Form 10-Q | Page 24

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

A summary of activity relating to grants of stock options for the period ended July 3, 2022 is as follows:

A summary of activity relating to grants of stock options for the period ended October 2, 2022 is as follows:

Stock Options Shares Weighted-Average

6 unchanged sentences

Expired ( 1,873 ) $ 103.07

Outstanding as of July 3, 2022

Outstanding as of October 2, 2022

1,016,000 $ 104.53 4.0 years $ 117,793

Options exercisable as of July 3, 2022

Options exercisable as of October 2, 2022

978,507 $ 102.65 3.8 years $ 115,291

The weighted-average fair value of options granted was $ 37.28 and $ 24.12 per share for the periods ended July 3, 2022 and July 4, 2021, respectively.

The weighted-average fair value of options granted was $ 37.28 and $ 24.12 per share for the periods ended October 2, 2022 and October 3, 2021, 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 3, 2022 July 4, 2021

Nine Months Ended

October 2, 2022 October 3, 2021

Dividend yields

2 unchanged sentences

Expected term in years 6.3 6.3

The total intrinsic value of options exercised was $ 24,870 and $ 21,453 for the periods ended July 3, 2022 and July 4, 2021, respectively.

The total intrinsic value of options exercised was $ 36,362 and $ 28,416 for the periods ended October 2, 2022 and October 3, 2021, respectively.

Performance Stock Units and Restricted Stock Units

7 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 3, 2022 and July 4, 2021 can range from 0 % to 250 % of the targeted amounts.

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 3, 2022 and July 4, 2021, we awarded RSUs to certain executive officers and other key employees under the EICP.

We also awarded RSUs to non-employee directors.

The performance scores of PSU grants during the nine months ended October 2, 2022 and October 3, 2021 can range from 0 % to 250 % of the targeted amounts.

The Hershey Company | Q3 2022 Form 10-Q | Page 26

2 unchanged sentences

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

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.

During the nine months ended October 2, 2022 and October 3, 2021, we awarded RSUs to certain executive officers and other key employees under the EICP.

We also awarded RSUs to non-employee directors.

We recognize the compensation expenses associated with employee RSUs over a specified award vesting period based on the grant date fair value of our Common Stock.

1 unchanged sentence

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 3, 2022 is as follows:

A summary of activity relating to grants of PSUs and RSUs for the period ended October 2, 2022 is as follows:

Performance Stock Units and Restricted Stock Units

7 unchanged sentences

( 27,016 ) $ 163.35

Outstanding as of July 3, 2022

Outstanding as of October 2, 2022

1,181,622 $ 182.34

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 3, 2022 July 4, 2021

Nine Months Ended

October 2, 2022 October 3, 2021

Units granted

6 unchanged sentences

Expected volatility 25.3 % 26.4 %

The fair value of shares vested totaled $ 100,292 and $ 46,352 for the periods ended July 3, 2022 and July 4, 2021, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 264,911 units as of July 3, 2022.

The fair value of shares vested totaled $ 103,081 and $ 50,361 for the periods ended October 2, 2022 and October 3, 2021, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 265,359 units as of October 2, 2022.

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

The Hershey Company | Q3 2022 Form 10-Q | Page 27

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

SEGMENT INFORMATION

10 unchanged sentences

This includes ready-to-eat popcorn, baked and trans fat free snacks, pretzels and other snacks.

The Hershey Company | Q2 2022 Form 10-Q | Page 26

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

• International – International is a combination of all other operating segments that are not individually material, including those geographic regions where we operate outside of North America.

9 unchanged sentences

We disclose depreciation and amortization that is generated by segment-specific assets, since these amounts are included within the measure of segment income reported to the CODM.

The Hershey Company | Q3 2022 Form 10-Q | Page 28

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Our segment net sales and earnings were as follows:

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

North America Confectionery $ 2,235,550 $ 2,024,243 $ 6,361,695 $ 5,700,031

17 unchanged sentences

Income before income taxes $ 473,085 $ 521,673 $ 1,553,949 $ 1,454,283

The Hershey Company | Q2 2022 Form 10-Q | Page 27

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

distribution and manufacturing, information systems and global shared services, (c) non-cash stock-based compensation expense, (d) acquisition-related costs, and (e) other gains or losses that are not integral to segment performance.

(1) Includes centrally-managed (a) corporate functional costs relating to legal, treasury, finance, and human resources, (b) expenses associated with the oversight and administration of our global operations, including warehousing, distribution and manufacturing, information systems and global shared services, (c) non-cash stock-based compensation expense, (d) acquisition-related costs, and (e) other gains or losses that are not integral to segment performance.

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

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Net losses (gains) on mark-to-market valuation of commodity derivative positions recognized in income $ 14,044 $ ( 33,643 ) $ ( 28,027 ) $ ( 64,199 )

1 unchanged sentence

Net losses (gains) on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses $ 50,065 $ ( 18,468 ) $ 63,524 $ ( 24,137 )

As of July 3, 2022, 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 $ 73,456 .

As of October 2, 2022, 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 $ 23,389 .

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 $ 32,656 to segment operating results in the next twelve months.

The Hershey Company | Q3 2022 Form 10-Q | Page 29

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

North America Confectionery $ 56,678 $ 53,124 $ 170,025 $ 157,313

4 unchanged sentences

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

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

United States $ 2,392,590 $ 2,017,378 $ 6,793,283 $ 5,681,498

1 unchanged sentence

Total $ 2,728,153 $ 2,359,839 $ 7,766,956 $ 6,645,209

The Hershey Company | Q2 2022 Form 10-Q | Page 28

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

TREASURY STOCK ACTIVITY

A summary of our treasury stock activity is as follows:

Six Months Ended July 3, 2022

Nine Months Ended October 2, 2022

Shares Dollars

6 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 3, 2022, $ 109,983 remained available for repurchases of our Common Stock under this program.

As of October 2, 2022, $ 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.

3 unchanged sentences

Purchases under approved share repurchase authorizations are in addition to our practice of buying back shares sufficient to offset those issued under incentive compensation plans.

The Hershey Company | Q3 2022 Form 10-Q | Page 30

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

CONTINGENCIES

On February 12, 2021, Issouf Coubaly, individually and on behalf of proposed class members, filed a complaint (Coubaly v.

Nestlé U.S.A.

et al., 1:21-cv-00386-DLF (D.D.C.

12, 2021)) in the District Court of the District of Columbia, seeking injunctive relief and unspecified damages for alleged violations of child labor and human trafficking laws under the Trafficking Victims Protection Reauthorization Act.

The Company was among several defendants named in the suit.

The defendants filed a joint motion to dismiss the case on July 30, 2021, and on June 28, 2022, the District Court granted the motion and dismissed the case without prejudice.

On July 22, 2022, the plaintiffs filed an appeal in the U.S.

Court of Appeals for the District of Columbia challenging the dismissal of the case.

The Company continues to believe that the suit, including the appeal, is without merit and is defending vigorously against the appeal.

In addition to the above-referenced matter, the Company is subject to certain legal proceedings and claims arising out of the ordinary course of our business, which cover a wide range of matters including trade regulation, product liability, advertising, contracts, environmental issues, patent and trademark matters, labor and employment matters, human and workplace rights matters and tax.

The Company is subject to certain legal proceedings and claims arising out of the ordinary course of our business, which cover a wide range of matters including trade regulation, product liability, advertising, contracts, environmental issues, patent and trademark matters, labor and employment matters, human and workplace rights matters and tax.

While it is not feasible to predict or determine the outcome of such proceedings and claims with certainty, in our opinion these matters, both individually and in the aggregate, are not expected to have a material effect on our financial condition, results of operations or cash flows.

9 unchanged sentences

Three Months Ended

July 3, 2022 July 4, 2021

October 2, 2022 October 3, 2021

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

19 unchanged sentences

Earnings Per Share—diluted $ 1.94 $ 1.81 $ 2.14 $ 2.01

The earnings per share calculations for the three months ended July 3, 2022 and July 4, 2021 excluded 4 and 43 stock options (in thousands), respectively, that would have been antidilutive.

The earnings per share calculations for the three months ended October 2, 2022 excluded 4 stock options (in thousands), that would have been antidilutive.

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

The Hershey Company | Q3 2022 Form 10-Q | Page 32

2 unchanged sentences

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

Six Months Ended

July 3, 2022 July 4, 2021

Nine Months Ended

October 2, 2022 October 3, 2021

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

19 unchanged sentences

Earnings Per Share—diluted $ 6.04 $ 5.65 $ 5.49 $ 5.14

The earnings per share calculations for the six months ended July 3, 2022 and July 4, 2021 excluded 4 and 43 stock options (in thousands), respectively, that would have been antidilutive.

The earnings per share calculations for the nine months ended October 2, 2022 and October 3, 2021 excluded 4 and 43 stock options (in thousands), respectively, that would have been antidilutive.

The Hershey Company | Q3 2022 Form 10-Q | Page 33

5 unchanged sentences

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

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

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

10 unchanged sentences

Most transactions with these related parties are immaterial and do not require disclosure, but certain transactions are more significant in nature and have been deemed material for disclosure.

A summary of material related party transactions with Hershey Trust Company and/or its affiliates for the six months ended July 3, 2022 is as follows:

A summary of material related party transactions with Hershey Trust Company and/or its affiliates for the nine months ended October 2, 2022 is as follows:

Sale and Donation of Property, Plant and Equipment

13 unchanged sentences

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

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

Raw materials $ 360,789 $ 395,358

42 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