What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-03 compared with 2023-10-26 · 179 added, 369 removed, 782 unchanged (41% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

Net sales $ 3,252,749 $ 2,987,614

26 unchanged sentences

(in thousands)

For the Three Months Ended For the Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

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

For the Three Months Ended

March 31, 2024 April 2, 2023

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

Net income $ 797,453 $ 587,185

15 unchanged sentences

(in thousands, except share data)

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

27 unchanged sentences

Common stock, shares issued:

166,938,702 at October 1, 2023 and 163,439,248 at December 31, 2022

166,939,511 at March 31, 2024 and December 31, 2023

166,939 166,939

Class B common stock, shares issued:

54,613,514 at October 1, 2023 and 58,113,777 at December 31, 2022

54,613,514 at March 31, 2024 and December 31, 2023

54,614 54,614

2 unchanged sentences

Treasury—common stock shares, at cost:

17,063,009 at October 1, 2023 and 16,588,308 at December 31, 2022

19,332,210 at March 31, 2024 and 17,160,099 at December 31, 2023

( 2,285,370 ) ( 1,800,232 )

7 unchanged sentences

(in thousands)

Nine Months Ended

October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

Operating Activities

5 unchanged sentences

Write-down of equity investments 31,391 —

Unrealized gains on derivative contracts ( 269,582 ) —

Other 19,923 22,347

11 unchanged sentences

Equity investments in tax credit qualifying partnerships ( 13,944 ) ( 12,309 )

Business acquisitions, net of cash and cash equivalents acquired ( 165,818 ) —

Other investing activities ( 321 ) 85

2 unchanged sentences

Net increase (decrease) in short-term debt 569,809 ( 90,700 )

Long-term borrowings, net of debt issuance costs 744,092 —

Repayment of long-term debt and finance leases ( 1,568 ) ( 1,187 )

14 unchanged sentences

The Hershey Company | Q1 2024 Form 10-Q | Page 5

HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended October 1, 2023 and October 2, 2022

(in thousands)

Stock Class B

Stock Additional

Capital Retained

Earnings Treasury

Stock Accumulated Other

Comprehensive

Stockholders’

Balance, July 2, 2023

$ — $ 166,939 $ 54,614 $ 1,301,247 $ 4,171,010 $ ( 1,777,984 ) $ ( 221,041 ) $ 3,694,785

Net income 518,577 518,577

Other comprehensive loss ( 29,606 ) ( 29,606 )

Dividends (including dividend equivalents):

Common Stock, $ 1.192 per share

( 178,978 ) ( 178,978 )

Class B Common Stock, $ 1.083 per share

( 59,146 ) ( 59,146 )

Conversion of Class B Common Stock into Common Stock — — —

Stock-based compensation 20,884 20,884

Exercise of stock options and incentive-based transactions ( 598 ) 1,705 1,107

Repurchase of common stock (including excise tax) 17 17

Balance, October 1, 2023

$ — $ 166,939 $ 54,614 $ 1,321,533 $ 4,451,463 $ ( 1,776,262 ) $ ( 250,647 ) $ 3,967,640

Stock Class B

Stock Additional

Capital Retained

Earnings Treasury

Stock Accumulated Other

Comprehensive

Stockholders’

Balance, July 3, 2022

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

Net income 399,487 399,487

Other comprehensive loss ( 27,669 ) ( 27,669 )

Dividends (including dividend equivalents):

Common Stock, $ 1.036 per share

( 152,144 ) ( 152,144 )

Class B Common Stock, $ 0.942 per share

( 54,743 ) ( 54,743 )

Stock-based compensation 18,132 18,132

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

Balance, October 2, 2022

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

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q3 2023 Form 10-Q | Page 6

THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended October 1, 2023 and October 2, 2022

For the Three Months Ended March 31, 2024 and April 2, 2023

(in thousands)

10 unchanged sentences

Net income 797,453 797,453

Other comprehensive income 1,686 1,686

Other comprehensive loss ( 757 ) ( 757 )

Dividends (including dividend equivalents):

3 unchanged sentences

( 67,994 ) ( 67,994 )

Conversion of Class B Common Stock into Common Stock 3,500 ( 3,500 ) —

Stock-based compensation 6,390 6,390

1 unchanged sentence

Repurchase of common stock (including excise tax) ( 498,994 ) ( 498,994 )

Balance, October 1, 2023

Balance, March 31, 2024

$ — $ 166,939 $ 54,614 $ 1,315,813 $ 5,087,126 $ ( 2,285,370 ) $ ( 230,835 ) $ 4,108,287

10 unchanged sentences

Net income 587,185 587,185

Other comprehensive loss ( 46,835 ) ( 46,835 )

Other comprehensive income 14,326 14,326

Dividends (including dividend equivalents):

6 unchanged sentences

Exercise of stock options and incentive-based transactions ( 30,108 ) 17,013 ( 13,095 )

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

Balance, October 2, 2022

Repurchase of common stock (including excise tax) ( 242,139 ) ( 242,139 )

Balance, April 2, 2023

$ — $ 164,439 $ 57,114 $ 1,285,412 $ 3,970,562 $ ( 1,781,155 ) $ ( 238,007 ) $ 3,458,365

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 October 1, 2023 may not be indicative of the results that may be expected for the year ending December 31, 2023 because of seasonal effects on our business.

Operating results for the quarter ended March 31, 2024 may not be indicative of the results that may be expected for the year ending December 31, 2024 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, 2023 (our “2023 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.

1 unchanged sentence

Recently Adopted Accounting Pronouncements

In September 2022, the FASB issued ASU No.

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

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

4 unchanged sentences

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.

We early adopted provisions of this ASU in the fourth quarter of 2022, with the exception of the amendment on rollforward information, which will be adopted in the fourth quarter of 2023.

As a result of the adoption of this new standard, we made the required disclosures in the consolidated financial statements.

We early adopted provisions of this ASU in the fourth quarter of 2022, with the exception of the amendment on rollforward information, which we adopted in the fourth quarter of 2023.

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

In October 2021, the FASB issued ASU No.

5 unchanged sentences

As a result, we adopted the provisions of this ASU in the first quarter of 2023.

This new standard was not applicable to the May 2023 acquisition (as discussed in Note 2 );

This new standard was not applicable to the May 2023 acquisition of Weaver Popcorn Manufacturing, Inc.

(“Weaver”) due to no contract assets or liabilities (as discussed in Note 2 );

however, will be applied in relevant future acquisitions.

4 unchanged sentences

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2023, the FASB issued ASU No.

2023-02, Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in tax credit structures using the proportional amortization method.

This ASU allows entities to elect the proportional amortization method for all tax equity investments, regardless of how the tax credits are received as long as certain criteria are met.

This ASU may be applied in a modified retrospective or retrospective basis and an entity must evaluate the investments in which it still expects to receive tax credits or other income tax benefits as of the beginning of the earliest period presented.

ASU 2023-02 is effective for annual periods beginning after December 15, 2023 and interim periods within those annual periods.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This ASU requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), an amount for other segment items with a description of the composition, and disclosure of the title and position of the CODM.

ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted and the update should be applied retrospectively to each period presented in the financial statements.

We are currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures.

As a result, we intend to adopt the provisions of this ASU in the fourth quarter of 2024.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This ASU requires public business entities on an annual basis to disclose specific categories in a tabular rate reconciliation and provide additional information for reconciling items that meet a five percent quantitative threshold.

Additionally, the ASU requires all entities to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes, as well as individual jurisdictions where income taxes paid are equal to or greater than five percent of total income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted and the update should be applied on a prospective basis, with a retrospective application permitted in the financial statements.

We are currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures.

As a result, we intend to adopt the provisions of this ASU in the fourth quarter of 2025.

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.

1 unchanged sentence

Manufacturing Capacity

On May 31, 2023, we completed the acquisition of certain assets that provide additional manufacturing capacity from Weaver Popcorn Manufacturing, Inc.

(“Weaver”), a leader in the production and co-packing of microwave popcorn and ready-to-eat popcorn, and former co-manufacturer of the Company’s SkinnyPop brand.

On May 31, 2023, we completed the acquisition of certain assets that provide additional manufacturing capacity from Weaver, a leader in the production and co-packing of microwave popcorn and ready-to-eat popcorn, and former co-manufacturer of the Company’s SkinnyPop brand.

The initial cash consideration paid for Weaver totaled $ 165,818 and consisted of cash on hand and short-term borrowings.

1 unchanged sentence

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

The preliminary purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values and consisted of $ 85,231 to goodwill, $ 79,136 to property, plant and equipment, net and $ 1,451 to other net 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.

The final fair value determination is not expected to result in material adjustments to our preliminary purchase price allocation, including goodwill.

We expect to finalize the purchase price allocation by the end of 2023.

The purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values and consisted of $ 85,231 to goodwill, $ 79,136 to property, plant and equipment, net and $ 1,451 to other net assets acquired.

The purchase price allocation has been finalized as of the fourth quarter of 2023 and did not include measurement period adjustments.

Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired.

The goodwill derived from this acquisition is deductible for tax purposes and reflects the value of leveraging our supply chain capabilities to accelerate growth and access to our portfolio of salty snacks products.

Pretzels Inc.

On December 14, 2021, we completed the acquisition of Pretzels Inc.

(“Pretzels”), previously a privately held company that manufactures and sells pretzels and other salty snacks for other branded products and private labels in the United States.

Pretzels is an industry leader in the pretzel category with a product portfolio that includes filled, gluten free and seasoned pretzels, as well as extruded snacks that complements Hershey’s snacks portfolio.

Based in Bluffton, Indiana, Pretzels operates three manufacturing locations in Indiana and Kansas.

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

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 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:

The Hershey Company | Q3 2023 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)

Goodwill $ 166,191

Other intangible assets 26,100

Current assets acquired 30,835

Property, plant and equipment, net 100,716

Other non-current assets, primarily operating lease ROU assets 111,787

Deferred income taxes 773

Current liabilities acquired ( 22,713 )

Other long-term liabilities, primarily operating lease liabilities ( 109,355 )

Net assets acquired $ 304,334

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 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 .

Trademarks were assigned an estimated useful life of five years and customer relationships were assigned an estimated useful life of 19 years.

Dot's Pretzels, LLC

On December 13, 2021, we completed the acquisition of Dot’s Pretzels, LLC (“Dot’s”), previously a privately held company that produces and sells pretzels and other snack food products to retailers and distributors in the United States, with Dot’s Homestyle Pretzels snacks as its primary product.

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

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 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:

The Hershey Company | Q3 2023 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)

Goodwill $ 284,427

Other intangible assets 543,100

Current assets acquired 51,121

Property, plant and equipment, net 40,266

Other non-current assets 2,201

Other liabilities assumed, primarily current liabilities ( 29,946 )

Net assets acquired $ 891,169

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 immaterial and 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 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 .

Trademarks were assigned an estimated useful life of 33 years and customer relationships were assigned an estimated useful life of 18 years.

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying value of goodwill by reportable segment for the nine months ended October 1, 2023 are as follows:

The changes in the carrying value of goodwill by reportable segment for the three months ended March 31, 2024 are as follows:

North America Confectionery North America Salty Snacks International Total

1 unchanged sentence

$ 2,020,831 $ 657,001 $ 18,218 $ 2,696,050

Acquired during the period (see Note 2 )

— 85,231 — 85,231

Foreign currency translation ( 2,379 ) — 250 ( 2,129 )

Balance at October 1, 2023

Balance at March 31, 2024

$ 2,018,452 $ 657,001 $ 18,468 $ 2,693,921

4 unchanged sentences

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

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

8 unchanged sentences

$ 1,859,052 $ 1,879,229

Total amortization expense for the three months ended October 1, 2023 and October 2, 2022 was $ 19,882 and $ 19,909 , respectively.

Total amortization expense for the nine months ended October 1, 2023 and October 2, 2022 was $ 59,620 and $ 59,827 , respectively.

Total amortization expense for the three months ended March 31, 2024 and April 2, 2023 was $ 19,554 and $ 19,177 , respectively.

SHORT AND LONG-TERM DEBT

5 unchanged sentences

The credit agreements governing the credit facility contain certain financial and other covenants, customary representations, warranties and events of default.

As of October 1, 2023, we were in compliance with all covenants pertaining to the credit facility, and we had no significant compensating balance agreements that legally restricted access to these funds.

As of March 31, 2024, we were in compliance with all covenants pertaining to the credit facility, and we had no significant compensating balance agreements that legally restricted access to these funds.

For more information, refer to the Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K.

2 unchanged sentences

Short-term debt consisted of the following:

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Short-term foreign bank borrowings against lines of credit $ 208,163 $ 192,278

10 unchanged sentences

Maturity Date

October 1, 2023 December 31, 2022

2.625 % Notes (1)

May 1, 2023 — 250,000

3.375 % Notes (1)

May 15, 2023 — 500,000

March 31, 2024 December 31, 2023

2.050 % Notes

28 unchanged sentences

Long-term portion $ 3,790,013 $ 3,789,132

(1) In May 2023, we repaid $ 250,000 of 2.625 % Notes and $ 500,000 of 3.375 % Notes due upon their maturity.

(2) During the second quarter of 2023, we issued $ 350,000 of 4.250 % Notes due in May 2028 and $ 400,000 of 4.500 % Notes due in May 2033 (the “2023 Notes”).

Proceeds from the issuance of the 2023 Notes, net of discounts and issuance costs, totaled $ 744,092 .

The 2023 Notes were issued under a shelf registration on Form S-3 filed in May 2021 that registered an indeterminate amount of debt securities.

Interest Expense

Net interest expense consists of the following:

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

Interest expense $ 46,044 $ 42,506

5 unchanged sentences

$ 39,822 $ 37,685

The Hershey Company | Q3 2023 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)

DERIVATIVE INSTRUMENTS

5 unchanged sentences

We do not expect any significant losses from counterparty defaults.

The Hershey Company | Q1 2024 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)

Commodity Price Risk

1 unchanged sentence

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

Our open commodity derivative contracts had a notional value of $ 155,320 as of October 1, 2023 and $ 243,009 as of December 31, 2022.

Our open commodity derivative contracts had a notional value of $ 206,349 as of March 31, 2024 and $ 94,917 as of December 31, 2023.

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 $ 76,824 at October 1, 2023 and $ 59,448 at December 31, 2022.

The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $ 50,648 at March 31, 2024 and $ 80,068 at December 31, 2023.

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 $ 19,172 at October 1, 2023 and $ 1,843 at December 31, 2022.

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.

The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $ 10,339 at March 31, 2024 and $ 13,665 at December 31, 2023.

The change in fair value on these instruments is recorded directly in cost of sales or selling, marketing and administrative (“SM&A”) expense, depending on the nature of the underlying exposure.

Interest Rate Risk

6 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 October 1, 2023 and December 31, 2022 was $ 23,641 and $ 18,803 , respectively.

The notional amount of the contracts outstanding at March 31, 2024 and December 31, 2023 was $ 25,004 and $ 22,867 , respectively.

The Hershey Company | Q1 2024 Form 10-Q | Page 11

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 October 1, 2023 and December 31, 2022:

October 1, 2023 December 31, 2022

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

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 October 1, 2023, amounts reflected on a net basis in liabilities were assets of $ 36,052 and liabilities of $ 36,023 , 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 March 31, 2024, amounts reflected on a net basis in liabilities were assets of $ 54,461 and liabilities of $ 52,990 , 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, 2023 were assets of $ 29,881 and liabilities of $ 30,493 .

At October 1, 2023 and December 31, 2022, the remaining amount reflected in assets and liabilities related to the fair value of other non-exchange traded derivative instruments, respectively.

At March 31, 2024 and December 31, 2023, 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 October 1, 2023 and October 2, 2022 was as follows:

Non-designated Hedges Cash Flow Hedges

Gains (losses) recognized in income (a) Gains (losses) recognized in other comprehensive income (“OCI”) Gains (losses) reclassified from accumulated OCI (“AOCI”) into income (b)

2023 2022 2023 2022 2023 2022

Commodities futures and options

$ 17,103 $ ( 14,044 ) $ — $ — $ — $ —

Foreign exchange contracts ( 583 ) ( 39 ) 2,945 891 ( 1,924 ) 421

Interest rate swap agreements

— — — — ( 2,274 ) ( 2,679 )

Deferred compensation derivatives

( 1,103 ) ( 1,098 ) — — — —

$ 15,417 $ ( 15,181 ) $ 2,945 $ 891 $ ( 4,198 ) $ ( 2,258 )

The Hershey Company | Q3 2023 Form 10-Q | Page 15

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The effect of derivative instruments on the Consolidated Statements of Income for the nine months ended October 1, 2023 and October 2, 2022 was as follows:

The effect of derivative instruments on the Consolidated Statements of Income for the three months ended March 31, 2024 and April 2, 2023 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 $ 17,930 as of October 1, 2023.

The Hershey Company | Q1 2024 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)

This amount is primarily associated with interest rate swap agreements.

5 unchanged sentences

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

The Hershey Company | Q3 2023 Form 10-Q | Page 16

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(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 October 1, 2023 and December 31, 2022:

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of March 31, 2024 and December 31, 2023:

Assets / Liabilities

Level 1 Level 2 Level 3 Total

October 1, 2023:

March 31, 2024:

Derivative Instruments:

14 unchanged sentences

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

The Hershey Company | Q1 2024 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)

Other Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair values as of October 1, 2023 and December 31, 2022 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 March 31, 2024 and December 31, 2023 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

October 1, 2023 December 31, 2022 October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

Current portion of long-term debt $ 299,074 $ 297,842 $ 305,425 $ 305,058

3 unchanged sentences

In addition to assets and liabilities that are recorded at fair value on a recurring basis, GAAP requires that, under certain circumstances, we also record assets and liabilities at fair value on a nonrecurring basis.

The Hershey Company | Q3 2023 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)

In connection with the acquisition of Weaver in May 2023, as discussed in Note 2 , we used valuation techniques to determine fair value, with the primary technique being the cost approach to value personal property, which uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

Additionally, in connection with the acquisitions of Pretzels and Dot’s in December 2021 and subsequent measurement period adjustments through the third quarter of 2022, 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.

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

16 unchanged sentences

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

The components of lease expense for the three months ended October 1, 2023 and October 2, 2022 were as follows:

The components of lease expense for the three months ended March 31, 2024 and April 2, 2023 were as follows:

Three Months Ended

Lease expense Classification October 1, 2023 October 2, 2022

Operating lease cost Cost of sales or SM&A (1) $ 12,101 $ 11,812

Finance lease cost:

Amortization of ROU assets Depreciation and amortization (1) 1,849 1,539

Interest on lease liabilities Interest expense, net 1,095 1,030

Net lease cost (2) $ 15,045 $ 14,381

The components of lease expense for the nine months ended October 1, 2023 and October 2, 2022 were as follows:

Nine Months Ended

Lease expense Classification October 1, 2023 October 2, 2022

Lease expense Classification March 31, 2024 April 2, 2023

Operating lease cost Cost of sales or SM&A (1) $ 12,215 $ 12,043

6 unchanged sentences

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

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases 6.3 % 6.2 %

The Hershey Company | Q3 2023 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 October 1, 2023 December 31, 2022

Leases Classification March 31, 2024 December 31, 2023

Operating lease ROU assets Other non-current assets $ 307,664 $ 307,976

8 unchanged sentences

Total lease liabilities $ 388,370 $ 387,968

The maturity of our lease liabilities as of October 1, 2023 were as follows:

The Hershey Company | Q1 2024 Form 10-Q | Page 15

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 March 31, 2024 were as follows:

Operating leases Finance leases Total

9 unchanged sentences

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

Nine Months Ended

October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

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

5 unchanged sentences

Finance leases 983 292

The Hershey Company | Q3 2023 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

6 unchanged sentences

rather, our proportionate share of earnings or losses are recorded on a net basis within other (income) expense, net in the Consolidated Statements of Income.

Both equity and cost method investments are reported within other non-current assets in our Consolidated Balance Sheets.

Both equity method investments and cost, less impairment, investments are reported within other non-current assets in our Consolidated Balance Sheets.

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

Total investments in unconsolidated affiliates were $ 126,325 and $ 133,029 as of October 1, 2023 and December 31, 2022, respectively.

Total investments in unconsolidated affiliates were $ 190,419 and $ 207,177 as of March 31, 2024 and December 31, 2023, respectively.

The Hershey Company | Q1 2024 Form 10-Q | Page 16

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 Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

Cost of sales $ 2,612 $ 1,050

1 unchanged sentence

Business realignment costs — 811

(Benefits) costs associated with business realignment activities $ ( 426 ) $ 393 $ 3,440 $ 2,373

Costs recorded by program during the three and nine months ended October 1, 2023 and October 2, 2022 related to these activities were as follows:

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Costs associated with business realignment activities $ 16,666 $ 2,349

Costs recorded by program during the three months ended March 31, 2024 and April 2, 2023 related to these activities were as follows:

Three Months Ended

March 31, 2024 April 2, 2023

Advancing Agility & Automation Initiative:

Other program costs 16,666 —

International Optimization Program:

2 unchanged sentences

Total $ 16,666 $ 2,349

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 October 1, 2023 are not significant.

Advancing Agility & Automation Initiative

On February 2, 2024, the Board of Directors of the Company approved a multi-year productivity initiative (“Advancing Agility & Automation” or "AAA") to improve supply chain and manufacturing-related spend, optimize selling, general and administrative expenses, leverage new technology and business models to further simplify and automate processes, and generate long-term savings.

The Company estimates that the AAA Initiative will result in total pre-tax costs of $ 200,000 to $ 250,000 from inception through 2026.

This estimate primarily includes program office execution and third-party costs supporting the design and implementation of the new organizational structure of $ 100,000 to $ 120,000 , as well as implementation and technology capability costs of $ 55,000 to $ 70,000 .

Additionally, we expect to incur employee severance and related separation benefits of $ 45,000 to $ 60,000 as we facilitate workforce reductions and reallocate resources to further drive the Company’s strategic priorities.

The cash portion of the total cost is estimated to be $ 175,000 to $ 225,000 .

At the conclusion of the program in 2026, ongoing annual savings are expected to be approximately $ 300,000 .

Since inception through March 31, 2024, we recognized total costs associated with the AAA Initiative of $ 16,666 .

These charges predominantly included third-party costs supporting the design and implementation of the new organizational structure, as well as technology capability costs.

The costs and related benefits of the AAA Initiative relate to the North America Confectionery segment and Corporate.

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

2020 International Optimization Program

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

This program was completed in 2023.

For the nine months ended October 1, 2023 and October 2, 2022, we recognized total costs associated with the International Optimization Program of $ 3,440 and $ 2,373 , 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 $ 53,799 .

For the three months ended April 2, 2023, we recognized total costs associated with the International Optimization Program of $ 2,349 .

From program inception in 2020 through completion in 2023, we incurred pre-tax charges to execute the program totaling $ 53,799 .

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 nine months ended October 1, 2023 and October 2, 2022 were 18.3 % and 19.7 %, respectively.

Relative to the statutory rate, the 2023 effective tax rate was primarily impacted by investment tax credits and employee share-based payments partially offset by state taxes and tax reserves.

The effective tax rates for the three months ended March 31, 2024 and April 2, 2023 were 19.1 % and 22.7 %, respectively.

Relative to the statutory rate, the 2024 effective tax rate was primarily 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.

We are routinely audited by taxing authorities in our filing jurisdictions, and a number of these disputes are currently underway, including multi-year controversies at various stages of review, negotiation and litigation in Mexico, Canada and the United States.

The outcome of tax audits cannot be predicted with certainty, including the timing of resolution or potential settlements.

5 unchanged sentences

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.

For the nine months ended October 1, 2023, the tax-related provisions of the IRA did not have a material impact on our consolidated financial statements, including our annual effective tax rate, or on our liquidity.

For the three months ended March 31, 2024 and April 2, 2023 the tax-related provisions of the IRA did not have a material impact on our consolidated financial statements, including our annual effective tax rate, or on our liquidity.

The Hershey Company | Q1 2024 Form 10-Q | Page 18

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Net Periodic Benefit Cost

The components of net periodic benefit cost for the three months ended October 1, 2023 and October 2, 2022 were as follows:

The components of net periodic benefit cost for the three months ended March 31, 2024 and April 2, 2023 were as follows:

Pension Benefits Other Benefits

Three Months Ended Three Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

March 31, 2024 April 2, 2023 March 31, 2024 April 2, 2023

Service cost $ 3,849 $ 3,753 $ 34 $ 54

3 unchanged sentences

Amortization of net loss (gain) 3,813 4,967 139 ( 326 )

Settlement loss 943 3,728 926 —

Total net periodic benefit cost $ 3,168 $ 5,197 $ 1,353 $ 1,821

We made contributions of $ 987 and $ 5,314 to the pension plans and other benefits plans, respectively, during the third quarter of 2023.

In the third quarter of 2022, we made contributions of $ 824 and $ 1,484 to our pension plans and other benefit plans, respectively.

The contributions in 2023 and 2022 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans.

The components of net periodic benefit cost for the nine months ended October 1, 2023 and October 2, 2022 were as follows:

Pension Benefits Other Benefits

Nine Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Service cost $ 11,269 $ 13,639 $ 166 $ 238

Interest cost 30,819 20,438 5,984 3,467

Expected return on plan assets ( 37,041 ) ( 36,788 ) — —

Amortization of prior service credit ( 4,243 ) ( 4,238 ) ( 13 ) —

Amortization of net loss 14,961 10,402 ( 901 ) 77

Settlement loss 5,332 14,104 926 —

Total net periodic benefit cost $ 21,097 $ 17,557 $ 6,162 $ 3,782

We made contributions of $ 4,849 and $ 16,224 to the pension plans and other benefits plans, respectively, during the first nine months of 2023.

In the first nine months of 2022, we made contributions of $ 4,580 and $ 12,059 to our pension plans and other benefit plans, respectively.

We made contributions of $ 816 and $ 1,592 to the pension plans and other benefits plans, respectively, during the first three months of 2024.

In the first three months of 2023, we made contributions of $ 833 and $ 5,699 to our pension plans and other benefit plans, respectively.

The contributions in 2024 and 2023 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans.

The Hershey Company | Q3 2023 Form 10-Q | Page 23

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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 nine months of 2023, we recognized pension settlement charges in our hourly 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 third quarter 2023 settlements, the related plan assets and liabilities were remeasured using a discount rate as of the remeasurement date that was 53 basis points higher than the rate as of December 31, 2022 and an expected rate of return on plan assets of 6.3 %, which was consistent with the rate as of December 31, 2022.

Annuitization of Other Post Employment Benefits

On August 21, 2023, the Hershey Employee Benefits Committee approved the purchase of an irrevocable group annuity contract with an insurance company for eligible retirees of The Hershey Company Retiree Medical and Life Insurance Plan to cover their medical benefits.

On August 31, 2023, we paid $ 88,689 for the irrevocable group annuity contract.

As a result of this transaction, we remeasured the projected benefit obligation and recognized a $ 926 non-cash pre-tax settlement charge during the quarter ended October 1, 2023.

STOCK COMPENSATION PLANS

19 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 Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

Pre-tax compensation expense

2 unchanged sentences

Compensation expenses for stock compensation plans are primarily included in SM&A expense.

As of October 1, 2023, total stock-based compensation expense related to non-vested awards not yet recognized was $ 94,733 and the weighted-average period over which this amount is expected to be recognized was approximately 1.9 years.

As of March 31, 2024, total stock-based compensation expense related to non-vested awards not yet recognized was $ 119,082 and the weighted-average period over which this amount is expected to be recognized was approximately 2.0 years.

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.

A summary of activity relating to grants of stock options for the period ended October 1, 2023 is as follows:

A summary of activity relating to grants of stock options for the period ended March 31, 2024 is as follows:

Stock Options Shares Weighted-Average

4 unchanged sentences

Exercised ( 43,892 ) $ 99.88

Outstanding as of October 1, 2023

Outstanding as of March 31, 2024

685,264 $ 106.35 3.1 years $ 60,678

Options exercisable as of October 1, 2023

Options exercisable as of March 31, 2024

669,879 $ 104.53 3.0 years $ 60,348

The weighted-average fair value of options granted was $ 57.65 and $ 37.28 per share for the periods ended October 1, 2023 and October 2, 2022, respectively.

The weighted-average fair value of options granted was $ 45.95 and $ 57.65 per share for the periods ended March 31, 2024 and April 2, 2023, respectively.

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

Nine Months Ended

October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

Dividend yields

2 unchanged sentences

Expected term in years 6.3 6.3

The total intrinsic value of options exercised was $ 34,060 and $ 36,362 for the periods ended October 1, 2023 and October 2, 2022, respectively.

The total intrinsic value of options exercised was $ 4,148 and $ 20,566 for the periods ended March 31, 2024 and April 2, 2023, respectively.

The Hershey Company | Q1 2024 Form 10-Q | Page 20

11 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 nine months ended October 1, 2023 and October 2, 2022 can range from 0 % to 250 % of the targeted amounts.

The performance scores of PSU grants during the three months ended March 31, 2024 and April 2, 2023 can range from 0 % to 250 % of the targeted amounts.

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

1 unchanged sentence

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 nine months ended October 1, 2023 and October 2, 2022, we awarded RSUs to certain executive officers and other key employees under the EICP.

During the three months ended March 31, 2024 and April 2, 2023, 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 October 1, 2023 is as follows:

A summary of activity relating to grants of PSUs and RSUs for the period ended March 31, 2024 is as follows:

Performance Stock Units and Restricted Stock Units

7 unchanged sentences

( 8,241 ) $ 219.04

Outstanding as of October 1, 2023

Outstanding as of March 31, 2024

843,138 $ 214.71

6 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.

Nine Months Ended

October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

Units granted

6 unchanged sentences

Expected volatility 18.5 % 19.2 %

The fair value of shares vested totaled $ 103,600 and $ 103,081 for the periods ended October 1, 2023 and October 2, 2022, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 261,654 units as of October 1, 2023.

The fair value of shares vested totaled $ 84,998 and $ 97,304 for the periods ended March 31, 2024 and April 2, 2023, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 258,847 units as of March 31, 2024.

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

6 unchanged sentences

(i) North America Confectionery, (ii) North America Salty Snacks and (iii) International.

This organizational structure aligns with how our Chief Operating Decision Maker (“CODM”) manages our business, including resource allocation and performance assessment, and further aligns with our product categories and the key markets we serve.

This organizational structure aligns with how our CODM manages our business, including resource allocation and performance assessment, and further aligns with our product categories and the key markets we serve.

• North America Confectionery – This segment is responsible for our traditional chocolate and non-chocolate confectionery market position in the United States and Canada.

22 unchanged sentences

Our segment net sales and earnings were as follows:

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

North America Confectionery $ 2,707,310 $ 2,452,165

8 unchanged sentences

Unallocated corporate expense (1) 172,899 177,074

Unallocated mark-to-market losses on commodity derivatives 1,753 50,065 5,217 63,524

(Benefits) costs associated with business realignment activities (see Note 9 )

( 426 ) 393 3,440 2,373

Unallocated mark-to-market (gains) losses on commodity derivatives ( 218,015 ) 10,244

Costs associated with business realignment activities (see Note 9 )

Operating profit 1,058,100 799,924

2 unchanged sentences

Other (income) expense, net (see Note 17 )

42,781 48,157 130,248 78,222

Income before income taxes $ 986,258 $ 759,256

(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.

(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 and integration-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 Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in income $ ( 197,764 ) $ 10,614

Net gains on commodity derivative positions reclassified from unallocated to segment income 18,856 36,021 5,269 91,551

Net losses on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses $ 1,753 $ 50,065 $ 5,217 $ 63,524

As of October 1, 2023, 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 $ 3,515 .

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 $ 1,502 to segment operating results in the next twelve months.

Net losses on commodity derivative positions reclassified from unallocated to segment income ( 20,251 ) ( 370 )

Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses $ ( 218,015 ) $ 10,244

As of March 31, 2024, 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 $ 167,808 .

Based on our forecasts of the timing of the recognition of the underlying hedged items, we expect to reclassify net pre-tax losses on commodity derivatives of $ 24,574 to segment operating results in the next twelve months.

The Hershey Company | Q1 2024 Form 10-Q | Page 24

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

North America Confectionery $ 62,421 $ 56,722

4 unchanged sentences

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

United States $ 2,854,432 $ 2,617,923

3 unchanged sentences

A summary of our treasury stock activity is as follows:

Nine Months Ended October 1, 2023

Three Months Ended March 31, 2024

Shares Dollars

Milton Hershey School Trust repurchase 1,000,000 $ 239,910

Shares repurchased in the open market under pre-approved share repurchase programs 2,022,064 $ 400,000

Shares repurchased in the open market to replace Treasury Stock issued for stock options and incentive compensation 483,033 94,191

Total share repurchases 2,505,097 494,191

Shares issued for stock options and incentive compensation ( 332,986 ) ( 13,856 )

4 unchanged sentences

In February 2023, the Company entered into a Stock Purchase Agreement with Hershey Trust Company, as trustee for the Milton Hershey School Trust (the “School Trust”), pursuant to which the Company purchased 1,000,000 shares of the Company’s Common Stock from the School Trust at a price equal to $ 239.91 per share, for a total purchase price of $ 239,910 .

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

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

As a result of the February 2023 Stock Purchase Agreement with Hershey Trust Company, as trustee for the School Trust, the July 2018 share repurchase authorization was completed and as of October 1, 2023, approximately $ 370 million remains available for repurchases under our May 2021 share repurchase authorization.

We are authorized to purchase our outstanding shares in open market and privately negotiated transactions.

The program has no expiration date and acquired shares of Common Stock will be held as treasury shares.

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 | Q1 2024 Form 10-Q | Page 25

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

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

As a result of the February 2023 Stock Purchase Agreement with Hershey Trust Company, as trustee for the School Trust, the July 2018 share repurchase authorization was completed.

In May 2021, our Board of Directors approved an additional $ 500 million share repurchase authorization, which was completed as of March 31, 2024.

In December 2023, our Board of Directors approved an additional $ 500 million share repurchase authorization.

This program commenced after the existing May 2021 authorization was completed.

As a result of the share repurchase authorization, approximately $ 470 million remains available for repurchases under our December 2023 share repurchase authorization.

We are authorized to purchase our outstanding shares in open market and privately negotiated transactions.

The program has no expiration date and acquired shares of Common Stock will be held as treasury shares.

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.

CONTINGENCIES

8 unchanged sentences

The Class B common stock is convertible into Common Stock on a share-for-share basis at any time.

In May 2023, 2,500,000 shares of Class B Common Stock were converted to Common Stock by Hershey Trust Company, as trustee for the School Trust.

The computation of diluted earnings per share for Common Stock assumes the conversion of Class B common stock using the if-converted method, while the diluted earnings per share of Class B common stock does not assume the conversion of those shares.

Three Months Ended

October 1, 2023 October 2, 2022

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

Basic earnings per share:

Allocation of distributed earnings (cash dividends paid) $ 178,573 $ 59,146 $ 152,262 $ 54,743

Allocation of undistributed earnings 211,085 69,773 141,630 50,852

Total earnings—basic $ 389,658 $ 128,919 $ 293,892 $ 105,595

Denominator (shares in thousands):

Total weighted-average shares—basic 150,116 54,614 147,169 58,114

Earnings Per Share—basic $ 2.60 $ 2.36 $ 2.00 $ 1.82

Diluted earnings per share:

Allocation of total earnings used in basic computation $ 389,658 $ 128,919 $ 293,892 $ 105,595

Reallocation of total earnings as a result of conversion of Class B common stock to Common stock 128,919 — 105,595 —

Reallocation of undistributed earnings — ( 264 ) — ( 251 )

Total earnings—diluted $ 518,577 $ 128,655 $ 399,487 $ 105,344

Denominator (shares in thousands):

Number of shares used in basic computation 150,116 54,614 147,169 58,114

Weighted-average effect of dilutive securities:

Conversion of Class B common stock to Common shares outstanding 54,614 — 58,114 —

Employee stock options 400 — 561 —

Performance and restricted stock units 358 — 430 —

Total weighted-average shares—diluted 205,488 54,614 206,274 58,114

Earnings Per Share—diluted $ 2.52 $ 2.36 $ 1.94 $ 1.81

The earnings per share calculations for the three months ended October 1, 2023 and October 2, 2022 excluded 8 and 4 stock options (in thousands), respectively, that would have been antidilutive.

The Hershey Company | Q3 2023 Form 10-Q | Page 32

THE HERSHEY COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Nine Months Ended

October 1, 2023 October 2, 2022

March 31, 2024 April 2, 2023

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

19 unchanged sentences

Earnings Per Share—diluted $ 3.89 $ 3.63 $ 2.85 $ 2.66

The earnings per share calculations for the nine months ended October 1, 2023 and October 2, 2022 excluded 12 and 4 stock options (in thousands), respectively, that would have been antidilutive.

The earnings per share calculations for the three months ended March 31, 2024 and April 2, 2023 excluded 12 and 8 stock options (in thousands), respectively, that would have been antidilutive.

The Hershey Company | Q1 2024 Form 10-Q | Page 27

5 unchanged sentences

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Three Months Ended

March 31, 2024 April 2, 2023

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

$ 38,058 $ 43,314 $ 115,418 $ 70,754

Non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans (see Note 11 )

4,952 4,895 15,824 7,462

Other (income) expense, net ( 9 ) ( 228 )

Total $ 32,020 $ 2,983

RELATED PARTY TRANSACTIONS

Hershey Trust Company, as trustee for the trust established by Milton S.

and Catherine S.

Hershey that has as its sole beneficiary for the School Trust, maintains voting control over The Hershey Company.

In any given year, we may engage in certain transactions with Hershey Trust Company, Milton Hershey School, the Milton Hershey School Trust and companies owned by and/or affiliated with any of the foregoing.

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 nine months ended October 1, 2023 and October 2, 2022 is as follows:

Stock Purchase Agreement

In February 2023 and February 2022, the Company entered into Stock Purchase Agreements with Hershey Trust Company, as trustee for the School Trust, pursuant to which the Company purchased shares of its Common Stock from the School Trust (see Note 14 ).

Sale and Donation of Property, Plant and Equipment

In May 2022, the Company entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Hershey Trust Company, as trustee for the School Trust, pursuant to which the Company agreed to sell certain real and personal property consisting of approximately six acres of land located in Hershey, Pennsylvania, together with portions of a building located on the land.

Additionally, in June 2022, the Company entered into a Donation Agreement with Hershey Trust Company, as trustee for The M.S.

Hershey Foundation, pursuant to which the Company agreed to donate a portion of the building concurrently with the closing of the Purchase Agreement.

The sale and donation transactions closed in June 2022.

Total proceeds from the sale were approximately $ 6,300 (net of transaction and closing costs), resulting in a loss of $ 13,568 , which was recorded in the SM&A expense caption within the Consolidated Statements of Income.

The fair values of the disposed assets were supported by a proposed sales price submitted by a third-party buyer received prior to executing the Purchase Agreement.

The Hershey Company | Q1 2024 Form 10-Q | Page 28

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The components of certain asset accounts included within our Consolidated Balance Sheets are as follows:

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Raw materials $ 527,719 $ 481,111

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The components of certain liability and stockholders’ equity accounts included within our Consolidated Balance Sheets are as follows:

October 1, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Accounts payable:

22 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