What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-07 compared with 2024-08-01 · 152 added, 142 removed, 948 unchanged (24% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Net sales $ 2,987,494 $ 3,029,987 $ 8,314,723 $ 8,507,881

4 unchanged sentences

591,920 624,304 1,750,888 1,777,695

Business realignment costs (benefits) 4,937 ( 370 ) 4,937 441

Business realignment costs 27,635 — 32,572 441

Operating profit

19 unchanged sentences

(in thousands)

For the Three Months Ended For the Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

For the Three Months Ended For the Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

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

16 unchanged sentences

(in thousands, except share data)

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Current assets:

27 unchanged sentences

Common stock, shares issued:

166,939,511 at June 30, 2024 and December 31, 2023

166,939,511 at September 29, 2024 and December 31, 2023

166,939 166,939

Class B common stock, shares issued:

54,613,514 at June 30, 2024 and December 31, 2023

54,613,514 at September 29, 2024 and December 31, 2023

54,614 54,614

2 unchanged sentences

Treasury—common stock shares, at cost:

19,281,035 at June 30, 2024 and 17,160,099 at December 31, 2023

19,207,198 at September 29, 2024 and 17,160,099 at December 31, 2023

( 2,280,116 ) ( 1,800,232 )

7 unchanged sentences

(in thousands)

Six Months Ended

June 30, 2024 July 2, 2023

Nine Months Ended

September 29, 2024 October 1, 2023

Operating Activities

43 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months Ended June 30, 2024 and July 2, 2023

For the Three Months Ended September 29, 2024 and October 1, 2023

(in thousands)

7 unchanged sentences

Stockholders’

Balance, March 31, 2024

Balance, June 30, 2024

$ — $ 166,939 $ 54,614 $ 1,325,876 $ 4,997,269 $ ( 2,283,219 ) $ ( 251,613 ) $ 4,009,866

9 unchanged sentences

Repurchase of common stock (including excise tax) 31 31

Balance, June 30, 2024

Balance, September 29, 2024

$ — $ 166,939 $ 54,614 $ 1,342,935 $ 5,172,717 $ ( 2,280,116 ) $ ( 252,120 ) $ 4,204,969

7 unchanged sentences

Stockholders’

Balance, April 2, 2023

Balance, July 2, 2023

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

6 unchanged sentences

( 59,146 ) ( 59,146 )

Conversion of Class B Common Stock into Common Stock 2,500 ( 2,500 ) —

Stock-based compensation 20,884 20,884

1 unchanged sentence

Repurchase of common stock (including excise tax) 17 17

Balance, July 2, 2023

Balance, October 1, 2023

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2024 and July 2, 2023

For the Nine Months Ended September 29, 2024 and October 1, 2023

(in thousands)

19 unchanged sentences

Repurchase of common stock (including excise tax) ( 498,942 ) ( 498,942 )

Balance, June 30, 2024

Balance, September 29, 2024

$ — $ 166,939 $ 54,614 $ 1,342,935 $ 5,172,717 $ ( 2,280,116 ) $ ( 252,120 ) $ 4,204,969

20 unchanged sentences

Repurchase of common stock (including excise tax) ( 242,091 ) ( 242,091 )

Balance, July 2, 2023

Balance, October 1, 2023

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

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 June 30, 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.

Operating results for the quarter ended September 29, 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.

54 unchanged sentences

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying value of goodwill by reportable segment for the six months ended June 30, 2024 are as follows:

The changes in the carrying value of goodwill by reportable segment for the nine months ended September 29, 2024 are as follows:

North America Confectionery North America Salty Snacks International Total

2 unchanged sentences

Foreign currency translation ( 2,213 ) — ( 1,642 ) ( 3,855 )

Balance at June 30, 2024

Balance at September 29, 2024

$ 2,018,618 $ 657,001 $ 16,576 $ 2,692,195

4 unchanged sentences

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

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization

8 unchanged sentences

$ 1,818,980 $ 1,879,229

Total amortization expense for the three months ended June 30, 2024 and July 2, 2023 was $ 19,539 and $ 20,562 , respectively.

Total amortization expense for the six months ended June 30, 2024 and July 2, 2023 was $ 39,093 and $ 39,739 , respectively.

Total amortization expense for the three months ended September 29, 2024 and October 1, 2023 was $ 19,534 and $ 19,882 , respectively.

Total amortization expense for the nine months ended September 29, 2024 and October 1, 2023 was $ 58,627 and $ 59,620 , 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 June 30, 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.

As of September 29, 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:

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Short-term foreign bank borrowings against lines of credit $ 200,276 $ 192,278

10 unchanged sentences

Maturity Date

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

2.050 % Notes

30 unchanged sentences

Net interest expense consists of the following:

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Interest expense $ 51,906 $ 45,776 $ 148,099 $ 132,175

5 unchanged sentences

$ 44,316 $ 39,755 $ 125,511 $ 114,101

The Hershey Company | Q3 2024 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)

DERIVATIVE INSTRUMENTS

5 unchanged sentences

We do not expect any significant losses from counterparty defaults.

The Hershey Company | Q2 2024 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)

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 $ 92,330 as of June 30, 2024 and $ 94,917 as of December 31, 2023.

Our open commodity derivative contracts had a notional value of $ 149,616 as of September 29, 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 $ 32,953 at June 30, 2024 and $ 80,068 at December 31, 2023.

The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $ 129,883 at September 29, 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 $ 6,899 at June 30, 2024 and $ 13,665 at December 31, 2023.

The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $ 54,442 at September 29, 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.

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 June 30, 2024 and December 31, 2023 was $ 27,643 and $ 22,867 , respectively.

The notional amount of the contracts outstanding at September 29, 2024 and December 31, 2023 was $ 28,827 and $ 22,867 , respectively.

The Hershey Company | Q3 2024 Form 10-Q | Page 12

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 June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of September 29, 2024 and December 31, 2023:

September 29, 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 June 30, 2024, amounts reflected on a net basis in assets were assets of $ 45,967 and liabilities of $ 45,050 , 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 September 29, 2024, amounts reflected on a net basis in assets were assets of $ 31,902 and liabilities of $ 32,667 , 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 June 30, 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.

At September 29, 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 June 30, 2024 and July 2, 2023 was as follows:

The effect of derivative instruments on the Consolidated Statements of Income for the three months ended September 29, 2024 and October 1, 2023 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 June 30, 2024 and July 2, 2023 was as follows:

The effect of derivative instruments on the Consolidated Statements of Income for the nine months ended September 29, 2024 and October 1, 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 $ 6,416 as of June 30, 2024.

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 June 30, 2024 and December 31, 2023:

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of September 29, 2024 and December 31, 2023:

Assets / Liabilities

Level 1 Level 2 Level 3 Total

June 30, 2024:

September 29, 2024:

Derivative Instruments:

2 unchanged sentences

Commodities futures and options (3) $ 2,759 $ — $ — $ 2,759

Foreign exchange contracts (1) $ — $ 1,312 $ — $ 1,312

Commodities futures and options (3) $ 2,907 $ — $ — $ 2,907

9 unchanged sentences

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

The Hershey Company | Q2 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)

Other Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair values as of June 30, 2024 and December 31, 2023 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 September 29, 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

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023 September 29, 2024 December 31, 2023

Current portion of long-term debt $ 893,986 $ 297,842 $ 904,819 $ 305,058

1 unchanged sentence

Total $ 3,746,284 $ 3,711,253 $ 4,093,898 $ 4,094,190

The Hershey Company | Q3 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)

Other Fair Value Measurements

19 unchanged sentences

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

The components of lease expense for the three months ended June 30, 2024 and July 2, 2023 were as follows:

The components of lease expense for the three months ended September 29, 2024 and October 1, 2023 were as follows:

Three Months Ended

Lease expense Classification June 30, 2024 July 2, 2023

Lease expense Classification September 29, 2024 October 1, 2023

Operating lease cost Cost of sales or SM&A (1) $ 13,678 $ 12,101

3 unchanged sentences

Net lease cost (2) $ 16,951 $ 15,045

The components of lease expense for the six months ended June 30, 2024 and July 2, 2023 were as follows:

Six Months Ended

Lease expense Classification June 30, 2024 July 2, 2023

The components of lease expense for the nine months ended September 29, 2024 and October 1, 2023 were as follows:

Nine Months Ended

Lease expense Classification September 29, 2024 October 1, 2023

Operating lease cost Cost of sales or SM&A (1) $ 39,159 $ 36,464

6 unchanged sentences

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

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Weighted-average remaining lease term (years)

9 unchanged sentences

Supplemental balance sheet information related to leases were as follows:

Leases Classification June 30, 2024 December 31, 2023

Leases Classification September 29, 2024 December 31, 2023

Operating lease ROU assets Other non-current assets $ 347,576 $ 307,976

8 unchanged sentences

Total lease liabilities $ 427,313 $ 387,968

The maturities of our lease liabilities as of June 30, 2024 were as follows:

The maturities of our lease liabilities as of September 29, 2024 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

June 30, 2024 July 2, 2023

Nine Months Ended

September 29, 2024 October 1, 2023

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

19 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 $ 215,759 and $ 207,177 as of June 30, 2024 and December 31, 2023, respectively.

Total investments in unconsolidated affiliates were $ 207,855 and $ 207,177 as of September 29, 2024 and December 31, 2023, respectively.

BUSINESS REALIGNMENT ACTIVITIES

7 unchanged sentences

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

Since inception through June 30, 2024, we recognized total costs associated with the AAA Initiative of $ 55,666 .

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.

Since inception through September 29, 2024, we recognized total costs associated with the AAA Initiative of $ 104,795 .

These charges predominantly included employee severance and related separation benefits related to workforce reductions and 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 predominantly relates 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.

2 unchanged sentences

The International Optimization Program was originally expected to total pre-tax costs of $ 50,000 to $ 75,000 , with cash costs in the range of $ 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 Program relate to the International segment.

However, segment operating results do not include these business realignment expenses because we evaluate

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

The Hershey Company | Q3 2024 Form 10-Q | Page 19

2 unchanged sentences

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

segment performance excluding such costs.

For the six months ended July 2, 2023, we recognized total costs associated with the International Optimization Program of $ 3,866 .

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 1, 2023, we recognized total costs associated with the International Optimization Program of $ 3,440 .

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

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

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Cost of sales $ 1,457 $ ( 506 ) $ 12,168 $ 527

Selling, marketing and administrative expense 20,037 80 60,055 2,472

Business realignment costs (benefits) 4,937 ( 370 ) 4,937 441

Business realignment costs 27,635 — 32,572 441

Costs associated with business realignment activities $ 49,129 $ ( 426 ) $ 104,795 $ 3,440

Costs recorded by program during the three and six months ended June 30, 2024 and July 2, 2023 related to these activities were as follows:

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Costs recorded by program during the three and nine months ended September 29, 2024 and October 1, 2023 related to these activities were as follows:

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Advancing Agility & Automation Initiative:

5 unchanged sentences

Total $ 49,129 $ ( 426 ) $ 104,795 $ 3,440

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 June 30, 2024 are not significant.

The following table presents the liability activity for costs qualifying as exit and disposal costs for the nine months ended September 29, 2024:

Liability balance at December 31, 2023 (1)

2024 business realignment charges (2)

Cash payments ( 3,933 )

Liability balance at September 29, 2024 (1)

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

(2) The costs reflected in the liability roll-forward represent employee-related charges.

The Hershey Company | Q3 2024 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 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 June 30, 2024 and July 2, 2023 were 20.6 % and 17.1 %, respectively.

The effective tax rates for the nine months ended September 29, 2024 and October 1, 2023 were 18.6 % and 18.3 %, respectively.

Relative to the statutory rate, the 2024 effective tax rate was primarily impacted by investment tax credits partially offset by state taxes.

8 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 six months ended June 30, 2024 and July 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.

For the nine months ended September 29, 2024 and 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.

The Hershey Company | Q3 2024 Form 10-Q | Page 21

4 unchanged sentences

Net Periodic Benefit Cost

The components of net periodic benefit cost for the three months ended June 30, 2024 and July 2, 2023 were as follows:

The components of net periodic benefit cost for the three months ended September 29, 2024 and October 1, 2023 were as follows:

Pension Benefits Other Benefits

Three Months Ended Three Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Service cost $ 3,827 $ 3,747 $ 33 $ 57

5 unchanged sentences

Total net periodic benefit cost $ 3,129 $ 6,234 $ 1,348 $ 2,522

We made contributions of $ 170 and $ 2,890 to the pension plans and other benefits plans, respectively, during the second quarter of 2024.

In the second quarter of 2023, we made contributions of $ 3,029 and $ 5,212 to our pension plans and other benefit plans, respectively.

We made contributions of $ 1,134 and $ 3,498 to the pension plans and other benefits plans, respectively, during the third quarter of 2024.

In the third quarter of 2023, we made contributions of $ 987 and $ 5,314 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 components of net periodic benefit cost for the six months ended June 30, 2024 and July 2, 2023 were as follows:

The components of net periodic benefit cost for the nine months ended September 29, 2024 and October 1, 2023 were as follows:

Pension Benefits Other Benefits

Six Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Nine Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Service cost $ 11,512 $ 11,269 $ 100 $ 166

5 unchanged sentences

Total net periodic benefit cost $ 9,415 $ 21,097 $ 4,049 $ 6,162

We made contributions of $ 986 and $ 4,482 to the pension plans and other benefits plans, respectively, during the first six months of 2024.

In the first six months of 2023, we made contributions of $ 3,862 and $ 10,911 to our pension plans and other benefit plans, respectively.

We made contributions of $ 2,120 and $ 7,980 to the pension plans and other benefits plans, respectively, during the first nine months of 2024.

In the first nine months of 2023, we made contributions of $ 4,849 and $ 16,224 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 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 ).

STOCK COMPENSATION PLANS

Share-based grants for compensation and incentive purposes are made pursuant to the Equity and Incentive Compensation Plan (“EICP”).

The EICP provides for grants of one or more of the following stock-based compensation awards to employees, non-employee directors and certain service providers upon whom the successful conduct of our business is dependent:

The Hershey Company | Q3 2024 Form 10-Q | Page 22

2 unchanged sentences

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

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

Share-based grants for compensation and incentive purposes are made pursuant to the Equity and Incentive Compensation Plan (“EICP”).

• Non-qualified stock options (“stock options”);

12 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

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Pre-tax compensation expense

2 unchanged sentences

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

As of June 30, 2024, total stock-based compensation expense related to non-vested awards not yet recognized was $ 88,119 and the weighted-average period over which this amount is expected to be recognized was approximately 1.8 years.

As of September 29, 2024, total stock-based compensation expense related to non-vested awards not yet recognized was $ 74,980 and the weighted-average period over which this amount is expected to be recognized was approximately 1.8 years.

The Hershey Company | Q3 2024 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)

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 2024 Form 10-Q | Page 22

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 June 30, 2024 is as follows:

A summary of activity relating to grants of stock options for the period ended September 29, 2024 is as follows:

Stock Options Shares Weighted-Average

6 unchanged sentences

Expired ( 1,565 ) $ 147.98

Outstanding as of June 30, 2024

Outstanding as of September 29, 2024

588,502 $ 106.65 2.9 years $ 51,314

Options exercisable as of June 30, 2024

Options exercisable as of September 29, 2024

574,672 $ 104.64 2.8 years $ 51,065

The weighted-average fair value of options granted was $ 45.95 and $ 57.65 per share for the periods ended June 30, 2024 and July 2, 2023, respectively.

The weighted-average fair value of options granted was $ 45.95 and $ 57.65 per share for the periods ended September 29, 2024 and October 1, 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:

Six Months Ended

June 30, 2024 July 2, 2023

Nine Months Ended

September 29, 2024 October 1, 2023

Dividend yields

2 unchanged sentences

Expected term in years 6.3 6.3

The total intrinsic value of options exercised was $ 8,357 and $ 31,581 for the periods ended June 30, 2024 and July 2, 2023, respectively.

The total intrinsic value of options exercised was $ 13,327 and $ 34,060 for the periods ended September 29, 2024 and October 1, 2023, 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 June 30, 2024 and July 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.

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 June 30, 2024 and July 2, 2023, 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 September 29, 2024 and October 1, 2023 can range from 0 % to 250 % of the targeted amounts.

The Hershey Company | Q3 2024 Form 10-Q | Page 24

2 unchanged sentences

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

We recognize the compensation expenses associated with PSUs ratably over the 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 September 29, 2024 and October 1, 2023, 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 June 30, 2024 is as follows:

A summary of activity relating to grants of PSUs and RSUs for the period ended September 29, 2024 is as follows:

Performance Stock Units and Restricted Stock Units

7 unchanged sentences

( 49,025 ) $ 217.48

Outstanding as of June 30, 2024

Outstanding as of September 29, 2024

624,867 $ 203.50

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

June 30, 2024 July 2, 2023

Nine Months Ended

September 29, 2024 October 1, 2023

Units granted

6 unchanged sentences

Expected volatility 18.5 % 19.2 %

The fair value of shares vested totaled $ 87,723 and $ 100,915 for the periods ended June 30, 2024 and July 2, 2023, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 264,139 units as of June 30, 2024.

The fair value of shares vested totaled $ 90,372 and $ 103,600 for the periods ended September 29, 2024 and October 1, 2023, respectively.

Deferred PSUs, deferred RSUs and deferred stock units representing directors’ fees totaled 254,757 units as of September 29, 2024.

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

31 unchanged sentences

Our segment net sales and earnings were as follows:

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

North America Confectionery $ 2,477,303 $ 2,457,647 $ 6,764,439 $ 6,902,891

8 unchanged sentences

Unallocated corporate expense (1) 161,796 199,270 496,215 562,974

Unallocated mark-to-market losses (gains) on commodity derivatives 53,371 ( 6,780 ) ( 164,644 ) 3,464

Unallocated mark-to-market (gains) losses on commodity derivatives ( 31,083 ) 1,753 ( 195,727 ) 5,217

Costs associated with business realignment activities (see Note 9 )

8 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Net losses (gains) on mark-to-market valuation of commodity derivative positions recognized in income $ ( 32,270 ) $ ( 17,103 ) $ ( 191,734 ) $ ( 52 )

1 unchanged sentence

Net losses (gains) on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses $ ( 31,083 ) $ 1,753 $ ( 195,727 ) $ 5,217

As of June 30, 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 $ 114,437 .

As of September 29, 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 $ 145,520 .

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 $ 39,871 to segment operating results in the next twelve months.

4 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

North America Confectionery $ 64,805 $ 59,921 $ 191,210 $ 176,604

4 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

United States $ 2,640,336 $ 2,683,348 $ 7,273,235 $ 7,459,710

3 unchanged sentences

A summary of our treasury stock activity is as follows:

Six Months Ended June 30, 2024

Nine Months Ended September 29, 2024

Shares Dollars

33 unchanged sentences

Three Months Ended

June 30, 2024 July 2, 2023

September 29, 2024 October 1, 2023

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

19 unchanged sentences

Earnings Per Share—diluted $ 2.20 $ 2.05 $ 2.52 $ 2.36

The earnings per share calculations for the three months ended June 30, 2024 and July 2, 2023 excluded 13 and 12 stock options (in thousands), respectively, that would have been antidilutive.

The earnings per share calculations for the three months ended September 29, 2024 and October 1, 2023 excluded 12 and 8 stock options (in thousands), respectively, that would have been antidilutive.

The Hershey Company | Q3 2024 Form 10-Q | Page 30

2 unchanged sentences

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

Six Months Ended

June 30, 2024 July 2, 2023

Nine Months Ended

September 29, 2024 October 1, 2023

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

19 unchanged sentences

Earnings Per Share—diluted $ 7.00 $ 6.53 $ 7.36 $ 6.91

The earnings per share calculations for the six months ended June 30, 2024 and July 2, 2023 excluded 13 and 12 stock options (in thousands), respectively, that would have been antidilutive.

The earnings per share calculations for the nine months ended September 29, 2024 and October 1, 2023 excluded 13 and 12 stock options (in thousands), respectively, that would have been antidilutive.

The Hershey Company | Q3 2024 Form 10-Q | Page 31

5 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, 2024 July 2, 2023 June 30, 2024 July 2, 2023

Three Months Ended Nine Months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

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

10 unchanged sentences

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

June 30, 2024 December 31, 2023

September 29, 2024 December 31, 2023

Raw materials $ 500,387 $ 481,111

28 unchanged sentences

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

June 30, 2024 December 31, 2023

September 29, 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