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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______to_______
Commission file number 1-183
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THE HERSHEY COMPANY
(Exact name of registrant as specified in its charter)
Delaware23-0691590
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
19 East Chocolate Avenue, Hershey, PA 17033
(Address of principal executive offices and Zip Code)
(717) 534-4200
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, one dollar par valueHSYNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerxAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Common Stock, one dollar par value—149,884,670 shares, as of October 20, 2023.
Class B Common Stock, one dollar par value—54,613,514 shares, as of October 20, 2023.



THE HERSHEY COMPANY
Quarterly Report on Form 10-Q
For the Period Ended October 1, 2023

TABLE OF CONTENTS

The Hershey Company | Q3 2023 Form 10-Q | Page 1
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
 
Three Months EndedNine Months Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Net sales$3,029,987 $2,728,153 $8,507,881 $7,766,956 
Cost of sales
1,669,734 1,619,653 4,633,207 4,412,977 
Gross profit
1,360,253 1,108,500 3,874,674 3,353,979 
Selling, marketing and administrative expense
624,304 551,880 1,777,695 1,619,564 
Business realignment costs  441 274 
Operating profit
735,949 556,620 2,096,538 1,734,141 
Interest expense, net39,755 35,378 114,101 101,970 
Other (income) expense, net42,781 48,157 130,248 78,222 
Income before income taxes653,413 473,085 1,852,189 1,553,949 
Provision for income taxes134,836 73,598 339,444 305,428 
Net income
$518,577 $399,487 $1,512,745 $1,248,521 
Net income per share—basic:
Common stock$2.60 $2.00 $7.56 $6.23 
Class B common stock$2.36 $1.82 $6.93 $5.67 
Net income per share—diluted:
Common stock$2.52 $1.94 $7.36 $6.04 
Class B common stock$2.36 $1.81 $6.91 $5.65 
Dividends paid per share:
Common stock$1.192 $1.036 $3.264 $2.838 
Class B common stock$1.083 $0.942 $2.967 $2.580 

See Notes to Unaudited Consolidated Financial Statements.
The Hershey Company | Q3 2023 Form 10-Q | Page 2
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

For the Three Months Ended
For the Nine Months Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Net income$518,577 $399,487 $1,512,745 $1,248,521 
Other comprehensive income, net of tax:
Foreign currency translation adjustments:
Foreign currency translation gains (losses) during period$(12,461)$ (12,461)$(13,511)$ (13,511)$8,875 $ 8,875 $(15,851)$ (15,851)
Pension and post-retirement benefit plans:
Net actuarial gain (loss) and service cost(35,109)8,417 (26,692)(27,909)6,704 (21,205)(34,185)8,239 (25,946)(66,720)13,895 (52,825)
Reclassification to earnings5,174 (1,242)3,932 6,904 (1,657)5,247 16,062 (3,855)12,207 20,345 (4,883)15,462 
Cash flow hedges:
Gains (losses) on cash flow hedging derivatives2,945 (1,365)1,580 891 (706)185 (538)(3,096)(3,634)245 (1,343)(1,098)
Reclassification to earnings4,198 (163)4,035 2,258 (643)1,615 13,451 (3,267)10,184 9,143 (1,666)7,477 
Total other comprehensive income (loss), net of tax$(35,253)$5,647 (29,606)$(31,367)$3,698 (27,669)$3,665 $(1,979)1,686 $(52,838)$6,003 (46,835)
Comprehensive income$488,971 $371,818 $1,514,431 $1,201,686 

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q3 2023 Form 10-Q | Page 3
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THE HERSHEY COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
October 1, 2023December 31, 2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$471,252 $463,889 
Accounts receivable—trade, net1,127,728 711,203 
Inventories1,347,820 1,173,119 
Prepaid expenses and other243,617 272,195 
Total current assets3,190,417 2,620,406 
Property, plant and equipment, net3,156,064 2,769,702 
Goodwill2,693,182 2,606,956 
Other intangibles1,907,371 1,966,269 
Other non-current assets950,395 944,989 
Deferred income taxes38,242 40,498 
Total assets$11,935,671 $10,948,820 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$1,085,016 $970,558 
Accrued liabilities968,926 832,518 
Accrued income taxes54,864 6,710 
Short-term debt819,880 693,790 
Current portion of long-term debt7,791 753,578 
Total current liabilities2,936,477 3,257,154 
Long-term debt4,086,087 3,343,977 
Other long-term liabilities641,801 719,742 
Deferred income taxes303,666 328,403 
Total liabilities7,968,031 7,649,276 
Stockholders’ equity:
The Hershey Company stockholders’ equity
Preferred stock, shares issued: none in 2023 and 2022
  
Common stock, shares issued: 166,938,702 at October 1, 2023 and 163,439,248 at December 31, 2022
166,939 163,439 
Class B common stock, shares issued: 54,613,514 at October 1, 2023 and 58,113,777 at December 31, 2022
54,614 58,114 
Additional paid-in capital1,321,533 1,296,572 
Retained earnings4,451,463 3,589,781 
Treasury—common stock shares, at cost: 17,063,009 at October 1, 2023 and 16,588,308 at December 31, 2022
(1,776,262)(1,556,029)
Accumulated other comprehensive loss(250,647)(252,333)
Total stockholders’ equity3,967,640 3,299,544 
Total liabilities and stockholders’ equity$11,935,671 $10,948,820 

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q3 2023 Form 10-Q | Page 4
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
October 1, 2023October 2, 2022
Operating Activities
Net income$1,512,745 $1,248,521 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization303,096 279,082 
Stock-based compensation expense56,351 50,640 
Deferred income taxes(16,539)(9,751)
Write-down of equity investments115,418 70,754 
Other75,677 92,632 
Changes in assets and liabilities, net of business acquisition:
Accounts receivable—trade, net(409,688)(259,064)
Inventories(168,110)(201,425)
Prepaid expenses and other current assets(12,937)(40,565)
Accounts payable and accrued liabilities128,178 248,230 
Accrued income taxes83,227 124,965 
Contributions to pension and other benefit plans(21,073)(16,639)
Other assets and liabilities(80,804)(27,186)
Net cash provided by operating activities1,565,541 1,560,194 
Investing Activities
Capital additions (including software)(548,600)(359,993)
Equity investments in tax credit qualifying partnerships(18,132)(159,713)
Business acquisitions, net of cash and cash equivalents acquired(165,818) 
Other investing activities(2,993)9,730 
Net cash used in investing activities(735,543)(509,976)
Financing Activities
Net increase (decrease) in short-term debt126,090 (145,552)
Long-term borrowings, net of debt issuance costs744,092  
Repayment of long-term debt and finance leases(753,545)(3,321)
Cash dividends paid(651,266)(567,989)
Repurchase of common stock(239,910)(355,271)
Proceeds from exercised stock options24,254 30,824 
Taxes withheld and paid on employee stock awards
(34,080)(34,722)
Net cash used in financing activities(784,365)(1,076,031)
Effect of exchange rate changes on cash and cash equivalents(38,270)24,288 
Net increase (decrease) in cash and cash equivalents7,363 (1,525)
Cash and cash equivalents, beginning of period463,889 329,266 
Cash and cash equivalents, end of period$471,252 $327,741 
Supplemental Disclosure
Interest paid$111,678 $90,787 
Income taxes paid264,497 190,724 

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q3 2023 Form 10-Q | Page 5
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HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three Months Ended October 1, 2023 and October 2, 2022
(in thousands)
(unaudited)


Preferred
Stock
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Common
Stock
Accumulated Other
Comprehensive
Loss
Total
Stockholders’
Equity
Balance, July 2, 2023
$ $166,939 $54,614 $1,301,247 $4,171,010 $(1,777,984)$(221,041)$3,694,785 
Net income518,577 518,577 
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 compensation20,884 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 

Preferred
Stock
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Common
Stock
Accumulated Other
Comprehensive
Loss
Total
Stockholders’
Equity
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 compensation18,132 18,132 
Exercise of stock options and incentive-based transactions4,239 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
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Nine Months Ended October 1, 2023 and October 2, 2022
(in thousands)
(unaudited)


Preferred
Stock
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Common
Stock
Accumulated Other
Comprehensive
(Loss) Income
Total
Stockholders’
Equity
Balance, December 31, 2022
$ $163,439 $58,114 $1,296,572 $3,589,781 $(1,556,029)$(252,333)$3,299,544 
Net income1,512,745 1,512,745 
Other comprehensive income1,686 1,686 
Dividends (including dividend equivalents):
Common Stock, $3.264 per share
(484,314)(484,314)
Class B Common Stock, $2.967 per share
(166,749)(166,749)
Conversion of Class B Common Stock into Common Stock3,500 (3,500) 
Stock-based compensation56,644 56,644 
Exercise of stock options and incentive-based transactions(31,683)21,858 (9,825)
Repurchase of common stock (including excise tax)(242,091)(242,091)
Balance, October 1, 2023
$ $166,939 $54,614 $1,321,533 $4,451,463 $(1,776,262)$(250,647)$3,967,640 

Preferred
Stock
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Common
Stock
Accumulated Other
Comprehensive
(Loss) Income
Total
Stockholders’
Equity
Balance, December 31, 2021
$ $160,939 $60,614 $1,260,331 $2,719,936 $(1,195,376)$(249,215)$2,757,229 
Net income1,248,521 1,248,521 
Other comprehensive loss(46,835)(46,835)
Dividends (including dividend equivalents):
Common Stock, $2.838 per share
(414,869)(414,869)
Class B Common Stock, $2.58 per share
(152,390)(152,390)
Conversion of Class B Common Stock into Common Stock2,500 (2,500) 
Stock-based compensation50,592 50,592 
Exercise of stock options and incentive-based transactions(30,461)26,564 (3,897)
Repurchase of common stock(355,271)(355,271)
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 7
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share data or if otherwise indicated)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited consolidated financial statements provided in this report include the accounts of The Hershey Company (the “Company,” “Hershey,” “we” or “us”) and our majority-owned subsidiaries and entities in which we have a controlling financial interest after the elimination of intercompany accounts and transactions. We have a controlling financial interest if we own a majority of the outstanding voting common stock and minority shareholders do not have substantive participating rights, we have significant control through contractual or economic interests in which we are the primary beneficiary or we have the power to direct the activities that most significantly impact the entity’s economic performance. We use the equity method of accounting when we have a 20% to 50% interest in other companies and exercise significant influence. Other investments that are not controlled, and over which we do not have the ability to exercise significant influence, are accounted for under the cost method. Both equity and cost method investments are included as Other non-current assets in the Consolidated Balance Sheets.
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not contain certain information and disclosures required by GAAP for comprehensive financial statements. 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. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):
Disclosure of Supplier Finance Program Obligations. This ASU requires a buyer in a supplier finance program to disclose qualitative and quantitative information about the program including the program’s nature, activity during the period, changes from period to period and potential magnitude. ASU 2022-04 is effective for annual periods beginning after December 15, 2022 and interim periods within those annual periods. A rollforward of obligations during the annual period, including the amount of obligations confirmed and obligations subsequently paid, is effective for annual periods beginning after December 15, 2023 with early adoption permitted. This ASU should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively. 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.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) rather than adjust them to fair value at the acquisition date. ASU 2021-08 is effective for annual periods beginning after December 15, 2022 and interim periods within those annual periods. This ASU should be applied prospectively to business combinations occurring on or after the date of adoption. 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); however, will be applied in relevant future acquisitions.


The Hershey Company | Q3 2023 Form 10-Q | Page 8
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

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. We are currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures.
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.
2. BUSINESS ACQUISITIONS
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. The initial cash consideration paid for Weaver totaled $165,818 and consisted of cash on hand and short-term borrowings. Acquisition-related costs for the Weaver acquisition were immaterial.
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.
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
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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 assets26,100 
Current assets acquired30,835 
Property, plant and equipment, net100,716 
Other non-current assets, primarily operating lease ROU assets111,787 
Deferred income taxes773 
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. 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, 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). 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
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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 assets543,100 
Current assets acquired51,121 
Property, plant and equipment, net40,266 
Other non-current assets2,201 
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.
3. 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:
North America ConfectioneryNorth America Salty SnacksInternationalTotal
Balance at December 31, 2022
$2,018,430 $571,771 $16,755 $2,606,956 
Acquired during the period (see Note 2)
 85,231  85,231 
Foreign currency translation(154) 1,149 995 
Balance at October 1, 2023
$2,018,276 $657,002 $17,904 $2,693,182 


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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset:
October 1, 2023December 31, 2022
Gross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Intangible assets subject to amortization:
Trademarks$1,701,863 $(227,276)$1,701,932 $(190,045)
Customer-related513,142 (115,697)513,188 (93,495)
Patents8,041 (8,041)8,053 (8,053)
Total
2,223,046 (351,014)2,223,173 (291,593)
Intangible assets not subject to amortization:
Trademarks35,339 34,689 
Total other intangible assets
$1,907,371 $1,966,269 
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.
4. SHORT AND LONG-TERM DEBT
Short-term Debt
As a source of short-term financing, we utilize cash on hand and commercial paper or bank loans with an original maturity of three months or less. We maintain a $1.35 billion unsecured revolving credit facility with the option to increase borrowings by an additional $500 million with the consent of the lenders. The credit facility is scheduled to expire on April 26, 2028; however, we may extend the termination date for up to two additional one-year periods upon notice to the administrative agent.
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. For more information, refer to the Consolidated Financial Statements included in our 2022 Annual Report on Form 10-K.

In addition to the revolving credit facility, we maintain lines of credit with domestic and international commercial banks. Commitment fees relating to our revolving credit facility and lines of credit are not material. Short-term debt consisted of the following:
October 1, 2023December 31, 2022
Short-term foreign bank borrowings against lines of credit$181,988$135,555
U.S. commercial paper637,892558,235
Total short-term debt$819,880$693,790
Weighted average interest rate on outstanding commercial paper5.4 %4.3 %



The Hershey Company | Q3 2023 Form 10-Q | Page 12
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

Long-term Debt
Long-term debt consisted of the following:
Debt Type and Rate
Maturity Date
October 1, 2023December 31, 2022
2.625% Notes (1)
May 1, 2023 250,000 
3.375% Notes (1)
May 15, 2023 500,000 
2.050% Notes
November 15, 2024300,000 300,000 
0.900% Notes
June 1, 2025300,000 300,000 
3.200% Notes
August 21, 2025300,000 300,000 
2.300% Notes
August 15, 2026500,000 500,000 
7.200% Debentures
August 15, 2027193,639 193,639 
4.250% Notes (2)
May 4, 2028350,000  
2.450% Notes
November 15, 2029300,000 300,000 
1.700% Notes
June 1, 2030350,000 350,000 
4.500% Notes (2)
May 4, 2033400,000  
3.375% Notes
August 15, 2046300,000 300,000 
3.125% Notes
November 15, 2049400,000400,000
2.650% Notes
June 1, 2050350,000350,000
Finance lease obligations (see Note 7)
72,69673,479
Net impact of interest rate swaps, debt issuance costs and unamortized debt discounts(22,457)(19,563)
Total long-term debt4,093,878 4,097,555 
Less—current portion7,791753,578
Long-term portion$4,086,087 $3,343,977 
(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 EndedNine Months Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Interest expense$45,776 $38,520 $132,175 $109,526 
Capitalized interest(3,932)(2,487)(10,720)(6,155)
Interest expense
41,844 36,033 121,455 103,371 
Interest income(2,089)(655)(7,354)(1,401)
Interest expense, net
$39,755 $35,378 $114,101 $101,970 



The Hershey Company | Q3 2023 Form 10-Q | Page 13
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

5. DERIVATIVE INSTRUMENTS
We are exposed to market risks arising principally from changes in foreign currency exchange rates, interest rates and commodity prices. We use certain derivative instruments to manage these risks. These include interest rate swaps to manage interest rate risk, foreign currency forward exchange contracts to manage foreign currency exchange rate risk, and commodities futures and options contracts to manage commodity market price risk exposures.
In entering into these contracts, we have assumed the risk that might arise from the possible inability of counterparties to meet the terms of their contracts. We mitigate this risk by entering into exchange-traded contracts with collateral posting requirements and/or by performing financial assessments prior to contract execution, conducting periodic evaluations of counterparty performance and maintaining a diverse portfolio of qualified counterparties. We do not expect any significant losses from counterparty defaults.

Commodity Price Risk
We enter into commodities futures and options contracts and other commodity derivative instruments to reduce the effect of future price fluctuations associated with the purchase of raw materials, energy requirements and transportation services. 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.
Derivatives used to manage commodity price risk are not designated for hedge accounting treatment. Therefore, the changes in fair value of these derivatives are recorded as incurred within cost of sales. As discussed in Note 13, we define our segment income to exclude gains and losses on commodity derivatives until the related inventory is sold, at which time the related gains and losses are reflected within segment income.  This enables us to continue to align the derivative gains and losses with the underlying economic exposure being hedged and thereby eliminate the mark-to-market volatility within our reported segment income.

Foreign Exchange Price Risk
We are exposed to foreign currency exchange rate risk related to our international operations, including non-functional currency intercompany debt and other non-functional currency transactions of certain subsidiaries. Principal currencies hedged include the euro, Canadian dollar, Japanese yen, British pound, Brazilian real, Malaysian ringgit, Mexican peso and Swiss franc. We typically utilize foreign currency forward exchange contracts to hedge these exposures for periods ranging from 3 to 12 months. 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 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.

Interest Rate Risk
In order to manage interest rate exposure, from time to time, we enter into interest rate swap agreements to protect against unfavorable interest rate changes relating to forecasted debt transactions. These swaps, which are settled upon issuance of the related debt, are designated as cash flow hedges and the gains and losses that are deferred in other comprehensive income are being recognized as an adjustment to interest expense over the same period that the hedged interest payments affect earnings.
Equity Price Risk
We are exposed to market price changes in certain broad market indices related to our deferred compensation obligations to our employees. To mitigate this risk, we use equity swap contracts to hedge the portion of the exposure that is linked to market-level equity returns. These contracts are not designated as hedges for accounting purposes and are entered into for periods of 3 to 12 months. 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 Hershey Company | Q3 2023 Form 10-Q | Page 14
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(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, 2023December 31, 2022
Assets (1)Liabilities (1)Assets (1)Liabilities (1)
Derivatives designated as cash flow hedging instruments:
Foreign exchange contracts$3,080 $3,022 $3,921 $261 
Derivatives not designated as hedging instruments:
Commodities futures and options (2)874 3,861 685 662 
Deferred compensation derivatives1,776  1,222  
Foreign exchange contracts116 59 246  
2,766 3,920 2,153 662 
Total$5,846 $6,942 $6,074 $923 

(1)Derivative assets are classified on our Consolidated Balance Sheets within prepaid expenses and other as well as other non-current assets. 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. The comparable amounts reflected on a net basis in liabilities at December 31, 2022 were assets of $25,308 and liabilities of $25,296. 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.

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 HedgesCash 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)
202320222023202220232022
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)    
Total
$15,417 $(15,181)$2,945 $891 $(4,198)$(2,258)

The Hershey Company | Q3 2023 Form 10-Q | Page 15
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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:
Non-designated HedgesCash 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)
202320222023202220232022
Commodities futures and options
$52 $28,027 $ $ $ $ 
Foreign exchange contracts 359 (173)(3,711)245 (196)(956)
Interest rate swap agreements
  3,173  (13,255)(8,187)
Deferred compensation derivatives
1,776 (6,142)    
Total
$2,187 $21,712 $(538)$245 $(13,451)$(9,143)

(a)Gains (losses) recognized in income for non-designated commodities futures and options contracts were included in cost of sales. Gains (losses) recognized in income for non-designated foreign currency forward exchange contracts and deferred compensation derivatives were included in selling, marketing and administrative expenses.
(b)Gains (losses) reclassified from AOCI into income for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses. 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. This amount is primarily associated with interest rate swap agreements.
6. FAIR VALUE MEASUREMENTS
Accounting guidance on fair value measurements requires that financial assets and liabilities be classified and disclosed in one of the following categories of the fair value hierarchy:
Level 1 – Based on unadjusted quoted prices for identical assets or liabilities in an active market.
Level 2 – Based on observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3 – Based on unobservable inputs that reflect the entity’s own assumptions about the assumptions that a market participant would use in pricing the asset or liability.

We did not 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
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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:
Assets / Liabilities
Level 1Level 2Level 3Total
October 1, 2023:
Derivative Instruments:
Assets:
Foreign exchange contracts (1)$$1,390$$1,390
Deferred compensation derivatives (2)$$1,103$$1,103
Commodities futures and options (3)$874$$$874
Liabilities:
Foreign exchange contracts (1)$$5,561$$5,561
Commodities futures and options (3)$3,861$$$3,861
December 31, 2022:
Assets:
Foreign exchange contracts (1)$$4,167$$4,167
Deferred compensation derivatives (2)$$1,222$$1,222
Commodities futures and options (3)$685$$