Hershey (HSY) 10-K risk factor changes: FY2023 vs FY2022

Approximately [removed: 70%] [added: 72%] of our manufacturing capacity is located in the United States.

- [removed: Pandemic] [added: Pandemics, epidemics or other] outbreak of disease (such as the coronavirus disease 2019 (“COVID-19”) global pandemic);

If we are unable, or find that it is not financially feasible, to effectively plan for, mitigate or manage operational stability and business [removed: resiliency,] [added: resiliency risks,] particularly within our international markets and snacks portfolio, due to the potential impacts of such disruptive events on our manufacturing operations or supply chain, our financial condition and results of operations could be negatively impacted if such events were to occur.

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In particular, if we are unable to hire the right individuals to fill new or existing senior management positions as vacancies arise, our business performance may be [added: adversely] impacted.

If we are not able to effectively retain and grow our talent, our ability to achieve our strategic objectives will be adversely affected, which may [added: negatively] impact our financial condition and results of operations.

Climate change or weather-related disruptions to our supply chain can impact the availability and cost of materials needed for [removed: manufacturing and could] [added: manufacturing, which may] increase insurance and other operating costs.

New or increasing laws and regulations related to GHG emissions and other climate change related concerns may adversely affect us, our suppliers and our customers, and may require [added: the Company to invest in] additional capital [removed: investments.][added: investments to maintain compliance.]

The GHG impacts of land-use change are most pronounced in our cocoa supply chain, where we have already been working for several years to prevent [removed: deforestation.][added: deforestation and build climate resilience.]

An enforcement action [added: for non-compliance with regulations or reporting requirements] could harm our reputation, financial position and ability to grow.

A failure to meet [added: investor or other external stakeholder] expectations [added: or standards] may adversely affect our results of operations, ability to manage our liquidity, or [added: ability to] implement our strategies.

The Company publishes its environmental goals, with a particular focus on achieving a 50% absolute reduction in our Scope 1 and 2 GHG emissions and a 25% absolute reduction in our Scope 3 GHG emissions by 2030 (compared to a 2018 baseline), as well as having 100% of plastic packaging be [removed: reusable, recyclable] [added: recyclable, reusable] or compostable and [added: eliminating] 25 million pounds of packaging [removed: be eliminated] by 2030.

Any failure to achieve our goals, a perception of our failure to act responsibly with respect to the environment, or failure to respond to new or evolving legal and regulatory [removed: requirements or other sustainability concerns could adversely affect our business, reputation and increase risk of litigation.]

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- Currency [removed: exchanges] [added: exchange] rates;

- Other events beyond our control such as the impacts on the business or supply chain arising from the [added: ongoing] conflict between Russia and Ukraine.

Although we use forward contracts and commodity futures and options contracts [removed: where possible] to hedge commodity [removed: prices,] [added: prices where possible,] commodity price increases ultimately result in corresponding increases in our raw material and energy costs.

- [removed: Changes] [added: Our ability to react to changes] in product category consumption;

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- Consumer health [added: and wellness] concerns, including [removed: obesity] [added: weight management (i.e., use of medications, dieting)] and the consumption of certain ingredients.

Our largest customer, McLane Company, Inc., accounted for approximately 28% of our total net sales in [removed: 2022.][added: 2023.]

Some of our competitors are large [removed: companies] [added: private companies, as well as large retailers,] that have significant resources and substantial international operations.

While we believe significant operating synergies can be obtained in connection with these acquisitions, achievement of these synergies will be driven by our ability to successfully leverage Hershey’s [removed: resources, expertise, capability-building, distribution locations and customer base.]

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In [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] respectively, we derived approximately [removed: 12.5%, 13.0%] [added: 12.7%, 12.5%] and [removed: 13.6%] [added: 13.0%] of our net sales from customers located outside of the United States.

Additionally, approximately [removed: 18%] [added: 17%] of our total long-lived assets were located outside of the United States as of December 31, [removed: 2022.][added: 2023.]

Additionally, from time to time we implement business realignment activities to support key strategic initiatives designed to maintain long-term sustainable growth, such as the International Optimization Program, which we commenced in the fourth quarter of [removed: 2020.][added: 2020 and completed in 2023.]

This program [removed: is] [added: was] intended to increase our operating effectiveness and efficiency, to reduce our costs and/or to generate savings that can be reinvested in other areas of our [removed: business.]

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Changes in [added: U.S. and non-U.S.] laws and regulations and the manner in which they are interpreted or applied may alter our business environment.

Political, economic and/or financial market conditions, including impacts on our business arising from the [added: ongoing] conflict between Russia and Ukraine, could negatively impact our financial results.

Volatility in food and energy costs, sustained global recessions, broad political instability, rising unemployment, [removed: pandemic] [added: pandemic, or other] outbreak of disease (such as COVID-19), climate change, weather, natural and other disasters and declines in personal spending could adversely impact our revenues, profitability and financial condition.

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[removed: While we] [added: We] have been subject to cyber attacks, ransomware and other security breaches, [added: though] these incidents [removed: did not] [added: historically] have [added: not had] a significant impact on our business operations.

[removed: Nevertheless, despite] [added: Despite] continued vigilance in these areas, disruptions in or failures of information technology systems are possible and could have a negative impact on our operations or business reputation.

Failure of our systems, including failures due to cyber [removed: attacks] [added: attacks, ransomware or other security breaches] that would prevent the ability of systems to function as intended, could cause transaction errors, loss of customers and sales, and could have negative consequences to our Company, our employees and those with whom we do business.

In addition, the cost to remediate any damages to our information technology systems suffered as a result of a cyber [removed: attack] [added: attack, ransomware or other security breach] could be significant.

We have in the past recalled or removed certain products from store shelves, and may in the future need to do so again in the future.

- Natural disasters;

- Fires or explosions;

- Third party service provider disruptions, such as cyber breaches or system failures;

We believe our sustainability practices, disclosures and performance are focused on the most material risks and opportunities to our business and support our environmental goals and continue to evolve to meet the growing needs of our stakeholders.

requirements or other sustainability concerns could adversely affect our business, reputation and increase risk of litigation.

In 2023, we completed the acquisition of certain assets that provide additional manufacturing capacity from Weaver Popcorn, a manufacturer of *SkinnyPop* popcorn, which helped us strengthen our supply chain capabilities.

resources, expertise, capability-building, distribution locations and customer base.

business.

Additionally, in February 2024, the Board of Directors approved the Advancing Agility & Automation Initiative, which is a multi-year productivity program 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.

For example, the European Union’s Deforestation Regulation (“EUDR”) will require the Company to conduct extensive diligence on seven commodities, including cocoa, palm oil and soy, as well as products derived from these commodities, such as chocolate, and the value chain, to ensure the goods do not result from recent deforestation, forest degradation, or breaches of local laws in order to sell such products in the European Union market or exported from it.

The EUDR is scheduled to be effective in December 2024.

The EUDR, and other current or proposed regulations in markets in which we operate, are likely to increase our compliance costs, could depress sales in such markets if our products are not in compliance by applicable effective dates, and could result in fines and penalties or reputational harm if we do not fully comply.

Employees are trained annually on cybersecurity wellness and our acceptable use policy and we have implemented phishing simulations to increase awareness and compliance.

We also currently maintain a cyber insurance policy that provides coverage for security breaches; however, such insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attacks and other related breaches.

The techniques that are used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and may be difficult to detect for long periods of time, and the sophistication of efforts by hackers to gain unauthorized access to information systems has continued to increase in recent years and may continue to do so.

For instance, in September 2023, we experienced a smishing breach, which did not have an impact on our consolidated financial statements.

Promptly after extracting the threat actor, we worked with a cyber expert firm and determined that certain employee and third-party personal information was exposed.

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We have in the past and may in the future need to recall products if any of our products become unfit for consumption.

- Natural disaster;

- Fire or explosion;

We believe our practices, disclosures and performance are strong and growing.

We believe our security technology tools and processes provide adequate measures of protection against security and data breaches and in reducing cybersecurity risks.

- [Business Model and Growth [removed: Strategy](#i99b894486862473eb1bc3dfcf6405c73_43)][added: Strategy](#i4548f14c535242b19fed9e6fe5606926_43)]

- [Trends Affecting Our [removed: Business](#i99b894486862473eb1bc3dfcf6405c73_49)][added: Business](#i4548f14c535242b19fed9e6fe5606926_49)]

- [Consolidated Results of [removed: Operations](#i99b894486862473eb1bc3dfcf6405c73_52)][added: Operations](#i4548f14c535242b19fed9e6fe5606926_52)]

- [Segment [removed: Results](#i99b894486862473eb1bc3dfcf6405c73_55)][added: Results](#i4548f14c535242b19fed9e6fe5606926_55)]

- [Liquidity and Capital [removed: Resources](#i99b894486862473eb1bc3dfcf6405c73_58)][added: Resources](#i4548f14c535242b19fed9e6fe5606926_58)]

- [Critical Accounting Policies and [removed: Estimates](#i99b894486862473eb1bc3dfcf6405c73_61)][added: Estimates](#i4548f14c535242b19fed9e6fe5606926_61)]

We report our operations through three segments: (i) North America Confectionery, (ii) North America Salty Snacks and (iii) International, as discussed in [Note [removed: 13](#i99b894486862473eb1bc3dfcf6405c73_136)] [added: 13](#i4548f14c535242b19fed9e6fe5606926_136)] to the Consolidated Financial Statements.

◦To expand our breadth in [removed: snacking,] [added: snacking and become a leading snacking powerhouse,] we are focused on [removed: expanding] [added: continuing to expand] the boundaries of our core confection brands to capture new snacking occasions and increasing our exposure into new snack categories through acquisitions.

Our expansion into snacking [removed: recently has been] [added: was] fueled by the acquisitions of Dot’s and Pretzels in December [removed: 2021,] [added: 2021 and the acquisition of Weaver in 2023,] which are included in our North America Salty Snacks segment.

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We utilize continuous listening surveys that are distributed throughout the year to all employees [removed: globally.][added: globally to hear their thoughts on the Company’s direction and their place in it.]

In [removed: 2022,] [added: 2023,] we maintained fair and equitable pay achievements, including 1:1 aggregate people of color pay equity [removed: for salaried employees in the United States] (2021) and 1:1 aggregate gender pay [removed: (2020).][added: (2020) for salaried employees in the United States.]

◦We [removed: have made strong] [added: continue to make] progress on our ESG priorities and continue to elevate these ESG initiatives for a greater global impact.

[removed: While we] [added: Through our] focus on sustainability and social impact across our value chain, we continue to improve and focus on the lives of cocoa farmers and cocoa communities, the environmental priorities of climate change and the role of packaging in our business, responsibly and sustainably sourcing the inputs to our products and increasing investments in human rights and diversity initiatives and growing diverse representation across the organization.

We market, sell and distribute our products under more than [removed: 100] [added: 90] brand names in approximately 80 countries worldwide.

Pretzels provides Hershey with deep pretzel category and product expertise and the manufacturing capabilities to support brand growth and future pretzel [removed: innovation.]

Additionally, 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 [removed: product.][added: product, which complements Hershey’s snacks portfolio.]

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[removed: As a result,] [added: Additionally,] we [removed: experienced] [added: continued to experience] corresponding incremental costs and gross margin pressures during the year ended December 31, [removed: 2022] [added: 2023] (see [removed: [Results] [added: [Consol](#i4548f14c535242b19fed9e6fe5606926_52)[idated R](#i4548f14c535242b19fed9e6fe5606926_52)[esults] of [removed: Operations](#i99b894486862473eb1bc3dfcf6405c73_52)] [added: Operations](#i4548f14c535242b19fed9e6fe5606926_52)] included in this MD&A).

[removed: In addition to broad-based supply chain disruptions,] [added: Furthermore,] certain geopolitical events, specifically the conflict between Russia and Ukraine, have increased global economic and political uncertainty.

For the year ended December 31, [removed: 2022,] [added: 2023,] this conflict did not have a material impact on our commodity prices or supply availability.

As of December 31, [removed: 2022,] [added: 2023,] we believe we have sufficient liquidity to satisfy our key strategic initiatives and other material cash requirements in both the short-term and in the long-term; however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can operate effectively during the current economic environment.

We continue to monitor our discretionary spending across the organization (see [Liquidity and Capital [removed: Resources](#i99b894486862473eb1bc3dfcf6405c73_58)] [added: Resources](#i4548f14c535242b19fed9e6fe5606926_58)] included in this MD&A).

Based on the length and severity of [removed: broad-based supply chain disruptions,] fluctuating levels of inflation, [added: including price volatility for our commodities, the likelihood of a potential recession,] changes in consumer shopping and consumption behavior, and [added: changes in geopolitical events, including] the [added: ongoing] conflict between Russia and Ukraine, we may experience increasing supply chain [removed: costs and] [added: costs,] higher [removed: inflation.][added: inflation and other impacts to our business.]

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| For the years ended December 31, | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2022] [added: 2023] vs [removed: 2021] [added: 2022] | | | | | | [removed: 2021] [added: 2022] vs [removed: 2020] [added: 2021] | | |

| Net sales | | | | | | $ | [removed: 10,419.3] [added: 11,165.0] | | | | | $ | [removed: 8,971.3] [added: 10,419.3] | | | | | $ | [removed: 8,149.7] [added: 8,971.3] | | | | | [removed: 16.1] [added: 7.2] | | % | | | | [removed: 10.1] [added: 16.1] | | % |

| Cost of sales | | | | | | [removed: 5,920.5] [added: 6,167.2] | | | | | | [removed: 4,922.7] [added: 5,920.5] | | | | | | [removed: 4,448.5] [added: 4,922.7] | | | | | | [removed: 20.3] [added: 4.2] | | % | | | | [removed: 10.7] [added: 20.3] | | % |

| Gross profit | | | | | | [removed: 4,498.8] [added: 4,997.8] | | | | | | [removed: 4,048.6] [added: 4,498.8] | | | | | | [removed: 3,701.2] [added: 4,048.6] | | | | | | 11.1 | | % | | | | [removed: 9.4] [added: 11.1] | | % |

| *Gross margin* | | | | | | [removed: *43.2*] [added: *44.8*] | | *%* | | | | [removed: *45.1*] [added: *43.2*] | | *%* | | | | [removed: *45.4*] [added: *45.1*] | | *%* | | | | | | | | | | | | |

| *SM&A expense as a percent of net sales* | | | | | | [removed: *21.5*] [added: *21.8*] | | *%* | | | | [removed: *22.3%*] [added: *21.5%*] | | | | | | [removed: *23.2%*] [added: *22.3%*] | | | | | | | | | | | | | | |

| Business realignment costs | | | | | | [removed: 2.0] [added: 0.4] | | | | | | [removed: 3.5] [added: 2.0] | | | | | | [removed: 18.5] [added: 3.5] | | | | | | [removed: (43.6)] [added: (77.8)] | | % | | | | [removed: (80.9)] [added: (43.6)] | | % |

| Operating profit | | | | | | [removed: 2,260.8] [added: 2,560.9] | | | | | | [removed: 2,043.7] [added: 2,260.8] | | | | | | [removed: 1,782.7] [added: 2,043.7] | | | | | | [removed: 10.6] [added: 13.3] | | % | | | | [removed: 14.6] [added: 10.6] | | % |

| *Operating profit margin* | | | | | | [removed: *21.7*] [added: *22.9*] | | *%* | | | | [removed: *22.8*] [added: *21.7*] | | *%* | | | | [removed: *21.9*] [added: *22.8*] | | *%* | | | | | | | | | | | | |

| Interest expense, net | | | | | | [removed: 137.6] [added: 151.8] | | | | | | [removed: 127.4] [added: 137.6] | | | | | | [removed: 149.4] [added: 127.4] | | | | | | [removed: 8.0] [added: 10.3] | | % | | | | [removed: (14.7)] [added: 8.0] | | % |

| Other (income) expense, net | | | | | | [removed: 206.1] [added: 237.2] | | | | | | [removed: 119.1] [added: 206.1] | | | | | | [removed: 138.3] [added: 119.1] | | | | | | [removed: 73.1] [added: 15.1] | | % | | | | [removed: (13.9)] [added: 73.1] | | % |

| Provision for income taxes | | | | | | [removed: 272.3] [added: 310.1] | | | | | | [removed: 314.4] [added: 272.3] | | | | | | [removed: 219.6] [added: 314.4] | | | | | | [removed: (13.4)] [added: 13.9] | | % | | | | [removed: 43.2] [added: (13.4)] | | % |

| *Effective income tax rate* | | | | | | [removed: *14.2*] [added: *14.3*] | | *%* | | | | [removed: *17.5*] [added: *14.2*] | | *%* | | | | [removed: *14.7*] [added: *17.5*] | | *%* | | | | | | | | | | | | |

| Net income including noncontrolling interest | | | | | | [removed: 1,644.8] [added: 1,861.8] | | | | | | [removed: 1,482.8] [added: 1,644.8] | | | | | | [removed: 1,275.4] [added: 1,482.8] | | | | | | [removed: 10.9] [added: 13.2] | | % | | | | [removed: 16.3] [added: 10.9] | | % |

| Less: Net gain (loss) attributable to noncontrolling interest | | | | | | — | | | | | | [removed: 5.3] [added: —] | | | | | | [removed: (3.3)] [added: 5.3] | | | | | | NM | | | | | | NM | | |

- [Overview](#i4548f14c535242b19fed9e6fe5606926_46)

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.

innovation.

Throughout 2023, the rate of inflation has slowed; however, negative macroeconomic conditions and future outlook, including fears of a pending recession, have negatively impacted consumer behaviors.

Net sales and net income increased during the year ended December 31, 2023; however, this was primarily driven by price increases on certain products across our portfolio.

Despite specific actions taken to mitigate these gross margin pressures, higher prices for direct materials used to manufacture our products were, and continue to be, the primary incremental cost to our business.

We utilize many exchange traded commodities for our business that are subject to price volatility, specifically cocoa products, which experienced an average increase in market prices of approximately 32% during 2023.

We continue to monitor and use our risk management strategy where possible to hedge commodity prices in order to mitigate corresponding increases in our raw materials and energy costs.

| Selling, Marketing & Administrative (“SM&A”) expense | | | | | | 2,436.5 | | | | | | 2,236.0 | | | | | | 2,001.4 | | | | | | 9.0 | | % | | | | 11.7 | | % |

*2023 compared with 2022*

Net sales were $11,165.0 million in 2023 compared to $10,419.3 million in 2022, an increase of $745.7 million, or 7.2%.

The net sales increase reflects a favorable price realization of 8.3% due to higher list prices across all segments and by a favorable impact from foreign currency exchange rates of 0.2%.

These increases were slightly offset by a volume decrease of 1.3% due to a decrease in consumer demand primarily in everyday core U.S. confection brands.

Net sales were $10,419.3 million in 2022 compared to $8,971.3 million in 2021, an increase of $1,448.0 million, or 16.1%.

Our Salty consumer takeaway increased 5.6% and experienced a Salty market share decline of 9 basis points.

*2023 compared with 2022*

Cost of sales were $6,167.2 million in 2023 compared to $5,920.5 million in 2022, an increase of $246.7 million, or 4.2%.

The increase included $356.2 million of unfavorable costs driven by higher supply chain costs, including higher labor costs partially offset by lower logistics costs, and unfavorable mix.

The increase was further driven by an incremental $97.7 million of unfavorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases (See [Item 7A -](#i4548f14c535242b19fed9e6fe5606926_64) [Quantitative and Qualitative Disclosures About Market Risk](#i4548f14c535242b19fed9e6fe5606926_64) for more information).

These increases were partially offset by $207.2 million of favorable supply chain productivity and price realization.

Gross margin was 44.8% in 2023 compared with 43.2% in 2022, an increase of 160 basis points.

The increase was partially offset by unfavorable activity on our mark-to-market impact from commodity derivative instruments, higher supply chain costs, including higher labor costs and increased waste.

The increase was further driven by unfavorable mix and foreign exchange rates.

Cost of sales were $5,920.5 million in 2022 compared with $4,922.7 million in 2021, an increase of $997.8 million, or 20.3%.

Additionally, we incurred incremental costs of $263.3 million associated with our 2021 acquisitions of Dot’s and Pretzels.

These increases were offset by $74.0 million of favorable price realization and supply chain productivity.

Gross margin was 43.2% in 2022 compared with 45.1% 2021, a decrease of 190 basis points.

*2023 compared with 2022*

Selling, marketing and administrative (“SM&A”) expenses were $2,436.5 million in 2023 compared to $2,236.0 million in 2022, an increase of $200.5 million, or 9.0%.

The increase was driven by increased corporate expenses.

Additionally, in February 2024, the Board of Directors approved the Advancing Agility & Automation Initiative, which is a multi-year productivity program 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.

*2023 compared with 2022*

Operating profit was $2,560.9 million in 2023 compared to $2,260.8 million in 2022, an increase of $300.1 million, or 13.3%.

Operating profit was $2,260.8 million in 2022 compared to $2,043.7 million in 2021, an increase of $217.1 million, or 10.6%.

The increase was predominantly due to higher gross profit, partially offset by higher SM&A expenses, as noted above.

*2023 compared with 2022*

Net interest expense was $151.8 million in 2023 compared to $137.6 million in 2022, an increase of $14.2 million, or 10.3%.

The increase was primarily due to higher rates on short-term debt balances in 2023 versus 2022, specifically related to outstanding commercial paper borrowings, and higher rates on long-term debt balances, specifically related to the $350 million 4.25% Notes and $400 million 4.50% Notes issued in May 2023.

The increase in the expense was partially offset by an increase in interest income.

Net interest expense was $137.6 million in 2022 compared to $127.4 million in 2021, an increase of $10.2 million, or 8.0%.

- [Overview](#i99b894486862473eb1bc3dfcf6405c73_46)

These short and fast surveys reach all of our employees around the world to hear their thoughts on the Company’s direction and their place in it.

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

During the second quarter of 2020, we completed the divestitures of KRAVE Pure Foods, Inc. (“Krave”), which was previously included within the North America Salty Snacks segment, and the *Scharffen Berger* and *Dagoba* brands, both of which were previously included within the North America Confectionery segment results in our consolidated financial statements.

Demand for consumer goods has remained strong throughout 2022, with continued positive consumer patterns identified for our products, as well as increased consumer optimism and mobility, including retail foot traffic.

However, negative macroeconomic conditions, including inflation on inputs to consumer products, labor shortages and demand outpacing supply, have led to broad-based supply chain disruptions across the U.S. and globally.

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

Net sales and net income increased during the year ended December 31, 2022, which was primarily driven by strong everyday performance on our core U.S. confection brands and salty snack brands (see [Segment Results](#i99b894486862473eb1bc3dfcf6405c73_55) included in this MD&A), partially offset by the aforementioned supply chain disruptions and gross margin pressures.

| SM&A expense | | | | | | 2,236.0 | | | | | | 2,001.4 | | | | | | 1,890.9 | | | | | | 11.7 | | % | | | | 5.8 | | % |

| Long-lived asset impairment charges | | | | | | — | | | | | | — | | | | | | 9.1 | | | | | | NM | | | | | | NM | | |

*2021 compared with 2020*

Cost of sales increased 20.3% in 2022 compared with 2021.

Gross margin decreased by 200 basis points in 2022 compared with 2021.

Cost of sales increased 10.7% in 2021 compared with 2020.

These drivers were partially offset by the incremental $78.8 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases; however, our mark-to-market activity was significantly impacted by financial market volatility during March 2020 amid the COVID-19 outbreak.

Gross margin decreased by 30 basis points in 2021 compared with 2020.

The decrease was driven by higher freight and logistics costs and additional plant costs.

These factors were partially offset by favorable price realization, supply chain productivity and the favorable year-over-year mark-to-market impact from commodity derivative instruments.

SM&A expenses increased $110.4 million, or 5.8%, in 2021 driven by increased corporate expenses.

Long-Lived Asset Impairment Charges

In 2022 and 2021, we recorded no impairments charges.

In 2020, we recorded the following impairment charges:

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Adjustment to disposal group (1) | | | | | | $ | 6.2 | |

| Other asset write-down (2) | | | | | | 2.9 | | |

| Long-lived asset impairment charges | | | | | | $ | 9.1 | |

(1)In connection with our LSFC disposal group, which was previously classified as held for sale during 2020, we recorded impairment charges to adjust long-lived asset values.

The fair value of the disposal group was supported by potential sales prices with third-party buyers.

The sale of the LSFC joint venture was completed in January 2021.

(2)In connection with a previous sale, the Company wrote-down certain receivables deemed uncollectible.

The assessment of the valuation of goodwill and other long-lived assets is based on management estimates and assumptions, as discussed in our critical accounting policies included in [Item 7](#i99b894486862473eb1bc3dfcf6405c73_61) of this Annual Report on Form 10-K.

These estimates and assumptions are subject to change due to changing economic and competitive conditions.

Operating profit increased 14.6% in 2021 compared with 2020 due primarily to higher gross profit, lower business realignment costs and lower impairment charges, partially offset by higher SM&A in the 2021 period, as noted above.

Net interest expense was $10.1 million higher in 2022 than in 2021.

Net interest expense was $22.0 million lower in 2021 than in 2020.

The decrease was due to lower average long-term debt balances in 2021 versus 2020, specifically resulting from $435 million of long-term debt repayments with varying maturity dates during 2021.

Other (income) expense, net totaled an expense of $119.1 million in 2021 versus an expense of $138.3 million in 2020.

Net income increased $167.3 million, or 11.3%, while EPS-diluted increased $0.85, or 12.0%, in 2022 compared with 2021.

Net income increased $198.8 million, or 15.5%, while EPS-diluted increased $1.00, or 16.4%, in 2021 compared with 2020.

Refer to [Note [removed: 1](#i99b894486862473eb1bc3dfcf6405c73_97)] [added: 1](#i4548f14c535242b19fed9e6fe5606926_97)] and [Note [removed: 5](#i99b894486862473eb1bc3dfcf6405c73_112)] [added: 5](#i4548f14c535242b19fed9e6fe5606926_112)] to the Consolidated Financial Statements for further discussion of these derivative instruments and our hedging policies.

A hypothetical 100 basis point increase in interest rates applied to this variable-rate [added: short-term] debt [removed: through its] [added: as of] December [removed: 2020 maturity] [added: 31, 2023] would have [removed: increased] [added: changed] interest expense by approximately [removed: $3.2] [added: $3.1] million for [removed: 2020.][added: 2023 and $4.5 million for 2022.]

[removed: In addition, the] [added: The] total amount of short-term debt, net of cash, amounted to net debt of [removed: $230] [added: $318] million and net debt of [removed: $610] [added: $230] million, respectively, at December 31, [removed: 2022] [added: 2023] and [removed: 2021.][added: 2022.]

A 100 basis point increase in market interest rates would decrease the fair value of our fixed-rate long-term debt at December 31, [removed: 2022] [added: 2023] and December 31, [removed: 2021] [added: 2022] by approximately [removed: $187] [added: $203] million and [removed: $319] [added: $187] million, respectively.

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 41] [added: 43] | | | [removed: ] [added: ] | | |

| December 31, | | | | | | [removed: 2022] [added: 2023] | | | | | | | | | | | | [removed: 2021] [added: 2022] | | | | | | | | |

| Foreign currency forward exchange contracts to purchase foreign currencies | | | | | | $ | [removed: 58.3] [added: 88.8] | | | | | Euros Malaysian ringgit [added: British pound] | | | | | | $ | [removed: 53.1] [added: 58.3] | | | | | Euros Malaysian ringgit [removed: British pound] | | |

| Foreign currency forward exchange contracts to sell foreign currencies | | | | | | $ | [removed: 119.6] [added: 155.3] | | | | | Canadian dollars Brazilian reals Japanese yen [removed: Mexican Pesos] | | | | | | $ | [removed: 144.7] [added: 119.6] | | | | | Canadian dollars Brazilian reals Japanese yen [added: Mexican pesos] | | |

At December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the net fair value of these instruments was an asset of [removed: $3.9] [added: $0.7] million and an asset of [removed: $2.8] [added: $3.9] million, respectively.

In addition, assuming an unfavorable 10% change in year-end foreign currency exchange rates, the fair value of these instruments would have declined by [removed: $18.4] [added: $20.2] million and [removed: $24.8] [added: $18.4] million, respectively, generally offset by a reduction in foreign exchange associated with our transactional activities.

- Currency [removed: exchanges] [added: exchange] rates;

- Other events beyond our control such as the impacts on the business or supply chain arising from the [added: ongoing] conflict between Russia and Ukraine.

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During [removed: 2022,] [added: 2023,] average cocoa futures contract prices [removed: decreased 0.9%] [added: increased 31.9%] compared with [removed: 2021] [added: 2022] and [removed: continued] [added: traded higher every month from January] to [removed: trade in a narrow range between $1.06] [added: December from $1.19] and [removed: $1.22] [added: $1.90] per pound, based on the Intercontinental Exchange futures contract.

| | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Annual Average | | | | | | $ | [removed: 1.13] [added: 1.49] | | | | | $ | [removed: 1.14] [added: 1.13] | | | | | $ | [removed: 1.11] [added: 1.14] | | | | | $ | [removed: 1.03] [added: 1.11] | | | | | $ | [removed: 1.06] [added: 1.03] | |

| High | | | | | | [removed: 1.22] [added: 1.90] | | | | | | [removed: 1.27] [added: 1.22] | | | | | | [removed: 1.29] [added: 1.27] | | | | | | [removed: 1.14] [added: 1.29] | | | | | | [removed: 1.23] [added: 1.14] | | |

| Low | | | | | | [removed: 1.06] [added: 1.19] | | | | | | [removed: 1.04] [added: 1.06] | | | | | | [removed: 1.00] [added: 1.04] | | | | | | [removed: 0.90] [added: 1.00] | | | | | | [removed: 0.88] [added: 0.90] | | |

The price of sugar is subject to price supports under U.S. farm [removed: legislation.][added: legislation, which establishes import quotas and duties to support the price of sugar.]

The U.S. delivered east coast refined sugar prices traded in a range from [removed: $0.53] [added: $0.62] to [removed: $0.71] [added: $0.68] per pound during [removed: 2022.][added: 2023.]

Prices were historically high throughout [removed: 2022] [added: 2023] due to lack of imports by the U.S. government resulting in an extremely tight domestic raw sugar market and [added: continued] strong demand which resulted in a scarcity market for much of the year.

Corn prices traded in [removed: a] [added: the] range from [removed: $5.62] [added: $4.74] to [removed: $8.25] [added: $6.83] per bushel during [removed: 2022.][added: 2023.]

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 43] [added: 45] | | | [removed: ] [added: ] | | |

During [removed: 2022] [added: 2023] prices for fluid dairy milk ranged from a low of [removed: $0.23] [added: $0.176] per pound to a high of [removed: $0.26] [added: $0.214] per pound, on a Class IV milk basis.

Fluid dairy milk prices were [removed: higher] [added: lower] than [removed: 2021,] [added: 2022,] driven by [removed: declines] [added: increases] in [removed: U.S.] [added: global] milk production [added: linked to improved farmer margins,] and [removed: higher global] [added: exacerbated by a decline in U.S.] dairy [removed: demand.][added: ingredient exports.]

In [removed: 2022] [added: 2023] we continued utilizing soft and hard wheat futures as a risk management tool for our flour purchasing.

[removed: The] [added: For the second year in a row, the] conflict between Russia and Ukraine, in addition to poor U.S. weather, [removed: resulted] [added: continued to result] in [removed: uncertainty] [added: volatility] in the wheat market and impacted global availability of supplies.

Hard wheat prices traded in the range of [removed: $7.72] [added: $6.20] to [removed: $13.21] [added: $8.94] per bushel during [removed: 2022,] [added: 2023,] while soft wheat prices traded in the range of [removed: $7.40] [added: $5.78] to [removed: $12.29] [added: $7.86] per bushel during [removed: 2022.][added: 2023.]

Peanut prices in the U.S. ranged from a low of [removed: $0.55] [added: $0.59] per pound to a high of [removed: $0.64] [added: $0.71] per pound during [removed: 2022.][added: 2023.]

Prices [removed: rose this year] [added: increased in 2023] due to higher [removed: competing crop prices] [added: export demand in the latter half of the year] and a smaller peanut crop.

Almond prices traded in the range of [removed: $2.00] [added: $1.75] per pound to [removed: $2.25] [added: $2.15] per pound during [removed: 2022.][added: 2023.]

Our open commodity derivative contracts had a notional value of [removed: $243.0] [added: $94.9] million as of December 31, [removed: 2022] [added: 2023] and [removed: $313.2] [added: $243.0] million as of December 31, [removed: 2021.][added: 2022.]

At the end of [removed: 2022,] [added: 2023,] the potential change in fair value of commodity derivative instruments, assuming a 10% decrease in the underlying commodity price, would have increased our net unrealized losses in [removed: 2022] [added: 2023] by [removed: $25.1] [added: $5.4] million, generally offset by a reduction in the cost of the underlying commodity purchases.

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 44] [added: 46] | | | [removed: ] [added: ] | | |

The production forecast for the 2023 – 2024 season is down significantly in Ghana and Ivory Coast by over 20% combined, due to a combination of inclement weather, lower inputs and marginally increased farmer prices versus inflation.

Despite higher cocoa prices to consumers, consumption remained consistent, leading to predictions of a large deficit, the third consecutive one by some accounts.

A record crop from both Brazil and the U.S. in 2023 drove prices down throughout the year.

Corn sweetener prices remained elevated due to tight capacity utilization throughout the industry.

Despite annual volatility, U.S. wheat remains uncompetitive in the world market, anchoring prices to their historical 5-year averages.

Prices increased towards the end of 2023, driven by smaller than expected crop and lower availability of small sized almonds.

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

Therefore, as of December 31, 2022 and December 31, 2021, we had no interest rate swap derivative instruments in a fair value hedging relationship.

Prior to maturing in December 2020, the total notional amount of interest rate swaps was $350 million.

The notional amount relates to fixed-to-floating interest rate swaps which convert a comparable amount of fixed-rate debt to variable rate debt.

A hypothetical 100 basis point increase in interest rates applied to this variable-rate short-term debt as of December 31, 2022 would have changed interest expense by approximately $4.5 million for 2022 and $2.4 million for 2021.

Production was down significantly in Ghana by nearly 30%, while it was stable in the rest of West Africa.

As consumption remained strong, the large surplus in the 2020 - 2021 season became a small deficit in the 2022 season.

The global surplus of the 2020 - 2021 season weighed on the price outlook for the first half of 2022 and the futures market corrected to accommodate the Living Income Differential being imposed by the Ghana and Ivory Coast cocoa marketing boards, leading to fairly similar price levels to the previous year.

Such legislation establishes import quotas and duties to support the price of sugar.

The conflict between Russia and Ukraine caused a tightness for global grain stocks in 2022.

Corn sweetener prices were also higher as strong demand resulted in a scarcity market during the year.

Wheat stock levels were at historic 15-year lows and prices reached historic highs in 2022.

Prices were lower than 2021 as a result of large crop and high inventory levels.

We market, sell and distribute our products under more than [removed: 100] [added: 90] brand names in approximately 80 countries worldwide.

Financial and other information regarding our segments is provided in our Management’s Discussion and Analysis and [Note [removed: 13](#i99b894486862473eb1bc3dfcf6405c73_136)] [added: 13](#i4548f14c535242b19fed9e6fe5606926_136)] to the Consolidated Financial Statements.

Additionally in December 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 [removed: product.][added: product, which complements Hershey’s snacks portfolio.]

In June 2021, we completed the acquisition of Lily’s Sweets, LLC (“Lily’s”), previously a privately held company that sells a line of sugar-free and low-sugar confectionery foods to retailers and distributors in the United States and [removed: Canada.]

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This includes ready-to-eat *SkinnyPop* popcorn, baked and trans fat free *Pirates Booty* [removed: snacks,] [added: snacks and] *Dot’s Homestyle Pretzels* [removed: snacks and other snack brands such as *Paqui.*][added: snacks.]

In [removed: 2022,] [added: 2023,] approximately 28% of our consolidated net sales were made to McLane Company, Inc., one of the largest wholesale distributors in the United States (“U.S.”) to convenience stores, drug stores, wholesale clubs and mass merchandisers and the primary distributor of our products to Wal-Mart Stores, Inc.

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Some of our competitors are large [removed: companies with] [added: private companies, as well as large retailers, that have] significant resources and substantial international operations.

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| Cadbury UK Limited | | | | | | *Cadbury Caramello* | | | | | | United States | | | | | | Minimum sales requirement exceeded in [removed: 2022] [added: 2023] | | |

| Société des Produits Nestlé SA | | | | | | *Kit Kat®* *Rolo®* | | | | | | United States | | | | | | Minimum unit volume sales exceeded in [removed: 2022] [added: 2023] | | |

Information concerning our research and development expense is contained in [Note [removed: 1](#i99b894486862473eb1bc3dfcf6405c73_97)] [added: 1](#i4548f14c535242b19fed9e6fe5606926_97)] to the Consolidated Financial Statements.

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page 5 | | | [removed: ] [added: ] | | |

Beyond ordinary operating and capital expenditures that we make to comply with government regulations, including environmental laws and regulations, we have made a number of voluntary commitments to [removed: protect] [added: drive long-term growth] and [added: business resilience and] reduce our environmental [removed: impacts in recent years,] [added: impacts,] including efforts to eliminate commodity-driven deforestation and reduce greenhouse gas (“GHG”) emissions across our own operations and supply chain.

Our climate change related investments and expenditures primarily focus on achieving a 50% absolute reduction in our Scope 1 and 2 GHG emissions and a 25% absolute reduction in our Scope 3 GHG emissions by 2030 (compared to a 2018 baseline), as well as having 100% of plastic packaging be recyclable, reusable or compostable and [added: eliminating] 25 million pounds of packaging [removed: be eliminated] by 2030.

We continue that legacy today through our [removed: holistic environmental, social and governance (“ESG”)] [added: global sustainability] strategy: [removed: our] [added: Our] Shared Goodness Promise, which guides how we empower the remarkable people who make and sell our brands, interact with farming communities that grow our ingredients, deliver on our commitments to consumers, customers, and external stakeholders, protect the environment and support children and youth.

The percentage of total consolidated net sales for our businesses outside of the United States was [removed: 12.5%] [added: 12.7%] for [removed: 2022, 13.0%] [added: 2023, 12.5%] for [removed: 2021] [added: 2022] and [removed: 13.6%] [added: 13.0%] for [removed: 2020.][added: 2021.]

The percentage of total long-lived assets outside of the United States was [removed: 17.9%] [added: 17.4%] as of December 31, [removed: 2022] [added: 2023] and [removed: 18.8%] [added: 17.9%] as of December 31, [removed: 2021.][added: 2022.]

As of December 31, [removed: 2022,] [added: 2023,] the Company employed approximately [removed: 18,075] [added: 18,650] full-time and [removed: 1,790] [added: 1,855] part-time employees worldwide.

Collective bargaining agreements covered approximately [removed: 6,470] [added: 6,295] employees, or approximately [removed: 33%] [added: 31%] of the Company’s employees worldwide.

During [removed: 2023,] [added: 2024,] agreements are expected to be negotiated for certain employees at five facilities, four of which are outside of the United States, comprising approximately [removed: 67%] [added: 72%] of total employees under collective bargaining agreements.

Additionally, continuous listening surveys are distributed throughout the year to all employees [removed: globally.][added: globally to hear their thoughts on the Company’s direction and their place in it.]

These surveys are further [removed: supplemented with quarterly and]

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page 6 | | | [removed: ] [added: ] | | |

[added: supplemented with quarterly and] informative enterprise and team town halls, which, in conjunction with the continuous listening surveys, generate stronger employee engagement with the Company’s strategy, initiatives and leadership.

Additionally, we [removed: have] co-created a culture of development with the enthusiastic support of our employees.

Through individual development plans, learning opportunities, feedback and coaching, employees can build careers at The Hershey Company, as evidenced by the fact that the majority of our [removed: eight] [added: ten] executive officers were promoted from within the organization (see [Information about Our Executive [removed: Officers](#i99b894486862473eb1bc3dfcf6405c73_31)).][added: Officers](#i4548f14c535242b19fed9e6fe5606926_31)).]

We believe that this flexibility improves productivity, [added: boosts] job satisfaction and increases employee engagement.

This model allows employees the option to work either [removed: remote,] [added: remotely,] in-office, or both, depending on individual needs, personal schedules and work demands.

Additionally, five of our [removed: 12] [added: 11] Board members are women [removed: (42%] [added: (45%] representation).

In [removed: 2022,] [added: 2023,] we maintained fair and equitable pay achievements, including 1:1 aggregate people of color pay equity [removed: for salaried employees in the United States] (2021) and 1:1 aggregate gender pay [removed: (2020).][added: (2020) for salaried employees in the United States.]

Further, our eight employee-led Business Resource Groups, which include Abilities First, [removed: African American, Asian,] [added: Black Heritage, Asian and Pacific Islander,] GenH (Generations), Latino, Prism (LGBTQ), Veteran’s and Women’s, play a critical role in attracting diverse talent, providing mentoring and career development opportunities, delivering commercial business insights and connecting people to the Company and the communities where we do business.

In [removed: 2022,] [added: 2023,] the Company was ranked [removed: #6] [added: #3] on DiversityInc’s Top 50 Companies for Diversity and was ranked as a top 50 company on Forbes Top [removed: Female Friendly Companies.][added: Companies for Women.]

Additionally, the Company also ranked as a top 30 company on Wall Street Journal’s Top 250 Best-Managed Companies of [removed: 2022.][added: 2023, and was recognized as a Best Place to Work for Disability Inclusion based on our Disability Equality Index score.]

Our philanthropy and volunteerism efforts reflect how we live out the Company’s value of [removed: making moments] [added: Making More Moments] of [removed: goodness,] [added: Goodness,] from supporting causes our employees care about to investing in the long-term success of the communities where we live and work.

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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.

Canada.

All of our climate-related investments are in progress or on track as outlined in our Environmental, Social and Governance (“ESG”) Report.

Business Realignment Activities and Strategic Initiatives

From time to time, we implement business realignment activities to support key strategic initiatives designed to maintain long-term growth.

Further to such goal, we completed our International Optimization Program in 2023, an initiative which began in the fourth quarter of 2020 and was designed to increase our operating effectiveness and efficiency, to reduce our costs and/or to generate savings that can be reinvested in other areas of our business.

In February 2024, the Board of Directors approved the Advancing Agility & Automation Initiative, which is a multi-year productivity program 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.

Costs associated with business realignment activities are classified in our Consolidated Statements of Income as described in [Note 9](#i4548f14c535242b19fed9e6fe5606926_124) to the Consolidated Financial Statements.

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

During the second quarter of 2020, we completed the divestitures of KRAVE Pure Foods, Inc. (“Krave”), which was previously included within the North America Salty Snacks segment, and the *Scharffen Berger* and *Dagoba* brands, both of which were previously included within the North America Confectionery segment results in our consolidated financial statements.

Total proceeds from the divestitures and the impact on our Consolidated Statements of Income, both individually and on an aggregate basis, were immaterial.

These short and fast surveys reach all of our employees around the world to hear their thoughts on the Company’s direction and their place in it.

Further, in June 2022, the Company conducted its first annual Ethics and Compliance Survey to assess employees’ perception of the health of ethics and compliance at Hershey.

Information on legal proceedings is included in [Note [removed: 15](#i99b894486862473eb1bc3dfcf6405c73_145)] [added: 15](#i4548f14c535242b19fed9e6fe5606926_145)] to the Consolidated Financial Statements.

For the fiscal year ended December 31, [removed: 2022][added: 2023]

[removed: ][added: ]

As of [removed: July 1, 2022] [added: June 30, 2023] (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the voting and non-voting common equity held by non-affiliates was [removed: $32,207,985,953.][added: $36,849,433,110.]

Determination of aggregate market value assumes all outstanding shares of Class B Common Stock held by non-affiliates were converted to Common Stock as of [removed: July 1, 2022.][added: June 30, 2023.]

The market value indicated is calculated based on the closing price of the Common Stock on the New York Stock Exchange on [removed: July 1, 2022 ($221.00] [added: June 30, 2023 ($249.70] per share).

Common Stock, one dollar par [removed: value—146,922,179] [added: value—149,336,442] shares, as of February [removed: 15, 2023.][added: 16, 2024.]

Class B Common Stock, one dollar par [removed: value—57,113,777] [added: value—54,613,514] shares, as of February [removed: 15, 2023.][added: 16, 2024.]

Portions of the Company’s Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

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| | | | | | | [Schedule II—Valuation and Qualifying [removed: Accounts](#i99b894486862473eb1bc3dfcf6405c73_196)] [added: Accounts](#i4548f14c535242b19fed9e6fe5606926_199)] | | | | | | [removed: [104](#i99b894486862473eb1bc3dfcf6405c73_196)] [added: [108](#i4548f14c535242b19fed9e6fe5606926_199)] | | |

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page 1 | | | [removed: ] [added: ] | | |

For the Fiscal Year Ended December 31, 2023

| [Item 1C.](#i4548f14c535242b19fed9e6fe5606926_1623) | | | | | | [Cybersecurity](#i4548f14c535242b19fed9e6fe5606926_1623) | | | | | | [16](#i4548f14c535242b19fed9e6fe5606926_1623) | | |

| | | | | | | [Signatures](#i4548f14c535242b19fed9e6fe5606926_196) | | | | | | [107](#i4548f14c535242b19fed9e6fe5606926_196) | | |

| | | | | | | [Signatures](#i99b894486862473eb1bc3dfcf6405c73_193) | | | | | | [103](#i99b894486862473eb1bc3dfcf6405c73_193) | | |

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| [Table of Contents](#i99b894486862473eb1bc3dfcf6405c73_7) | | | The Hershey Company \| 2022 Form 10-K \| Page 15 | | |  | | |

Cybersecurity Risk Management and Strategy

Information technology is important to our business operations, and we are committed to protecting the privacy, security and integrity of our data, as well as our employee and customer data.

The Company has a comprehensive cybersecurity program in place for assessing, identifying and managing cybersecurity risks that is designed to protect its systems and data from unauthorized access, use or other security impact.

This program is integrated into the Company’s overall Enterprise Risk Management and Resiliency process.

We continuously monitor and update our information technology networks and infrastructure to prevent, detect, address and mitigate risks associated with unauthorized access, misuse, computer viruses and other events that could have a security impact.

We invest in industry standard security technology to protect the Company’s data and business processes against risk of cybersecurity incidents.

Our data security management program includes identity, trust, vulnerability and threat management business processes, as well as adoption of standard data protection policies.

We measure our data security effectiveness by benchmarking against industry-accepted methods and we work to remediate any significant findings.

We maintain and routinely test backup systems and disaster recovery and also have processes in place to prevent disruptions resulting from our implementation of new software and systems.

The Company has a comprehensive incident response plan to address cybersecurity incidents.

The Company’s incident response plan includes procedures for identifying, containing and responding to cybersecurity incidents and is subject to regular review and assessment to ensure that it is effective in protecting the Company’s information technology.

To date, the Company believes that its cybersecurity program has been effective in protecting the confidentiality, integrity, and availability of its information; however, the Company cannot guarantee that its cybersecurity program will be successful in preventing all cybersecurity incidents.

Further, we currently maintain a cyber insurance policy that provides coverage for security breaches; however, such insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attacks and other related breaches.

The Company engages external parties, including consultants, computer security firms and risk management and governance experts, to enhance its cybersecurity oversight.

In order to oversee and identify risks from cybersecurity threats associated with the Company’s use of third-party service providers, we also have a third-party risk management program designed to help protect against the misuse of information technology by third parties and business partners, which includes certification of our major technology suppliers and any outsourced services through accepted security certification standards.

While we are regularly subject to cybersecurity attacks, ransomware and other security breaches, the Company has not experienced any material cybersecurity incidents or a series of related unauthorized occurrences for the year ended December 31, 2023.

The Company does not believe that there are currently any known risks from cybersecurity threats that are reasonably likely to materially affect the Company or its business strategy, results of operations or financial condition.

However, as discussed under “[Item 1A.

Risk Factors](#i4548f14c535242b19fed9e6fe5606926_16),” specifically the risks titled “Disruptions, failures or security breaches of our information technology infrastructure could have a negative impact on our operations,” the sophistication of cyber, ransomware and other security threats continues to increase, and the preventative actions we take to reduce the risk of these incidents and protect our systems and information may be insufficient.

Accordingly, no matter how well designed or implemented our controls are, we will not be able to anticipate all cybersecurity attacks, ransomware and other security breaches and we may not be able to implement effective preventive measures against such security breaches in a timely manner.

Cybersecurity Governance and Oversight

The Company’s Board of Directors has a mix of experiences, skills, qualifications and backgrounds to support strategy and risk oversight, including expertise in cybersecurity and oversight of cybersecurity matters.

This oversight is achieved through the Company’s Finance and Risk Management (“F&RM”) Committee, which is comprised of five members of our Board of Directors, and one Board member who serves in an ex-officio capacity.

The F&RM Committee is responsible for reviewing key enterprise risks identified through our Enterprise Risk Management and

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| [Table of Contents](#i4548f14c535242b19fed9e6fe5606926_7) | | | The Hershey Company \| 2023 Form 10-K \| Page 16 | | |  | | |

Resiliency process, which includes information security strategies and risks, as well as data privacy and protection risks and mitigation strategies (collectively, “Information Security”).

At each regularly scheduled F&RM Committee meeting, management, through the Company’s Chief Information Security Officer (“CISO”), reports on Information Security controls, audits, guidelines and developments and the F&RM Committee is notified between such updates regarding significant new cybersecurity threats or incidents.

The CISO, who reports to the Chief Technology Officer (“CTO”), oversees a dedicated Information Security team that is supported by the Privacy Center of Excellence, and works in partnership with internal audit to review certain information technology-related internal controls with our independent auditors as part of the overall internal controls process.

Our CTO, who reports to the Chief Executive Officer, has oversight of our Information Security team and leads the company’s global technology strategy, architecting and deploying digital capabilities that are innovative, flexible and prepared to meet the changing needs of our consumers, retail partners and employees.

The CISO’s cybersecurity experience includes over thirty years of Information Technology experience, including twenty years within the Information Security field.

The CISO’s Information Security roles have included security engineering, security architecture, strategy development and execution, risk and compliance management and identity and access management and incident response.

The Company’s CTO has over twenty years of experience, including deep expertise in developing cutting-edge automated systems, supply chain planning, optimization and simulation, artificial intelligence and predictive analytics.

Additional experience held by the CTO is described further under [Information about Our Executive Officers](#i4548f14c535242b19fed9e6fe5606926_31).

To ensure our employees are educated on potential cybersecurity threats or actions, we train our executive officers and global workforce on an ongoing basis in the event of a potential cyber threat or cybersecurity incident.

Our Company-wide Information Security training program includes security awareness training, including regular phishing simulations, acceptable use training, cyber wellness trainings and other targeted trainings throughout the year.

These trainings provide employees the opportunity to gain an understanding of the various forms of cybersecurity incidents and enable our employees to handle and report any suspicious activity or threat.

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As discussed in [Note [removed: 13](#i99b894486862473eb1bc3dfcf6405c73_136)] [added: 13](#i4548f14c535242b19fed9e6fe5606926_136)] to the Consolidated Financial Statements, we do not manage our assets on a segment basis given the integration of certain manufacturing, warehousing, distribution and other activities in support of our global operations.

| | | | | | | Whitestown, Indiana | | | | | | Manufacturing—salty snack products | | | | | | Lease | | |

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 16] [added: 18] | | | [removed: ] [added: ] | | |

The executive officers of the Company, their positions and, as of February [removed: 15, 2023,] [added: 16, 2024,] their ages are set forth below.

| Michele G. Buck | | | | | | [removed: 61] [added: 62] | | | | | | Chairman of the Board, President and Chief Executive Officer (October 2019); President and Chief Executive Officer (March 2017) | | |

| Jennifer L. McCalman [removed: (1)] [added: (2)] | | | | | | [removed: 45] [added: 46] | | | | | | Vice President, Chief Accounting Officer (February 2021); Senior Director, Global Controller (March 2019) | | |

| Charles R. Raup | | | | | | [removed: 55] [added: 56] | | | | | | President, U.S. Confection (November 2022); President, U.S. (January 2020); Vice President, U.S. CMG (June [removed: 2018); Vice President and General Manager, Chocolate (August 2017)] [added: 2018)] | | |

| Jason R. Reiman | | | | | | [removed: 51] [added: 52] | | | | | | Senior Vice President, Chief Supply Chain Officer (June 2019); Vice President, Supply Chain Operations (August [removed: 2018); Vice President, US Supply Chain Operations (July 2017); Vice President, International Operations (May 2017)] [added: 2018)] | | |

| Kristen J. Riggs | | | | | | [removed: 44] [added: 45] | | | | | | President, Salty Snacks (November 2022); Senior Vice President, Chief Growth Officer (January 2020); Vice President, Innovation and Strategic Growth Platforms (September 2019); Vice President, Commercial Planning (June [removed: 2018); Vice President, Brand Commercialization (July 2017)] [added: 2018)] | | |

| Christopher M. Scalia | | | | | | [removed: 47] [added: 48] | | | | | | Senior Vice President, Chief Human Resources Officer (January 2020); Vice President, Global Human Resources (March [removed: 2018); Vice President, Talent, HR Operations and Analytics (December 2014)] [added: 2018)] | | |

| James Turoff | | | | | | [removed: 46] [added: 47] | | | | | | Senior Vice President, General Counsel and Secretary (May 2021); Acting General Counsel (December 2020); Vice President, Deputy General Counsel (March 2019); Vice President, SEC, Corporate Governance & Compliance (March [removed: 2018); Associate General Counsel, Securities & Governance and Business Transformation (May 2017)] [added: 2018)] | | |

| Steven E. Voskuil [removed: (2)] [added: (3)] | | | | | | [removed: 54] [added: 55] | | | | | | Senior Vice President, Chief Financial Officer (February 2021); Senior Vice President, Chief Financial Officer and Chief Accounting Officer (November 2019); Senior Vice President, Chief Financial Officer (May 2019) | | |

[removed: (1)] [added: (2)] Ms. McCalman was appointed Vice President, Chief Accounting Officer effective February 23, 2021.

Prior to joining our Company she was Senior Director and Assistant Controller for Keurig Dr. Pepper (formerly Keurig Green Mountain) (May [removed: 2017).][added: 2017), a beverage and coffeemaker company.]

[removed: (2)] [added: (3)] Mr. Voskuil was appointed Senior Vice President, Chief Financial Officer effective May 13, 2019.

Prior to joining our Company he was Senior Vice President and Chief Financial Officer at Avanos Medical, Inc. (November [removed: 2014).][added: 2014), a medical technology company.]

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 17] [added: 19] | | | [removed: ] [added: ] | | |

| Deepak Bhatia (1) | | | | | | 50 | | | | | | Senior Vice President, Chief Technology Officer (October 2023) | | |

| Rohit Grover | | | | | | 51 | | | | | | President, International (April 2019); Vice President, General Manager, General China (January 2017) | | |

(1) Mr. Bhatia was appointed Senior Vice President, Chief Technology Officer effective October 23, 2023.

Prior to joining our Company he was the Vice President of Supply Chain Optimization Technologies (August 2021), Vice President of Technology, Inventory Planning & Control in Supply Chain Optimization Technologies (March 2019), and Director, Inventory Optimization, Simulations, S&OP in Inventory Planning & Control (April 2014) at Amazon.com, Inc., a multinational technology company.

The closing price of our Common Stock on December [removed: 30, 2022] [added: 29, 2023] (the last business day of the of the fiscal year) was [removed: $231.57.][added: $186.44.]

There were [removed: 24,076] [added: 23,327] stockholders of record of our Common Stock and 5 stockholders of record of our Class B Stock as of December 31, [removed: 2022.][added: 2023.]

We paid [removed: $775.0] [added: $889.1] million in cash dividends on our Common Stock and Class B Stock in [removed: 2022] [added: 2023] and [removed: $686.0] [added: $775.0] million in [removed: 2021.][added: 2022.]

The annual dividend rate on our Common Stock in [removed: 2022] [added: 2023] was [removed: $3.874] [added: $4.456] per share.

On [removed: January 31, 2023,] [added: February 7, 2024,] our Board declared a quarterly dividend of [removed: $1.036] [added: $1.370] per share of Common Stock payable on March 15, [removed: 2023,] [added: 2024,] to stockholders of record as of February [removed: 17, 2023.][added: 20, 2024.]

It is the Company’s [removed: 373rd] [added: 376th] consecutive quarterly Common Stock dividend.

A quarterly dividend of [removed: $0.942] [added: $1.245] per share of Class B Stock also was declared.

The following table shows the purchases of shares of Common Stock made by or on behalf of Hershey, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended) of Hershey, for each fiscal month in the three months ended December 31, [removed: 2022:][added: 2023:]

| November [removed: 28] [added: 27] through December 31 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | [removed: 609,983] [added: 370,073] | |

(1) During the three months ended December 31, [removed: 2022, 145,701] [added: 2023, 127,609] shares of Common Stock were purchased in open market transactions in connection with our standing authorization to buy back shares sufficient to offset those issued under incentive compensation plans, which authorization does not have a dollar or share limit and is not included in our share repurchase authorizations described in the following note (2).

This program is to commence after the existing [removed: 2018] [added: 2021] authorization is completed and is to be utilized at management’s discretion.

[removed: These] [added: The May 2021 and December 2023] share repurchase programs do not have an expiration date.

In February 2023, the Company entered into a Stock Purchase Agreement with Hershey Trust Company, as trustee for the [removed: Milton Hershey] School [removed: Trust (the “School Trust”),] [added: 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 $239.9 million.

As a result of [removed: this repurchase, our] [added: the February 2023 Stock Purchase Agreement with Hershey Trust Company, as trustee for the Milton Hershey School Trust (the “School Trust”), the] July 2018 share repurchase authorization [removed: program] was completed [removed: in February 2023,] and [added: as of December 31, 2023,] approximately $370 million [removed: remains] [added: remained] available for repurchases [added: of our Common Stock] under our May 2021 share repurchase authorization.

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 18] [added: 20] | | | [removed: ] [added: ] | | |

[removed: ][added: ]

| Company/Index | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2022] [added: 2023] | | |

| S&P 500 Packaged Foods Index | | | | | | $ | 100 | | | | | $ | [removed: 81] [added: 131] | | | | | $ | [removed: 106] [added: 137] | | | | | $ | [removed: 111] [added: 155] | | | | | $ | [removed: 126] [added: 169] | | | | | $ | [removed: 137] [added: 156] | |

| October 2 through October 29 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 370,073 | |

| October 30 through November 26 | | | | | | 127,609 | | | | | | $ | 196.33 | | | | | — | | | | | | $ | 370,073 | |

| Total | | | | | | 127,609 | | | | | | $ | — | | | | | — | | | | | | | | |

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

| The Hershey Company | | | | | | $ | 100 | | | | | $ | 140 | | | | | $ | 148 | | | | | $ | 192 | | | | | $ | 234 | | | | | $ | 193 | |

| S&P 500 Index | | | | | | $ | 100 | | | | | $ | 131 | | | | | $ | 156 | | | | | $ | 200 | | | | | $ | 164 | | | | | $ | 207 | |

| October 3 through October 30 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 609,983 | |

| October 31 through November 27 | | | | | | 145,701 | | | | | | $ | 231.25 | | | | | — | | | | | | $ | 609,983 | |

| Total | | | | | | 145,701 | | | | | | $ | — | | | | | — | | | | | | | | |

As of December 31, 2022, approximately $110 million remained available for repurchases of our Common Stock under this program.

*$100 invested on December 31, 2017 in stock or index, assuming reinvestment of dividends.

| The Hershey Company | | | | | | $ | 100 | | | | | $ | 97 | | | | | $ | 136 | | | | | $ | 144 | | | | | $ | 187 | | | | | $ | 228 | |

| S&P 500 Index | | | | | | $ | 100 | | | | | $ | 96 | | | | | $ | 126 | | | | | $ | 149 | | | | | $ | 191 | | | | | $ | 157 | |

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 19] [added: 21] | | | [removed: ] [added: ] | | |

| [Report of Independent Registered Public Accounting Firm (PCAOB [removed: ID:](#i99b894486862473eb1bc3dfcf6405c73_70) 42[)](#i99b894486862473eb1bc3dfcf6405c73_70)] [added: ID:](#i4548f14c535242b19fed9e6fe5606926_70) 42[)](#i4548f14c535242b19fed9e6fe5606926_70)] | | | | | | [removed: [46](#i99b894486862473eb1bc3dfcf6405c73_70)] [added: [48](#i4548f14c535242b19fed9e6fe5606926_70)] | | |

| [Report of Independent Registered Public Accounting Firm on Internal Control Over Financial [removed: Reporting](#i99b894486862473eb1bc3dfcf6405c73_73)] [added: Reporting](#i4548f14c535242b19fed9e6fe5606926_73)] | | | | | | [removed: [48](#i99b894486862473eb1bc3dfcf6405c73_73)] [added: [50](#i4548f14c535242b19fed9e6fe5606926_73)] | | |

| [Consolidated Statements of Income for the years ended December 31, [removed: 202](#i99b894486862473eb1bc3dfcf6405c73_76)[2](#i99b894486862473eb1bc3dfcf6405c73_76)[, 202](#i99b894486862473eb1bc3dfcf6405c73_76)[1](#i99b894486862473eb1bc3dfcf6405c73_76)] [added: 202](#i4548f14c535242b19fed9e6fe5606926_76)[3](#i4548f14c535242b19fed9e6fe5606926_76)[, 202](#i4548f14c535242b19fed9e6fe5606926_76)[2](#i4548f14c535242b19fed9e6fe5606926_76)] [and [removed: 20](#i99b894486862473eb1bc3dfcf6405c73_76)[20](#i99b894486862473eb1bc3dfcf6405c73_76)] [added: 202](#i4548f14c535242b19fed9e6fe5606926_76)[1](#i4548f14c535242b19fed9e6fe5606926_76)] | | | | | | [removed: [50](#i99b894486862473eb1bc3dfcf6405c73_76)] [added: [52](#i4548f14c535242b19fed9e6fe5606926_76)] | | |

| [Consolidated Statements of Comprehensive Income for the years ended December [removed: 31,](#i99b894486862473eb1bc3dfcf6405c73_79) [202](#i99b894486862473eb1bc3dfcf6405c73_76)[2](#i99b894486862473eb1bc3dfcf6405c73_76)[, 202](#i99b894486862473eb1bc3dfcf6405c73_76)[1](#i99b894486862473eb1bc3dfcf6405c73_76)] [added: 31,](#i4548f14c535242b19fed9e6fe5606926_79) [202](#i4548f14c535242b19fed9e6fe5606926_76)[3](#i4548f14c535242b19fed9e6fe5606926_76)[, 202](#i4548f14c535242b19fed9e6fe5606926_76)[2](#i4548f14c535242b19fed9e6fe5606926_76)] [and [removed: 20](#i99b894486862473eb1bc3dfcf6405c73_76)[20](#i99b894486862473eb1bc3dfcf6405c73_76)] [added: 202](#i4548f14c535242b19fed9e6fe5606926_76)[1](#i4548f14c535242b19fed9e6fe5606926_76)] | | | | | | [removed: [51](#i99b894486862473eb1bc3dfcf6405c73_79)] [added: [53](#i4548f14c535242b19fed9e6fe5606926_79)] | | |

| [Consolidated Balance Sheets as of December 31, [removed: 202](#i99b894486862473eb1bc3dfcf6405c73_82)[2](#i99b894486862473eb1bc3dfcf6405c73_82)] [added: 202](#i4548f14c535242b19fed9e6fe5606926_82)[3](#i4548f14c535242b19fed9e6fe5606926_82)] [and [removed: 202](#i99b894486862473eb1bc3dfcf6405c73_82)[1](#i99b894486862473eb1bc3dfcf6405c73_82)] [added: 202](#i4548f14c535242b19fed9e6fe5606926_82)[2](#i4548f14c535242b19fed9e6fe5606926_82)] | | | | | | [removed: [52](#i99b894486862473eb1bc3dfcf6405c73_82)] [added: [54](#i4548f14c535242b19fed9e6fe5606926_82)] | | |

| [Consolidated Statements of Cash Flows for the years ended December [removed: 31,](#i99b894486862473eb1bc3dfcf6405c73_88) [202](#i99b894486862473eb1bc3dfcf6405c73_76)[2](#i99b894486862473eb1bc3dfcf6405c73_76)[, 202](#i99b894486862473eb1bc3dfcf6405c73_76)[1](#i99b894486862473eb1bc3dfcf6405c73_76)] [added: 31,](#i4548f14c535242b19fed9e6fe5606926_88) [202](#i4548f14c535242b19fed9e6fe5606926_76)[3](#i4548f14c535242b19fed9e6fe5606926_76)[, 202](#i4548f14c535242b19fed9e6fe5606926_76)[2](#i4548f14c535242b19fed9e6fe5606926_76)] [and [removed: 20](#i99b894486862473eb1bc3dfcf6405c73_76)[2](#i99b894486862473eb1bc3dfcf6405c73_76)[0](#i99b894486862473eb1bc3dfcf6405c73_76)] [added: 202](#i4548f14c535242b19fed9e6fe5606926_76)[1](#i4548f14c535242b19fed9e6fe5606926_76)] | | | | | | [removed: [53](#i99b894486862473eb1bc3dfcf6405c73_88)] [added: [55](#i4548f14c535242b19fed9e6fe5606926_88)] | | |

| [Consolidated Statements of Stockholders’ Equity for the years ended December [removed: 31,](#i99b894486862473eb1bc3dfcf6405c73_91) [20](#i99b894486862473eb1bc3dfcf6405c73_76)[2](#i99b894486862473eb1bc3dfcf6405c73_76)[2](#i99b894486862473eb1bc3dfcf6405c73_76)[, 202](#i99b894486862473eb1bc3dfcf6405c73_76)[1](#i99b894486862473eb1bc3dfcf6405c73_76)] [added: 31,](#i4548f14c535242b19fed9e6fe5606926_91) [202](#i4548f14c535242b19fed9e6fe5606926_76)[3](#i4548f14c535242b19fed9e6fe5606926_76)[, 202](#i4548f14c535242b19fed9e6fe5606926_76)[2](#i4548f14c535242b19fed9e6fe5606926_76)] [and [removed: 20](#i99b894486862473eb1bc3dfcf6405c73_76)[20](#i99b894486862473eb1bc3dfcf6405c73_76)] [added: 202](#i4548f14c535242b19fed9e6fe5606926_76)[1](#i4548f14c535242b19fed9e6fe5606926_76)] | | | | | | [removed: [54](#i99b894486862473eb1bc3dfcf6405c73_91)] [added: [56](#i4548f14c535242b19fed9e6fe5606926_91)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i99b894486862473eb1bc3dfcf6405c73_94)] [added: Statements](#i4548f14c535242b19fed9e6fe5606926_94)] | | | | | | [removed: [55](#i99b894486862473eb1bc3dfcf6405c73_94)] [added: [57](#i4548f14c535242b19fed9e6fe5606926_94)] | | |

| [Note 1 - Summary of Significant Accounting [removed: Policies](#i99b894486862473eb1bc3dfcf6405c73_97)] [added: Policies](#i4548f14c535242b19fed9e6fe5606926_97)] | | | | | | [removed: [55](#i99b894486862473eb1bc3dfcf6405c73_97)] [added: [57](#i4548f14c535242b19fed9e6fe5606926_97)] | | |

| [Note 2 - Business Acquisitions and [removed: Divestitures](#i99b894486862473eb1bc3dfcf6405c73_100)] [added: Divestitures](#i4548f14c535242b19fed9e6fe5606926_100)] | | | | | | [removed: [60](#i99b894486862473eb1bc3dfcf6405c73_100)] [added: [63](#i4548f14c535242b19fed9e6fe5606926_100)] | | |

| [Note 3 - Goodwill and Intangible [removed: Assets](#i99b894486862473eb1bc3dfcf6405c73_103)] [added: Assets](#i4548f14c535242b19fed9e6fe5606926_103)] | | | | | | [removed: [64](#i99b894486862473eb1bc3dfcf6405c73_103)] [added: [66](#i4548f14c535242b19fed9e6fe5606926_103)] | | |

| [Note 4 - Short and Long-Term [removed: Debt](#i99b894486862473eb1bc3dfcf6405c73_106)] [added: Debt](#i4548f14c535242b19fed9e6fe5606926_106)] | | | | | | [removed: [64](#i99b894486862473eb1bc3dfcf6405c73_106)] [added: [67](#i4548f14c535242b19fed9e6fe5606926_106)] | | |

| [Note 5 - Derivative [removed: Instruments](#i99b894486862473eb1bc3dfcf6405c73_112)] [added: Instruments](#i4548f14c535242b19fed9e6fe5606926_112)] | | | | | | [removed: [66](#i99b894486862473eb1bc3dfcf6405c73_112)] [added: [69](#i4548f14c535242b19fed9e6fe5606926_112)] | | |

| [Note 6 - Fair Value [removed: Measurements](#i99b894486862473eb1bc3dfcf6405c73_115)] [added: Measurements](#i4548f14c535242b19fed9e6fe5606926_115)] | | | | | | [removed: [68](#i99b894486862473eb1bc3dfcf6405c73_115)] [added: [71](#i4548f14c535242b19fed9e6fe5606926_115)] | | |

| [Note 7 - [removed: Leases](#i99b894486862473eb1bc3dfcf6405c73_118)] [added: Leases](#i4548f14c535242b19fed9e6fe5606926_118)] | | | | | | [removed: [70](#i99b894486862473eb1bc3dfcf6405c73_118)] [added: [73](#i4548f14c535242b19fed9e6fe5606926_118)] | | |

| [Note 8 - Investments in Unconsolidated [removed: Affiliates](#i99b894486862473eb1bc3dfcf6405c73_121)] [added: Affiliates](#i4548f14c535242b19fed9e6fe5606926_121)] | | | | | | [removed: [72](#i99b894486862473eb1bc3dfcf6405c73_121)] [added: [75](#i4548f14c535242b19fed9e6fe5606926_121)] | | |

| [Note 9 - Business Realignment [removed: Activities](#i99b894486862473eb1bc3dfcf6405c73_124)] [added: Activities](#i4548f14c535242b19fed9e6fe5606926_124)] | | | | | | [removed: [72](#i99b894486862473eb1bc3dfcf6405c73_124)] [added: [75](#i4548f14c535242b19fed9e6fe5606926_124)] | | |

| [Note 10 - Income [removed: Taxes](#i99b894486862473eb1bc3dfcf6405c73_127)] [added: Taxes](#i4548f14c535242b19fed9e6fe5606926_127)] | | | | | | [removed: [74](#i99b894486862473eb1bc3dfcf6405c73_127)] [added: [77](#i4548f14c535242b19fed9e6fe5606926_127)] | | |

| [Note 11 - Pension and Other Post-Retirement Benefit [removed: Plans](#i99b894486862473eb1bc3dfcf6405c73_130)] [added: Plans](#i4548f14c535242b19fed9e6fe5606926_130)] | | | | | | [removed: [77](#i99b894486862473eb1bc3dfcf6405c73_130)] [added: [80](#i4548f14c535242b19fed9e6fe5606926_130)] | | |

| [Note 12 - Stock Compensation [removed: Plans](#i99b894486862473eb1bc3dfcf6405c73_133)] [added: Plans](#i4548f14c535242b19fed9e6fe5606926_133)] | | | | | | [removed: [83](#i99b894486862473eb1bc3dfcf6405c73_133)] [added: [86](#i4548f14c535242b19fed9e6fe5606926_133)] | | |

| [Note 13 - Segment [removed: Information](#i99b894486862473eb1bc3dfcf6405c73_136)] [added: Information](#i4548f14c535242b19fed9e6fe5606926_136)] | | | | | | [removed: [86](#i99b894486862473eb1bc3dfcf6405c73_136)] [added: [89](#i4548f14c535242b19fed9e6fe5606926_136)] | | |

| [Note 14 - Equity [removed: and](#i99b894486862473eb1bc3dfcf6405c73_139) [Treasury] [added: and Treasury] Stock [removed: Activity](#i99b894486862473eb1bc3dfcf6405c73_139)] [added: Activity](#i4548f14c535242b19fed9e6fe5606926_139)] | | | | | | [removed: [88](#i99b894486862473eb1bc3dfcf6405c73_139)] [added: [92](#i4548f14c535242b19fed9e6fe5606926_139)] | | |

| [Note 15 - Commitments and [removed: Contingencies](#i99b894486862473eb1bc3dfcf6405c73_145)] [added: Contingencies](#i4548f14c535242b19fed9e6fe5606926_145)] | | | | | | [removed: [90](#i99b894486862473eb1bc3dfcf6405c73_145)] [added: [94](#i4548f14c535242b19fed9e6fe5606926_145)] | | |

| [Note 16 - Earnings Per [removed: Share](#i99b894486862473eb1bc3dfcf6405c73_148)] [added: Share](#i4548f14c535242b19fed9e6fe5606926_148)] | | | | | | [removed: [91](#i99b894486862473eb1bc3dfcf6405c73_148)] [added: [94](#i4548f14c535242b19fed9e6fe5606926_148)] | | |

| [Note 17 - Other (Income) Expense, [removed: Net](#i99b894486862473eb1bc3dfcf6405c73_151)] [added: Net](#i4548f14c535242b19fed9e6fe5606926_151)] | | | | | | [removed: [93](#i99b894486862473eb1bc3dfcf6405c73_151)] [added: [96](#i4548f14c535242b19fed9e6fe5606926_151)] | | |

| [Note [removed: 1](#i99b894486862473eb1bc3dfcf6405c73_1624)[8](#i99b894486862473eb1bc3dfcf6405c73_1624) [-] [added: 18 -] Related Party [removed: Transactions](#i99b894486862473eb1bc3dfcf6405c73_1624)] [added: Transactions](#i4548f14c535242b19fed9e6fe5606926_154)] | | | | | | [removed: [99](#i99b894486862473eb1bc3dfcf6405c73_1624)] [added: [96](#i4548f14c535242b19fed9e6fe5606926_154)] | | |

| [Note [removed: 1](#i99b894486862473eb1bc3dfcf6405c73_154)[9](#i99b894486862473eb1bc3dfcf6405c73_154) [-] [added: 19 -] Supplemental Balance Sheet [removed: Information](#i99b894486862473eb1bc3dfcf6405c73_154)] [added: Information](#i4548f14c535242b19fed9e6fe5606926_157)] | | | | | | [removed: [94](#i99b894486862473eb1bc3dfcf6405c73_154)] [added: [97](#i4548f14c535242b19fed9e6fe5606926_157)] | | |

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 45] [added: 47] | | | [removed: ] [added: ] | | |

We have audited the accompanying consolidated balance sheets of The Hershey Company (the Company) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of income, comprehensive income, cash flows, and stockholders' equity for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal [removed: Control-Integrated] [added: Control–Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February [removed: 17, 2023] [added: 20, 2024] expressed an unqualified opinion thereon.

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 46] [added: 48] | | | [removed: ] [added: ] | | |

| *Description of the Matter* | | | | | | The unsettled portion of the Company’s obligation for trade promotion activities at December 31, [removed: 2022] [added: 2023] was [removed: $215.7] [added: $194.0] million. As discussed in Note 1 of the consolidated financial statements, the Company promotes its products through programs such as, but not limited to, discounts, coupons, rebates, in-store display incentives, and volume-based incentives. The Company recognizes the estimated costs of these trade promotion activities as a component of variable consideration when determining the transaction price. The unsettled portion of the Company’s obligation for trade promotion activities is included in accrued liabilities in the consolidated balance sheet. Auditing management’s calculation of the unsettled portion of the Company’s obligation for trade promotion activities was [removed: highly] subjective and required [removed: significant] judgment as a result of the nature of the required estimates and assumptions. In particular, the estimates required an analysis of the programs offered, expectations regarding customer and consumer participation, [removed: historical sales] and [removed: payment trends, and] experience with [added: historical] payment [removed: patterns associated with similar programs offered in the past. The estimated cost of these programs is sensitive to changes in trends with regard to customer and consumer participation, particularly for new programs and for programs related to the introduction of new products.] [added: patterns.] | | |

| *How We Addressed the Matter in Our Audit* | | | | | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls related to the Company’s calculation of the accrued liabilities for trade promotion activities. For example, we tested controls over management’s review of the completeness of the promotional activities as well as the significant assumptions and the data inputs utilized in the calculations. To test the unsettled portion of the Company’s obligation for trade promotion activities, we performed audit procedures that included, among others, assessing (1) the expected value estimation methodology used by management, (2) whether all material trade promotion activities were properly included in management’s estimate, and (3) the [removed: significant] assumptions discussed above and the underlying data used in its analyses. Specifically, when evaluating the [removed: significant] assumptions, we compared them to historical trends, third party data, and assumptions used in prior periods, and inspected management’s retrospective review of actual trade promotion activities compared to previous estimates. We also performed sensitivity analyses of [removed: significant] assumptions to evaluate the changes in the estimate that would result from changes in the assumptions. | | |

| [removed: February 17, 2023] | | | [added: | | | 2023 | | | | | | | | |]

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 47] [added: 49] | | | [removed: ] [added: ] | | |

We have audited The Hershey Company’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal [removed: Control-Integrated] [added: Control–Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, The Hershey Company (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of income, comprehensive income, cash flows, and stockholders' equity for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February [removed: 17, 2023] [added: 20, 2024] expressed an unqualified opinion thereon.

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 48] [added: 50] | | | [removed: ] [added: ] | | |

| February 20, 2024 | | |

As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the acquisition of certain assets that provide additional manufacturing capacity from Weaver Popcorn Manufacturing, Inc. (“Weaver”) on May 31, 2023, which is included in the 2023 consolidated financial statements of the Company and constituted 1.4% of total assets as of December 31, 2023.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Weaver.

| February 20, 2024 | | |

| Cash and cash equivalents | | | | | | $ | 401,902 | | | | | $ | 463,889 | |

| Net income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,861,787 | | | | | | | | | | | | | | | | | | — | | | | | | 1,861,787 | | |

| Other comprehensive income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 22,255 | | | | | | — | | | | | | 22,255 | | |

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

| Repurchase of common stock (including excise tax) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (267,331) | | | | | | | | | | | | | | | | | | (267,331) | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

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| Balance, December 31, 2023 | | | | | | $ | — | | | | | $ | 166,939 | | | | | $ | 54,614 | | | | | $ | 1,345,580 | | | | | $ | 4,562,263 | | | | | $ | (1,800,232) | | | | | $ | (230,078) | | | | | $ | — | | | | | $ | 4,099,086 | |

The rollforward of the Company’s outstanding obligations confirmed as valid under its supplier finance program, which are included in Accounts Payable in the Consolidated Balance Sheets, for year ended December 31, 2023 are as follows:

| Supplier finance program obligations outstanding at beginning of the year | | | | | | $ | 105,293 | | | | | | | |

| Invoice amounts added during the year | | | | | | 585,872 | | | | | | | | |

| Invoice amounts paid during the year | | | | | | (541,904) | | | | | | | | |

| Supplier finance program obligations outstanding at end of the year | | | | | | $ | 149,261 | | | | | | | |

This ASU should be applied

This new standard was not applicable to our May 2023 acquisition of Weaver Popcorn Manufacturing, Inc. (“Weaver”) due to no contract assets or liabilities (as discussed in [Note 2](#i4548f14c535242b19fed9e6fe5606926_100)); however, will be applied in relevant future acquisitions.

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.

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

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.

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.

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.

Early adoption is permitted and the updated 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.

2023 Activity

Manufacturing Capacity

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 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 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.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Long-lived asset impairment charges | | | | | | — | | | | | | — | | | | | | 9,143 | | |

| Impairment of long-lived assets (see [Note 6](#i99b894486862473eb1bc3dfcf6405c73_115)) | | | | | | — | | | | | | — | | | | | | 9,143 | | |

| Cash and cash equivalents, beginning of period | | | | | | 329,266 | | | | | | 1,143,987 | | | | | | 493,262 | | |

| Balance, January 1, 2020 | | | | | | $ | — | | | | | $ | 160,939 | | | | | $ | 60,614 | | | | | $ | 1,142,210 | | | | | $ | 1,290,461 | | | | | $ | (591,036) | | | | | $ | (323,966) | | | | | $ | 5,772 | | | | | $ | 1,744,994 | |

| Net income (loss) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,278,708 | | | | | | | | | | | | | | | | | | (3,295) | | | | | | 1,275,413 | | |

| Other comprehensive (loss) income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (14,116) | | | | | | 1,054 | | | | | | (13,062) | | |

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

Included in Accounts Payable in the Consolidated Balance Sheets at December 31, 2022 and 2021 were $105,293 and $36,386 of outstanding payment obligations, respectively, that were sold to the financial institution under the Company’s supplier finance program.

In June 2016, the FASB issued ASU No. 2016-13, *Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments*.

This ASU modifies the measurement of expected credit losses of certain financial instruments.

The amendments in this ASU should be applied on a modified retrospective basis to all periods presented.

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

In August 2018, the FASB issued ASU No. 2018-13, *Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement*.

This ASU modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures.

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.

All other amendments should be applied retrospectively to all periods presented upon their effective date.

In August 2018, the FASB issued ASU No. 2018-15, *Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract*.

This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop

or obtain internal-use software (and hosting arrangements that include an internal-use software license).

The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

We adopted the provisions of this ASU in the first quarter of 2020 on a prospective basis.

This ASU is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities.

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

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

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

Evaluation of this new standard is dependent on multiple circumstances including the timing and complexity of completed business combinations.

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

2020 Activity

During the second quarter of 2020, we completed the divestitures of KRAVE Pure Foods, Inc. (“Krave”), which was previously included within the North America Salty Snacks segment, and the *Scharffen Berger* and *Dagoba* brands, both of which were previously included within the North America Confectionery segment results in our consolidated financial statements.

Total proceeds from the divestitures and the impact on our Consolidated Statements of Income, both individually and on an aggregate basis, were immaterial.

| Goodwill | | | | | | $ | 1,854,266 | | | | | $ | 121,152 | | | | | $ | 375,145 | | | | | $ | 2,350,563 | |

| Balance at January 1, 2021 | | | | | | 1,849,293 | | | | | | 121,152 | | | | | | 17,770 | | | | | | 1,988,215 | | |

| Acquired during the period | | | | | | 174,516 | | | | | | 468,646 | | | | | | — | | | | | | 643,162 | | |

| Measurement period adjustments | | | | | | 1,310 | | | | | | — | | | | | | — | | | | | | 1,310 | | |

| Foreign currency translation | | | | | | 887 | | | | | | — | | | | | | (400) | | | | | | 487 | | |

| Trademarks | | | | | | $ | 1,701,932 | | | | | $ | (190,045) | | | | | $ | 1,705,390 | | | | | $ | (141,760) | |

| Total | | | | | | 2,223,173 | | | | | | (291,593) | | | | | | 2,218,680 | | | | | | (215,514) | | |

| Amortization expense | | | | | | $ | 79,249 | | | | | $ | 78,667 | | | | | $ | 78,667 | | | | | $ | 78,620 | | | | | $ | 77,527 | |

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), as of December 31, [removed: 2022.][added: 2023.]

Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, [removed: 2022.][added: 2023.]

[removed: There were] [added: Other than the implementation of the new ERP system in North America Salty Snacks and the ongoing integration of the Weaver acquisition, there have been] no changes [removed: in] [added: to] the Company’s internal control over financial reporting during the fourth quarter of [removed: 2022] [added: 2023] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

We are in the process of a multi-year implementation of a new global enterprise resource planning (“ERP”) system, which [removed: will replace] [added: replaces] our existing operating and financial systems.

The ERP system is designed to accurately maintain the Company’s financial records, enhance operational [removed: functionality] [added: functionality,] and provide timely information to the Company’s management team related to the operation of the business.

During the third quarter of 2022, we completed the implementation of [removed: our new ERP system for] one operating segment [removed: which] [added: that] is included in our International segment.

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 95] [added: 99] | | | [removed: ] [added: ] | | |

The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]

Based on this assessment, management concluded that, as of December 31, [removed: 2022,] [added: 2023,] the Company’s internal control over financial reporting was effective based on those criteria.

The Company’s independent auditors have audited, and reported on, the Company’s internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]

In July 2023, we completed the transition to the new ERP system as the consolidated book of record.

During October 2023, we completed the implementation of our new ERP system in the North America Salty Snacks segment.

We updated our internal controls to reflect changes to the financial reporting business processes impacted by the implementation.

Additionally, the Company acquired certain assets that provide additional manufacturing capacity from Weaver Popcorn Manufacturing, Inc. (“Weaver”) (May 2023).

Further, the final implementation phase will occur in 2024 for the remainder of the business.

The implementation will result in changes to our internal controls over financial reporting.

As implementation occurs, we will evaluate quarterly whether such changes materially affect our internal control over financial reporting.

Management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the acquisition of certain assets that provide additional manufacturing capacity from Weaver, which is included in the 2023 consolidated financial statements of the Company and constituted 1.4% of total assets as of December 31, 2023.

This exclusion is in accordance with the guidance issued by the U.S. Securities and Exchange Commission that allows companies to exclude acquisitions from management’s report on internal control over financial reporting for the first year after the acquisition.

We rely extensively on information systems and technology to manage our business and summarize operating results.

The implementation is expected to occur in phases over the next several years.

The portion of the transition to the new ERP system which we have completed to date did not result in significant changes in our internal control over financial reporting.

However, as the next phases of the updated processes are rolled out in connection with the ERP implementation, we will give appropriate consideration to whether these process changes necessitate changes in the design of and testing for effectiveness of internal controls over financial reporting.

Director and Executive Officer Trading

A portion of our directors’ and officers’ compensation is in the form of equity awards and, from time to time, they may engage in open-market transactions with respect to their Company securities for diversification or other personal reasons.

All such transactions in Company securities by directors and officers must comply with the Company’s Insider Trading Policy, which requires that transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information.

Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables directors and officers to prearrange transactions in the Company’s securities in a manner that avoids concerns about initiating transactions while in possession of material nonpublic information.

The following table describes the contracts, instructions or written plans for the purchase or sale of securities adopted by our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) during the three months ended December 31, 2023, that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).

No other Rule 10b5-1 trading arrangements or “non-Rule 10b5–1 trading arrangements” (as defined by S-K Item 408(c)) were entered into or terminated by our directors or officers during such period.

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| Name and Title | | | | | | Date of Adoption of 10b5-1 Plan | | | | | | Duration of 10b5-1 Plan(1) | | | | | | Aggregate Number of Securities to be Sold or Purchased | | |

| Jennifer L. McCalman VP, Chief Accounting Officer | | | | | | 11/3/2023 | | | | | | 2/24/2024 | | | | | | Sell 453 shares | | |

(1) The plan duration is until the date listed in this column or such earlier date upon the completion of all trades under the plan (or the expiration of the orders relating to such trades without execution) or the occurrence of such other termination events as specified in the plan.

None.

| [Table of [removed: Contents](#i99b894486862473eb1bc3dfcf6405c73_7)] [added: Contents](#i4548f14c535242b19fed9e6fe5606926_7)] | | | The Hershey Company \| [removed: 2022] [added: 2023] Form 10-K \| Page [removed: 96] [added: 100] | | | [removed: ] [added: ] | | |

To the extent disclosure of any delinquent form under Section 16(a) of the Securities Exchange Act of 1934 is made by the Company, such disclosure will be set forth in our Proxy Statement under the caption “Delinquent Section 16(a) Reports” and is incorporated herein by reference.