Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis (“MD&A”) is intended to provide an understanding of Hershey’s financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. The MD&A should be read in conjunction with our Unaudited Consolidated Financial Statements and accompanying notes. This discussion contains a number of forward-looking statements, all of which are based on current expectations. Actual results may differ materially. Refer to the Safe Harbor Statement below as well as the Risk Factors and other information contained in our 2021 Annual Report on Form 10-K for information concerning the key risks to achieving future performance goals.

The MD&A is organized in the following sections:

• Overview

• Trends Affecting Our Business

• Consolidated Results of Operations

• Segment Results

• Liquidity and Capital Resources

• Safe Harbor Statement

OVERVIEW

Hershey is a global confectionery leader known for making more moments of goodness through chocolate, sweets, mints and other great tasting snacks. We are the largest producer of quality chocolate in North America, a leading snack maker in the United States (“U.S.”) and a global leader in chocolate and non-chocolate confectionery. We market, sell and distribute our products under more than 100 brand names in approximately 80 countries worldwide.

Our principal product offerings include chocolate and non-chocolate confectionery products; gum and mint refreshment products and protein bars; pantry items, such as baking ingredients, toppings and beverages; and snack items such as spreads, bars, and snack bites and mixes, popcorn, pretzels and protein bars.

Business Acquisitions and Divestiture

In December 2021, we completed the acquisition of Pretzels Inc. (“Pretzels”), previously a privately held company that manufactures and sells pretzels and other salty snacks for other branded products and private labels in the United States. Pretzels is an industry leader in the pretzel category with a product portfolio that includes filled, gluten free and seasoned pretzels, as well as extruded snacks that complements Hershey’s snacks portfolio. Based in Bluffton, Indiana, Pretzels operates three manufacturing locations in Indiana and Kansas. Pretzels provides Hershey deep pretzel category and product expertise and the manufacturing capabilities to support brand growth and future pretzel innovation. 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 product. Dot’s is the fastest-growing scale brand in the pretzel category and 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 Canada. Lily’s products include dark and milk chocolate style bars, baking chips, peanut butter cups and other confection products that complement Hershey’s confectionery and confectionery-based portfolio.

In January 2021, we completed the divestiture of Lotte Shanghai Foods Co., Ltd., which was previously included within the International segment results in our consolidated financial statements. Total proceeds from the divestiture and the impact on our consolidated financial statements were immaterial.

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TRENDS AFFECTING OUR BUSINESS

On March 11, 2020, the World Health Organization designated coronavirus disease 2019 (“COVID-19”) as a global pandemic, which has spread worldwide and impacted various markets around the world, including the U.S. Throughout the pandemic we have remained committed to promoting the health and safety of our employees and communities and helping to maintain the global food supply. In 2022, minimal COVID-19 restrictions remained as the availability of vaccinations (including vaccine boosters) continued to increase around the world, albeit with slower than anticipated rollouts and challenges within certain countries. The lifting of restrictions has resulted in daily activities and habits being more representative of pre-pandemic times. However, beginning in 2021, and continuing through the three months ended April 3, 2022, the continued strong demand for consumer goods and the effects of COVID-19 mitigation strategies have led to broad-based supply chain disruptions across the U.S. and globally, including inflation on many consumer products, labor shortages and demand outpacing supply. As a result, during the three months ended April 3, 2022, we continued to experience corresponding incremental costs and gross margin pressures (see Results of Operations included in this MD&A). 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.

In addition to COVID-19 and broad-based supply chain disruptions, certain geopolitical events, specifically the conflict between Russia and Ukraine, have increased global economic and political uncertainty. For the three months ended April 3, 2022, this conflict did not have a material impact on our commodity prices or supply availability. However, we are continuing to monitor for any significant escalation or expansion of economic or supply chain disruptions or broader inflationary costs, which may result in material adverse effects on our results of operations.

We experienced an increase in our net sales and net income during the three months ended April 3, 2022, which was primarily driven by strong everyday performance on our core U.S. confection brands and salty snack brands (see Segment Results included in this MD&A), partially offset by the aforementioned supply chain disruptions and gross margin pressures. As of April 3, 2022, we believe we have sufficient liquidity to satisfy our key strategic initiatives and other material cash requirements; 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 Resources included in this MD&A).

Based on the length and severity of COVID-19 and the conflict between Russia and Ukraine, including broad-based supply chain disruptions, rising levels of inflation, new trends in outbreaks and hotspots, the spread of COVID-19 variants, resurgences and the continued distribution of vaccinations, we may experience continued volatility in retail foot traffic, consumer shopping and consumption behavior and may experience increasing supply chain costs and higher inflation. We will continue to evaluate the nature and extent of these potential and evolving impacts on our business, consolidated results of operations, segment results, liquidity and capital resources.

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CONSOLIDATED RESULTS OF OPERATIONS

						Three Months Ended
						April 3, 2022						April 4, 2021						Percent Change
In millions of dollars except per share amounts
Net sales						$	2,666.2					$	2,295.9					16.1		%
Cost of sales						1,420.7						1,247.0						13.9		%
Gross profit						1,245.5						1,048.9						18.7		%
Gross margin						46.7		%				45.7		%
Selling, marketing & administrative (“SM&A”) expenses						524.2						494.7						6.0		%
SM&A expense as a percent of net sales						19.7		%				21.5		%
Business realignment activities						0.3						1.2						(77.9)		%
Operating profit						721.0						553.0						30.4		%
Operating profit margin						27.0		%				24.1		%
Interest expense, net						33.2						36.4						(8.9)		%
Other (income) expense, net						10.4						2.4						331.1		%
Provision for income taxes						143.9						117.3						22.7		%
Effective income tax rate						21.2%						22.8%
Net income including noncontrolling interest						533.5						396.9						34.4		%
Less: Net gain attributable to noncontrolling interest						—						1.1						NM
Net income attributable to The Hershey Company						$	533.5					$	395.8					34.8		%
Net income per share—diluted						$	2.57					$	1.90					35.3		%
NOTE: Percentage changes may not compute directly as shown due to rounding of amounts presented above.
NM = not meaningful

Results of Operations - First Quarter 2022 vs. First Quarter 2021

Net Sales

Net sales increased 16.1% in the first quarter of 2022 compared to the same period of 2021, reflecting a favorable price realization of 6.9% primarily due to higher list prices across our reportable segments, a volume increase of 4.6% driven by increases in everyday core U.S. confection brands, salty snack brands and our international markets. There was a 4.6% benefit from the 2021 acquisitions of Pretzels, Dot’s and Lily’s.

Key U.S. Marketplace Metrics

For the first quarter of 2022, our total U.S. retail takeaway declined 1.4% in the expanded multi-outlet combined plus convenience store channels (IRI MULO + C-Stores), which includes candy, mint, gum, salty snacks and grocery items. Our U.S. candy, mint and gum (“CMG”) consumer takeaway decreased 4.4% and experienced a CMG market share loss of approximately 156 basis points as a result of capacity constraints limiting the Company’s ability to fully service consumer demand.

The CMG consumer takeaway and market share information reflects measured channels of distribution accounting for approximately 90% of our U.S. confectionery retail business. These channels of distribution primarily include food, drug, mass merchandisers, and convenience store channels, plus Wal-Mart Stores, Inc., partial dollar, club and military channels. These metrics are based on measured market scanned purchases as reported by Information Resources, Incorporated (“IRI”), the Company’s market insights and analytics provider, and provide a means to assess our retail takeaway and market position relative to the overall category.

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Cost of Sales and Gross Margin

Cost of sales increased 13.9% in the first quarter of 2022 compared to the same period of 2021. The increase was driven by higher sales volume, higher freight and logistics costs, as well as higher supply chain inflation costs. The increase was partially offset by favorable price realization, supply chain productivity, as well as the incremental $37.1 million of favorable mark-to-market activity on our commodity derivative instruments intended to economically hedge future years’ commodity purchases.

Gross margin increased by 100 basis points in the first quarter of 2022 compared to the same period of 2021. The increase was driven by favorable price realization, volume increases and favorable year-over-year mark-to-market impact from commodity derivative instruments. These factors were offset by higher freight and logistics costs, higher supply chain inflation costs, as well as unfavorable product mix.

SM&A Expenses

SM&A expenses increased $29.5 million, or 6.0%, in the first quarter of 2022. Total advertising and related consumer marketing expenses decreased 0.7% driven by lower advertising in the North America Confectionery segment in response to sustained consumer demand and capacity constraints on select brands, offset by an increase in the North America Salty Snacks segment to raise brand awareness. SM&A expenses, excluding advertising and related consumer marketing, increased approximately 9.9% in the first quarter of 2022 driven by an increase in acquisition and integration related costs, as well as higher compensation costs and investments in capabilities and technology.

Business Realignment Activities

We periodically undertake business realignment activities designed to increase our efficiency and focus our business in support of our key growth strategies. In the first quarter of 2022, we recorded business realignment costs of $0.3 million versus costs of $1.2 million in the first quarter of 2021 related to the International Optimization Program. This program is focused on optimizing our China operating model to improve our operational efficiency and provide for a strong, sustainable and simplified base going forward. Costs associated with business realignment activities are classified in our Consolidated Statements of Income as described in Note 9 to the Unaudited Consolidated Financial Statements.

Operating Profit and Operating Profit Margin

Operating profit increased 30.4% in the first quarter of 2022 compared to the same period of 2021 predominantly due to higher gross profit, partially offset by higher SM&A expenses, as noted above. Operating profit margin increased to 27.0% in 2022 from 24.1% in 2021 driven by these same factors.

Interest Expense, Net

Net interest expense was $3.2 million lower in the first quarter of 2022 compared to the same period of 2021. The decrease was primarily due to lower long-term debt balances in 2022 versus 2021, specifically resulting from the repayment of $350 million of 3.100% Notes upon their maturity in May 2021. This decrease was partially offset by higher short-term debt balances in 2022 versus 2021, specifically outstanding commercial paper borrowings.

Other (Income) Expense, Net

Other (income) expense, net was $10.4 million in the first quarter of 2022 versus net expense of $2.4 million in the first quarter of 2021. The increase in net expense was primarily due to higher write-downs on equity investments qualifying for tax credits in 2022 versus 2021, offset by lower non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans.

Income Taxes and Effective Tax Rate

The effective income tax rate was 21.2% for the first quarter of 2022 compared with 22.8% for the first quarter of 2021. Relative to the 21% statutory rate, the 2022 and 2021 effective tax rates, were impacted by state taxes, partially offset by investment tax credits and the benefit of employee share-based payments.

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Net Income Attributable to The Hershey Company and Earnings Per Share-diluted

Net income increased $137.7 million, or 34.8%, while EPS-diluted increased $0.67, or 35.3%, in the first quarter of 2022 compared to the same period of 2021. The increase in both net income and EPS diluted was driven primarily by higher gross profit and lower income taxes, partially offset by higher SM&A expenses, as noted above. Our 2022 EPS-diluted benefited from lower weighted-average shares outstanding as a result of share repurchases.

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SEGMENT RESULTS

The summary that follows provides a discussion of the results of operations of our three reportable segments: North America Confectionery, North America Salty Snacks and International. For segment reporting purposes, we use “segment income” to evaluate segment performance and allocate resources. Segment income excludes unallocated general corporate administrative expenses, unallocated mark-to-market gains and losses on commodity derivatives, business realignment and impairment charges, acquisition-related costs and other unusual gains or losses that are not part of our measurement of segment performance. These items of our operating income are largely managed centrally at the corporate level and are excluded from the measure of segment income reviewed by the CODM and used for resource allocation and internal management reporting and performance evaluation. Segment income and segment income margin, which are presented in the segment discussion that follows, are non-GAAP measures and do not purport to be alternatives to operating income as a measure of operating performance. We believe that these measures are useful to investors and other users of our financial information in evaluating ongoing operating profitability as well as in evaluating operating performance in relation to our competitors, as they exclude the activities that are not directly attributable to our ongoing segment operations.

Our segment results, including a reconciliation to our consolidated results, were as follows:

						Three Months Ended
						April 3, 2022						April 4, 2021
In millions of dollars
Net Sales:
North America Confectionery						$	2,217.0					$	1,985.4
North America Salty Snacks						226.1						121.4
International						223.1						189.1
Total						$	2,666.2					$	2,295.9
Segment Income:
North America Confectionery						$	781.9					$	642.6
North America Salty Snacks						21.3						25.4
International						42.0						27.4
Total segment income						845.2						695.4
Unallocated corporate expense (1)						150.3						137.8
Unallocated mark-to-market gains on commodity derivatives (2)						(27.4)						(2.3)
Costs associated with business realignment activities						1.3						6.9
Operating profit						721.0						553.0
Interest expense, net						33.2						36.4
Other (income) expense, net						10.4						2.4
Income before income taxes						$	677.4					$	514.2

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

(2)Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses. See Note 13 to the Unaudited Consolidated Financial Statements.

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North America Confectionery

The North America Confectionery segment is responsible for our chocolate and non-chocolate confectionery market position in the United States and Canada. This includes developing and growing our business in chocolate and non-chocolate confectionery, gum and refreshment products, protein bars, spreads, snack bites and mixes, as well as pantry and food service lines. While a less significant component, this segment also includes our retail operations, including Hershey’s Chocolate World stores in Hershey, Pennsylvania; New York, New York; Las Vegas, Nevada; Niagara Falls (Ontario) and Singapore, as well as operations associated with licensing the use of certain trademarks and products to third parties around the world. North America Confectionery results, which accounted for 83.1% and 86.5% of our net sales for the three months ended April 3, 2022 and April 4, 2021, respectively, were as follows:

						Three Months Ended
						April 3, 2022						April 4, 2021						Percent Change
In millions of dollars
Net sales						$	2,217.0					$	1,985.4					11.7		%
Segment income						781.9						642.6						21.7		%
Segment margin						35.3		%				32.4		%

Results of Operations - First Quarter 2022 vs. First Quarter 2021

Net sales of our North America Confectionery segment increased $231.6 million or 11.7% in the first quarter of 2022 compared to the same period of 2021, reflecting a favorable price realization of 6.8% due to list price increases on certain products across our portfolio, a volume increase of 3.8% due to an increase in everyday core U.S. confection brands and a 1.1% increase from the 2021 acquisition of Lily’s.

Our North America Confectionery segment also includes licensing and owned retail. This includes our Hershey’s Chocolate World stores in the United States (3 locations), Niagara Falls (Ontario) and Singapore. Our net sales increased approximately 21.5% during the first quarter of 2022 compared to the same period of 2021.

Our North America Confectionery segment income increased $139.3 million or 21.7% in the first quarter of 2022 compared to the same period of 2021, primarily due to favorable price realization and volume increases, partially offset by higher freight and logistics costs, higher supply chain inflation costs, as well as, unfavorable product mix.

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North America Salty Snacks

The North America Salty Snacks segment is responsible for our grocery and snacks market positions, including our salty snacking products. North America Salty Snacks results, which accounted for 8.5% and 5.3% of our net sales for the three months ended April 3, 2022 and April 4, 2021, respectively, were as follows:

						Three Months Ended
						April 3, 2022						April 4, 2021						Percent Change
In millions of dollars
Net sales						$	226.1					$	121.4					86.2		%
Segment income						21.3						25.4						(16.1)		%
Segment margin						9.4		%				20.9		%

Results of Operations - First Quarter 2022 vs. First Quarter 2021

Net sales of our North America Salty Snacks segment increased $104.7 million or 86.2% in the first quarter of 2022 compared to the same period of 2021, reflecting a 69.0% benefit from the 2021 acquisitions of Dot’s and Pretzels, a favorable price realization of 13.2% due to higher prices on certain products and related trade promotions and a volume increase of 4.0% primarily related to SkinnyPop and Pirates Booty snacks.

Our North America Salty Snacks segment income decreased $4.1 million or 16.1% in the first quarter of 2022 compared to the same period of 2021 due to unfavorable product mix, as well as higher supply chain inflation costs and increased advertising and related consumer marketing costs, partially offset by favorable price realization and volume increases.

International

The International segment includes all other countries where we currently manufacture, import, market, sell or distribute chocolate and non-chocolate confectionery and other products. Currently, this includes our operations in Asia, Latin America, Europe, Africa and the Middle East, along with exports to these regions. International results, which accounted for 8.4% and 8.2% of our net sales for the three months ended April 3, 2022 and April 4, 2021, respectively, were as follows:

						Three Months Ended
						April 3, 2022						April 4, 2021						Percent Change
In millions of dollars
Net sales						$	223.1					$	189.1					17.9		%
Segment income						42.0						27.4						53.4		%
Segment margin						18.8		%				14.5		%

Results of Operations - First Quarter 2022 vs. First Quarter 2021

Net sales of our International segment increased $34.0 million or 17.9% in the first quarter of 2022 compared to the same period of 2021, reflecting a volume increase of 11.9% and a favorable price realization of 5.8%. The volume increase was primarily attributable to solid marketplace growth in Brazil, Mexico, and India, where net sales increased by 34.9%, 29.5%, and 14.5%, respectively. These increases also benefited from a favorable impact from foreign currency exchange rates of 0.2%.

Our International segment generated income of $42.0 million in the first quarter of 2022 compared to $27.4 million in the first quarter of 2021 with the improvement primarily resulting from execution of our International Optimization Program in China, as we streamline and optimize our China operating model, as well as volume increases and favorable price realization.

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Unallocated Corporate Expense

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

In the first quarter of 2022, unallocated corporate expense totaled $150.3 million, as compared to $137.8 million in the first quarter of 2021. The increase is primarily driven by higher acquisition and integration related costs, as well as incremental investments in capabilities and technology and higher group insurance costs, partially offset by lower incentive compensation.

LIQUIDITY AND CAPITAL RESOURCES

Historically, our primary source of liquidity has been cash generated from operations. Domestic seasonal working capital needs, which typically peak during the summer months, are generally met by utilizing cash on hand, bank borrowings or the issuance of commercial paper. Commercial paper may also be issued, from time to time, to finance ongoing business transactions, such as the repayment of long-term debt, business acquisitions and for other general corporate purposes.

At April 3, 2022, our cash and cash equivalents totaled $338.1 million, an increase of $8.8 million compared to the 2021 year-end balance. We believe we have sufficient liquidity to satisfy our cash needs; however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during the ongoing COVID-19 pandemic. Additional detail regarding the net uses of cash are outlined in the following discussion.

Approximately 80% of the balance of our cash and cash equivalents at April 3, 2022 was held by subsidiaries domiciled outside of the United States. We intend to continue to reinvest the remainder of the earnings outside of the United States for which there would be a material tax implication to distributing, such as withholding tax, for the foreseeable future and, therefore, have not recognized additional tax expense on these earnings. We believe we have sufficient liquidity to satisfy our cash needs for at least the next twelve months, including our cash needs in the United States.

Cash Flow Summary

The following table is derived from our Consolidated Statements of Cash Flows:

						Three Months Ended
In millions of dollars						April 3, 2022						April 4, 2021
Net cash provided by (used in):
Operating activities						$	656.5					$	609.6
Investing activities						(164.0)						(137.0)
Financing activities						(463.5)						(491.8)
Effect of exchange rate changes on cash and cash equivalents						(20.2)						(3.9)
Less: Cash classified as assets held for sale						—						11.4
Increase (decrease) in cash and cash equivalents						$	8.8					$	(11.7)

Operating activities

We generated cash of $656.5 million from operating activities in the first three months of 2022, an increase of $46.9 million compared to $609.6 million in the same period of 2021. This increase in net cash provided by operating activities was mainly driven by the following factors:

• Net income adjusted for non-cash charges to operations (including depreciation, amortization, stock-based compensation, deferred income taxes, a write-down of equity investments and other charges) resulted in $166.9 million of higher cash flow in 2022 relative to 2021.

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• The increase in cash provided by operating activities was partially offset by the following net cash outflows:

• Net working capital (comprised of trade accounts receivable, inventory, accounts payable and accrued liabilities) consumed cash of $128.9 million in 2022, compared to $25.7 million in 2021. This $103.2 million fluctuation was mainly driven by a higher year-over-year build up of U.S. inventories to satisfy product requirements and maintain sufficient levels to accommodate customer requirements and an increase in cash used by accounts receivable due to a longer Easter season in 2022 as compared to prior year, partially offset by the timing of vendor and supplier payments and higher accrued incentive compensation related to annual performance that was paid in the first quarter of 2022.

Investing activities

We used cash of $164.0 million for investing activities in the first three months of 2022, an increase of $27.0 million compared to $137.0 million in the same period of 2021. This increase in net cash used in investing activities was mainly driven by the following factors:

*•*Capital spending. Capital expenditures, including capitalized software, primarily to support our ERP system implementation, capacity expansion projects, innovation and cost savings, were $141.1 million in the first three months of 2022 compared to $114.5 million in the same period of 2021. We expect our full year 2022 capital expenditures, including capitalized software, to approximate $600 million, the high end of our previously announced range of $550 million to $600 million. Our 2022 capital expenditures are largely driven by our key strategic initiatives, including expanding the agility and capacity of the Company’s supply chain and building digital infrastructure across the enterprise. We intend to use our existing cash and internally generated funds to meet our 2022 capital requirements.

• Investments in partnerships qualifying for tax credits. We make investments in partnership entities that in turn make equity investments in projects eligible to receive federal historic and renewable energy tax credits. We invested approximately $22.5 million in the first three months of 2022, compared to $25.1 million in the same period of 2021.

Financing activities

We used cash of $463.5 million for financing activities in the first three months of 2022, a decrease of $28.3 million compared to $491.8 million in the same period of 2021. This decrease in net cash used in financing activities was mainly driven by the following factors:

*•*Short-term borrowings, net. In addition to utilizing cash on hand, we use short-term borrowings (commercial paper and bank borrowings) to fund seasonal working capital requirements and ongoing business needs. During the first three months of 2022, we used cash of $65.6 million to reduce a portion of our short-term commercial paper borrowings originally used to fund our 2021 acquisitions of Dot’s and Pretzels, partially offset by an increase in short-term foreign bank borrowings. During the first three months of 2021, we used cash of $6.1 million to reduce a portion of our short-term foreign bank borrowings.

• Long-term debt borrowings and repayments. During the first three months of 2022, long-term debt activity was minimal. During the first three months of 2021, we repaid $84.7 million of 8.800% Debentures due upon their maturity.

• Dividend payments. Total dividend payments to holders of our Common Stock and Class B Common Stock were $181.1 million during the first three months of 2022, an increase of $18.4 million compared to $162.7 million in the same period of 2021. Details regarding our 2022 cash dividends paid to stockholders are as follows:

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						Quarter Ended
In millions of dollars except per share amounts						April 3, 2022
Dividends paid per share – Common stock						$	0.901
Dividends paid per share – Class B common stock						$	0.819
Total cash dividends paid						$	181.1
Declaration date						February 2, 2022
Record date						February 18, 2022
Payment date						March 15, 2022

*•*Share repurchases. We repurchase shares of Common Stock to offset the dilutive impact of treasury shares issued under our equity compensation plans. The value of these share repurchases in a given period varies based on the volume of stock options exercised and our market price. In addition, we periodically repurchase shares of Common Stock pursuant to Board-authorized programs intended to drive additional stockholder value. Details regarding our share repurchases are as follows:

						Quarter Ended
In millions						April 3, 2022						April 4, 2021
Milton Hershey School Trust repurchase						$	203.4					$	—
Shares repurchased in the open market to replace Treasury Stock issued for stock options and incentive compensation						—						240.4
Cash used for total share repurchases						$	203.4					$	240.4

In February 2022, the Company entered into a Stock Purchase Agreement with Hershey Trust Company, as trustee for the Milton Hershey School Trust, pursuant to which the Company purchased 1,000,000 shares of the Company’s Common Stock from the Milton Hershey School Trust at a price equal to $203.35 per share, for a total purchase price of $203.4 million.

In July 2018, our Board of Directors approved a $500 million share repurchase authorization. As of April 3, 2022, approximately $110 million remained available for repurchases of our Common Stock under this program. The share repurchase program does not have an expiration date. In May 2021, our Board of Directors approved an additional $500 million share repurchase authorization. This program is to commence after the existing 2018 authorization is completed and is to be utilized at management’s discretion. We expect 2022 share repurchases to be in line with our traditional buyback strategy.

*•*Proceeds from exercised stock options and employee tax withholding. During the first three months of 2022, we received $16.7 million from employee exercises of stock options and paid $29.0 million of employee taxes withheld from share-based awards. During the first three months of 2021, we received $15.1 million from employee exercises of stock options and paid $11.9 million of employee taxes withheld from share-based awards. Variances are driven primarily by the number of shares exercised and the share price at the date of grant.

Recent Accounting Pronouncements

Information on recently adopted and issued accounting standards is included in Note 1 to the Unaudited Consolidated Financial Statements.

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Safe Harbor Statement

We are subject to changing economic, competitive, regulatory and technological risks and uncertainties that could have a material impact on our business, financial condition or results of operations. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we note the following factors that, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions that we have discussed directly or implied in this Quarterly Report on Form 10-Q. Many of these forward-looking statements can be identified by the use of words such as “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “potential,” “predict,” “project,” “strategy,” “target” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would,” among others.

The factors that could cause our actual results to differ materially from the results projected in our forward-looking statements include, but are not limited to the following:

• Our business and financial results may be negatively impacted by the failure to successfully manage a disruption in consumer and trade patterns, as well as operational challenges associated with the actual or perceived effects of a disease outbreak, including epidemics, pandemics or similar widespread public health concerns, such as the COVID-19 pandemic;

• Our Company’s reputation or brand image might be impacted as a result of issues or concerns relating to the quality and safety of our products, ingredients or packaging, human and workplace rights, and other environmental, social or governance matters, which in turn could result in litigation or otherwise negatively impact our operating results;

• Disruption to our manufacturing operations or supply chain could impair our ability to produce or deliver finished products, resulting in a negative impact on our operating results;

• We might not be able to hire, engage and retain the talented global workforce we need to drive our growth strategies;

• Risks associated with climate change and other environmental impacts, and increased focus and evolving views of our customers, stockholders and other stakeholders on climate change issues, could negatively affect our business and operations;

• Increases in raw material and energy costs along with the availability of adequate supplies of raw materials could affect future financial results;

• Price increases may not be sufficient to offset cost increases and maintain profitability or may result in sales volume declines associated with pricing elasticity;

• Market demand for new and existing products could decline;

• Increased marketplace competition could hurt our business;

• Our financial results may be adversely impacted by the failure to successfully execute or integrate acquisitions, divestitures and joint ventures;

• Our international operations may not achieve projected growth objectives, which could adversely impact our overall business and results of operations;

• We may not fully realize the expected cost savings and/or operating efficiencies associated with our strategic initiatives or restructuring programs, which may have an adverse impact on our business;

• Changes in governmental laws and regulations could increase our costs and liabilities or impact demand for our products;

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• Political, economic and/or financial market conditions, including impacts on our business arising from the conflict between Russia and Ukraine, could negatively impact our financial results;

• Disruptions, failures or security breaches of our information technology infrastructure could have a negative impact on our operations;

• Complications with the design or implementation of our new enterprise resource planning system could adversely impact our business and operations; and

• Such other matters as discussed in our 2021 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q, including Part II, Item 1A, ”Risk Factors.”

We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results, changes in expectations or events or circumstances after the date this Quarterly Report on Form 10-Q is filed.