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-30

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

FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______to_______
Commission file number 1-183
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THE HERSHEY COMPANY
(Exact name of registrant as specified in its charter)
Delaware23-0691590
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
19 East Chocolate Avenue, Hershey, PA 17033
(Address of principal executive offices and Zip Code)
(717) 534-4200
(Registrant's telephone number, including area code)

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

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

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

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

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Common Stock, one dollar par value—147,674,274 shares, as of July 26, 2024.
Class B Common Stock, one dollar par value—54,613,514 shares, as of July 26, 2024.


THE HERSHEY COMPANY
Quarterly Report on Form 10-Q
For the Period Ended June 30, 2024

TABLE OF CONTENTS

The Hershey Company | Q2 2024 Form 10-Q | Page 1
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
 
Three Months EndedSix Months Ended
June 30, 2024July 2, 2023June 30, 2024July 2, 2023
Net sales$2,074,480 $2,490,280 $5,327,229 $5,477,894 
Cost of sales
1,240,735 1,358,181 2,817,403 2,963,473 
Gross profit
833,745 1,132,099 2,509,826 2,514,421 
Selling, marketing and administrative expense
540,987 571,804 1,158,968 1,153,391 
Business realignment costs (benefits)4,937 (370)4,937 441 
Operating profit
287,821 560,665 1,345,921 1,360,589 
Interest expense, net41,373 36,661 81,195 74,346 
Other (income) expense, net574 84,484 32,594 87,467 
Income before income taxes245,874 439,520 1,232,132 1,198,776 
Provision for income taxes64,980 32,537 253,785 204,608 
Net income
$180,894 $406,983 $978,347 $994,168 
Net income per share—basic:
Common stock$0.92 $2.03 $4.93 $4.96 
Class B common stock$0.83 $1.88 $4.48 $4.57 
Net income per share—diluted:
Common stock$0.89 $1.98 $4.80 $4.83 
Class B common stock$0.83 $1.88 $4.47 $4.56 
Dividends paid per share:
Common stock$1.370 $1.036 $2.740 $2.072 
Class B common stock$1.245 $0.942 $2.490 $1.884 

See Notes to Unaudited Consolidated Financial Statements.
The Hershey Company | Q2 2024 Form 10-Q | Page 2
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

For the Three Months Ended
For the Six Months Ended
June 30, 2024July 2, 2023June 30, 2024July 2, 2023
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Net income$180,894 $406,983 $978,347 $994,168 
Other comprehensive income, net of tax:
Foreign currency translation adjustments:
Foreign currency translation gains (losses) during period$(26,844)$— (26,844)$12,395 $— 12,395 $(31,842)$— (31,842)$21,336 $— 21,336 
Pension and post-retirement benefit plans:
Net actuarial gain (loss) and service cost286 (15)271 905 (180)725 238 (8)230 924 (178)746 
Reclassification to earnings2,537 (609)1,928 7,661 (1,839)5,822 5,078 (1,218)3,860 10,888 (2,613)8,275 
Cash flow hedges:
Gains (losses) on cash flow hedging derivatives2,522 (238)2,284 (4,930)(2,271)(7,201)3,857 (322)3,535 (3,483)(1,731)(5,214)
Reclassification to earnings1,796 (213)1,583 7,246 (2,021)5,225 3,650 (968)2,682 9,253 (3,104)6,149 
Total other comprehensive income (loss), net of tax$(19,703)$(1,075)(20,778)$23,277 $(6,311)16,966 $(19,019)$(2,516)(21,535)$38,918 $(7,626)31,292 
Comprehensive income$160,116 $423,949 $956,812 $1,025,460 

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q2 2024 Form 10-Q | Page 3
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THE HERSHEY COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, 2024December 31, 2023
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$467,058 $401,902 
Accounts receivable—trade, net846,440 823,617 
Inventories1,459,488 1,340,996 
Prepaid expenses and other562,641 345,588 
Total current assets3,335,627 2,912,103 
Property, plant and equipment, net3,368,322 3,309,678 
Goodwill2,691,613 2,696,050 
Other intangibles1,838,525 1,879,229 
Other non-current assets1,140,255 1,061,427 
Deferred income taxes41,332 44,454 
Total assets$12,415,674 $11,902,941 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$1,138,226 $1,086,183 
Accrued liabilities783,723 867,815 
Accrued income taxes37,232 29,457 
Short-term debt1,321,274 719,839 
Current portion of long-term debt605,176 305,058 
Total current liabilities3,885,631 3,008,352 
Long-term debt3,489,393 3,789,132 
Other long-term liabilities700,065 660,673 
Deferred income taxes330,719 345,698 
Total liabilities8,405,808 7,803,855 
Stockholders’ equity:
The Hershey Company stockholders’ equity
Preferred stock, shares issued: none in 2024 and 2023
— — 
Common stock, shares issued: 166,939,511 at June 30, 2024 and December 31, 2023
166,939 166,939 
Class B common stock, shares issued: 54,613,514 at June 30, 2024 and December 31, 2023
54,614 54,614 
Additional paid-in capital1,325,876 1,345,580 
Retained earnings4,997,269 4,562,263 
Treasury—common stock shares, at cost: 19,281,035 at June 30, 2024 and 17,160,099 at December 31, 2023
(2,283,219)(1,800,232)
Accumulated other comprehensive loss(251,613)(230,078)
Total stockholders’ equity4,009,866 4,099,086 
Total liabilities and stockholders’ equity$12,415,674 $11,902,941 

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q2 2024 Form 10-Q | Page 4
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
June 30, 2024July 2, 2023
Operating Activities
Net income$978,347 $994,168 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization218,185 199,787 
Stock-based compensation expense17,500 35,841 
Deferred income taxes(16,704)(27,294)
Write-down of equity investments31,391 77,360 
Unrealized gains on derivative contracts(191,142)— 
Other35,235 54,697 
Changes in assets and liabilities, net of business acquisition:
Accounts receivable—trade, net(33,051)(43,503)
Inventories(128,122)(201,906)
Prepaid expenses and other current assets(90,937)(4,457)
Accounts payable and accrued liabilities19,944 (20,271)
Accrued income taxes63,555 (3,674)
Contributions to pension and other benefit plans(5,468)(14,773)
Other assets and liabilities(3,993)3,833 
Net cash provided by operating activities894,740 1,049,808 
Investing Activities
Capital additions (including software)(343,457)(330,505)
Equity investments in tax credit qualifying partnerships(46,053)(19,077)
Business acquisitions, net of cash and cash equivalents acquired— (165,818)
Other investing activities(222)(629)
Net cash used in investing activities(389,732)(516,029)
Financing Activities
Net increase in short-term debt609,999 165,984 
Long-term borrowings, net of debt issuance costs— 744,092 
Repayment of long-term debt and finance leases(3,029)(752,367)
Cash dividends paid(543,926)(413,546)
Repurchase of common stock(494,191)(239,910)
Proceeds from exercised stock options8,285 22,021 
Taxes withheld and paid on employee stock awards
(30,012)(32,953)
Net cash used in financing activities(452,874)(506,679)
Effect of exchange rate changes on cash and cash equivalents13,022 (44,828)
Net increase (decrease) in cash and cash equivalents65,156 (17,728)
Cash and cash equivalents, beginning of period401,902 463,889 
Cash and cash equivalents, end of period$467,058 $446,161 
Supplemental Disclosure
Interest paid$87,527 $76,537 
Income taxes paid165,530 229,144 

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q2 2024 Form 10-Q | Page 5
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HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three Months Ended June 30, 2024 and July 2, 2023
(in thousands)
(unaudited)


Preferred
Stock		Common
Stock		Class B
Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Treasury
Common
Stock		Accumulated Other
Comprehensive
(Loss) Income		Total
Stockholders’
Equity
Balance, March 31, 2024
$— $166,939 $54,614 $1,315,813 $5,087,126 $(2,285,370)$(230,835)$4,108,287 
Net income180,894 180,894 
Other comprehensive loss(20,778)(20,778)
Dividends (including dividend equivalents):
Common Stock, $1.370 per share
(202,757)(202,757)
Class B Common Stock, $1.245 per share
(67,994)(67,994)
Stock-based compensation11,619 11,619 
Exercise of stock options and incentive-based transactions(1,556)2,130 574 
Repurchase of common stock (including excise tax)21 21 
Balance, June 30, 2024
$— $166,939 $54,614 $1,325,876 $4,997,269 $(2,283,219)$(251,613)$4,009,866 

Preferred
Stock		Common
Stock		Class B
Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Treasury
Common
Stock		Accumulated Other
Comprehensive
(Loss) Income		Total
Stockholders’
Equity
Balance, April 2, 2023
$— $164,439 $57,114 $1,285,412 $3,970,562 $(1,781,155)$(238,007)$3,458,365 
Net income 406,983 406,983 
Other comprehensive income16,966 16,966 
Dividends (including dividend equivalents):
Common Stock, $1.036 per share
(152,734)(152,734)
Class B Common Stock, $0.942 per share
(53,801)(53,801)
Conversion of Class B Common Stock into Common Stock2,500 (2,500)— 
Stock-based compensation16,812 16,812 
Exercise of stock options and incentive-based transactions(977)3,140 2,163 
Repurchase of common stock (including excise tax)31 31 
Balance, July 2, 2023
$— $166,939 $54,614 $1,301,247 $4,171,010 $(1,777,984)$(221,041)$3,694,785 


The Hershey Company | Q2 2024 Form 10-Q | Page 6
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Six Months Ended June 30, 2024 and July 2, 2023
(in thousands)
(unaudited)


Preferred
Stock		Common
Stock		Class B
Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Treasury
Common
Stock		Accumulated Other
Comprehensive
(Loss) Income		Total
Stockholders’
Equity
Balance, December 31, 2023
$— $166,939 $54,614 $1,345,580 $4,562,263 $(1,800,232)$(230,078)$4,099,086 
Net income978,347 978,347 
Other comprehensive loss(21,535)(21,535)
Dividends (including dividend equivalents):
Common Stock, $2.740 per share
(407,353)(407,353)
Class B Common Stock, $2.49 per share
(135,988)(135,988)
Stock-based compensation18,009 18,009 
Exercise of stock options and incentive-based transactions(37,713)15,986 (21,727)
Repurchase of common stock (including excise tax)(498,973)(498,973)
Balance, June 30, 2024
$— $166,939 $54,614 $1,325,876 $4,997,269 $(2,283,219)$(251,613)$4,009,866 

Preferred
Stock		Common
Stock		Class B
Common
Stock		Additional
Paid-in
Capital		Retained
Earnings		Treasury
Common
Stock		Accumulated Other
Comprehensive
(Loss) Income		Total
Stockholders’
Equity
Balance, December 31, 2022
$— $163,439 $58,114 $1,296,572 $3,589,781 $(1,556,029)$(252,333)$3,299,544 
Net income994,168 994,168 
Other comprehensive income31,292 31,292 
Dividends (including dividend equivalents):
Common Stock, $2.072 per share
(305,337)(305,337)
Class B Common Stock, $1.884 per share
(107,602)(107,602)
Conversion of Class B Common Stock into Common Stock3,500 (3,500)— 
Stock-based compensation35,760 35,760 
Exercise of stock options and incentive-based transactions(31,085)20,153 (10,932)
Repurchase of common stock (including excise tax)(242,108)(242,108)
Balance, July 2, 2023
$— $166,939 $54,614 $1,301,247 $4,171,010 $(1,777,984)$(221,041)$3,694,785 


See Notes to Unaudited Consolidated Financial Statements.



The Hershey Company | Q2 2024 Form 10-Q | Page 7
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share data or if otherwise indicated)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited consolidated financial statements provided in this report include the accounts of The Hershey Company (the “Company,” “Hershey,” “we” or “us”) and our majority-owned subsidiaries and entities in which we have a controlling financial interest after the elimination of intercompany accounts and transactions. We have a controlling financial interest if we own a majority of the outstanding voting common stock and minority shareholders do not have substantive participating rights, we have significant control through contractual or economic interests in which we are the primary beneficiary or we have the power to direct the activities that most significantly impact the entity’s economic performance. We use the equity method of accounting when we have a 20% to 50% interest in other companies and exercise significant influence. Other investments that are not controlled, and over which we do not have the ability to exercise significant influence, are accounted for under the cost method. Both equity method investments and cost, less impairment, investments are included as Other non-current assets in the Consolidated Balance Sheets.
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not contain certain information and disclosures required by GAAP for comprehensive financial statements. The financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in our opinion, necessary for a fair presentation of the results of operations, financial position, and cash flows for the indicated periods.
Operating results for the quarter ended June 30, 2024 may not be indicative of the results that may be expected for the year ending December 31, 2024 because of seasonal effects on our business. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 (our “2023 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. This ASU requires a buyer in a supplier finance program to disclose qualitative and quantitative information about the program including the program’s nature, activity during the period, changes from period to period and potential magnitude. ASU 2022-04 is effective for annual periods beginning after December 15, 2022 and interim periods within those annual periods. A rollforward of obligations during the annual period, including the amount of obligations confirmed and obligations subsequently paid, is effective for annual periods beginning after December 15, 2023 with early adoption permitted. This ASU should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively. We early adopted provisions of this ASU in the fourth quarter of 2022, with the exception of the amendment on rollforward information, which we adopted in the fourth quarter of 2023. Adoption of the new standard did not have a material impact on our consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) rather than adjust them to fair value at the acquisition date. ASU 2021-08 is effective for annual periods beginning after December 15, 2022 and interim periods within those annual periods. This ASU should be applied prospectively to business combinations occurring on or after the date of adoption. As a result, we adopted the provisions of this ASU in the first quarter of 2023. This new standard was not applicable to the May 2023 acquisition of Weaver Popcorn Manufacturing, Inc. (“Weaver”) due to no contract assets or liabilities being acquired in this transaction (as discussed in Note 2); however, it will be applied in relevant future acquisitions.

The Hershey Company | Q2 2024 Form 10-Q | Page 8
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)


Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), an amount for other segment items with a description of the composition, and disclosure of the title and position of the CODM. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and the update should be applied retrospectively to each period presented in the financial statements. We are currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures. As a result, we intend to adopt the provisions of this ASU in the fourth quarter of 2024.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires public business entities on an annual basis to disclose specific categories in a tabular rate reconciliation and provide additional information for reconciling items that meet a five percent quantitative threshold. Additionally, the ASU requires all entities to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes, as well as individual jurisdictions where income taxes paid are equal to or greater than five percent of total income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted and the update should be applied on a prospective basis, with a retrospective application permitted in the financial statements. We are currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures. As a result, we intend to adopt the provisions of this ASU in the fourth quarter of 2025.
No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures.
2. BUSINESS ACQUISITIONS
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 initial cash consideration paid for Weaver totaled $165,818 and consisted of cash on hand and short-term borrowings. Acquisition-related costs for the Weaver acquisition were immaterial.
The acquisition has been accounted for as a business combination and, accordingly, Weaver has been included within the North America Salty Snacks segment from the date of acquisition. The purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values and consisted of $85,231 to goodwill, $79,136 to property, plant and equipment, net and $1,451 to other net assets acquired. The purchase price allocation has been finalized as of the fourth quarter of 2023 and did not include measurement period adjustments.
Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired. The goodwill derived from this acquisition is deductible for tax purposes and reflects the value of leveraging our supply chain capabilities to accelerate growth and access to our portfolio of salty snacks products.
3. GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying value of goodwill by reportable segment for the six months ended June 30, 2024 are as follows:
North America ConfectioneryNorth America Salty SnacksInternationalTotal
Balance at December 31, 2023
$2,020,831 $657,001 $18,218 $2,696,050 
Foreign currency translation(3,585)— (852)(4,437)
Balance at June 30, 2024
$2,017,246 $657,001 $17,366 $2,691,613 


The Hershey Company | Q2 2024 Form 10-Q | Page 9
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset:
June 30, 2024December 31, 2023
Gross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Intangible assets subject to amortization:
Trademarks$1,701,392 $(273,432)$1,703,029 $(249,947)
Customer-related512,832 (137,324)513,910 (123,282)
Patents7,963 (7,963)8,233 (8,233)
Total
2,222,187 (418,719)2,225,172 (381,462)
Intangible assets not subject to amortization:
Trademarks35,057 35,519 
Total other intangible assets
$1,838,525 $1,879,229 
Total amortization expense for the three months ended June 30, 2024 and July 2, 2023 was $19,539 and $20,562, respectively. Total amortization expense for the six months ended June 30, 2024 and July 2, 2023 was $39,093 and $39,739, respectively.
4. SHORT AND LONG-TERM DEBT
Short-term Debt
As a source of short-term financing, we utilize cash on hand and commercial paper or bank loans with an original maturity of three months or less. We maintain a $1.35 billion unsecured revolving credit facility with the option to increase borrowings by an additional $500 million with the consent of the lenders. The credit facility is scheduled to expire on April 26, 2028; however, we may extend the termination date for up to two additional one-year periods upon notice to the administrative agent.
The credit agreements governing the credit facility contain certain financial and other covenants, customary representations, warranties and events of default. As of June 30, 2024, we were in compliance with all covenants pertaining to the credit facility, and we had no significant compensating balance agreements that legally restricted access to these funds. For more information, refer to the Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K.

In addition to the revolving credit facility, we maintain lines of credit with domestic and international commercial banks. Commitment fees relating to our revolving credit facility and lines of credit are not material. Short-term debt consisted of the following:
June 30, 2024December 31, 2023
Short-term foreign bank borrowings against lines of credit$175,812$192,278
U.S. commercial paper1,145,462527,561
Total short-term debt$1,321,274$719,839
Weighted average interest rate on outstanding commercial paper5.4 %5.4 %


The Hershey Company | Q2 2024 Form 10-Q | Page 10
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

Long-term Debt
Long-term debt consisted of the following:
Debt Type and Rate
Maturity Date
June 30, 2024December 31, 2023
2.050% Notes
November 15, 2024300,000 300,000 
0.900% Notes
June 1, 2025300,000 300,000 
3.200% Notes
August 21, 2025300,000 300,000 
2.300% Notes
August 15, 2026500,000 500,000 
7.200% Debentures
August 15, 2027193,639 193,639 
4.250% Notes
May 4, 2028350,000 350,000 
2.450% Notes
November 15, 2029300,000 300,000 
1.700% Notes
June 1, 2030350,000 350,000 
4.500% Notes
May 4, 2033400,000 400,000 
3.375% Notes
August 15, 2046300,000 300,000 
3.125% Notes
November 15, 2049400,000400,000
2.650% Notes
June 1, 2050350,000350,000
Finance lease obligations (see Note 7)
74,95676,385
Net impact of interest rate swaps, debt issuance costs and unamortized debt discounts(24,026)(25,834)
Total long-term debt4,094,569 4,094,190 
Less—current portion605,176305,058
Long-term portion$3,489,393 $3,789,132 
Interest Expense
Net interest expense consists of the following:
Three Months EndedSix Months Ended
June 30, 2024July 2, 2023June 30, 2024July 2, 2023
Interest expense$50,149 $43,893 $96,193 $86,399 
Capitalized interest(5,841)(3,721)(10,277)(6,788)
Interest expense
44,308 40,172 85,916 79,611 
Interest income(2,935)(3,511)(4,721)(5,265)
Interest expense, net
$41,373 $36,661 $81,195 $74,346 

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



The Hershey Company | Q2 2024 Form 10-Q | Page 11
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

Commodity Price Risk
We enter into commodities futures and options contracts and other commodity derivative instruments to reduce the effect of future price fluctuations associated with the purchase of raw materials, energy requirements and transportation services. We generally hedge commodity price risks for 3- to 24-month periods. Our open commodity derivative contracts had a notional value of $92,330 as of June 30, 2024 and $94,917 as of December 31, 2023.
Derivatives used to manage commodity price risk are not designated for hedge accounting treatment. Therefore, the changes in fair value of these derivatives are recorded as incurred within cost of sales. As discussed in Note 13, we define our segment income to exclude gains and losses on commodity derivatives until the related inventory is sold, at which time the related gains and losses are reflected within segment income.  This enables us to continue to align the derivative gains and losses with the underlying economic exposure being hedged and thereby eliminate the mark-to-market volatility within our reported segment income.

Foreign Exchange Price Risk
We are exposed to foreign currency exchange rate risk related to our international operations, including non-functional currency intercompany debt and other non-functional currency transactions of certain subsidiaries. Principal currencies hedged include the euro, Canadian dollar, Japanese yen, British pound, Brazilian real, Malaysian ringgit, Mexican peso and Swiss franc. We typically utilize foreign currency forward exchange contracts to hedge these exposures for periods ranging from 3 to 12 months. The contracts are either designated as cash flow hedges or are undesignated. The net notional amount of foreign exchange contracts accounted for as cash flow hedges was $32,953 at June 30, 2024 and $80,068 at December 31, 2023. The effective portion of the changes in fair value on these contracts is recorded in other comprehensive income and reclassified into earnings in the same period in which the hedged transactions affect earnings. The net notional amount of foreign exchange contracts that are not designated as accounting hedges was $6,899 at June 30, 2024 and $13,665 at December 31, 2023. The change in fair value on these instruments is recorded directly in cost of sales or selling, marketing and administrative (“SM&A”) expense, depending on the nature of the underlying exposure.

Interest Rate Risk
In order to manage interest rate exposure, from time to time, we enter into interest rate swap agreements to protect against unfavorable interest rate changes relating to forecasted debt transactions. These swaps, which are settled upon issuance of the related debt, are designated as cash flow hedges and the gains and losses that are deferred in other comprehensive income are being recognized as an adjustment to interest expense over the same period that the hedged interest payments affect earnings.
Equity Price Risk
We are exposed to market price changes in certain broad market indices related to our deferred compensation obligations to our employees. To mitigate this risk, we use equity swap contracts to hedge the portion of the exposure that is linked to market-level equity returns. These contracts are not designated as hedges for accounting purposes and are entered into for periods of 3 to 12 months. The change in fair value of these derivatives is recorded in selling, marketing and administrative expense, together with the change in the related liabilities. The notional amount of the contracts outstanding at June 30, 2024 and December 31, 2023 was $27,643 and $22,867, respectively.

The Hershey Company | Q2 2024 Form 10-Q | Page 12
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

The following table presents the classification of derivative assets and liabilities within the Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023:
June 30, 2024December 31, 2023
Assets (1)Liabilities (1)Assets (1)Liabilities (1)
Derivatives designated as cash flow hedging instruments:
Foreign exchange contracts$3,769 $1,312 $1,219 $1,670 
Derivatives not designated as hedging instruments:
Commodities futures and options (2)1,577 884 66 679 
Deferred compensation derivatives776 — 2,343 — 
Foreign exchange contracts607 — 1,123 — 
2,960 884 3,532 679 
Total$6,729 $2,196 $4,751 $2,349 

(1)Derivative assets are classified on our Consolidated Balance Sheets within prepaid expenses and other as well as other non-current assets. Derivative liabilities are classified on our Consolidated Balance Sheets within accrued liabilities and other long-term liabilities.
(2)As of June 30, 2024, amounts reflected on a net basis in assets were assets of $45,967 and liabilities of $45,050, which are associated with cash transfers receivable or payable on commodities futures contracts reflecting the change in quoted market prices on the last trading day for the period. The comparable amounts reflected on a net basis in liabilities at December 31, 2023 were assets of $29,881 and liabilities of $30,493. At June 30, 2024 and December 31, 2023, the remaining amount reflected in assets and liabilities related to the fair value of other non-exchange traded derivative instruments, respectively.

Income Statement Impact of Derivative Instruments
The effect of derivative instruments on the Consolidated Statements of Income for the three months ended June 30, 2024 and July 2, 2023 was as follows:
Non-designated HedgesCash Flow Hedges
Gains (losses) recognized in income (a)Gains (losses) recognized in other comprehensive income (“OCI”)Gains (losses) reclassified from accumulated OCI (“AOCI”) into income (b)
202420232024202320242023
Commodities futures and options
$(38,300)$(6,437)$— $— $— $— 
Foreign exchange contracts 111 573 2,522 (4,930)505 966 
Interest rate swap agreements
— — — — (2,301)(8,212)
Deferred compensation derivatives
776 1,606 — — — — 
Total
$(37,413)$(4,258)$2,522 $(4,930)$(1,796)$(7,246)

The Hershey Company | Q2 2024 Form 10-Q | Page 13
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

The effect of derivative instruments on the Consolidated Statements of Income for the six months ended June 30, 2024 and July 2, 2023 was as follows:
Non-designated HedgesCash Flow Hedges
Gains (losses) recognized in income (a)Gains (losses) recognized in other comprehensive income (“OCI”)Gains (losses) reclassified from accumulated OCI (“AOCI”) into income (b)
202420232024202320242023
Commodities futures and options
$159,464 $(17,051)$— $— $— $— 
Foreign exchange contracts (156)942 3,857 (6,656)950 1,728 
Interest rate swap agreements
— — — 3,173 (4,600)(10,981)
Deferred compensation derivatives
3,047 2,879 — — — — 
Total
$162,355 $(13,230)$3,857 $(3,483)$(3,650)$(9,253)

(a)Gains (losses) recognized in income for non-designated commodities futures and options contracts were included in cost of sales. Gains (losses) recognized in income for non-designated foreign currency forward exchange contracts and deferred compensation derivatives were included in selling, marketing and administrative expenses.
(b)Gains (losses) reclassified from AOCI into income for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses. Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense.
The amount of pre-tax net losses on derivative instruments, including interest rate swap agreements and foreign currency forward exchange contracts expected to be reclassified into earnings in the next 12 months was approximately $6,416 as of June 30, 2024. This amount is primarily associated with interest rate swap agreements.
6. FAIR VALUE MEASUREMENTS
Accounting guidance on fair value measurements requires that financial assets and liabilities be classified and disclosed in one of the following categories of the fair value hierarchy:
Level 1 – Based on unadjusted quoted prices for identical assets or liabilities in an active market.
Level 2 – Based on observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3 – Based on unobservable inputs that reflect the entity’s own assumptions about the assumptions that a market participant would use in pricing the asset or liability.

We did not have any Level 3 financial assets or liabilities, nor were there any transfers between levels during the periods presented.

The Hershey Company | Q2 2024 Form 10-Q | Page 14
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of June 30, 2024 and December 31, 2023:
Assets / Liabilities
Level 1Level 2Level 3Total
June 30, 2024:
Derivative Instruments:
Assets:
Foreign exchange contracts (1)$—$4,376$—$4,376
Deferred compensation derivatives (2)$—$776$—$776
Commodities futures and options (3)$1,577$—$—$1,577
Liabilities:
Foreign exchange contracts (1)$—$1,312$—$1,312
Commodities futures and options (3)$884$—$—$884
December 31, 2023:
Assets:
Foreign exchange contracts (1)$—$2,342$—$2,342
Deferred compensation derivatives (2)$—$2,343$—$2,343
Commodities futures and options (3)$66$—$—$66
Liabilities:
Foreign exchange contracts (1)$—$1,670$—$1,670
Commodities futures and options (3)$679$—$—$679
(1)The fair value of foreign currency forward exchange contracts is the difference between the contract and current market foreign currency exchange rates at the end of the period. We estimate the fair value of foreign currency forward exchange contracts on a quarterly basis by obtaining market quotes of spot and forward rates for contracts with similar terms, adjusted where necessary for maturity differences.
(2)The fair value of deferred compensation derivatives is based on quoted prices for market interest rates and a broad market equity index.
(3)The fair value of commodities futures and options contracts is based on quoted market prices.


The Hershey Company | Q2 2024 Form 10-Q | Page 15
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

Other Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair values as of June 30, 2024 and December 31, 2023 because of the relatively short maturity of these instruments.
The estimated fair value of our long-term debt is based on quoted market prices for similar debt issues and is, therefore, classified as Level 2 within the valuation hierarchy. The fair values and carrying values of long-term debt, including the current portion, were as follows:
Fair ValueCarrying Value
June 30, 2024December 31, 2023June 30, 2024December 31, 2023
Current portion of long-term debt$589,530$297,842$605,176$305,058
Long-term debt3,011,240 3,413,411 3,489,393 3,789,132 
Total$3,600,770 $3,711,253 $4,094,569 $4,094,190 

Other Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, GAAP requires that, under certain circumstances, we also record assets and liabilities at fair value on a nonrecurring basis.
In connection with the acquisition of Weaver in May 2023, as discussed in Note 2, we used valuation techniques to determine fair value, with the primary technique being the cost approach to value personal property, which uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.
7. LEASES
We lease office and retail space, warehouse and distribution facilities, land, vehicles, and equipment. We determine if an agreement is or contains a lease at inception. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.
Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are based on the estimated present value of lease payments over the lease term and are recognized at the lease commencement date.
As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from information available at the lease commencement date.
Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. A limited number of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements generally do not contain residual value guarantees or material restrictive covenants.
For real estate, equipment and vehicles that support selling, marketing and general administrative activities, the Company accounts for the lease and non-lease components as a single lease component. These asset categories comprise the majority of our leases. The lease and non-lease components of real estate and equipment leases supporting production activities are not accounted for as a single lease component. Consideration for such contracts are allocated to the lease and non-lease components based upon relative standalone prices either observable or estimated if observable prices are not readily available.


The Hershey Company | Q2 2024 Form 10-Q | Page 16
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

The components of lease expense for the three months ended June 30, 2024 and July 2, 2023 were as follows:  
Three Months Ended
Lease expenseClassificationJune 30, 2024July 2, 2023
Operating lease costCost of sales or SM&A (1)$13,266 $12,320 
Finance lease cost:
Amortization of ROU assetsDepreciation and amortization (1)2,158 1,834 
Interest on lease liabilitiesInterest expense, net1,164 1,092 
Net lease cost (2)$16,588 $15,246 
The components of lease expense for the six months ended June 30, 2024 and July 2, 2023 were as follows:
Six Months Ended
Lease expenseClassificationJune 30, 2024July 2, 2023
Operating lease costCost of sales or SM&A (1)$25,481 $24,363 
Finance lease cost:
Amortization of ROU assetsDepreciation and amortization (1)4,371 3,696 
Interest on lease liabilitiesInterest expense, net2,349 2,192 
Net lease cost (2)$32,201 $30,251 
(1)Supply chain-related amounts were included in cost of sales.
(2)Net lease cost does not include short-term leases, variable lease costs or sublease income, all of which are immaterial.
Information regarding our lease terms and discount rates were as follows:
June 30, 2024December 31, 2023
Weighted-average remaining lease term (years)
Operating leases12.814.4
Finance leases25.925.9
Weighted-average discount rate
Operating leases3.7