HERSHEY CO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

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 Consolidated Financial Statements and
accompanying Notes included in Item 8 of this Annual Report on Form 10-K. This
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including
those discussed elsewhere in this Annual Report on Form 10-K, particularly in
Item 1A. "Risk Factors."

The MD&A is organized in the following sections:

• Business Model and Growth Strategy

• Overview

• Trends Affecting Our Business

• Consolidated Results of Operations

• Segment Results

• Liquidity and Capital Resources

• Critical Accounting Policies and Estimates

BUSINESS MODEL AND GROWTH STRATEGY


We are the largest producer of quality chocolate in North America, a leading
snack maker in the United States and a global leader in chocolate and
non-chocolate confectionery. We report our operations through three segments:
(i) North America Confectionery, (ii) North America Salty Snacks and (iii)
International, as discussed in   Note 13   to the Consolidated Financial
Statements.

Our vision is to be a leading snacking powerhouse. We aspire to be a leader in
meeting consumers' evolving snacking needs while strengthening the capabilities
that drive our growth. We are focused on four strategic imperatives to ensure
the Company's success now and in the future:

•Drive Core Confection Business and Broaden Participation in Snacking. We
continue to be the undisputed leader in U.S. confection by taking actions to
deepen our consumer connections and utilize our beloved brands to deliver
meaningful innovation, while also diversifying our portfolio to capture
profitable and incremental growth across the broader snacking continuum.
•Our products frequently play an important role in special moments among family
and friends. Seasons are an important part of our business model and for
consumers, as they are highly anticipated, cherished times, centered around
traditions. For us, it's an opportunity for our brands to be part of many
connections during the year when family and friends gather.
•Innovation is an important lever in this variety-seeking category and we are
leveraging work from our proprietary demand landscape analytical tool to shape
our future innovation and make it more impactful. We are becoming more
disciplined in our focus on platform innovation, which should enable sustainable
growth over time and significant extensions to our core.
•To expand our breadth in snacking, we are focused on expanding 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 recently has been fueled by the acquisitions of Dot's and Pretzels in
December 2021, which are included in our North America Salty Snacks segment.

•Deliver Profitable International Growth. We are focused on ensuring that we
efficiently allocate our resources to the areas with the highest potential for
profitable growth. We have reset our international investment strategy, while
holding fast to our belief that our targeted emerging market strategy will
deliver long-term, profitable growth. The uncertain macroeconomic environment in
many of these markets is expected to continue and we aim to ensure our
investments in these international markets are appropriate relative to the size
of the opportunity.

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•Expand Competitive Advantage through Differentiated Capabilities. In order to
generate actionable insights, we must acquire, integrate, access and utilize
vast sources of the right data in an effective manner. We are working to
leverage our advanced data and analytical techniques to gain a deep
understanding of our consumers, our customers, our shoppers, our end-to-end
supply chain, our retail environment and key economic drivers at both a macro
and precision level, including digital transformation and new media models. In
addition, we are in the process of transforming our supply chain capabilities
and enterprise resource planning system, which will enable employees to work
more efficiently and effectively.

•Responsibly Manage Our Operations to Ensure the Long-Term Sustainability of Our
Business, Our Planet and Our People. We are a purpose-driven company and for
more than a century, our iconic brands have been built on a foundation of
community investment and connections between people around the world. We could
not have achieved this without our remarkable employees who make our purpose a
reality. We believe our long-standing values make our Company a special place to
work.
•We believe our employees are among our most important resources and are
critical to our continued success. We utilize continuous listening surveys that
are distributed throughout the year to all employees globally. 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. These continuous touchpoints
allow for real-time feedback and action from the Company. These surveys are
further 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.
•Our diverse and inclusive culture makes the difference across all areas of the
business. Our gender representation includes women occupying many of the top
positions in the Company, including Chief Executive Officer and Chairman of the
Board, Chief Accounting Officer and President, Salty Snacks, and approximately
50% representation across the Company. In 2022, we maintained fair and equitable
pay achievements, including 1:1 aggregate people of color pay equity for
salaried employees in the United States (2021) and 1:1 aggregate gender pay
(2020).
•We have made strong progress on our ESG priorities and continue to elevate
these ESG initiatives for a greater global impact. While we 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.

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 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 and pretzels.

Business Acquisitions and Divestitures


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 with 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.
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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.
("LSFC"), 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.

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.

TRENDS AFFECTING OUR BUSINESS


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. As a result, we experienced
corresponding incremental costs and gross margin pressures during the year ended
December 31, 2022 (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 broad-based supply chain disruptions, certain geopolitical
events, specifically the conflict between Russia and Ukraine, have increased
global economic and political uncertainty. For the year ended December 31, 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.

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   included in
this MD&A), partially offset by the aforementioned supply chain disruptions and
gross margin pressures. As of December 31, 2022, 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 Resources   included in this MD&A).

Based on the length and severity of broad-based supply chain disruptions,
fluctuating levels of inflation, changes in consumer shopping and consumption
behavior, and the conflict between Russia and Ukraine, we 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


                                                                                                                   Percent Change
For the years ended December 31,              2022                2021               2020             2022 vs 2021             2021 vs 2020
In millions of dollars except per
share amounts
Net sales                                 $ 10,419.3          $ 8,971.3          $ 8,149.7                   16.1  %                     10.1  %
Cost of sales                                5,920.5            4,922.7            4,448.5                   20.3  %                     10.7  %
Gross profit                                 4,498.8            4,048.6            3,701.2                   11.1  %                      9.4  %
Gross margin                                    43.2  %            45.1  %            45.4  %
SM&A expense                                 2,236.0            2,001.4            1,890.9                   11.7  %                      5.8  %
SM&A expense as a percent of net
sales                                           21.5  %              22.3%              23.2%
Long-lived asset impairment charges                -                  -                9.1                        NM                          NM
Business realignment costs                       2.0                3.5               18.5                  (43.6) %                    (80.9) %
Operating profit                             2,260.8            2,043.7            1,782.7                   10.6  %                     14.6  %
Operating profit margin                         21.7  %            22.8  %            21.9  %
Interest expense, net                          137.6              127.4              149.4                    8.0  %                    (14.7) %
Other (income) expense, net                    206.1              119.1              138.3                   73.1  %                    (13.9) %
Provision for income taxes                     272.3              314.4              219.6                  (13.4) %                     43.2  %
Effective income tax rate                       14.2  %            17.5  %            14.7  %
Net income including noncontrolling
interest                                     1,644.8            1,482.8            1,275.4                   10.9  %                     16.3  %
Less: Net gain (loss) attributable
to noncontrolling interest                         -                5.3               (3.3)                       NM                          NM
Net income attributable to The
Hershey Company                           $     1,644.8       $    1,477.5       $    1,278.7                11.3  %                     15.5  %
Net income per share-diluted              $        7.96       $       7.11       $       6.11                12.0  %                     16.4  %

Note: Percentage changes may not compute directly as shown due to rounding of amounts presented above.

 NM = not meaningful


Net Sales

2022 compared with 2021

Net sales increased 16.1% in 2022 compared with 2021, reflecting a favorable
price realization of 8.0% due to higher prices on certain products, a 4.3%
benefit from net acquisitions and divestitures driven by the 2021 acquisitions
of Lily's, Dot's and Pretzels and a volume increase of 4.0% due to an increase
in consumer demand primarily in everyday core U.S. confection brands and salty
snack brands. These increases were slightly offset by an unfavorable impact from
foreign currency exchange rates of 0.2%.

2021 compared with 2020


Net sales increased 10.1% in 2021 compared with 2020, reflecting a volume
increase of 5.6% due to an increase in everyday core U.S. confection brands and
salty snack brands, a favorable price realization of 3.1% due to higher prices
on certain products, a 1.0% benefit from net acquisitions and divestitures
driven by the 2021 acquisitions of Lily's, Dot's and Pretzels and a favorable
impact from foreign currency exchange rates of 0.4%.

Key U.S. Marketplace Metrics


For the full year 2022, our total U.S. retail takeaway increased 11.4% 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 increased 10.7%, resulting in
a CMG market share decline of approximately 54 basis points.
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The CMG consumer takeaway and market share information reflect 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.

Cost of Sales and Gross Margin

2022 compared with 2021


Cost of sales increased 20.3% in 2022 compared with 2021. The increase was
driven by higher sales volume, higher supply chain inflation costs, including
higher logistics and labor costs and an incremental $40.8 million of unfavorable
mark-to-market activity on our commodity derivative instruments intended to
economically hedge future years' commodity purchases. Additionally, the increase
was partially offset by favorable price realization and supply chain
productivity.

Gross margin decreased by 200 basis points in 2022 compared with 2021. The
decrease was driven by unfavorable year-over-year mark-to-market impact from
commodity derivative instruments, higher supply chain inflation costs, including
higher logistics and labor costs, and unfavorable product mix. These declines
were offset by favorable price realization and volume increases.

2021 compared with 2020


Cost of sales increased 10.7% in 2021 compared with 2020. The increase was
driven by higher sales volume, higher freight and logistics costs and additional
plant costs. 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. Additionally,
the increase was partially offset by favorable price realization and supply
chain productivity.

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.

Selling, Marketing and Administrative

2022 compared with 2021


Selling, marketing and administrative ("SM&A") expenses increased $234.7
million, or 11.7%, in 2022 driven by increased corporate expenses. Total
advertising and related consumer marketing expenses increased 2.7% driven by
advertising increases in our confectionery brands and increased investment in
our salty snacks portfolio, which were partially offset by cost efficiencies
related to new media partners. SM&A expenses, excluding advertising and related
consumer marketing, increased approximately 16.3% in 2022 driven by an increase
in acquisition and integration related costs, as well as higher compensation
costs, investments in capabilities and technology and broad-based marketplace
inflation.

2021 compared with 2020

SM&A expenses increased $110.4 million, or 5.8%, in 2021 driven by increased
corporate expenses. Total advertising and related consumer marketing expenses
decreased 0.2% driven by lower advertising in our North America Confectionery
segment. SM&A expenses, excluding advertising and related consumer marketing,
increased approximately 9.2% in 2021 driven by higher compensation costs and
investments in capabilities and technology.


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Long-Lived Asset Impairment Charges


In 2022 and 2021, we recorded no impairments charges. In 2020, we recorded the
following impairment charges:
For the year ended December 31,           2020
In millions of dollars
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   of this Annual Report on Form 10-K. These
estimates and assumptions are subject to change due to changing economic and
competitive conditions.

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 2022, 2021 and 2020 , we recorded business realignment costs of $2.0 million,
$3.5 million and $18.5 million, respectively. The 2022, 2021, and 2020 costs
related primarily to the International Optimization Program, a program 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 Consolidated
Financial Statements.

Operating Profit and Operating Profit Margin

2022 compared with 2021


Operating profit increased 10.6% in 2022 compared with 2021 predominantly due to
higher gross profit, partially offset by higher SM&A expenses, as noted above.
Operating profit margin decreased to 21.7% in 2022 from 22.8% in 2021 by the
same factors noted above that resulted in lower gross margin for the period.

2021 compared with 2020


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.
Operating profit margin increased to 22.8% in 2021 from 21.9% in 2020 driven by
these same factors.

Interest Expense, Net

2022 compared with 2021

Net interest expense was $10.1 million higher in 2022 than in 2021. The increase
was primarily due to higher rates on short-term debt balances in 2022 versus
2021, specifically related to outstanding commercial paper borrowings. The
increase was partially offset due to lower average long-term debt balances,
specifically resulting from the repayment of $84.7 million of 8.800% Debentures
upon their maturity in February 2021 and $350 million of 3.100% Notes upon their
maturity in May 2021.

2021 compared with 2020

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.

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Other (Income) Expense, Net

2022 compared with 2021


Other (income) expense, net totaled an expense of $206.1 million in 2022 versus
an expense of $119.1 million in 2021. The increase in the net expense was
primarily due to higher write-downs on equity investments qualifying for tax
credits in 2022 versus 2021 and higher non-service cost components of net
periodic benefit cost relating to pension and other post-retirement benefit
plans.

2021 compared with 2020


Other (income) expense, net totaled an expense of $119.1 million in 2021 versus
an expense of $138.3 million in 2020. The decrease in the net expense was
primarily due to lower write-downs on equity investments qualifying for historic
and renewable energy tax credits, in addition to lower non-service cost
components of net periodic benefit cost relating to pension and other
post-retirement benefit plans during 2021 compared to the 2020 period.

Income Taxes and Effective Tax Rate

2022 compared with 2021


Our effective income tax rate was 14.2% for 2022 compared with 17.5% for 2021.
Relative to the 21% statutory rate, the 2022 effective tax rate benefited from
investment tax credits, partially offset by state taxes. The 2021 effective
rate, relative to the 21% statutory rate, benefited from investment tax credits,
partially offset by incremental tax reserves incurred as a result of an adverse
ruling in connection with a non-U.S. tax litigation matter, as well as state
taxes.

2021 compared with 2020


Our effective income tax rate was 17.5% for 2021 compared with 14.7% for 2020.
Relative to the 21% statutory rate, the 2021 effective tax rate benefited from
investment tax credits, partially offset by incremental tax reserves incurred as
a result of an adverse ruling in connection with a non-U.S. tax litigation
matter, as well as state taxes. The 2020 effective rate, relative to the 21%
statutory rate, benefited from investment tax credits and the benefit of
employee share-based payments, partially offset by state taxes.

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

2022 compared with 2021


Net income increased $167.3 million, or 11.3%, while EPS-diluted increased
$0.85, or 12.0%, in 2022 compared with 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 and higher other income and expenses.
Our 2022 EPS-diluted also benefited from lower weighted-average shares
outstanding as a result of share repurchases pursuant to our Board-approved
repurchase programs.

2021 compared with 2020


Net income increased $198.8 million, or 15.5%, while EPS-diluted increased
$1.00, or 16.4%, in 2021 compared with 2020. The increase in both net income and
EPS-diluted was driven primarily by higher gross profit, partially offset by
higher SM&A and higher income taxes in 2021. Our 2021 EPS-diluted also benefited
from lower weighted-average shares outstanding as a result of share repurchases
pursuant to our Board-approved repurchase programs.
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SEGMENT RESULTS


The summary that follows provides a discussion of the results of operations of
our three 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 Chief Operating
Decision Maker 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:


For the years ended December 31,                               2022                2021                2020
In millions of dollars
Net Sales:
North America Confectionery                                $  8,536.5          $  7,682.4          $  7,084.9
North America Salty Snacks                                    1,029.4               555.4               438.2
International                                                   853.4               733.5               626.6
Total                                                      $ 10,419.3          $  8,971.3          $  8,149.7

Segment Income:
North America Confectionery                                $  2,811.1          $  2,475.9          $  2,274.6
North America Salty Snacks                                      159.9               100.7                75.8
International                                                   107.9                74.2                   -
Total segment income                                          3,078.9             2,650.8             2,350.4
Unallocated corporate expense (1)                               735.5               614.9               520.7
Unallocated mark-to-market losses (gains) on
commodity derivatives (2)                                        78.2               (24.4)                6.4
Long-lived asset impairment charges                                 -                   -                 9.1
Costs associated with business realignment
activities                                                        4.4                16.6                31.5

Operating profit                                              2,260.8             2,043.7             1,782.7
Interest expense, net                                           137.6               127.4               149.4
Other (income) expense, net                                     206.2               119.1               138.3
Income before income taxes                                 $  1,917.0

$ 1,797.2 $ 1,495.0



(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 losses (gains) on mark-to-market valuation of commodity derivative
positions recognized in unallocated derivative losses (gains). See Note 13
to the 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 accounted for 81.9%, 85.6% and
86.9% of our net sales in 2022, 2021 and 2020, respectively. North America
Confectionery results for the years ended December 31, 2022, 2021 and 2020 were
as follows:
                                                                                                             Percent Change
For the years ended December 31,             2022               2021               2020            2022 vs 2021          2021 vs 2020
In millions of dollars
Net sales                                $ 8,536.5          $ 7,682.4          $ 7,084.9                  11.1  %               8.4  %
Segment income                             2,811.1            2,475.9            2,274.6                  13.5  %               8.8  %
Segment margin                                32.9  %            32.2  %            32.1  %


2022 compared with 2021

Net sales of our North America Confectionery segment increased $854.1 million,
or 11.1%, in 2022 compared to 2021, reflecting a favorable price realization of
8.1% due to higher prices on certain products, a volume increase of 2.8% due to
an increase in everyday core U.S. confection brands, and a 0.4% benefit from the
2021 acquisition of Lily's. These increases were partially offset by an
unfavorable impact from foreign currency exchange rates of 0.2%.

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 for
licensing and owned retail increased approximately 12.7% during 2022 compared to
2021.

Our North America Confectionery segment income increased $335.2 million, or
13.5%, in 2022 compared to 2021, primarily due to favorable price realization
and volume increases, partially offset by higher supply chain inflation costs,
including higher logistics and labor costs, as well as, unfavorable product mix.

2021 compared with 2020


Net sales of our North America Confectionery segment increased $597.5 million,
or 8.4%, in 2021 compared to 2020, reflecting a volume increase of 5.1% due to
an increase in everyday core U.S. confection brands, a favorable price
realization of 2.1% due to higher prices on certain products, a 0.9% benefit
from the 2021 acquisition of Lily's and a favorable impact from foreign currency
exchange rates of 0.3%.

Our North America Confectionery segment also includes licensing and owned
retail. At the onset of the pandemic, all Hershey's Chocolate World stores were
temporarily closed and subsequently re-opened in July 2020 with increased safety
measures. This included the United States (3 locations), Niagara Falls (Ontario)
and Singapore. As a result, our net sales increased approximately 37.4% during
2021 compared to 2020.

Our North America Confectionery segment income increased $201.3 million, or
8.8%, in 2021 compared to 2020, primarily due to favorable price realization and
volume increases, partially offset by higher supply chain-related costs, higher
freight and logistics 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 accounted for 9.9%, 6.2% and 5.4% of our net sales in 2022, 2021 and
2020, respectively. North America Salty Snacks results for the years ended
December 31, 2022, 2021 and 2020 were as follows:

                                                                                                           Percent Change
For the years ended December 31,             2022              2021              2020            2022 vs 2021          2021 vs 2020
In millions of dollars
Net sales                                $ 1,029.4          $  555.4          $  438.2                  85.3  %               26.7  %
Segment income                               159.9             100.7              75.8                  58.8  %               32.8  %
Segment margin                                15.5  %           18.1  %           17.3  %


2022 compared with 2021

Net sales for our North America Salty Snacks segment increased $474 million, or
85.3%, in 2022 compared to 2021, reflecting a 64.0% benefit from the 2021
acquisitions of Dot's and Pretzels, a favorable price realization of 12.0% due
to higher prices on certain products and a volume increase of 9.3% primarily
related to SkinnyPop and Pirates Booty snacks.

Our North America Salty Snacks segment income increased $59.2 million, or 58.8%,
in 2022 compared to 2021, primarily due to favorable price realization and
volume increases, partially offset by higher supply chain inflation costs,
including higher logistics and labor costs, as well as, unfavorable product mix.

2021 compared with 2020


Net sales for our North America Salty Snacks segment increased $117.2 million,
or 26.7%, in 2021 compared to 2020, reflecting a volume increase of 16.9%,
primarily related to SkinnyPop and Pirates Booty snacks, a favorable price
realization of 5.7% due to higher prices on certain products and a 4.1% benefit
from net acquisitions and divestitures driven by the 2021 acquisitions of Dot's
and Pretzels.

Our North America Salty Snacks segment income increased $24.9 million, or 32.8%,
in 2021 compared to 2020, primarily due to favorable price realization and
volume increases, partially offset by higher supply chain-related costs, higher
freight and logistics costs, as well as unfavorable product mix.
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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. We currently, have operations and manufacture
product in Mexico, Brazil, India and Malaysia, primarily for consumers in these
regions, and also distribute and sell confectionery products in export markets
of Latin America, as well as Asia, Europe, the Middle East and Africa ("AEMEA")
and other regions. International accounted for 8.2%, 8.2% and 7.7% of our net
sales in 2022, 2021 and 2020, respectively. International results for the years
ended December 31, 2022, 2021 and 2020 were as follows:

                                                                                                          Percent Change
For the years ended December 31,            2022              2021              2020            2022 vs 2021          2021 vs 2020
In millions of dollars
Net sales                                $  853.4          $  733.5          $  626.6                  16.3  %               17.1  %
Segment income                              107.9              74.2                 -                  45.4  %                    NM
Segment margin                               12.6  %           10.1  %              -  %


NM = not meaningful

2022 compared with 2021

Net sales of our International segment increased $119.9 million, or 16.3%, in
2022 compared to 2021, reflecting a volume increase of 11.9%, a favorable price
realization of 4.1%, and a favorable impact from foreign currency exchange rates
of 0.3%. The volume increase was primarily attributed to solid marketplace
growth in Brazil, Mexico and India, where net sales increased by 21.6%, 20.6%
and 13.7%, respectively. Our International segment also includes world travel
retail, where net sales increased approximately 28.6%.

Our International segment income increased $33.7 million in 2022 compared to
2021 primarily resulting from volume increases, favorable price realization, and
the execution of our International Optimization Program in China, as we
streamline and optimize our China operating model.

2021 compared with 2020


Net sales of our International segment increased $106.9 million, or 17.1%, in
2021 compared to 2020, reflecting a favorable price realization of 12.1%, a
volume increase of 4.2% and a favorable impact from foreign currency exchange
rates of 0.8%. The volume increase was primarily attributed to solid marketplace
growth in Mexico, India, and Brazil, where net sales increased by 39.0%, 23.9%
and 21.3%, respectively. Our International segment also includes world travel
retail, where net sales increased approximately 27.1%. These increases also
benefited from a favorable impact from foreign currency exchange rates of 1.0%.

Our International segment income increased $74.2 million in 2021 compared to
2020 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 and (d) other gains or losses that are not integral to segment
performance.

Unallocated corporate expense totaled $735.5 million in 2022 as compared to
$614.9 million in 2021. The increase was primarily driven by an increase in
acquisition and integration related costs, as well as higher compensation costs,
investments in capabilities and technology and broad-based marketplace
inflation.

Unallocated corporate expense totaled $614.9 million in 2021 as compared to
$520.7 million in 2020 primarily driven by higher incentive compensation, higher
group insurance costs from COVID-19-related delays in preventive care and
incremental investments in capabilities and technology.

LIQUIDITY AND CAPITAL RESOURCES


We assess our liquidity in terms of our ability to generate cash to fund our
operating, investing and financing activities. Significant factors affecting
liquidity include cash flows generated from operating activities, capital
expenditures, acquisitions, dividends, repurchases of outstanding shares, the
adequacy of available commercial paper and bank lines of credit, and the ability
to attract long-term capital with satisfactory terms. We generate substantial
amounts of cash from operations and remain in a strong financial position, with
sufficient liquidity available for capital reinvestment, strategic acquisitions
and the payment of dividends.

Cash Flow Summary

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


In millions of dollars                                        2022                2021                2020
Net cash provided by (used in):
Operating activities                                      $     2,327.8       $     2,082.9       $    1,699.6
Investing activities                                          (787.4)           (2,222.8)            (531.3)
Financing activities                                        (1,415.7)             (681.1)            (499.2)
Effect of exchange rate changes on cash and cash
equivalents                                                      9.9                (5.1)              (7.0)
Less: Cash classified as assets held for sale                      -                11.4              (11.4)

Increase (decrease) in cash and cash equivalents $ 134.6

  $   (814.7)         $   650.7


Operating activities

Our principal source of liquidity is cash flow from operations. Our net income
and, consequently, our cash provided by operations are impacted by sales volume,
seasonal sales patterns, timing of new product introductions, profit margins and
price changes. Sales are typically higher during the third and fourth quarters
of the year due to seasonal and holiday-related sales patterns. Generally,
working capital needs peak during the summer months. We meet these needs
primarily with cash on hand, bank borrowings or the issuance of commercial
paper.

We generated cash of $2.3 billion from operating activities in 2022, an increase
of $244.9 million compared to $2.1 billion in 2021. This increase in net cash
provided by operating activities was mainly driven by the following factors:
•In the aggregate, select net working capital items, specifically, trade
accounts receivable, inventory, accounts payable and accrued liabilities,
consumed cash of $9 million in 2022 and generated cash of $47 million in 2021.
This $56 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, partially offset by the timing of
vendor and supplier payments.

•Net income adjusted for non-cash charges to operations (including depreciation,
amortization, stock-based compensation, deferred income taxes, write-down of
equity investments and other charges) resulted in $348 million of higher cash
flow in 2022 relative to 2021.
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We generated cash of $2.1 billion from operating activities in 2021, an increase
of $383.3 million compared to $1.7 billion in 2020. This increase in net cash
provided by operating activities was mainly driven by the following factors:

•In the aggregate, select net working capital items, specifically, trade
accounts receivable, inventory, accounts payable and accrued liabilities,
generated cash of $47 million in 2021 and consumed cash of $166 million in 2020.
This $213 million fluctuation was mainly driven by strong demand of U.S.
inventories, specifically our everyday core U.S. confection brands and salty
snack brands.

•Net income adjusted for non-cash charges to operations (including depreciation,
amortization, stock-based compensation, deferred income taxes, long-lived asset
charges, write-down of equity investments and other charges) resulted in $185
million of higher cash flow in 2021 relative to 2020.

Pension and Post-Retirement Activity. We recorded net periodic benefit costs of
$36.3 million, $28.4 million and $34.5 million in 2022, 2021 and 2020,
respectively, relating to our benefit plans (including our defined benefit and
other post retirement plans). The main drivers of fluctuations in expense from
year to year are assumptions in formulating our long-term estimates, including
discount rates used to value plan obligations, expected returns on plan assets,
the service and interest costs and the amortization of actuarial gains and
losses.

The funded status of our qualified defined benefit pension plans is dependent
upon many factors, including returns on invested assets, the level of market
interest rates and the level of funding. We contribute cash to our plans at our
discretion, subject to applicable regulations and minimum contribution
requirements. Cash contributions to our pension and post retirement plans
totaled $78.5 million, $51.1 million and $11.7 million in 2022, 2021 and 2020,
respectively.

Investing activities

Our principal uses of cash for investment purposes relate to purchases of
property, plant and equipment and capitalized software, as well as acquisitions
of businesses, partially offset by proceeds from sales of property, plant and
equipment. We used cash of $787.4 million for investing activities in 2022
compared to $2.2 billion in 2021, with the decrease in cash spend driven by
lower levels of acquisition activity, partially offset by higher capital spend
and investment tax credits. We used cash of $531.3 million for investing
activities in 2020, with the increase in 2021 in cash spend driven by higher
levels acquisition activity.

Primary investing activities include the following:


•Capital spending. Capital expenditures, including capitalized software,
primarily to support our ERP system implementation, capacity expansion,
innovation and cost savings, were $519.5 million in 2022, $495.9 million in 2021
and $441.6 million in 2020. For each of the years presented, our expenditures
increased due to progress on capacity expansion projects and our ERP system
implementation. We expect 2023 capital expenditures, including capitalized
software, to approximate $800 million to $900 million. The increase in our 2023
capital expenditures is largely driven by our key strategic initiatives,
including core confection capacity expansion and continued investments in a
digital infrastructure including the build and upgrade of a new ERP system
across the enterprise. We intend to use our existing cash and internally
generated funds to meet our 2023 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 energy tax credits. We invested approximately
$275.5 million in 2022, $128.4 million in 2021 and $87.2 million in 2020 in
projects qualifying for tax credits.

•Business acquisitions. In 2022 and 2020, we had no acquisition activity. In
2021, we spent an aggregate $1.6 billion to acquire Lily's (June 2021), as well
as Dot's and Pretzels (December 2021). Further details regarding our business
acquisition activity is provided in   Note 2   to the Consolidated Financial
Statements.

•Other investing activities. In 2022, 2021, and 2020, our other investing
activities were minimal.

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Financing activities


Our cash flow from financing activities generally relates to the use of cash for
purchases of our Common Stock and payment of dividends, offset by net borrowing
activity and proceeds from the exercise of stock options. Financing activities
in 2022 used cash of $1.4 billion, compared to cash used of $681.1 million in
2021. We used cash of $499.2 million for financing activities in 2020.

The majority of our financing activity was attributed to the following:


•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. In 2022, used cash of
$245.6 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. In 2021, we
generated cash flow of $869.0 million predominantly through the issuance of
short-term commercial paper. In 2020, we generated cash flow of $41.8 million
due to an increase in short-term foreign bank borrowings.

•Long-term debt borrowings and repayments. In 2022, long-term debt activity was
minimal. In February 2021 and May 2021, we repaid $84.7 million of 8.800%
Debentures and $350 million of 3.100% Notes due upon their maturities,
respectively. In May 2020, we issued $300 million of 0.900% Notes due in 2025,
$350 million of 1.700% Notes due in 2030 and $350 million of 2.650% Notes due in
2050 (the "2020 Notes"). Proceeds from the issuance of the 2020 Notes, net of
discounts and issuance costs, totaled $989.9 million. Additionally, in May 2020
and December 2020, we repaid $350 million of 2.900% Notes and $350 million of
4.125% Notes due upon their maturities, respectively. In 2023, we expect our
long-term debt repayments to approximate $750 million upon the maturity of $250
million of 2.625% Notes and $500 million of 3.375% Notes, both due in May 2023.

•Dividend payments. Total dividend payments to holders of our Common Stock and
Class B Common Stock were $775.0 million in 2022, $686.0 million in 2021 and
$640.7 million in 2020. Dividends per share of Common Stock increased 13.6% to
$3.874 per share in 2022 compared to $3.410 per share in 2021, while dividends
per share of Class B Common Stock increased 13.6% in 2022. Details regarding our
2022 cash dividends paid to stockholders are as follows:

                                                                             Quarter Ended
In millions of dollars
except per share amounts            April 3, 2022             July 3, 2022             October 2, 2022             December 31, 2022
Dividends paid per share -
Common stock                     $           0.901          $        0.901          $             1.036          $            1.036
Dividends paid per share -
Class B common stock             $           0.819          $        0.819          $             0.942          $            0.942
Total cash dividends paid        $           181.1          $        179.9          $             207.0          $            207.0
Declaration date                     February 2, 2022          April 27,

2022                July 27, 2022            November 2, 2022
Record date                         February 18, 2022            May 20, 2022              August 19, 2022           November 18, 2022
Payment date                           March 15, 2022           June 15, 2022           September 15, 2022           December 15, 2022



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•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:

In millions                                                     2022              2021              2020
Milton Hershey School Trust repurchase (1)                   $  203.4          $      -          $      -
Shares repurchased in the open market under
pre-approved share repurchase programs (2)                          -             150.0             150.0

Shares repurchased in the open market to replace
Treasury Stock issued for stock options and incentive
compensation

$ 185.6 $ 308.0 $ 61.2
Cash used for total share repurchases 389.0 458.0 211.2
Total shares repurchased under pre-approved share
repurchase programs - 0.9 1.0

(1) In February 2022, the Company entered into a Stock Purchase Agreement with
Hershey Trust Company, as trustee for the School 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 $203.35 per share, for a total purchase price of
$203.4 million.

(2) In July 2018, our Board of Directors approved a $500 million share
repurchase authorization. As of December 31, 2022, approximately $110 million
remained available for repurchases of our Common Stock under this program. 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.
These share repurchase programs do not have an expiration date. We expect 2023
share repurchases to be in line with our traditional buyback strategy.

Additionally, in February 2023, the Company entered into a Stock Purchase
Agreement with Hershey Trust Company, as trustee for the School 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 this repurchase, our July 2018
share repurchase authorization program was completed in February 2023, and
approximately $370 million remains available for repurchases under our May 2021
share repurchase authorization.

•Proceeds from the exercise of stock options, including tax benefits. In 2022 we
received $34.2 million from employee exercises of stock options and paid $35.5
million of employee taxes withheld from share-based awards. We received $33.2
million and $25.5 million from employee exercises of stock options, net of
employee taxes withheld from share-based awards in 2021 and 2020, respectively.
Variances are driven primarily by the number of shares exercised and the share
price at the date of grant.

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Financial Condition


At December 31, 2022, our cash and cash equivalents totaled $463.9 million. At
December 31, 2021, our cash and cash equivalents totaled $329.3 million. Our
cash and cash equivalents at the end of 2022 increased $134.6 million compared
to the 2021 year-end balance as a result of the net sources of cash outlined in
the previous discussion.

Approximately 90% of the balance of our cash and cash equivalents at
December 31, 2022 was held by subsidiaries domiciled outside of the United
States. A majority of this balance is distributable to the United States without
material tax implications, such as withholding tax. 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 for the foreseeable
future and, therefore, have not recognized additional tax expense on these
earnings. We believe that our existing sources of liquidity are adequate to meet
anticipated funding needs at comparable risk-based interest rates for the
foreseeable future. Acquisition spending and/or share repurchases could
potentially increase our debt. Operating cash flow and access to capital markets
are expected to satisfy our various short- and long-term cash flow requirements,
including acquisitions and capital expenditures.

We maintain debt levels we consider prudent based on our cash flow, interest
coverage ratio and percentage of debt to capital. We use debt financing to lower
our overall cost of capital which increases our return on stockholders' equity.
Our total short- and long-term debt was $4.8 billion at December 31, 2022 and
$5.0 billion at December 31, 2021. Our total debt decreased in 2022 mainly due
the repayment of short-term commercial paper borrowings originally used to fund
our 2021 acquisitions of Dot's and Pretzels.

As a source of short-term financing, we maintain a $1.5 billion unsecured
revolving credit facility with the option to increase borrowings by an
additional $500 million with the consent of the lenders. As of December 31,
2022, the termination date of this agreement is July 2, 2024, however, we may
extend the termination date for up to two additional one-year periods upon
notice to the administrative agent under the facility. We may use these funds
for general corporate purposes, including commercial paper backstop and business
acquisitions. As of December 31, 2022, we had $942 million of available capacity
under the agreement. The unsecured revolving credit agreement contains certain
financial and other covenants, customary representations, warranties and events
of default. We were in compliance with all covenants as of December 31, 2022.

In addition to the revolving credit facility, we maintain lines of credit in
various currencies with domestic and international commercial banks. As of
December 31, 2022, we had available capacity of $178 million under these lines
of credit.

Furthermore, we have a current shelf registration statement filed with the SEC
that allows for the issuance of an indeterminate amount of debt securities.
Proceeds from the debt issuances and any other offerings under the current
registration statement may be used for general corporate requirements, including
reducing existing borrowings, financing capital additions and funding
contributions to our pension plans, future business acquisitions and working
capital requirements.

Our ability to obtain debt financing at comparable risk-based interest rates is
partly a function of our existing cash-flow-to-debt and debt-to-capitalization
levels as well as our current credit rating.

We believe that our existing sources of liquidity are adequate to meet
anticipated funding needs at comparable risk-based interest rates for the
foreseeable future. Acquisition spending and/or share repurchases could
potentially increase our debt. Operating cash flow and access to capital markets
are expected to satisfy our various short- and long-term cash flow requirements,
including acquisitions and capital expenditures.


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Equity Structure

We have two classes of stock outstanding – Common Stock and Class B Stock.
Holders of the Common Stock and the Class B Stock generally vote together
without regard to class on matters submitted to stockholders, including the
election of directors. Holders of the Common Stock have 1 vote per share.
Holders of the Class B Stock have 10 votes per share. Holders of the Common
Stock, voting separately as a class, are entitled to elect one-sixth of our
Board. With respect to dividend rights, holders of the Common Stock are entitled
to cash dividends 10% higher than those declared and paid on the Class B Stock.


Hershey Trust Company, as trustee for the trust established by Milton S. and
Catherine S. Hershey that has as its sole beneficiary Milton Hershey School,
maintains voting control over The Hershey Company. In addition, three
representatives of Hershey Trust Company currently serve as members of the
Company's Board. In performing their responsibilities on the Company's Board,
these representatives may from time to time exercise influence with regard to
the ongoing business decisions of our Board or management. Hershey Trust
Company, as trustee for the Trust, in its role as controlling stockholder of the
Company, has indicated it intends to retain its controlling interest in The
Hershey Company. The Company's Board, and not the Hershey Trust Company board,
is solely responsible and accountable for the Company's management and
performance.

Pennsylvania law requires that the Office of Attorney General be provided
advance notice of any transaction that would result in Hershey Trust Company, as
trustee for the Trust, no longer having voting control of the Company. The law
provides specific statutory authority for the Attorney General to intercede and
petition the court having jurisdiction over Hershey Trust Company, as trustee
for the Trust, to stop such a transaction if the Attorney General can prove that
the transaction is unnecessary for the future economic viability of the Company
and is inconsistent with investment and management considerations under
fiduciary obligations. This legislation makes it more difficult for a third
party to acquire a majority of our outstanding voting stock and thereby may
delay or prevent a change in control of the Company.

Material Cash Requirements


The following table summarizes our future material cash requirements as of
December 31, 2022:

                                                                                 Payments due by Period
                                                              Less than 1
In millions of dollars                       Total               year              1-3 years           3-5 years           More than 5 years
Short-term debt (primarily U.S.
commercial paper)                         $   693.8          $    693.8          $        -          $        -          $                -
Long-term notes (excluding finance
lease obligations)                          4,043.6               750.0               900.0               693.6                     1,700.0
Interest expense (1)                        1,080.8                99.0               164.3               120.2                       697.3
Operating lease obligations (2)               419.7                41.4                66.3                47.4                       264.6
Finance lease obligations (3)                 171.4                 8.3                13.0                 8.1                       142.0
Unconditional purchase obligations
(4)                                         2,246.4             1,871.0               215.1                25.0                       135.3
Total obligations                         $    8,655.7       $     3,463.5       $     1,358.7       $       894.3       $             2,939.2

(1) Includes the net interest payments on fixed rate debt associated with
long-term notes.


(2) Includes the minimum rental commitments (including imputed interest) under
non-cancelable operating leases primarily for offices, retail stores, warehouses
and distribution facilities.

(3) Includes the minimum rental commitments (including imputed interest) under
non-cancelable finance leases primarily for offices and warehouse facilities, as
well as vehicles.

(4) Purchase obligations consist primarily of fixed commitments for the purchase
of raw materials to be utilized in the normal course of business. Amounts
presented include fixed price forward contracts and unpriced contracts that were
valued using market prices as of December 31, 2022. The amounts presented in the
table do not include items already recorded in accounts payable or accrued
liabilities at year-end 2022, nor does the table reflect cash flows we are
likely to incur based on our plans, but are not obligated to incur. Such amounts
are part of normal operations and are reflected in historical operating cash
flow trends. We do not believe such purchase obligations will adversely affect
our liquidity position.


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In entering into contractual obligations, 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 performing financial assessments prior to
contract execution, conducting periodic evaluations of counterparty performance
and maintaining a diverse portfolio of qualified counterparties. Our risk is
limited to replacing the contracts at prevailing market rates. We do not expect
any significant losses resulting from counterparty defaults.

These obligations impact our liquidity and capital resource needs. To meet those
cash requirements, we intend to use our existing cash and internally generated
funds. To the extent necessary, we may also borrow under our existing unsecured
revolving credit facility or under other short-term borrowings, and depending on
market conditions and upon the significance of the cost of a particular Note
maturity or acquisition to our then-available sources of funds, to obtain
additional short- and long-term financing. We believe that cash provided from
these sources will be adequate to meet our future short- and long-term cash
requirements.

Asset Retirement Obligations


We have a number of facilities that contain varying amounts of asbestos in
certain locations within the facilities. Our asbestos management program is
compliant with current applicable regulations, which require that we handle or
dispose of asbestos in a specified manner if such facilities undergo major
renovations or are demolished. We do not have sufficient information to estimate
the fair value of any asset retirement obligations related to these facilities.
We cannot specify the settlement date or range of potential settlement dates
and, therefore, sufficient information is not available to apply an expected
present value technique. We expect to maintain the facilities with repairs and
maintenance activities that would not involve or require the removal of
significant quantities of asbestos.

Income Tax Obligations


Liabilities for unrecognized income tax benefits are excluded from the table
above as we are unable to reasonably predict the ultimate amount or timing of a
settlement of these potential liabilities. See   Note 10   to the Consolidated
Financial Statements for more information.

Recent Accounting Pronouncements

Information on recently adopted and issued accounting standards is included in

Note 1 to the Consolidated Financial Statements.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES


The preparation of financial statements requires management to use judgment and
make estimates and assumptions. We believe that our most critical accounting
policies and estimates relate to the following:

•Accrued Liabilities for Trade Promotion Activities
•Pension and Other Post-Retirement Benefits Plans
•Business Acquisitions, Valuation and Impairment of Goodwill and Other
Intangible Assets
•Income Taxes


Management has discussed the development, selection and disclosure of critical
accounting policies and estimates with the Audit Committee of our Board. While
we base estimates and assumptions on our knowledge of current events and actions
we may undertake in the future, actual results may ultimately differ from these
estimates and assumptions. Other significant accounting policies are outlined in

Note 1 to the Consolidated Financial Statements.

Accrued Liabilities for Trade Promotion Activities


We promote our products with advertising, trade promotions and consumer
incentives. These programs include, but are not limited to, discounts, coupons,
rebates, in-store display incentives and volume-based incentives. We expense
advertising costs and other direct marketing expenses as incurred. We recognize
the costs of trade promotion and consumer incentive activities as a reduction to
net sales along with a corresponding accrued liability based on estimates at the
time of revenue recognition. These estimates are based on our analysis of the
programs offered, historical trends, expectations regarding customer and
consumer participation, sales and payment trends and our experience with payment
patterns associated with similar programs offered in the past. The estimated
costs of these programs are reasonably likely to change in future periods due 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. Differences between estimated expense and actual program
performance are recognized as a change in estimate in a subsequent period and
are normally not significant. During 2022, 2021, and 2020, actual annual
promotional costs have not deviated from the estimated amount by more than 3%.
Our trade promotion and consumer incentive accrued liabilities totaled $215.7
million and $174.0 million at December 31, 2022 and 2021, respectively.

Pension and Other Post-Retirement Benefits Plans


We sponsor various defined benefit pension plans. The primary plans are The
Hershey Company Retirement Plan and The Hershey Company Retirement Plan for
Hourly Employees, which are cash balance plans that provide pension benefits for
most U.S. employees hired prior to January 1, 2007. We also sponsor two primary
other post-employment benefit ("OPEB") plans, consisting of a health care plan
and life insurance plan for retirees. The health care plan is contributory, with
participants' contributions adjusted annually, and the life insurance plan is
non-contributory.

For accounting purposes, the defined benefit pension and OPEB plans require
assumptions to estimate the projected and accumulated benefit obligations,
including the following variables: discount rate; expected salary increases;
certain employee-related factors, such as turnover, retirement age and
mortality; expected return on assets; and health care cost trend rates. These
and other assumptions affect the annual expense and obligations recognized for
the underlying plans. Our assumptions reflect our historical experiences and
management's best judgment regarding future expectations. Our related accounting
policies, accounting balances and plan assumptions are discussed in   Note 11
to the Consolidated Financial Statements.

Pension Plans


Changes in certain assumptions could significantly affect pension expense and
benefit obligations, particularly the estimated long-term rate of return on plan
assets and the discount rates used to calculate such obligations:

•Long-term rate of return on plan assets. The expected long-term rate of return
is evaluated on an annual basis. We consider a number of factors when setting
assumptions with respect to the long-term rate of return, including current and
expected asset allocation and historical and expected returns on the plan asset
categories. Actual asset allocations are regularly reviewed and periodically
rebalanced to the targeted allocations when considered appropriate. Investment
gains or losses represent the difference between the expected return estimated
using the
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long-term rate of return and the actual return realized. For 2022, we increased
the expected return on plan assets assumption to 6.3% from the 4.9% assumption
used during 2021. The historical average return (compounded annually) over the
20 years prior to December 31, 2022 was approximately 6.4%.

As of December 31, 2022, our primary plans had cumulative unrecognized
investment and actuarial losses of approximately $213 million. We amortize the
unrecognized net actuarial gains and losses in excess of the corridor amount,
which is the greater of 10% of a respective plan's projected benefit obligation
or the fair market value of plan assets. These unrecognized net losses may
increase future pension expense if not offset by (i) actual investment returns
that exceed the expected long-term rate of investment returns, (ii) other
factors, including reduced pension liabilities arising from higher discount
rates used to calculate pension obligations or (iii) other actuarial gains when
actual plan experience is favorable as compared to the assumed experience. A 100
basis point decrease or increase in the long-term rate of return on pension
assets would correspondingly increase or decrease annual net periodic pension
benefit expense by approximately $7 million.

•Discount rate. We utilize a full yield curve approach in the estimation of
service and interest costs by applying the specific spot rates along the yield
curve used in the determination of the benefit obligation to the relevant
projected cash flows. This approach provides a more precise measurement of
service and interest costs by improving the correlation between the projected
cash flows to the corresponding spot rates along the yield curve. This approach
does not affect the measurement of our pension and other post-retirement benefit
liabilities but generally results in lower benefit expense in periods when the
yield curve is upward sloping.

A 100 basis point decrease (increase) in the weighted-average pension discount
rate would increase (decrease) annual net periodic pension benefit expense by
approximately $5 million and the December 31, 2022 pension liability would
increase by approximately $57 million or decrease by approximately $50 million,
respectively.

Pension expense for defined benefit pension plans is expected to be
approximately $21 million in 2023. Pension expense beyond 2023 will depend on
future investment performance, our contributions to the pension trusts, changes
in discount rates and various other factors related to the covered employees in
the plans.