Financial Analysis

CONTINGENCIES The Company is subject to certain legal proceedings and claims arising out of the ordinary course of our business, which cover a wide range of matters including trade regulation, product liability, advertising, contracts, environmental issues, patent and trademark matters, labor and employment matters, human and workplace rights matters and tax. While it is not feasible to predict or determine the outcome of such proceedings and claims with certainty, in our opinion, these matters, both individually and in the aggregate, are not expected to have a material effect on our financial condition, results of operations or cash flows.

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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. As of June 28, 2026, we maintained a $1.875 billion unsecured revolving credit facility with the option to increase the aggregate amount of the commitments by up to $1 billion with the consent of the lenders. The credit facility is scheduled to expire on October 21, 2030; however, we may extend the termination date for up to two additional one-year periods upon notice to the administrative agent under the facility. The credit agreements governing the credit facility contain certain financial and other covenants, customary representations, warranties and events of default. As of June 28, 2026, 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 2025 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 28, 2026 December 31, 2025 Short-term foreign bank borrowings against lines of credit $ 157,274 $ 218,546 U.S. commercial paper 264,271 Total sh …

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STOCK COMPENSATION PLANS Share-based grants for compensation and incentive purposes are made pursuant to the Equity and Incentive Compensation Plan (EICP). The EICP provides for grants of one or more of the following stock-based compensation awards to employees, non-employee directors and certain service providers upon whom the successful conduct of our business is dependent: Non-qualified stock options (stock options); Performance stock units (PSUs) and performance stock; Stock appreciation rights; Restricted stock units (RSUs) and restricted stock; and Other stock-based awards. The EICP also provides for the deferral of stock-based compensation awards by participants if approved by the Compensation and Human Capital Committee of our Board and if in accordance with an applicable deferred compensation plan of the Company. Currently, the Compensation and Human Capital Committee has authorized the deferral of PSU and RSU awards by certain eligible employees under the Companys Deferred Compensation Plan. Our Board has authorized our non-employee directors to defer any portion of their cash retainer, committee chair fees and RSUs awarded that they elect to convert into deferred stock units under our Directors Compensation Plan. At the time stock options are exercised or PSUs and RSUs become payable, Common Stock is issued from our accumulated treasury shares. Dividend equivalents are credited on RSUs on the same date and at the same rate as dividends paid on our Common Stock. Div …

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GOODWILL AND INTANGIBLE ASSETS The changes in the carrying value of goodwill by reportable segment for the six months ended June 28, 2026 are as follows: North America Confectionery North America Salty Snacks International Total Balance at December 31, 2025 $ 2,039,098 $ 946,143 $ 10,764 $ 2,996,005 Measurement period adjustments (7,213) (7,213) Foreign currency translation (3,510) 327 (3,183) Balance at June 28, 2026 $ 2,035,588 $ 938,930 $ 11,091 $ 2,985,609 The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset: June 28, 2026 December 31, 2025 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Intangible assets subject to amortization: Trademarks $ 1,802,371 $ (361,311) $ 1,803,973 $ (335,974) Customer-related 854,499 (208,775) 855,556 (185,995) Patents 7,680 (7,680) 7,944 (7,944) Total 2,664,550 (577,766) 2,667,473 (529,913) Intangible assets not subject to amortization: Trademarks 338,319 338,138 Total other intangible assets $ 2,425,103 $ 2,475,698 Total amortization expense for the three months ended June 28, 2026 and June 29, 2025 was $24,972 and $21,188, respectively. Total amortization expense for the six months ended June 28, 2026 and June 29, 2025 was $49,946 and $41,756, respectively. …

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INCOME TAXES The majority of our taxable income is generated in the United States and taxed at the United States statutory rate of 21%. The effective tax rates for the six months ended June 28, 2026 and June 29, 2025 were 24.4% and 39.3%, respectively. The 2025 effective tax rate was higher due to the impact of tax reserves and foreign rate differentials related to mark-to-market activity. Relative to the statutory rate, the 2026 effective tax rate was primarily impacted by state taxes and foreign rate differential. The Company and its subsidiaries file tax returns in the United States, including various state and local returns, and in other foreign jurisdictions. We are routinely audited by taxing authorities in our filing jurisdictions, and a number of these disputes are currently underway, including multi-year controversies at various stages of review, negotiation and litigation in Mexico, Canada, and the United States. The outcome of tax audits cannot be predicted with certainty, including the timing of resolution or potential settlements. If any issues addressed in our tax audits are resolved in a manner not consistent with managements expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs. Based on our current assessments, we believe adequate provision has been made for all income tax uncertainties. Organization for Economic Cooperation Development In December 2021, the Organization for Economic Cooperation and D …

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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 …

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Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. We adopted the provisions of this ASU in the fourth quarter of 2025 and applied the provisions on a prospective basis. Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires entities to disclose certain additional expense information including, among other items, purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each Consolidated Statement of Income expense caption. ASU 2024-0 …

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PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS Net Periodic Benefit Cost The components of net periodic benefit cost for the three months ended June 28, 2026 and June 29, 2025 were as follows: Pension Benefits Other Benefits Three Months Ended Three Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 Service cost $ 2,965 $ 3,537 $ 30 $ 29 Interest cost 7,997 9,249 1,257 1,232 Expected return on plan assets (12,369) (12,046) Amortization of prior service credit (755) (890) (97) (96) Amortization of net loss 1,854 3,554 991 314 Settlement loss 5,883 Total net periodic benefit cost $ 5,575 $ 3,404 $ 2,181 $ 1,479 We made contributions of $209 and $2,624 to our pension plans and other benefits plans, respectively, during the second quarter of 2026. In the second quarter of 2025, we made contributions of $423 and $2,994 to our pension plans and other benefit plans, respectively. The contributions in 2026 and 2025 also included benefit payments from our non-qualified pension plans and post-retirement benefit plans. The components of net periodic benefit cost for the six months ended June 28, 2026 and June 29, 2025 were as follows: Pension Benefits Other Benefits Six Months Ended Six Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 Service cost $ 5,942 $ 7,039 $ 60 $ 56 Interest cost 16,002 18,469 2,511 2,460 Expected return on plan assets (24,731) (24,057) Amortization of prior service credit (1,510) (1,779) (194) (192) Amortization of net loss …

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SEGMENT INFORMATION The Company reports its operations through three segments: (i) North America Confectionery, (ii) North America Salty Snacks and (iii) International. This organizational structure aligns with how our Chief Operating Decision Maker (CODM), Kirk Tanner, President and Chief Executive Officer, manages our business, including resource allocation and performance assessment, and further aligns with our product categories and the key markets we serve. North America Confectionery This segment is responsible for our traditional chocolate and non-chocolate confectionery market position in the United States and Canada. This includes 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. This segment also includes our retail operations, including Hersheys 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 of the Companys trademarks and products to third parties around the world. North America Salty Snacks This segment is responsible for our salty snacking products in the United States. This includes ready-to-eat popcorn, baked and trans fat free snacks, pretzels and other snacks. International International is a combination of all other operating segments that are not individually material, including those geo …

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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 entitys 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 …

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TREASURY STOCK ACTIVITY A summary of our treasury stock activity is as follows: Six Months Ended June 28, 2026 Shares Dollars In thousands Shares repurchased in the open market under pre-approved share repurchase programs 1,030,614 $ 200,000 Shares repurchased in the open market to replace Treasury Stock issued for stock options and incentive compensation 1,215,696 239,354 Total share repurchases 2,246,310 439,354 Shares issued for stock options and incentive compensation (322,162) $ (13,405) Total net share repurchases 1,924,148 425,949 Excise tax associated with net share repurchases (1) $ 4,259 Net change 1,924,148 $ 430,208 (1) A corresponding liability for excise tax associated with net share repurchases is classified on our Consolidated Balance Sheets within accrued liabilities. In December 2023, our Board of Directors approved a $500 million share repurchase authorization. As a result of the share repurchase authorization, approximately $270 million remains available for repurchases under our December 2023 share repurchase authorization. In June 2026, our Board of Directors approved an additional $500 million share repurchase authorization. This program is to commence after the existing 2023 authorization is completed and is to be utilized at managements discretion. We are authorized to purchase our outstanding shares in open market and privately negotiated transactions. The program has no expiration date and acquired shares of Common Stock will be held as treasury sha …

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