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SEGMENT INFORMATION
 6 Months Ended
Jul. 02, 2023
Segment Reporting [Abstract]  
Segment Information SEGMENT INFORMATION
The Company reports its operations through three reportable 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”) 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 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 of the Company’s 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 geographic regions where we operate outside of North America. 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 Asia, Latin America, Middle East, Europe, Africa and other regions.
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 managed centrally at the corporate level and are excluded from the measure of segment income reviewed by the CODM as well as the measure of segment performance used for incentive compensation purposes.
As discussed in Note 5, derivatives used to manage commodity price risk are not designated for hedge accounting treatment. These derivatives are recognized at fair market value with the resulting realized and unrealized (gains) losses recognized in unallocated derivative (gains) losses outside of the reporting segment results until the related inventory is sold, at which time the related gains and losses are reallocated to segment income. This enables us to align the derivative gains and losses with the underlying economic exposure being hedged and thereby eliminate the mark-to-market volatility within our reported segment income.
Certain manufacturing, warehousing, distribution and other activities supporting our global operations are integrated to maximize efficiency and productivity. As a result, assets and capital expenditures are not managed on a segment basis and are not included in the information reported to the CODM for the purpose of evaluating performance or allocating resources. We disclose depreciation and amortization that is generated by segment-specific assets, since these amounts are included within the measure of segment income reported to the CODM.
Our segment net sales and earnings were as follows:
Three Months EndedSix Months Ended
July 2, 2023July 3, 2022July 2, 2023July 3, 2022
Net sales:
North America Confectionery$1,993,079 $1,909,101 $4,445,244 $4,126,145 
North America Salty Snacks272,365256,297542,350482,419
International224,836207,184490,300430,239
Total$2,490,280 $2,372,582 $5,477,894 $5,038,803 
Segment income:
North America Confectionery$657,178$618,864$1,544,928$1,400,749
North America Salty Snacks43,753 37,433 90,545 58,734 
International41,101 30,700 96,150 72,679 
Total segment income742,032686,9971,731,6231,532,162
Unallocated corporate expense (1)186,630188,929363,704339,202
Unallocated mark-to-market losses (gains) on commodity derivatives(6,780)40,8383,46413,459
Costs associated with business realignment activities (see Note 9)
1,517 699 3,866 1,980 
Operating profit560,665456,5311,360,5891,177,521
Interest expense, net (see Note 4)
36,661 33,413 74,346 66,592 
Other (income) expense, net (see Note 17)
84,48419,65887,46730,065
Income before income taxes$439,520 $403,460 $1,198,776 $1,080,864 
(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.

Activity within the unallocated mark-to-market adjustment for commodity derivatives is as follows:
Three Months EndedSix Months Ended
July 2, 2023July 3, 2022July 2, 2023July 3, 2022
Net losses (gains) on mark-to-market valuation of commodity derivative positions recognized in income$6,437 $8,754 $17,051 $(42,071)
Net (losses) gains on commodity derivative positions reclassified from unallocated to segment income (13,217)32,084 (13,587)55,530 
Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses$(6,780)$40,838 $3,464 $13,459 
As of July 2, 2023, the cumulative amount of mark-to-market gains on commodity derivatives that have been recognized in our consolidated cost of sales and not yet allocated to reportable segments was $5,267. Based on our forecasts of the timing of the recognition of the underlying hedged items, we expect to reclassify net pre-tax gains on commodity derivatives of $14,465 to segment operating results in the next twelve months.
Depreciation and amortization expense included within segment income presented above is as follows:
Three Months EndedSix Months Ended
July 2, 2023July 3, 2022July 2, 2023July 3, 2022
North America Confectionery$59,961 $57,439 $116,683 $113,347 
North America Salty Snacks18,263 16,983 35,843 33,662 
International5,620 5,921 11,678 11,581 
Corporate17,744 13,503 35,583 26,292 
Total$101,588 $93,846 $199,787 $184,882 

Additional information regarding our net sales disaggregated by geographical region is as follows:
Three Months EndedSix Months Ended
July 2, 2023July 3, 2022July 2, 2023July 3, 2022
Net sales:
United States$2,158,439 $2,060,047 $4,776,362 $4,400,693 
All other countries331,841 312,535 701,532 638,110 
Total$2,490,280 $2,372,582 $5,477,894 $5,038,803