HERSHEY CO
For the period ended Dec 31, 2025. Filed Feb 17, 2026.
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FY2025 · Filed Feb 17, 2026
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Report of Independent Registered Public Accounting Firm (PCAOB ID:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of The Hershey Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of The Hershey Company (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, cash flows, and stockholders' equity for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 17, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Valuation of Accrued Liabilities for Trade Promotion Activities | |
|---|---|
| Description of the Matter | The unsettled portion of the Company’s obligation for trade promotion activities at December 31, 2025 was $227.7 million. As discussed in Note 1 of the consolidated financial statements, the Company promotes its products through programs such as, but not limited to, discounts, coupons, rebates, in-store display incentives, and volume-based incentives. The Company recognizes the estimated costs of these trade promotion activities as a component of variable consideration when determining the transaction price. The unsettled portion of the Company’s obligation for trade promotion activities is included in accrued liabilities in the consolidated balance sheet.Auditing management’s calculation of the unsettled portion of the Company’s obligation for trade promotion activities was subjective and required judgment as a result of the nature of the required estimates and assumptions. In particular, the estimates required an analysis of the programs offered, expectations regarding customer and consumer participation, and experience with historical payment patterns. |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls related to the Company’s calculation of the accrued liabilities for trade promotion activities. For example, we tested controls over management’s review of the completeness of the promotional activities as well as the significant assumptions and the data inputs utilized in the calculations. To test the unsettled portion of the Company’s obligation for trade promotion activities, we performed audit procedures that included, among others, assessing (1) the expected value estimation methodology used by management, (2) whether all material trade promotion activities were properly included in management’s estimate, and (3) the assumptions discussed above and the underlying data used in its analyses. Specifically, when evaluating the assumptions, we compared them to historical trends, third party data, and assumptions used in prior periods, and inspected management’s retrospective review of actual trade promotion activities compared to previous estimates. We also performed sensitivity analyses of assumptions to evaluate the changes in the estimate that would result from changes in the assumptions. |
| Accounting for the Provisional Valuation of Identifiable Intangible Assets in the Acquisition of LesserEvil, LLC | |
|---|---|
| Description of the Matter | As described in Note 2 to the consolidated financial statements, the Company completed the acquisition of LesserEvil, LLC (“LesserEvil”) on November 18, 2025 for consideration of $815.2 million. As of December 31, 2025, the purchase price that has been provisionally allocated to acquired intangible assets consisting of trademarks and customer relationships was $303.0 million and $301.5 million, respectively.Auditing the Company’s accounting for its acquisition of LesserEvil was complex due to the significant estimation uncertainty in determining the fair values of the trademarks and customer relationships. The Company used the relief from royalty method to value the trademarks and the multi-period excess earnings method to value the customer relationships, both of which were complex and required the use of assumptions that were inherently uncertain. The significant assumptions used to estimate the fair value of the trademarks included forecasted revenue growth rates, the discount rate, and the royalty rate. The significant assumptions used to estimate the fair value of the customer relationships included forecasted revenue growth rates and forecasted EBITDA margins. All of these significant assumptions are affected by expectations about future market or economic conditions. |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s estimation of the fair values of the trademarks and customer relationships. For example, we tested controls over the valuation of these acquired identifiable intangible assets, including controls over management’s review of the valuation models and the significant assumptions described above, forecasted financial information, and the completeness and accuracy of underlying data used in the valuation models.To test the provisional estimated fair value of the trademarks and customer relationships, we performed audit procedures that included, among others, assessing the fair value methodologies utilized by management as well as the significant assumptions discussed above, including the completeness and accuracy of the underlying data used in the valuation models. For example, when evaluating the significant assumptions, we compared them to current financial and operating plans, market and industry studies, and historical trends. We also performed sensitivity analyses to evaluate the changes in the fair value of the trademarks and customer relationships that would result from changes in the significant assumptions. We involved our valuation specialists to assist in evaluating the discount rate, royalty rate, and valuation methodologies used by the Company. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2016.
Philadelphia, Pennsylvania
February 17, 2026
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