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SEGMENT INFORMATION
 9 Months Ended
Oct. 03, 2021
Segment Reporting [Abstract]  
Segment Information SEGMENT INFORMATION
Our organizational structure is designed to ensure continued focus on North America, coupled with an emphasis on profitable growth in our focus international markets. Our business is primarily organized around geographic regions, which enables us to build processes for repeatable success in our global markets. As a result, we have defined our operating segments on a geographic basis, as this aligns with how our Chief Operating Decision Maker (“CODM”) manages our business, including resource allocation and performance assessment. Our North America business, which generates approximately 90% of our consolidated revenue, is our only individually reportable segment. None of our other operating segments individually meet the quantitative thresholds to qualify as reportable segments; therefore, these operating segments are combined and disclosed below as International and Other.
•North America - This segment is responsible for our traditional chocolate and non-chocolate confectionery market position, as well as our grocery and growing snacks market positions, in the United States and Canada. This includes developing and growing our business in chocolate and non-chocolate confectionery, pantry, food service and other snacking product lines.
•International and Other - International and Other 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. This segment also includes our global retail operations, including Hershey’s Chocolate World stores in Hershey, Pennsylvania, New York City, Las Vegas, 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.
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 EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Net sales:
North America$2,125,627 $2,014,152 $5,986,692 $5,442,760 
International and Other234,212205,677658,517521,715
Total$2,359,839 $2,219,829 $6,645,209 $5,964,475 
Segment income:
North America$666,089$647,109$1,893,554$1,726,251
International and Other38,699 24,477 114,722 36,512 
Total segment income704,788671,5862,008,2761,762,763
Unallocated corporate expense (1)145,028131,934434,070363,384
Unallocated mark-to-market (gains) losses on commodity derivatives(18,468)(71,758)(24,137)10,483
Long-lived asset impairment charges (see Note 6)
———9,143
Costs associated with business realignment activities (see Note 9)
3,397 — 13,793 2,170 
Operating profit574,831611,4101,584,5501,377,583
Interest expense, net (see Note 4)
30,154 37,258 97,655 111,592 
Other (income) expense, net (see Note 18)
23,00411,64432,61234,394
Income before income taxes$521,673 $562,508 $1,454,283 $1,231,597 
(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 EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in income$(33,643)$(74,279)$(64,199)$189 
Net gains on commodity derivative positions reclassified from unallocated to segment income 15,175 2,521 40,062 10,294 
Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative (gains) losses$(18,468)$(71,758)$(24,137)$10,483 
As of October 3, 2021, 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 $86,675. 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 $57,391 to segment operating results in the next twelve months.
Depreciation and amortization expense included within segment income presented above is as follows:
Three Months EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
North America$59,216 $56,518 $175,238 $164,599 
International and Other6,439 6,956 20,187 21,202 
Corporate12,368 11,691 36,528 31,888 
Total$78,023 $75,165 $231,953 $217,689 

Additional information regarding our net sales disaggregated by geographical region is as follows:
Three Months EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Net sales:
United States$2,017,378 $1,914,316 $5,681,498 $5,185,858 
All other countries342,461 305,513 963,711 778,617 
Total$2,359,839 $2,219,829 $6,645,209 $5,964,475 

The majority of our products are confectionery or confectionery-based and include chocolate and non-chocolate confectionery products, gum and mint refreshment products, spreads, snack bites and mixes, as well as pantry items such as baking ingredients, toppings and sundae syrups. Our snacks portfolio includes ready-to-eat popcorn, baked and trans fat free snacks, protein bars and other better-for-you snacks. Additional information regarding our net sales disaggregated by product line is as follows:
Three Months EndedNine Months Ended
October 3, 2021September 27, 2020October 3, 2021September 27, 2020
Net sales:
Confectionery and confectionery-based portfolio$2,190,223 $2,078,582 $6,183,741 $5,578,997 
Snacks portfolio169,616 141,247 461,468 385,478 
Total$2,359,839 $2,219,829 $6,645,209 $5,964,475