Cash flow hedge gain (loss) to be reclassified within twelve months

THE HERSHEY COMPANYNOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(amounts in thousands, except share data or if otherwise indicated)  
The effect of derivative instruments on the Consolidated Statements of Income for the nine months ended October 2, 2022 and October 3, 2021 was as follows:

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|  |  | Non-designated Hedges |  | Cash Flow Hedges |
|  |  | Gains (losses) recognized in income (a) |  | Gains (losses) recognized in other comprehensive income (“OCI”) |  | Gains (losses) reclassified from accumulated OCI (“AOCI”) into income (b) |  |  |
|  |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  |  |  |  |
| Commodities futures and options |  | $ | 28,027  |  |  | $ | 64,199  |  |  | $ | —  |  |  | $ | —  |  |  | $ | —  |  |  | $ | —  |  |  |  |  |  |
| Foreign exchange contracts  |  | (173) |  |  | 574  |  |  | 245  |  |  | (2,200) |  |  | (956) |  |  | (5,174) |  |  |  |  |  |
| Interest rate swap agreements |  | —  |  |  | —  |  |  | —  |  |  | —  |  |  | (8,187) |  |  | (8,353) |  |  |  |  |  |
| Deferred compensation derivatives |  | (6,142) |  |  | 3,592  |  |  | —  |  |  | —  |  |  | —  |  |  | —  |  |  |  |  |  |
| Total |  | $ | 21,712  |  |  | $ | 68,365  |  |  | $ | 245  |  |  | $ | (2,200) |  |  | $ | (9,143) |  |  | $ | (13,527) |  |  |  |  |  |

  
(a)Gains (losses) recognized in income for non-designated commodities futures and options contracts were included in cost of sales. Gains (losses) recognized in income for non-designated foreign currency forward exchange contracts and deferred compensation derivatives were included in selling, marketing and administrative expenses.(b)Gains (losses) reclassified from AOCI into income for foreign currency forward exchange contracts were included in selling, marketing and administrative expenses. Losses reclassified from AOCI into income for interest rate swap agreements were included in interest expense.The amount of pre-tax net losses on derivative instruments, including interest rate swap agreements and foreign currency forward exchange contracts expected to be reclassified into earnings in the next 12 months was approximately $7,479 as of October 2, 2022. This amount is primarily associated with interest rate swap agreements.6. FAIR VALUE MEASUREMENTSAccounting guidance on fair value measurements requires that financial assets and liabilities be classified and disclosed in one of the following categories of the fair value hierarchy:

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| Level 1 – Based on unadjusted quoted prices for identical assets or liabilities in an active market.  |
| Level 2 – Based on observable market-based inputs or unobservable inputs that are corroborated by market data. |
| Level 3 – Based on unobservable inputs that reflect the entity’s own assumptions about the assumptions that a market participant would use in pricing the asset or liability. |

  
We did not have any Level 3 financial assets or liabilities, nor were there any transfers between levels during the periods presented.  


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| [Table of Contents](#i0bc28196a24d4084af1a4cbdf6bdf4bd_7) | The Hershey Company | Q3 2022 Form 10-Q | Page 17 | hsy-20221002_g2.jpg |

  

