Hershey Foods (HSY)

Property, Plant and Equipment

Property, plant and equipment are stated at cost and depreciated on a straight-line basis over the estimated useful lives of the assets, as follows: 3 to 15 years for machinery and equipment; and 25 to 40 years for buildings and related improvements. Maintenance and repairs are expensed as incurred. We capitalize applicable interest charges incurred during the construction of new facilities and production lines and amortize these costs over the assets’ estimated useful lives.

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We measure the recoverability of assets to be held and used by a comparison of the carrying amount of long-lived assets to future undiscounted net cash flows expected to be generated. If these assets are considered to be impaired, we measure impairment as the amount by which the carrying amount of the assets exceeds the fair value of the assets. We report assets held for sale or disposal at the lower of the carrying amount or fair value less cost to sell.

Property, Plant and Equipment

The property, plant and equipment balance included construction in progress of $78.9 million as of December 31, 2009 and $131.4 million as of December 31, 2008. Major classes of property, plant and equipment were as follows:

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THE HERSHEY COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During 2009, we recorded accelerated depreciation of property, plant and equipment of $4.2 million associated with our 2007 business realignment initiatives. As of December 31, 2009, certain real estate with a carrying value or fair value less cost to sell, if lower, of $11.7 million was being held for sale. These assets were associated with the closure of facilities as part of the 2007 business realignment initiatives.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets, as follows: 3 to 15 years for machinery and equipment; and 25 to 40 years for buildings and related improvements. Maintenance and repair expenditures are charged to expense as incurred. Applicable interest charges incurred during the construction of new facilities and production lines are capitalized as one of the elements of cost and are amortized over the assets’ estimated useful lives.

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We measure the recoverability of assets to be held and used by a comparison of the carrying amount of long-lived assets to future undiscounted net cash flows expected to be generated, in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. If such assets are considered to be impaired, we measure the impairment to be recognized as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.

Property, Plant and Equipment

SIZE="2">Property, plant and equipment are stated at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets, as follows: 3 to 15 years for machinery and equipment; and 25 to 40 years for buildings and related
improvements. Maintenance and repair expenditures are charged to expense as incurred. Applicable interest charges incurred during the construction of new facilities and production lines are capitalized as one of the elements of cost and are
amortized over the assets’ estimated useful lives.

We review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be recoverable. We measure the recoverability of assets to be held and used by a comparison of the carrying amount of long-lived assets to future undiscounted net cash flows
expected to be generated, in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. If such assets are considered to be impaired, we measure the impairment to
be recognized as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.

Property, Plant and Equipment

The property, plant and equipment balance included construction in progress of $131.4 million as of December 31, 2008 and $142.6 million as of December 31, 2007. Major classes of property, plant and equipment were as follows:

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THE HERSHEY COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During 2008, we recorded accelerated depreciation of property, plant and equipment of $60.6 million associated with our 2007 business realignment initiatives. As of December 31, 2008, certain real estate with a carrying value or fair value less cost to sell, if lower, of $15.8 million was being held for sale. These assets were associated with the closure of facilities as part of the 2007 business realignment initiatives.

Property, Plant and Equipment

FACE="Times New Roman" SIZE="2">The property, plant and equipment balance included construction in progress of $131.4 million as of December 31, 2008 and $142.6 million as of December 31, 2007. Major classes of property, plant and
equipment were as follows:

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THE HERSHEY COMPANY

ALIGN="center">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During 2008, we recorded accelerated depreciation of property, plant and equipment of $60.6 million
associated with our 2007 business realignment initiatives. As of December 31, 2008, certain real estate with a carrying value or fair value less cost to sell, if lower, of $15.8 million was being held for sale. These assets were associated with
the closure of facilities as part of the 2007 business realignment initiatives.

Property, Plant and Equipment

The property, plant and equipment balance included construction in progress of $142.6 million as of December 31, 2007 and $76.3 million as of December 31, 2006. Major classes of property, plant and equipment were as follows:

During 2007 we recorded accelerated depreciation of property, plant and equipment of $108.6 million associated with our 2007 business realignment initiatives. As of December 31, 2007, certain real estate with a carrying value or fair value less cost to sell, if lower, of $40.2 million was being held for sale. These assets were associated with the closure of facilities as part of the 2007 business realignment initiatives.

Property Plant and Equipment

The property, plant and equipment balance included construction in progress of $76.3 million as of December 31, 2006 and $73.1 million as of December 31, 2005. Major classes of property, plant and equipment were as follows:

We recorded accelerated depreciation of property, plant and equipment of $21.8 million associated with our business realignment initiatives in 2005. As of December 31, 2006, no real estate was being held for sale. The net realizable value of real estate held for sale as of December 31, 2005 was $5.6 million. These assets were associated with the closure of facilities as part of the 2005 business realignment initiatives.

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THE HERSHEY COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Property Plant and Equipment

Property, plant and equipment balances included construction in progress of $74.8 million and $153.7 million as of December 31, 2004 and 2003, respectively. Net write-downs of property, plant and equipment of $5.7 million were recorded as a result of asset impairments associated with the Company’s business realignment initiatives recorded in the fourth quarter of 2003. These initiatives included realigning the sales organizations and streamlining the supply chain by divesting or eliminating certain non-strategic brands and products and by product line rationalization. Major classes of property, plant and equipment were as follows:

Certain real estate with a net realizable value of $7.0 million and $1.5 million was being held for sale as of December 31, 2004 and 2003, respectively. These assets were associated with the closure of facilities as part of the Company’s business realignment initiatives.