Hershey Foods (HSY)

Research and Development

We engage in a variety of research and development activities. We develop new products, improve the quality of existing products, improve and modernize production processes, and develop and implement new technologies to enhance the quality and value of both current and proposed product lines. Information concerning our research and development expense is contained in the Notes to the Consolidated Financial Statements, Note 1, Summary of Significant Accounting Policies.

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Research and Development

We expense research and development costs as incurred. Research and development expense was $28.1 million in 2009, $28.1 million in 2008 and $28.0 million in 2007. Research and development expense is included in selling, marketing and administrative expenses.

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THE HERSHEY COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Research and Development

We engage in a variety of research and development activities. We develop new products, improve the quality of existing products, improve and modernize production processes, and develop and implement new technologies to enhance the quality and value of both current and proposed product lines. Information concerning our research and development expense is contained in Note 1 of the Notes to the Consolidated Financial Statements (Item 8. Financial Statements and Supplementary Data).

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Table of Contents

Research and Development

We engage in a variety
of research and development activities. We develop new products, improve the quality of existing products, improve and modernize production processes, and develop and implement new technologies to enhance the quality and value of both current and
proposed product lines. Information concerning our research and development expense is contained in Note 1 of the Notes to the Consolidated Financial Statements (Item 8. Financial Statements and Supplementary Data).

Research and Development

We expense research and development costs as incurred. Research and development expense was $28.1 million in 2008, $28.0 million in 2007 and $27.6 million in 2006. Research and development expense is included in selling, marketing and administrative expenses.

Research and Development

We engage in a variety
of research and development activities. We develop new products, improve the quality of existing products, improve and modernize production processes, and develop and implement new technologies to enhance the quality and value of both current and
proposed product lines. Information concerning our research and development expense is contained in Note 1 of the Notes to the Consolidated Financial Statements (Item 8. Financial Statements and Supplementary Data).

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Table of Contents

Food Quality and Safety Regulation

The manufacture and sale of consumer food products is highly regulated. In the United States, our activities are subject to regulation by
various government agencies, including the Food and Drug Administration, the Department of Agriculture, the Federal Trade Commission, the Department of Commerce and the Environmental Protection Agency, as well as various state and local agencies.
Similar agencies also regulate our businesses outside of the United States.

Research and Development

We expense research and development costs as incurred. Research and development expense was $28.0 million in 2007, $27.6 million in 2006 and $22.6 million in 2005. Research and development expense is included in selling, marketing and administrative expenses.

Research and Development

We expense research and development costs as incurred. Research and development expense was $27.6 million in 2006, $22.6 million in 2005 and $23.2 million in 2004. Research and development expense is included in selling, marketing and administrative expenses.

Research and Development

The Company expenses research and development costs as incurred. Research and development expense was $23.2 million, $24.5 million and $23.4 million in 2004, 2003 and 2002, respectively, and is included in selling, marketing and administrative expenses.