HSY has slight increase in accounts receivable reflecting the timing of seasonal sales at the end of 2011 as compared with 2010. Although its primary credit risk concentrates on two clients, McLane and Wal-Mart, its accounts receivable turnover is increasing. It means Hershey’s collection ability is good. Accounts Receivable—Trade In the normal course of business, we extend credit to customers that satisfy pre-defined credit criteria based upon the results of our recurring financial account reviews and our evaluation of the current and projected economic conditions.

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Our primary concentrations of credit risk are associated with McLane Company, Inc. and Wal-Mart Stores, Inc. McLane Company, Inc. is one of the largest wholesale distributors in the United States to convenience stores, drug stores, wholesale clubs and mass merchandisers. Wal-Mart Stores, Inc. accounted for approximately 17. 2% of our total accounts receivable as of December 31, 2011. McLane Company, Inc. accounted for approximately 13. 5% of our total accounts receivable as of December 31, 2011. As of December 31, 2011, no other customers accounted for more than 10% of our total accounts receivable.

We believe that we have little concentration of credit risk associated with the remainder of our customer base. Accounts Receivable—Trade, as shown on the Consolidated Balance Sheets, were net of allowances and anticipated discounts. An allowance for doubtful accounts is determined through analysis of the following: • Aging of accounts receivable at the date of the financial statements; • Assessments of collectability based on historical trends; and • Evaluation of the impact of current and projected economic conditions.

We monitor the collectability of our accounts receivable on an ongoing basis by analyzing aged accounts receivable, assessing the credit worthiness of our customers and evaluating the impact of reasonably likely changes in economic conditions that may impact credit risks. Estimates with regard to the collectability of accounts receivable are reasonably likely to change in the future.

Information on our Accounts Receivable—Trade, related expenses and assumptions is as follows: For the three-year period 2009-2011 In millions of dollars, except percents Average expense for potential uncollectible accounts $1. 2 Average write-offs of uncollectible accounts $1. 6 Allowance for doubtful accounts as a percentage of gross accounts receivable 1%-2% • We recognize the provision for uncollectible accounts as selling, marketing and administrative expense in the Consolidated Statements of Income. If we made reasonably possible near-term changes in the most material assumptions regarding collectability of accounts receivable, our annual provision could change within the following range: • A reduction in expense of approximately $4. 4 million; and • An increase in expense of approximately $4. 5 million. • Changes in estimates for future uncollectible accounts receivable would not have a material impact on our liquidity or capital resources.

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