Company Quick10K Filing
Hershey
Price1.00 EPS-1,279,727,000
Shares-0 P/E-0
MCap-0 P/FCF-0
Net Debt2,943 EBIT1,617
TEV2,943 TEV/EBIT2
TTM 2019-09-29, in MM, except price, ratios
10-Q 2020-03-29 Filed 2020-04-23
10-K 2019-12-31 Filed 2020-02-20
10-Q 2019-09-29 Filed 2019-10-25
10-Q 2019-06-30 Filed 2019-07-25
10-Q 2019-03-31 Filed 2019-04-25
10-K 2018-12-31 Filed 2019-02-22
10-Q 2018-09-30 Filed 2018-10-26
10-Q 2018-07-01 Filed 2018-07-27
10-Q 2018-04-01 Filed 2018-04-26
10-K 2017-12-31 Filed 2018-02-27
10-Q 2017-10-01 Filed 2017-10-27
10-Q 2017-07-02 Filed 2017-07-28
10-Q 2017-04-02 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-02-21
10-Q 2016-10-02 Filed 2016-10-28
10-Q 2016-07-03 Filed 2016-07-28
10-Q 2016-04-03 Filed 2016-04-29
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-10-04 Filed 2015-10-30
10-Q 2015-07-05 Filed 2015-08-07
10-Q 2015-04-05 Filed 2015-05-01
10-K 2014-12-31 Filed 2015-02-20
10-Q 2014-09-28 Filed 2014-10-31
10-Q 2014-06-29 Filed 2014-08-01
10-Q 2014-03-30 Filed 2014-05-02
10-K 2013-12-31 Filed 2014-02-21
10-Q 2013-09-29 Filed 2013-11-01
10-Q 2013-06-30 Filed 2013-08-07
10-Q 2013-03-31 Filed 2013-05-08
10-K 2012-12-31 Filed 2013-02-22
10-Q 2012-09-30 Filed 2012-11-07
10-Q 2012-07-01 Filed 2012-08-08
10-Q 2012-04-01 Filed 2012-05-09
10-K 2011-12-31 Filed 2012-02-17
10-Q 2011-10-02 Filed 2011-11-04
10-Q 2011-07-03 Filed 2011-08-10
10-Q 2011-04-03 Filed 2011-05-11
10-K 2010-12-31 Filed 2011-02-18
10-Q 2010-10-03 Filed 2010-11-10
10-Q 2010-07-04 Filed 2010-08-11
10-Q 2010-04-04 Filed 2010-05-12
10-K 2009-12-31 Filed 2010-02-19
8-K 2020-05-12 Shareholder Vote
8-K 2020-05-12 Regulation FD, Exhibits
8-K 2020-04-23 Earnings, Exhibits
8-K 2020-03-25 Other Events
8-K 2020-01-30 Earnings
8-K 2019-12-18 Officers, Regulation FD
8-K 2019-11-01 Officers
8-K 2019-10-31 Enter Agreement, Off-BS Arrangement
8-K 2019-10-28 Enter Agreement, Other Events
8-K 2019-10-24 Earnings
8-K 2019-10-11 Other Events
8-K 2019-08-27 Other Events
8-K 2019-07-25 Earnings, Exhibits
8-K 2019-07-02 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2019-05-21 Shareholder Vote
8-K 2019-04-25 Earnings, Exhibits
8-K 2019-04-18 Officers
8-K 2019-01-31 Earnings, Exhibits
8-K 2018-11-07 Enter Agreement
8-K 2018-10-25 Earnings, Exhibits
8-K 2018-10-17 M&A, Other Events
8-K 2018-09-12 Enter Agreement, Other Events
8-K 2018-08-28 Regulation FD, Exhibits
8-K 2018-08-16 Officers, Regulation FD, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-05-25 Other Events
8-K 2018-05-10 Enter Agreement, Off-BS Arrangement
8-K 2018-05-03 Enter Agreement, Other Events
8-K 2018-05-02 Shareholder Vote
8-K 2018-04-26 Earnings, Exhibits
8-K 2018-02-20 Officers
8-K 2018-02-01 Earnings, Exhibits
8-K 2018-01-31 M&A, Other Events, Exhibits
8-K 2018-01-18 Officers
8-K 2018-01-08 Enter Agreement, Off-BS Arrangement

HSY 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 hsy20200329exhibit311.htm
EX-31.2 hsy20200329exhibit312.htm
EX-32.1 hsy20200329exhibit321.htm

Hershey Earnings 2020-03-29

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
2.21.71.30.80.4-0.12012201420172020
Rev, G Profit, Net Income
0.80.40.1-0.3-0.6-1.02012201420172020
Ops, Inv, Fin

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______to_______
Commission file number 1-183

thehersheycompanylogojulya12.jpg
THE HERSHEY COMPANY
(Exact name of registrant as specified in its charter)
Delaware
 
23-0691590
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
19 East Chocolate Avenue, Hershey, PA 17033
(Address of principal executive offices and Zip Code)
 
(717) 534-4200
(Registrant's telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, one dollar par value
 
HSY
 
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
 
Accelerated filer
¨

 
Non-accelerated filer
¨

 
Smaller reporting company
 
 
 
 
 
 
 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Common Stock, one dollar par value—147,395,851 shares, as of April 17, 2020.
Class B Common Stock, one dollar par value—60,613,777 shares, as of April 17, 2020.




THE HERSHEY COMPANY
Quarterly Report on Form 10-Q
For the Period Ended March 29, 2020

TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
 
 
 
Three Months Ended
 
 
March 29, 2020
 
March 31, 2019
Net sales
 
$
2,037,317

 
$
2,016,488

Cost of sales
 
1,170,695

 
1,123,984

Gross profit
 
866,622

 
892,504

Selling, marketing and administrative expense
 
475,384

 
453,573

Long-lived asset impairment charges
 
7,543

 

Business realignment costs
 
895

 
62

Operating profit
 
382,800

 
438,869

Interest expense, net
 
36,255

 
37,458

Other (income) expense, net
 
11,533

 
5,477

Income before income taxes
 
335,012

 
395,934

Provision for income taxes
 
66,229

 
92,053

Net income including noncontrolling interest
 
268,783

 
303,881

Less: Net loss attributable to noncontrolling interest
 
(2,354
)
 
(477
)
Net income attributable to The Hershey Company
 
$
271,137

 
$
304,358

 
 
 
 
 
Net income per share—basic:
 
 
 
 
Common stock
 
$
1.33

 
$
1.49

Class B common stock
 
$
1.21

 
$
1.36

 
 
 
 
 
Net income per share—diluted:
 
 
 
 
Common stock
 
$
1.29

 
$
1.45

Class B common stock
 
$
1.21

 
$
1.36

 
 
 
 
 
Dividends paid per share:
 
 
 
 
Common stock
 
$
0.773

 
$
0.722

Class B common stock
 
$
0.702

 
$
0.656


See Notes to Unaudited Consolidated Financial Statements.


The Hershey Company | Q1 2020 Form 10-Q | Page 3



THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

 
 
For the three months ended
 
 
March 29, 2020
 
March 31, 2019
 
 
Pre-Tax Amount
 
Tax (Expense) Benefit
 
After-Tax Amount
 
Pre-Tax Amount
 
Tax (Expense) Benefit
 
After-Tax Amount
Net income including noncontrolling interest
 
 
 
 
 
$
268,783

 
 
 
 
 
$
303,881

Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation (losses) gains during period
 
$
(51,343
)
 
$

 
(51,343
)
 
$
3,428

 
$

 
3,428

Pension and post-retirement benefit plans:
 
 
 
 
 
 
 
 
 
 
 
 
Reclassification to earnings
 
4,755

 
(548
)
 
4,207

 
6,718

 
(1,807
)
 
4,911

Cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
 
Gains (losses) on cash flow hedging derivatives
 
5,381

 
(1,105
)
 
4,276

 
(789
)
 
718

 
(71
)
Reclassification to earnings
 
2,091

 
(1,114
)
 
977

 
1,438

 
(891
)
 
547

Total other comprehensive (loss) income, net of tax
 
$
(39,116
)
 
$
(2,767
)
 
(41,883
)
 
$
10,795

 
$
(1,980
)
 
8,815

Total comprehensive income including noncontrolling interest
 
 
 
 
 
$
226,900

 
 
 
 
 
$
312,696

Comprehensive (loss) income attributable to noncontrolling interest
 
 
 
 
 
(2,462
)
 
 
 
 
 
78

Comprehensive income attributable to The Hershey Company
 
 
 
 
 
$
229,362

 
 
 
 
 
$
312,618


See Notes to Unaudited Consolidated Financial Statements.


The Hershey Company | Q1 2020 Form 10-Q | Page 4



THE HERSHEY COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
 
March 29, 2020
 
December 31, 2019
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
1,094,796

 
$
493,262

Accounts receivable—trade, net
 
705,639

 
568,509

Inventories
 
832,193

 
815,251

Prepaid expenses and other
 
222,125

 
240,080

Total current assets
 
2,854,753

 
2,117,102

Property, plant and equipment, net
 
2,150,217

 
2,153,139

Goodwill
 
1,976,699

 
1,985,955

Other intangibles
 
1,324,797

 
1,341,166

Other assets
 
523,913

 
512,000

Deferred income taxes
 
25,064

 
31,033

Total assets
 
$
8,855,443

 
$
8,140,395

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
531,928

 
$
550,828

Accrued liabilities
 
673,285

 
702,372

Accrued income taxes
 
61,273

 
19,921

Short-term debt
 
837,621

 
32,282

Current portion of long-term debt
 
788,692

 
703,390

Total current liabilities
 
2,892,799

 
2,008,793

Long-term debt
 
3,453,525

 
3,530,813

Other long-term liabilities
 
637,533

 
655,777

Deferred income taxes
 
197,045

 
200,018

Total liabilities
 
7,180,902

 
6,395,401

 
 
 
 
 
Stockholders’ equity:
 
 
 
 
The Hershey Company stockholders’ equity
 
 
 
 
Preferred stock, shares issued: none in 2020 and 2019
 

 

Common stock, shares issued: 160,939,248 at March 29, 2020 and December 31, 2019
 
160,939

 
160,939

Class B common stock, shares issued: 60,613,777 at March 29, 2020 and December 31, 2019
 
60,614

 
60,614

Additional paid-in capital
 
1,153,130

 
1,142,210

Retained earnings
 
1,404,453

 
1,290,461

Treasury—common stock shares, at cost: 13,390,995 at March 29, 2020 and 12,723,592 at December 31, 2019
 
(742,164
)
 
(591,036
)
Accumulated other comprehensive loss
 
(365,741
)
 
(323,966
)
Total—The Hershey Company stockholders’ equity
 
1,671,231

 
1,739,222

Noncontrolling interest in subsidiary
 
3,310

 
5,772

Total stockholders’ equity
 
1,674,541

 
1,744,994

Total liabilities and stockholders’ equity
 
$
8,855,443

 
$
8,140,395


See Notes to Unaudited Consolidated Financial Statements.


The Hershey Company | Q1 2020 Form 10-Q | Page 5



THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Three Months Ended
 
March 29, 2020
 
March 31, 2019
Operating Activities
 
 
 
Net income including noncontrolling interest
$
268,783

 
$
303,881

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
70,624

 
72,329

Stock-based compensation expense
12,575

 
10,556

Deferred income taxes
(7,003
)
 
1,300

Impairment of long-lived assets (see Note 6)
7,543

 

Write-down of equity investments
11,103

 
1,152

Other
15,404

 
8,497

Changes in assets and liabilities, net of business acquisitions and divestitures:
 
 
 
Accounts receivable—trade, net
(153,086
)
 
(99,991
)
Inventories
(27,907
)
 
(6,410
)
Prepaid expenses and other current assets
(3,913
)
 
(8,740
)
Accounts payable and accrued liabilities
636

 
(2,798
)
Accrued income taxes
71,263

 
56,282

Contributions to pension and other benefit plans
(4,109
)
 
(4,661
)
Other assets and liabilities
(15,820
)
 
(1,437
)
Net cash provided by operating activities
246,093

 
329,960

Investing Activities
 
 
 
Capital additions (including software)
(99,217
)
 
(92,814
)
Proceeds from sales of property, plant and equipment and other long-lived assets
21

 
75

Equity investments in tax credit qualifying partnerships
(11,473
)
 
(18,884
)
Net cash used in investing activities
(110,669
)
 
(111,623
)
Financing Activities
 
 
 
Net increase (decrease) in short-term debt
807,290

 
(28,990
)
Long-term borrowings, net of debt issuance costs

 
1,370

Repayment of long-term debt and finance leases
(1,086
)
 
(3,135
)
Cash dividends paid
(157,803
)
 
(146,463
)
Repurchase of common stock
(169,176
)
 
(198,500
)
Exercise of stock options
16,400

 
34,573

Net cash provided by (used in) financing activities
495,625

 
(341,145
)
Effect of exchange rate changes on cash and cash equivalents
(18,671
)
 
775

Increase (decrease) in cash and cash equivalents, including cash classified as held for sale
612,378

 
(122,033
)
Less: Increase in cash and cash equivalents classified as held for sale (see Note 8)
(10,844
)
 

Net increase (decrease) in cash and cash equivalents
601,534

 
(122,033
)
Cash and cash equivalents, beginning of period
493,262

 
587,998

Cash and cash equivalents, end of period
$
1,094,796

 
$
465,965

Supplemental Disclosure
 
 
 
Interest paid
$
27,820

 
$
35,271

Income taxes paid
14,107

 
28,733


See Notes to Unaudited Consolidated Financial Statements.


The Hershey Company | Q1 2020 Form 10-Q | Page 6



THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)


 
Preferred
Stock
 
Common
Stock
 
Class B
Common
Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Treasury
Common
Stock
 
Accumulated Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interests in
Subsidiaries
 
Total
Stockholders’
Equity
Balance, December 31, 2019
 

 
160,939

 
60,614

 
1,142,210

 
1,290,461

 
(591,036
)
 
(323,966
)
 
5,772

 
1,744,994

Net income (loss)
 
 
 
 
 
 
 
 
 
271,137

 
 
 
 
 
(2,354
)
 
268,783

Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
(41,775
)
 
(108
)
 
(41,883
)
Dividends (including dividend equivalents):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock, $0.773 per share
 
 
 
 
 
 
 
 
 
(114,594
)
 
 
 
 
 
 
 
(114,594
)
Class B Common Stock, $0.702 per share
 
 
 
 
 
 
 
 
 
(42,551
)
 
 
 
 
 
 
 
(42,551
)
Stock-based compensation
 
 
 
 
 
 
 
12,568

 
 
 
 
 
 
 
 
 
12,568

Exercise of stock options and incentive-based transactions
 
 
 
 
 
 
 
(1,648
)
 
 
 
18,048

 
 
 
 
 
16,400

Repurchase of common stock
 
 
 
 
 
 
 
 
 
 
 
(169,176
)
 
 
 
 
 
(169,176
)
Balance, March 29, 2020
 
$

 
$
160,939

 
$
60,614

 
$
1,153,130

 
$
1,404,453

 
$
(742,164
)
 
$
(365,741
)
 
$
3,310

 
$
1,674,541


 
 
Preferred
Stock
 
Common
Stock
 
Class B
Common
Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Treasury
Common
Stock
 
Accumulated Other
Comprehensive
Income (Loss)
 
Noncontrolling
Interests in
Subsidiaries
 
Total
Stockholders’
Equity
Balance, December 31, 2018
 

 
299,287

 
60,614

 
982,205

 
7,032,020

 
(6,618,625
)
 
(356,780
)
 
8,545

 
1,407,266

Net income (loss)
 
 
 
 
 
 
 
 
 
304,358

 
 
 
 
 
(477
)
 
303,881

Other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
8,260

 
555

 
8,815

Dividends (including dividend equivalents):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock, $0.722 per share
 
 
 
 
 
 
 
 
 
(107,288
)
 
 
 
 
 
 
 
(107,288
)
Class B Common Stock, $0.656 per share
 
 
 
 
 
 
 
 
 
(39,763
)
 
 
 
 
 
 
 
(39,763
)
Stock-based compensation
 
 
 
 
 
 
 
10,463

 
 
 
 
 
 
 
 
 
10,463

Exercise of stock options and incentive-based transactions
 
 
 
 
 
 
 
3,513

 
 
 
31,060

 
 
 
 
 
34,573

Repurchase of common stock
 
 
 
 
 
 
 
 
 
 
 
(198,500
)
 
 
 
 
 
(198,500
)
Impact of ASU 2016-02 related to leases
 
 
 
 
 
 
 
 
 
3,913

 
 
 
 
 
 
 
3,913

Balance, March 31, 2019
 
$

 
$
299,287

 
$
60,614

 
$
996,181

 
$
7,193,240

 
$
(6,786,065
)
 
$
(348,520
)
 
$
8,623

 
$
1,423,360



See Notes to Unaudited Consolidated Financial Statements.


The Hershey Company | Q1 2020 Form 10-Q | Page 7

THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share data or if otherwise indicated)


 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited consolidated financial statements provided in this report include the accounts of The Hershey Company (the “Company,” “Hershey,” “we” or “us”) and our majority-owned subsidiaries and entities in which we have a controlling financial interest after the elimination of intercompany accounts and transactions. We have a controlling financial interest if we own a majority of the outstanding voting common stock and minority shareholders do not have substantive participating rights, we have significant control through contractual or economic interests in which we are the primary beneficiary or we have the power to direct the activities that most significantly impact the entity's economic performance. We use the equity method of accounting when we have a 20% to 50% interest in other companies and exercise significant influence. Other investments that are not controlled, and over which we do not have the ability to exercise significant influence, are accounted for under the cost method. Both equity and cost method investments are included as Other non-current assets in the Consolidated Balance Sheets.
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not contain certain information and disclosures required by GAAP for comprehensive financial statements. The financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in our opinion, necessary for a fair presentation of the results of operations, financial position, and cash flows for the indicated periods.
Operating results for the quarter ended March 29, 2020 may not be indicative of the results that may be expected for the year ending December 31, 2020 because of seasonal effects on our business. These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 (our “2019 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters. Additionally, based on the duration and severity of the novel coronavirus ("COVID-19") pandemic, including but not limited to stock market volatility, supply chain disruptions, reduced or eliminated food services, reduced travel, the closure of retailing establishments and the cancellation of major sporting and entertainment events, we are uncertain of the ultimate impact COVID-19 could have on our business.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for defined benefit pension plans and other post-retirement plans. ASU 2018-14 is effective for annual periods beginning after December 15, 2020, with early adoption permitted. The amendments in this ASU should be applied on a retrospective basis to all periods presented. We elected to early adopt the provisions of this ASU in the fourth quarter of 2019. Adoption of the new standard did not have a material impact on our consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU modifies the measurement of expected credit losses of certain financial instruments. ASU 2016-13 is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. The amendments in this ASU should be applied on a modified retrospective basis to all periods presented. We adopted the provisions of this ASU in the first quarter of 2020. Adoption of the new standard did not have a material impact on our consolidated financial statements.


The Hershey Company | Q1 2020 Form 10-Q | Page 8

THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)


In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. ASU 2018-13 is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods, with early adoption permitted. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. We adopted the provisions of this ASU in the first quarter of 2020. Adoption of the new standard did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). ASU 2018-15 is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods, with early adoption permitted. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We adopted the provisions of this ASU in the first quarter of 2020 on a prospective basis. Adoption of the new standard did not have a material impact on our consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period. Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the impact of the new standard on our consolidated financial statements and related disclosures.
No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures.
2. BUSINESS ACQUISITION
2019 Activity
ONE Brands, LLC
On September 23, 2019, we completed the acquisition of ONE Brands, LLC ("ONE Brands"), previously a privately held company that sells a line of low-sugar, high-protein nutrition bars to retailers and distributors in the United States, with the ONE Bar as its primary product. The purchase consideration for ONE Brands totaled $402,160 and consisted of cash on hand and short-term borrowings. Acquisition-related costs for the ONE Brands acquisition were immaterial.



The Hershey Company | Q1 2020 Form 10-Q | Page 9

THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)


The acquisition has been accounted for as a purchase and, accordingly, ONE Brands' results of operations have been included within the North America segment results in our consolidated financial statements since the date of acquisition. The purchase consideration was allocated to assets acquired and liabilities assumed based on their respective fair values as follows:
 
Initial Allocation (1)
 
Adjustments
 
Final Allocation
Goodwill
$
179,240

 
$
825

 
$
180,065

Other intangible assets
206,800

 

 
206,800

Other assets acquired, primarily current assets
25,926

 
(491
)
 
25,435

Other liabilities assumed, primarily current liabilities
(9,806
)
 
(334
)
 
(10,140
)
Net assets acquired
$
402,160

 
$

 
$
402,160

(1)
As reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

The purchase price allocation presented above has been finalized as of the end of the first quarter of 2020. The measurement period adjustments to the initial allocation are based on more detailed information obtained about the specific assets acquired and liabilities assumed.

Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired (including the identifiable intangible assets). The goodwill derived from this acquisition is expected to be deductible for tax purposes and reflects the value of leveraging our brand building expertise, supply chain capabilities and retail relationships to accelerate growth and access to the portfolio of ONE Brands products.

Other intangible assets include trademarks valued at $144,900, customer relationships valued at $58,800 and covenants not to compete valued at $3,100. Trademarks were assigned an estimated useful life of 33 years, customer relationships were assigned estimated useful lives ranging from 17 to 19 years and covenants not to compete were assigned an estimated useful life of 4 years.
3. GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying value of goodwill by reportable segment for the three months ended March 29, 2020 are as follows:
 
 
North America
 
    International and Other
 
Total
Balance at December 31, 2019
 
1,967,466

 
18,489

 
1,985,955

Measurement period adjustments (see Note 2)
 
825

 

 
825

Foreign currency translation
 
(7,684
)
 
(2,397
)
 
(10,081
)
Balance at March 29, 2020
 
$
1,960,607

 
$
16,092

 
$
1,976,699




The Hershey Company | Q1 2020 Form 10-Q | Page 10

THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)


The following table provides the gross carrying amount and accumulated amortization for each major class of intangible asset:
 
 
March 29, 2020
 
December 31, 2019
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Gross Carrying Amount
 
Accumulated Amortization
Intangible assets subject to amortization:
 
 
 
 
 
 
 
 
Trademarks
 
$
1,208,653

 
$
(80,475
)
 
$
1,212,172

 
$
(73,262
)
Customer-related
 
204,588

 
(41,845
)
 
207,749

 
(40,544
)
Patents
 
16,132

 
(15,999
)
 
16,711

 
(16,525
)
Total
 
1,429,373

 
(138,319
)
 
1,436,632

 
(130,331
)
 
 
 
 
 
 
 
 
 
Intangible assets not subject to amortization:
 
 
 
 
 
 
 
 
Trademarks
 
33,743

 
 
 
34,865

 
 
Total other intangible assets
 
$
1,324,797

 
 
 
$
1,341,166

 
 

Total amortization expense for the three months ended March 29, 2020 and March 31, 2019 was $11,640 and $12,238, respectively.
4. SHORT AND LONG-TERM DEBT
Short-term Debt
As a source of short-term financing, we utilize cash on hand and commercial paper or bank loans with an original maturity of three months or less. We maintain a $1.5 billion unsecured revolving credit facility with the option to increase borrowings by an additional $500 million with the consent of the lenders. This facility is scheduled to expire on July 2, 2024, however, we may extend the termination date for up to two additional one-year periods upon notice to the administrative agent under the facility.
The credit agreement contains certain financial and other covenants, customary representations, warranties and events of default. As of March 29, 2020, we were in compliance with all covenants pertaining to the credit agreement, and we had no significant compensating balance agreements that legally restricted these funds. For more information, refer to the Consolidated Financial Statements included in our 2019Annual Report on Form 10-K.
In addition to the revolving credit facility, we maintain lines of credit with domestic and international commercial banks. Commitment fees relating to our revolving credit facility and lines of credit are not material. Short-term debt consisted of the following:
 
March 29, 2020
 
December 31, 2019
Short-term foreign bank borrowings against lines of credit
$
37,263

 
$
32,282

U.S. commercial paper
800,358

 

Total short-term debt
$
837,621

 
$
32,282

Weighted average interest rate on outstanding commercial paper
1.4
%
 
N/A





The Hershey Company | Q1 2020 Form 10-Q | Page 11

THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)


Long-term Debt
Long-term debt consisted of the following:
Debt Type and Rate
 
Maturity Date
 
March 29, 2020
 
December 31, 2019
2.90% Notes
 
May 15, 2020
 
$
350,000

 
$
350,000

4.125% Notes
 
December 1, 2020
 
350,000

 
350,000

8.8% Debentures
 
February 15, 2021
 
84,715

 
84,715

3.10% Notes
 
May 15, 2021
 
350,000

 
350,000

2.625% Notes
 
May 1, 2023
 
250,000

 
250,000

3.375% Notes
 
May 15, 2023
 
500,000

 
500,000

2.050% Notes
 
November 15, 2024
 
300,000

 
300,000

3.20% Notes
 
August 21, 2025
 
300,000

 
300,000

2.30% Notes
 
August 15, 2026
 
500,000

 
500,000

7.2% Debentures
 
August 15, 2027
 
193,639

 
193,639

2.450% Notes
 
November 15, 2029
 
300,000

 
300,000

3.375% Notes
 
August 15, 2046
 
300,000

 
300,000

3.125% Notes
 
November 15, 2049
 
400,000

 
400,000

Finance lease obligations (see Note 7)
 
 
 
81,094

 
79,643

Net impact of interest rate swaps, debt issuance costs and unamortized debt discounts
 
 
 
(17,231
)
 
(23,794
)
Total long-term debt
 
 
 
4,242,217

 
4,234,203

Less—current portion
 
 
 
788,692

 
703,390

Long-term portion
 
 
 
$
3,453,525

 
$
3,530,813


Interest Expense
Net interest expense consists of the following: