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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 July 3, 2022
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
hsy-20220703_g1.jpg
THE HERSHEY COMPANY
(Exact name of registrant as specified in its charter)
Delaware23-0691590
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, one dollar par valueHSYNew 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 filerxAccelerated filerNon-accelerated filerSmaller reporting companyEmerging 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—146,869,652 shares, as of July 22, 2022.
Class B Common Stock, one dollar par value—58,113,777 shares, as of July 22, 2022.



THE HERSHEY COMPANY
Quarterly Report on Form 10-Q
For the Period Ended July 3, 2022

TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Notes to Unaudited Consolidated Financial Statements

The Hershey Company | Q2 2022 Form 10-Q | Page 1
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
 
Three Months EndedSix Months Ended
July 3, 2022July 4, 2021July 3, 2022July 4, 2021
Net sales$2,372,582 $1,989,422 $5,038,803 $4,285,370 
Cost of sales
1,372,583 1,063,977 2,793,324 2,310,974 
Gross profit
999,999 925,445 2,245,479 1,974,396 
Selling, marketing and administrative expense
543,468 467,629 1,067,684 962,294 
Business realignment costs 1,141 274 2,383 
Operating profit
456,531 456,675 1,177,521 1,009,719 
Interest expense, net33,413 31,065 66,592 67,501 
Other (income) expense, net19,658 7,194 30,065 9,608 
Income before income taxes403,460 418,416 1,080,864 932,610 
Provision for income taxes87,904 117,186 231,830 234,509 
Net income including noncontrolling interest315,556 301,230 849,034 698,101 
Less: Net gain attributable to noncontrolling interest   1,072 
Net income attributable to The Hershey Company
$315,556 $301,230 $849,034 $697,029 
Net income per share—basic:
Common stock$1.57 $1.50 $4.24 $3.46 
Class B common stock$1.44 $1.36 $3.85 $3.14 
Net income per share—diluted:
Common stock$1.53 $1.45 $4.10 $3.35 
Class B common stock$1.44 $1.36 $3.84 $3.13 
Dividends paid per share:
Common stock$0.901 $0.804 $1.802 $1.608 
Class B common stock$0.819 $0.731 $1.638 $1.462 

See Notes to Unaudited Consolidated Financial Statements.
The Hershey Company | Q2 2022 Form 10-Q | Page 2
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

For the Three Months Ended
For the Six Months Ended
July 3, 2022July 4, 2021July 3, 2022July 4, 2021
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Net income including noncontrolling interest$315,556 $301,230 $849,034 $698,101 
Other comprehensive income, net of tax:
Foreign currency translation adjustments:
Foreign currency translation (losses) gains during period$(16,758)$ (16,758)$12,996 $ 12,996 $(2,340)$ (2,340)$14,194 $ 14,194 
Reclassification to earnings due to the sale of businesses         5,210  5,210 
Pension and post-retirement benefit plans:
Net actuarial (loss) gain and service cost(32,337)7,758 (24,579)18,481 (4,399)14,082 (38,811)7,191 (31,620)20,705 (4,928)15,777 
Reclassification to earnings9,481 (2,275)7,206 8,936 (2,201)6,735 13,441 (3,226)10,215 15,789 (4,068)11,721 
Cash flow hedges:
Gains (losses) on cash flow hedging derivatives5,278 (1,511)3,767 (6,344)(446)(6,790)(646)(637)(1,283)(7,979)(159)(8,138)
Reclassification to earnings4,289 (296)3,993 5,681 158 5,839 6,885 (1,023)5,862 8,818 (382)8,436 
Total other comprehensive income, net of tax$(30,047)$3,676 (26,371)$39,750 $(6,888)32,862 $(21,471)$2,305 (19,166)$56,737 $(9,537)47,200 
Total comprehensive income including noncontrolling interest$289,185 $334,092 $829,868 $745,301 
Comprehensive (loss) income attributable to noncontrolling interest (8) 6,326 
Comprehensive income attributable to The Hershey Company$289,185 $334,100 $829,868 $738,975 

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q2 2022 Form 10-Q | Page 3
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THE HERSHEY COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
July 3, 2022December 31, 2021
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$339,722 $329,266 
Accounts receivable—trade, net654,399 671,464 
Inventories1,208,239 988,511 
Prepaid expenses and other226,105 256,965 
Total current assets2,428,465 2,246,206 
Property, plant and equipment, net2,590,826 2,586,187 
Goodwill2,616,497 2,633,174 
Other intangibles2,007,748 2,037,588 
Other non-current assets904,822 868,203 
Deferred income taxes40,516 40,873 
Total assets$10,588,874 $10,412,231 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$876,193 $692,338 
Accrued liabilities736,685 855,638 
Accrued income taxes20,543 3,070 
Short-term debt914,916 939,423 
Current portion of long-term debt752,573 2,844 
Total current liabilities3,300,910 2,493,313 
Long-term debt3,340,472 4,086,627 
Other long-term liabilities764,041 787,058 
Deferred income taxes291,711 288,004 
Total liabilities7,697,134 7,655,002 
Stockholders’ equity:
The Hershey Company stockholders’ equity
Preferred stock, shares issued: none in 2022 and 2021
  
Common stock, shares issued: 163,439,248 at July 3, 2022 and 160,939,248 at December 31, 2021
163,439 160,939 
Class B common stock, shares issued: 58,113,777 at July 3, 2022 and 60,613,777 at December 31, 2021
58,114 60,614 
Additional paid-in capital1,258,091 1,260,331 
Retained earnings3,208,598 2,719,936 
Treasury—common stock shares, at cost: 16,581,634 at July 3, 2022 and 15,444,011 at December 31, 2021
(1,528,121)(1,195,376)
Accumulated other comprehensive loss(268,381)(249,215)
Total stockholders’ equity2,891,740 2,757,229 
Total liabilities and stockholders’ equity$10,588,874 $10,412,231 

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q2 2022 Form 10-Q | Page 4
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
July 3, 2022July 4, 2021
Operating Activities
Net income including noncontrolling interest$849,034 $698,101 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization184,882 153,929 
Stock-based compensation expense32,561 32,482 
Deferred income taxes7,388 5,789 
Write-down of equity investments27,440 7,771 
Other66,235 51,355 
Changes in assets and liabilities, net of business acquisitions and divestitures:
Accounts receivable—trade, net19,216 88,945 
Inventories(220,071)(68,968)
Prepaid expenses and other current assets(3,588)14,432 
Accounts payable and accrued liabilities123,335 (33,238)
Accrued income taxes51,927 68,317 
Contributions to pension and other benefit plans(14,331)(9,338)
Other assets and liabilities(10,255)8,075 
Net cash provided by operating activities1,113,773 1,017,652 
Investing Activities
Capital additions (including software)(240,960)(227,607)
Equity investments in tax credit qualifying partnerships(116,191)(57,445)
Business acquisitions, net of cash and cash equivalents acquired (418,191)
Other investing activities6,166 3,123 
Net cash used in investing activities(350,985)(700,120)
Financing Activities
Net (decrease) increase in short-term debt(24,507)137,027 
Repayment of long-term debt and finance leases(2,473)(436,957)
Cash dividends paid(360,984)(324,304)
Repurchase of common stock(355,271)(434,346)
Proceeds from exercised stock options21,770 31,749 
Taxes withheld and paid on employee stock awards
(33,940)(14,860)
Net cash used in financing activities(755,405)(1,041,691)
Effect of exchange rate changes on cash and cash equivalents3,073 (5,061)
Increase (decrease) in cash and cash equivalents, including cash classified as held for sale10,456 (729,220)
Less: Increase in cash and cash equivalents classified as held for sale 11,434 
Net increase (decrease) in cash and cash equivalents10,456 (717,786)
Cash and cash equivalents, beginning of period329,266 1,143,987 
Cash and cash equivalents, end of period$339,722 $426,201 
Supplemental Disclosure
Interest paid$61,657 $68,345 
Income taxes paid172,888 139,078 

See Notes to Unaudited Consolidated Financial Statements.

The Hershey Company | Q2 2022 Form 10-Q | Page 5
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Three Months Ended July 3, 2022 and July 4, 2021
(in thousands)
(unaudited)


Preferred
Stock
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Common
Stock
Accumulated Other
Comprehensive
Loss
Total
Stockholders’
Equity
Balance, April 3, 2022
$ $161,939 $59,614 $1,243,240 $3,071,416 $(1,378,651)$(242,009)$2,915,549 
Net income315,556 315,556 
Other comprehensive loss(26,372)(26,372)
Dividends (including dividend equivalents):
Common Stock, $0.901 per share
(129,551)(129,551)
Class B Common Stock, $0.819 per share
(48,823)(48,823)
Conversion of Class B Common Stock into Common Stock1,500 (1,500) 
Stock-based compensation17,146 17,146 
Exercise of stock options and incentive-based transactions(2,295)2,451 156 
Repurchase of common stock(151,921)(151,921)
Balance, July 3, 2022
$ $163,439 $58,114 $1,258,091 $3,208,598 $(1,528,121)$(268,381)$2,891,740 

Preferred
Stock
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Common
Stock
Accumulated Other
Comprehensive
(Loss) Income
Noncontrolling
Interests in
Subsidiaries
Total
Stockholders’
Equity
Balance, April 4, 2021
$ $160,939 $60,614 $1,195,748 $2,162,464 $(994,765)$(329,006)$8,852 $2,264,846 
Net income 301,230  301,230 
Other comprehensive income32,870 (8)32,862 
Dividends (including dividend equivalents):
Common Stock, $0.804 per share
(117,581)(117,581)
Class B Common Stock, $0.731 per share
(44,308)(44,308)
Stock-based compensation17,121 17,121 
Exercise of stock options and incentive-based transactions5,839 7,871 13,710 
Repurchase of common stock(193,987)(193,987)
Balance, July 4, 2021
$ $160,939 $60,614 $1,218,708 $2,301,805 $(1,180,881)$(296,136)$8,844 $2,273,893 


See Notes to Unaudited Consolidated Financial Statements.


The Hershey Company | Q2 2022 Form 10-Q | Page 6
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THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Six Months Ended July 3, 2022 and July 4, 2021
(in thousands)
(unaudited)


Preferred
Stock
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Common
Stock
Accumulated Other
Comprehensive
(Loss) Income
Total
Stockholders’
Equity
Balance, December 31, 2021
$ $160,939 $60,614 $1,260,331 $2,719,936 $(1,195,376)$(249,215)$2,757,229 
Net income849,034 849,034 
Other comprehensive income(19,166)(19,166)
Dividends (including dividend equivalents):
Common Stock, $1.802 per share
(262,725)(262,725)
Class B Common Stock, $1.638 per share
(97,647)(97,647)
Conversion of Class B Common Stock into Common Stock2,500 (2,500) 
Stock-based compensation32,460 32,460 
Exercise of stock options and incentive-based transactions(34,700)22,526 (12,174)
Repurchase of common stock(355,271)(355,271)
Balance, July 3, 2022
$ $163,439 $58,114 $1,258,091 $3,208,598 $(1,528,121)$(268,381)$2,891,740 

Preferred
Stock
Common
Stock
Class B
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Common
Stock
Accumulated Other
Comprehensive
Loss
Noncontrolling
Interests in
Subsidiaries
Total
Stockholders’
Equity
Balance, December 31, 2020
$ $160,939 $60,614 $1,191,200 $1,928,673 $(768,992)$(338,082)$3,531 $2,237,883 
Net income697,029 1,072 698,101 
Other comprehensive income41,946 5,254 47,200 
Dividends (including dividend equivalents):
Common Stock, $1.608 per share
(235,280)(235,280)
Class B Common Stock, $1.462 per share
(88,617)(88,617)
Stock-based compensation33,076 33,076 
Exercise of stock options and incentive-based transactions(5,568)22,457 16,889 
Repurchase of common stock(434,346)(434,346)
Divestiture of noncontrolling interest(1,013)(1,013)
Balance, July 4, 2021
$ $160,939 $60,614 $1,218,708 $2,301,805 $(1,180,881)$(296,136)$8,844 $2,273,893 


See Notes to Unaudited Consolidated Financial Statements.



The Hershey Company | Q2 2022 Form 10-Q | Page 7
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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 July 3, 2022 may not be indicative of the results that may be expected for the year ending December 31, 2022 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, 2021 (our “2021 Annual Report on Form 10-K”), which provides a more complete understanding of our accounting policies, financial position, operating results and other matters.
COVID-19
On March 11, 2020, the World Health Organization designated coronavirus disease 2019 (“COVID-19”) as a global pandemic. We continue to actively monitor COVID-19 and its potential impact on our operations and financial results. Employee health and safety remains our first priority while we continue our efforts to support community food supplies. Since the onset of COVID-19, there has been minimal disruption to our supply chain network, and all our manufacturing plants are currently open. However, beginning in 2021 and continuing into 2022, ongoing strong demand for consumer goods and the effects of COVID-19 mitigation strategies have led to broad-based supply chain disruptions across the U.S. and globally, including inflation on many consumer products, labor shortages and demand outpacing supply. We continue to work closely with our business units, contract manufacturers, distributors, contractors and other external business partners to minimize the potential impact on our business.
The ultimate impact that COVID-19 will have on our consolidated financial statements remains uncertain and ultimately will be dictated by the length and severity of the pandemic, including broad-based supply chain disruptions, rising levels of inflation, the spread of COVID-19 variants or resurgences, as well as the economic recovery and actions taken in response by local, state and national governments around the world, including the distribution of vaccinations. We will continue to evaluate the nature and extent of these potential and evolving impacts to our business and consolidated financial statements.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU is intended to provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference

The Hershey Company | Q2 2022 Form 10-Q | Page 8
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

rates. Entities may apply this ASU upon issuance through December 31, 2022 on a prospective basis. We early adopted the provisions of this ASU in the first quarter of 2022. Adoption of the new standard did not have a material impact on our consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) rather than adjust them to fair value at the acquisition date. ASU 2021-08 is effective for annual periods beginning after December 15, 2022 and interim periods within those annual periods. This ASU should be applied prospectively to business combinations occurring on or after the date of adoption. Evaluation of this new standard is dependent on multiple circumstances including the timing and complexity of completed business combinations. As a result, we intend to adopt the provisions of this ASU in the first quarter of 2023.
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 ACQUISITIONS AND DIVESTITURE
2021 Activity
Pretzels Inc.
On December 14, 2021, we completed the acquisition of Pretzels Inc. (“Pretzels”), previously a privately held company that manufactures and sells pretzels and other salty snacks for other branded products and private labels in the United States. Pretzels is an industry leader in the pretzel category with a product portfolio that includes filled, gluten free and seasoned pretzels, as well as extruded snacks that complements Hershey’s snacks portfolio. Based in Bluffton, Indiana, Pretzels operates three manufacturing locations in Indiana and Kansas. Pretzels provides Hershey deep pretzel category and product expertise and the manufacturing capabilities to support brand growth and future pretzel innovation. The initial cash consideration paid for Pretzels totaled $304,334 and consisted of cash on hand and short-term borrowings. Acquisition-related costs for the Pretzels acquisition were immaterial.
The acquisition has been accounted for as a business combination and, accordingly, Pretzels has been included within the North America Salty Snacks segment from 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)AdjustmentsUpdated Allocation
Goodwill$165,301 $890 $166,191 
Other intangible assets32,100 (6,000)26,100 
Current assets acquired30,717 118 30,835 
Property, plant and equipment, net96,099 4,617 100,716 
Other non-current assets, primarily operating lease ROU assets111,787 — 111,787 
Deferred income taxes541 232 773 
Current liabilities assumed(22,713)— (22,713)
Other long-term liabilities, primarily operating lease liabilities(109,355)— (109,355)
Net assets acquired$304,477 $(143)$304,334 
(1) As reported in the Company’s 2021 Annual Report on Form 10-K.



The Hershey Company | Q2 2022 Form 10-Q | Page 9
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

The purchase price allocation presented above is preliminary. The measurement period adjustments to the initial allocation are based on more detailed information obtained about the specific assets acquired. We are in the process of evaluating additional information necessary to finalize the valuation of assets acquired and liabilities assumed as of the acquisition date including, but not limited to, post-closing adjustments to the working capital acquired including certain holdbacks. The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation, including other intangible assets, goodwill and the related tax impact of such adjustments. We expect to finalize the purchase price allocation by the end of the third quarter of 2022.
Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired (including the identifiable intangible assets). A portion of 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 Pretzels’ products.
Other intangible assets include trademarks valued at $5,700 and customer relationships valued at $20,400. Trademarks were assigned an estimated useful life of five years and customer relationships were assigned an estimated useful life of 19 years.
Dot's Pretzels, LLC
On December 13, 2021, we completed the acquisition of Dot’s Pretzels, LLC (“Dot’s”), previously a privately held company that produces and sells pretzels and other snack food products to retailers and distributors in the United States, with Dot’s Homestyle Pretzels snacks as its primary product. Dot’s is the fastest-growing scale brand in the pretzel category and complements Hershey’s snacks portfolio. The initial cash consideration paid for Dot’s totaled $894,166 and consisted of cash on hand and short-term borrowings. Acquisition-related costs for the Dot’s acquisition were immaterial.
The acquisition has been accounted for as a business combination and, accordingly, Dot’s has been included within the North America Salty Snacks segment from 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)AdjustmentsUpdated Allocation
Goodwill$303,345 $(14,960)$288,385 
Other intangible assets526,300 16,800 543,100 
Current assets acquired51,121 — 51,121 
Property, plant and equipment, net39,256 1,010 40,266 
Other non-current assets2,201 — 2,201 
Other liabilities assumed, primarily current liabilities(28,057)(2,850)(30,907)
Net assets acquired$894,166 $ $894,166 
(1) As reported in the Company’s 2021 Annual Report on Form 10-K.
The purchase price allocation presented above is preliminary. The measurement period adjustments, specifically to other intangible assets and resulting impact on the valuation of goodwill, are principally related to the refinement of certain assumptions in the value of customer relationships based on an analysis of historical customer-specific data. The remaining measurement period adjustments to the initial allocation are based on more detailed information obtained about the specific assets acquired and liabilities assumed. We are in the process of evaluating additional information necessary to finalize the valuation of assets acquired and liabilities assumed as of the acquisition date including, but not limited to, post-closing adjustments to the working capital acquired including certain holdbacks. The final fair value determination could result in material adjustments to the values presented in the preliminary purchase price allocation, including other intangible assets and goodwill. We expect to finalize the purchase price allocation by the end of the third quarter of 2022.

The Hershey Company | Q2 2022 Form 10-Q | Page 10
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

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 Dot’s products.
Other intangible assets include trademarks valued at $336,600 and customer relationships valued at $206,500. Trademarks were assigned an estimated useful life of 33 years and customer relationships were assigned an estimated useful life of 18 years.
Lily's Sweets, LLC
On June 25, 2021, we completed the acquisition of Lily’s Sweets, LLC (“Lily’s”), previously a privately held company that sells a line of sugar-free and low-sugar confectionery foods to retailers and distributors in the United States and Canada. Lily’s products include dark and milk chocolate style bars, baking chips, peanut butter cups and other confection products that complement Hershey’s confectionery and confectionery-based portfolio. The cash consideration paid for Lily’s totaled $422,210 and the Company may be required to pay additional cash consideration if certain defined targets related to net sales and gross margin were exceeded during the period from the closing date through December 31, 2021. As of the acquisition date, the estimated fair value of the contingent consideration obligation was classified as a liability of $5,000 and was determined using a scenario-based analysis on forecasted future results. Based on financial results through December 31, 2021, the fair value was reduced during the fourth quarter of 2021 to $1,250, with the adjustment to fair value recorded in the selling, marketing and administrative (“SM&A”) expense caption within the Consolidated Statements of Income. We paid this contingent consideration during the second quarter of 2022. Acquisition-related costs for the Lily’s acquisition were immaterial.

The acquisition has been accounted for as a business combination and, accordingly, Lily’s has been included within the North America Confectionery segment from the date of acquisition. The purchase consideration, inclusive of the acquisition date fair value of the contingent consideration, was allocated to assets acquired and liabilities assumed based on their respective fair values as follows:

Goodwill$175,826 
Other intangible assets235,800 
Other assets acquired, primarily current assets33,092 
Other liabilities assumed, primarily current liabilities(9,620)
Deferred income taxes(7,888)
Net assets acquired$427,210 
The purchase price allocation presented above has been finalized as of the fourth quarter of 2021 and includes an immaterial amount of measurement period adjustments. The measurement period adjustments to the initial allocation were 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 majority of 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 Lily’s products.

Other intangible assets include trademarks valued at $151,600 and customer relationships valued at $84,200. Trademarks were assigned an estimated useful life of 33 years and customer relationships were assigned estimated useful lives ranging from 17 to 18 years.
Lotte Shanghai Foods Co., Ltd.
In January 2021, we completed the divestiture of Lotte Shanghai Foods Co., Ltd., which was previously included within the International segment results in our consolidated financial statements. Total proceeds from the divestiture and the impact on our consolidated financial statements were immaterial and were recorded in the SM&A expense caption within the Consolidated Statements of Income.

The Hershey Company | Q2 2022 Form 10-Q | Page 11
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THE HERSHEY COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(amounts in thousands, except share data or if otherwise indicated)

3. GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying value of goodwill by reportable segment for the six months ended July 3, 2022 are as follows:
North America ConfectioneryNorth America Salty SnacksInternationalTotal
Balance at December 31, 2021
$2,026,006 $589,798 $17,370 $2,633,174