This Management's Discussion and Analysis ("MD&A") is intended to provide an understanding ofHershey's financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. The MD&A should be read in conjunction with our Unaudited Consolidated Financial Statements and accompanying notes. This discussion contains a number of forward-looking statements, all of which are based on current expectations. Actual results may differ materially. Refer to the Safe Harbor Statement below as well as the Risk Factors and other information contained in our 2019 Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the quarterly period endedMarch 29, 2020 , and our Current Report on Form 8-K filedMay 27, 2020 . for information concerning the key risks to achieving future performance goals. The MD&A is organized in the following sections: • Overview • Trends Affecting Our Business • Consolidated Results of Operations • Segment Results • Liquidity and Capital Resources • Safe Harbor Statement OVERVIEWHershey is a global confectionery leader known for bringing goodness to the world through chocolate, sweets, mints, gum and other great tasting snacks. We are the largest producer of quality chocolate inNorth America , a leading snack maker inthe United States and a global leader in chocolate and non-chocolate confectionery. We market, sell and distribute our products under more than 80 brand names in approximately 85 countries worldwide. We report our operations through two segments:North America and International and Other. The majority of our products are confectionery or confectionery-based and include chocolate and non-chocolate confectionery products, gum and mint refreshment products, spreads, snack bites and mixes, as well as pantry items such as baking ingredients, toppings and sundae syrups. The confectionery and confectionery-based portfolio is predominantly sold under the renowned brands ofHershey's , Reese's and Kisses, as well as Kit Kat®, Jolly Rancher, Ice Breakers, Twizzlers, Heath, Payday, Cadbury and a variety of other popular brands. Our snacks portfolio includes ready-to-eat popcorn, baked and trans fat free snacks, protein bars and other better-for-you snacks. The snacks portfolio is predominantly sold under the brands of SkinnyPop, Pirate's Booty, ONE Bar, Paqui and Oatmega. Divestitures During the second quarter of 2020, we completed the divestitures ofKRAVE Pure Foods, Inc. ("Krave") and the Scharffen Berger and Dagoba brands. Total proceeds from the divestitures and the impact on our Consolidated Statements of Income, both individually and on an aggregate basis, were immaterial. TRENDS AFFECTING OUR BUSINESS OnMarch 11, 2020 , theWorld Health Organization designated the recent novel coronavirus ("COVID-19") as a global pandemic. COVID-19 was first detected inWuhan City,Hubei Province ,China and continued to spread, significantly impacting various markets around the world, includingthe United States . Various policies and initiatives have been implemented to reduce the global transmission of COVID-19.
Local, state and national governments continue to emphasize the importance of food supply during this pandemic and asked that food manufacturers and retailers remain open to meet the needs of our communities. Employee safety is our first priority, and as a result, we put preparedness plans in place at our manufacturing facilities. Our manufacturing facilities are currently open, however, we have adjusted shift schedules, enforced social distancing, increased sanitation and adjusted time and attendance policies for worker absenteeism. Our sales teams continue to support
The Hershey Company | Q2 2020 Form 10-Q | Page 34
--------------------------------------------------------------------------------
community food supplies, while adhering to social distancing guidelines,
implementing flexible hours, reducing person-to-person interaction and
increasing safety measures. Additionally, in June, the Company re-opened
Also in June, we commenced a phased in approach to reopen our corporate
headquarters in
We believe we have sufficient liquidity to satisfy our cash needs, however, we
continue to evaluate and take action, as necessary, to preserve adequate
liquidity and ensure that our business can continue to operate during these
uncertain times. Our most recent liquidity measures include an increase in our
short-term commercial paper balances and the
As a result of shelter-in-place restrictions that were implemented in late March
and early April, as well as decreases in retail foot traffic and volatility in
consumer shopping and consumption behavior across several areas of our
portfolio, we experienced a reduction in our net sales and income during the
three and six months ended
In late May and early June, many state governments began a phased reopening of their economies. These phased approaches promote limited food service offerings, outdoor dining, increased travel and the reopening of retailing establishments while adhering to new guidelines and enhanced safety measures, including social distancing and face mask protocols. However, certain states have paused or reversed plans to reopen their economies as new cases of COVID-19 have been on the rise in recent weeks. Based on the length and severity of COVID-19, we may experience continued volatility in retail foot traffic, consumer shopping and consumption behavior. We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources.
© Edgar Online, source