This Management's Discussion and Analysis ("MD&A") is intended to provide an
understanding of Hershey'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
ended March 29, 2020, and our Current Report on Form 8-K filed May 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
OVERVIEW
Hershey 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 in North America, a leading snack
maker in the 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 of
Hershey'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 of KRAVE 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
On March 11, 2020, the World Health Organization designated the recent novel
coronavirus ("COVID-19") as a global pandemic. COVID-19 was first detected in
Wuhan City, Hubei Province, China and continued to spread, significantly
impacting various markets around the world, including the 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

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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 Hershey's Chocolate World stores in the United States (3 locations) and Niagara Falls (Ontario) on a limited capacity basis with increased safety measures and enforced social distancing. The Company's Chocolate World store in Singapore remains temporarily closed.

Also in June, we commenced a phased in approach to reopen our corporate headquarters in Hershey, Pennsylvania and other select offices with increased safety protocols. We have successfully onboarded several teams, however, occupancy levels remain low as we continue to monitor the latest COVID-19 related public health and government guidance. As a result, a majority of our office-based employees continue to work remotely where possible. We have crisis management teams in place to monitor the continually evolving situation and recommending risk mitigation actions as deemed necessary. To date, there has been minimal disruption to our supply chain network, including the supply of our ingredients, packaging or other sourced materials, though it is possible that more significant disruptions could occur if the COVID-19 pandemic continues to impact markets around the world. We are also working closely with our business units, contract manufacturers, distributors, contractors and other external business partners to minimize the potential impact on our business.

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 $1 billion Notes issuance in May 2020 with varying rates ranging from 0.900% to 2.650% and maturity dates ranging from 2025 to 2050. Additionally, we continue to limit discretionary spending across the organization and re-prioritizing our capital projects amid the COVID-19 pandemic. We plan to move forward with our new global enterprise resource planning ("ERP") system implementation and supply chain capacity projects, as these investments are of strategic importance to our long-term growth. However, as previously announced, we did selectively pause certain aspects of the ERP system implementation due to resource constraints and challenges associated with the critical design phase during these uncertain times. We expect this to delay our overall ERP implementation by approximately one year.

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 June 28, 2020. The unfavorable impacts predominantly related to our International and Other segment (see Segment Results included in this MD&A). We believe the financial impacts from COVID-19 are temporary in nature and do not significantly affect our business model and growth strategy.

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.

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