Segment Reporting

The Company develops, processes, and distributes a wide array of food products in a variety of markets. The Company reports its results in the following four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. As a result of a business realignment at the beginning of fiscal 2018, the former Specialty Foods segment results are now reported as part of the Grocery Products segment. Periods presented herein have been recast to reflect this change.

The Grocery Products segment consists primarily of the processing, marketing, and sale of shelf-stable food products sold predominantly in the retail market, along with the sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial customers. This segment also includes the results from the Company’s MegaMex joint venture.

The Refrigerated Foods segment consists primarily of the processing, marketing, and sale of branded and unbranded pork, beef, and poultry products for retail, foodservice, deli, and commercial customers.

The Jennie-O Turkey Store segment consists primarily of the processing, marketing, and sale of branded and unbranded turkey products for retail, foodservice, and fresh product customers.

The International & Other segment includes Hormel Foods International which manufactures, markets, and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures and royalty arrangements.

Intersegment sales are recorded at prices that approximate cost and are eliminated in the Consolidated Statements of Operations. The Company does not allocate investment income, interest expense, and interest income to its segments when measuring performance. The Company also retains various other income and unallocated expenses at corporate. Equity in earnings of affiliates is included in segment operating profit; however, earnings attributable to the Company’s noncontrolling interests are excluded. These items are included below as net interest and investment expense (income), general corporate expense, and noncontrolling interest when reconciling to earnings before income taxes.

Sales and operating profits for each of the Company’s reportable segments and reconciliation to earnings before income taxes are set forth below. The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the operating profit and other financial information shown below.



(in thousands)	2018			2017			2016
Net Sales (to unaffiliated customers)
Grocery Products	$	2,521,992		$	2,555,613		$	2,623,890
Refrigerated Foods	4,771,836			4,403,732			4,647,173
Jennie-O Turkey Store	1,627,433			1,663,160			1,740,968
International & Other	624,439			545,014			511,193
Total	$	9,545,700		$	9,167,519		$	9,523,224
Intersegment Sales
Grocery Products	$	38		$	32		$	26
Refrigerated Foods	8,591			7,832			11,341
Jennie-O Turkey Store	110,753			113,384			120,742
International & Other	$	—		—			—
Total	119,382			121,248			132,109
Intersegment elimination	(119,382		)	(121,248		)	(132,109		)
Total	$	—		$	—		$	—
Segment Net Sales
Grocery Products	$	2,522,030		$	2,555,645		$	2,623,916
Refrigerated Foods	4,780,427			4,411,564			4,658,514
Jennie-O Turkey Store	1,738,186			1,776,544			1,861,710
International & Other	624,439			545,014			511,193
Intersegment elimination	(119,382		)	(121,248		)	(132,109		)
Total	$	9,545,700		$	9,167,519		$	9,523,224
Segment Operating Profit
Grocery Products	$	362,750		$	387,637		$	379,378
Refrigerated Foods	617,626			587,929			585,652
Jennie-O Turkey Store	175,684			247,322			329,427
International & Other	88,953			85,304			78,409
Total segment operating profit	1,245,013			$	1,308,192		$	1,372,866
Net interest and investment expense (income)	17,637			1,824			6,680
General corporate expense	46,534			28,091			49,436
Noncontrolling interest	442			368			465
Earnings Before Income Taxes	$	1,181,284		$	1,278,645		$	1,317,215
Assets
Grocery Products	$	2,205,396		$	2,215,154		$	2,277,913
Refrigerated Foods	3,379,612			2,324,749			1,999,821
Jennie-O Turkey Store	1,048,716			942,369			882,812
International & Other	679,003			675,878			510,904
Corporate	829,565			817,758			698,617
Total	$	8,142,292		$	6,975,908		$	6,370,067
Additions to Property, Plant & Equipment
Grocery Products	$	13,042		$	16,443		$	21,202
Refrigerated Foods	220,499			79,836			93,430
Jennie-O Turkey Store	131,946			88,063			61,340
International & Other	16,513			33,124			44,407
Corporate	7,607			3,820			35,145
Total	$	389,607		$	221,286		$	255,524
Depreciation and Amortization
Grocery Products	$	35,217		$	37,096		$	34,890
Refrigerated Foods	70,564			45,911			53,229
Jennie-O Turkey Store	33,324			31,611			29,225
International & Other	10,755			4,042			3,969
Corporate	11,998			12,317			10,655
Total	$	161,858		$	130,977		$	131,968

The Company’s products primarily consist of meat and other food products. Perishable includes fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamole, and bacon (excluding JOTS products). Shelf-stable includes canned luncheon meats, peanut butter, chilies, shelf-stable microwaveable meals, hash, stews, meat spreads, flour and corn tortillas, salsas, tortilla chips, and other items that do not require refrigeration. The Poultry category is composed primarily of JOTS products. The Miscellaneous category primarily consists of nutritional food products and supplements, dessert and drink mixes, and industrial gelatin products. The percentages of total revenues contributed by classes of similar products for the last three fiscal years are as follows:



	Fiscal Year Ended
	October 28, 2018		October 29, 2017		October 30, 2016
Perishable	55.9	%	53.7	%	53.1	%
Poultry	19.3	%	19.1	%	20.5	%
Shelf-stable	18.5	%	20.2	%	18.2	%
Miscellaneous	6.3	%	7.0	%	8.2	%
Total	100.0	%	100.0	%	100.0	%

Revenues from external customers are classified as domestic or foreign based on the destination where title passes. No individual foreign country is material to the consolidated results. Additionally, the Company’s long-lived assets located in foreign countries are not significant. Total revenues attributed to the U.S. and all foreign countries in total for the last three fiscal years are as follows:



	Fiscal Year Ended
(in thousands)	October 28, 2018		October 29, 2017		October 30, 2016
United States	$	8,957,305	$	8,631,325	$	9,012,797
Foreign	588,395		536,194		510,427
Total	$	9,545,700	$	9,167,519	$	9,523,224

In fiscal 2018, sales to Walmart Inc. (Walmart) represented $1.4 billion or 13.6% percent of the Company’s consolidated revenues (measured as gross sales less returns and allowances). In fiscal 2017, sales to Walmart represented $1.5 billion or 14.4% percent of the Company’s consolidated revenues. Walmart is a customer for all four segments of the Company.