SEGMENT REPORTING

3 Months Ended

Jan. 26, 2020

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.

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, or interest income to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in earnings of affiliates is included in segment profit; however, earnings attributable to the Company’s noncontrolling interests are excluded. These items are included below as Net Unallocated 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 these segments, if operated independently, would report the profit and other financial information shown below.



	Three Months Ended
(in thousands)	January 26, 2020			January 27, 2019
Sales to Unaffiliated Customers
Grocery Products	$	540,626		$	606,825
Refrigerated Foods	1,351,790			1,278,747
Jennie-O Turkey Store	330,128			321,234
International & Other	161,890			153,549
Total	$	2,384,434		$	2,360,355

Intersegment Sales
Grocery Products	$	7		$	22
Refrigerated Foods	5,803			2,178
Jennie-O Turkey Store	27,842			28,811
International & Other	—			—
Total	33,652			31,011
Intersegment Elimination	(33,652		)	(31,011		)
Total	$	—		$	—

Net Sales
Grocery Products	$	540,633		$	606,847
Refrigerated Foods	1,357,593			1,280,925
Jennie-O Turkey Store	357,970			350,045
International & Other	161,890			153,549
Intersegment Elimination	(33,652		)	(31,011		)
Total	$	2,384,434		$	2,360,355

Segment Profit
Grocery Products	$	68,435		$	95,297
Refrigerated Foods	167,343			162,593
Jennie-O Turkey Store	38,551			37,904
International & Other	19,952			24,978
Total Segment Profit	294,280			320,772
Net Unallocated Expense	4,199			13,891
Noncontrolling Interest	81			94
Earnings Before Income Taxes	$	290,162		$	306,975

Revenue has been disaggregated into the categories below to show how sales channels affect the nature, amount, timing, and uncertainty of revenue and cash flows. The amount of total revenues contributed by sales channel for the first three months of fiscal 2020 and 2019 are as follows:



	Three Months Ended
(in thousands)	January 26, 2020		January 27, 2019
U.S. Retail	$	1,226,430	$	1,253,315
U.S. Foodservice	709,106		689,905
U.S. Deli	260,638		251,276
International	188,260		165,859
Total	$	2,384,434	$	2,360,355

The Company’s products primarily consist of meat and other food products. The amount of total revenues contributed by classes of similar products for the first three months of fiscal 2020 and 2019 are as follows:



	Three Months Ended
(in thousands)	January 26, 2020		January 27, 2019
Perishable	$	1,400,195	$	1,341,152
Poultry	459,083		441,392
Shelf-stable	450,704		436,897
Miscellaneous	74,452		140,914
Total	$	2,384,434	$	2,360,355

Perishable includes fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamole, and bacon (excluding Jennie-O Turkey Store 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 Jennie-O Turkey Store products. The Miscellaneous category primarily consists of nutritional food products and supplements, dessert and drink mixes, and industrial gelatin products. The reduction in the Miscellaneous category during fiscal 2020 is due to the divestiture of CytoSport on April 15, 2019.