Derivatives and Hedging (Tables)

12 Months Ended

Oct. 27, 2024

Derivatives and hedging

Schedule of gross fair values of derivative instruments

The gross fair values of the Company’s derivative instruments designated as hedges are:

	October 27, 2024						October 29, 2023
In thousands	Assets			Liabilities			Assets			Liabilities
Gross Fair Value of Commodity Contracts		$	9,851		$	(12,638)		$	13,747		$	(26,980)
Counterparty and Collateral Netting Offset(1)		(1,785)			12,638			5,226			26,980
Amounts Recognized on Consolidated Statements of Financial Position(2)		$	8,066		$	—		$	18,972		$	—

(1)    Per the terms of the Company's master netting arrangements, the gross fair value of the Company's commodity contracts were offset by the right to reclaim net cash collateral of $10.9 million and $32.2 million as of October 27, 2024 and October 29, 2023, respectively.

(2)    The Company's commodity contracts are located in Prepaid Expenses and Other Current Assets on the Consolidated Statements of Financial Position.

Schedule of fair value hedge assets (liabilities)

The carrying amount of the Company’s fair value hedged assets (liabilities) are:

In thousands	Location on Consolidated Statements of Financial Position	October 27, 2024		October 29, 2023
Commodity Contracts	Accounts Payable(1)	$	(2,902)	$	(4,914)
Interest Rate Contracts	Current Maturities of Long-term Debt(2)	—		(442,549)

(1)    Represents the carrying amount of fair value hedged assets and liabilities, which are offset by other assets included in master netting arrangements described above.

(2)    Represents the carrying amount of the hedged portion of the 2024 Notes. As of October 29, 2023, the carrying amount of the 2024 Notes included a cumulative fair value hedging adjustment of $7.5 million from discontinued hedges. The 2024 Notes were paid on June 3, 2024.

Schedule of gains or losses (before tax) related to derivative instruments

The pre-tax gains or (losses) recognized in AOCL related to the Company’s derivative instruments are:

In thousands	Fiscal Year Ended
	October 27, 2024		October 29, 2023
Commodity Contracts	$	(12,898)	$	(50,353)
Excluded Component(1)	2,136		1,127

(1)    Represents the time value of commodity options excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in AOCL.

The pre-tax gains (losses) reclassified from AOCL into earnings related to the Company’s derivative instruments are:

In thousands	Location on  Consolidated Statements of Operations	Fiscal Year Ended
		October 27, 2024		October 29, 2023
Commodity Contracts	Cost of Products Sold	$	(26,445)	$	1,225
Interest Rate Contracts	Interest Expense	988		988

See Note H - Accumulated Other Comprehensive Loss for the after-tax impact of these gains or losses on Net Earnings.

Consolidated Statements of Operations Impact: The effect on the Consolidated Statements of Operations for pre-tax gains (losses) related to the Company’s derivative instruments are:

	Fiscal Year Ended
In thousands	October 27, 2024			October 29, 2023			October 30, 2022
Net Earnings Attributable to Hormel Foods Corporation		$	805,038		$	793,572		$	999,987
Cash Flow Hedges - Commodity Contracts
Gain (Loss) Reclassified from AOCL		(26,445)			1,225			55,350
Amortization of Excluded Component from Options		(2,774)			(5,835)			(4,369)
Gain (Loss) Reclassified from AOCL Due to Discontinuance of Cash Flow Hedges(1)		—			—			2,242
Fair Value Hedges - Commodity Contracts
Gain (Loss) on Commodity Futures(2)		6,263			656			(18,122)
Total Gain (Loss) on Commodity Contracts(3)		$	(22,957)		$	(3,955)		$	35,101
Cash Flow Hedges - Interest Rate Contracts
Gain (Loss) Reclassified from AOCL		988			988			988
Fair Value Hedge - Interest Rate Contracts
Gain (Loss) on Interest Rate Swap		—			—			928
Amortization of Loss Due to Discontinuance of Fair Value Hedge(4)		(7,451)			(12,499)			(1,923)
Total Gain (Loss) on Interest Rate Contracts(5)		$	(6,463)		$	(11,511)		$	(7)
Total Gain (Loss) Recognized in Earnings		$	(29,420)		$	(15,466)		$	35,094

(1)    In fiscal year 2022, the Company discontinued hedge accounting related to corn usage that was deemed no longer probable to occur resulting in the immediate recognition of gains of $2.2 million (1.0 million bushels).

(2)    Represents gains or losses on commodity contracts designated as fair value hedges that were closed during the year, which were offset by a corresponding gain or loss on the underlying hedged purchase commitment. Additional gains or losses related to changes in the fair value of open commodity contracts, along with the offsetting gain or loss on the hedged purchase commitment, are also marked-to-market through earnings with no impact on a net basis.

(3)    Total Gain (Loss) on Commodity Contracts is recognized in earnings through Cost of Products Sold.

(4)    Represents the fair value hedging adjustment amortized through earnings.

(5)    Total Gain (Loss) on Interest Rate Contracts is recognized in earnings through Interest Expense.

Cash Flow Hedges

Derivatives and hedging

Schedule of outstanding commodity futures contracts

The Company’s outstanding contracts related to its commodity hedging programs include:

In millions	October 27, 2024		October 29, 2023
Corn	29.2	bushels	30.7	bushels
Lean Hogs	175.6	pounds	144.2	pounds
Natural Gas	4.2	MMBtu	3.0	MMBtu
Diesel Fuel	4.0	gallons	—	gallons