SEGMENT REPORTING

6 Months Ended

Apr. 28, 2013

SEGMENT REPORTING

SEGMENT REPORTING

NOTE M               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 five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, 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.  This segment also includes the results from the Company’s MegaMex joint venture.

The Refrigerated Foods segment includes the Hormel Refrigerated operating segment and the Affiliated Business Units.  This segment consists primarily of the processing, marketing, and sale of branded and unbranded pork and beef products for retail, foodservice, and fresh product customers.  The Affiliated Business Units include the Farmer John, Burke Corporation, Dan’s Prize, Saag’s Products, Inc., and Precept Foods businesses.  Precept Foods, LLC, is a 50.01 percent owned joint venture.

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 Specialty Foods segment includes the Diamond Crystal Brands, Century Foods International, and Hormel Specialty Products operating segments.  This segment consists of the packaging and sale of various sugar and sugar substitute products, salt and pepper products, liquid portion products, dessert mixes, ready-to-drink products, sports nutrition products, gelatin products, and private label canned meats to retail and foodservice customers.  This segment also includes the processing, marketing, and sale of nutritional food products and supplements to hospitals, nursing homes, and other marketers of nutritional products.

The International & Other segment includes the Hormel Foods International operating segment, which manufactures, markets, and sells Company products internationally.  This segment also includes the results from the Company’s international joint ventures and miscellaneous corporate sales.  This segment was previously the All Other segment, and was renamed in the second quarter of fiscal 2013 with no change in the composition of the segment.

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.

	Three Months Ended						Six Months Ended
(in thousands)	April 28, 2013			April 29, 2012			April 28, 2013			April 29, 2012
Sales to Unaffiliated Customers
Grocery Products	$	393,505		$	263,993		$	727,645		$	533,472
Refrigerated Foods	1,011,370			1,031,975			2,074,771			2,115,500
Jennie-O Turkey Store	384,739			391,053			775,073			768,424
Specialty Foods	245,691			228,947			479,536			446,971
International & Other	117,381			96,891			211,902			187,931
Total	$	2,152,686		$	2,012,859		$	4,268,927		$	4,052,298
Intersegment Sales
Grocery Products	$	—		$	—		$	—		$	—
Refrigerated Foods	3,296			3,131			5,739			5,544
Jennie-O Turkey Store	29,562			32,585			59,983			62,720
Specialty Foods	22			26			53			67
International & Other	—			—			—			—
Total	$	32,880		$	35,742		$	65,775		$	68,331
Intersegment elimination	(32,880		)	(35,742		)	(65,775		)	(68,331		)
Total	$	—		$	—		$	—		$	—
Net Sales
Grocery Products	$	393,505		$	263,993		$	727,645		$	533,472
Refrigerated Foods	1,014,666			1,035,106			2,080,510			2,121,044
Jennie-O Turkey Store	414,301			423,638			835,056			831,144
Specialty Foods	245,713			228,973			479,589			447,038
International & Other	117,381			96,891			211,902			187,931
Intersegment elimination	(32,880		)	(35,742		)	(65,775		)	(68,331		)
Total	$	2,152,686		$	2,012,859		$	4,268,927		$	4,052,298
Segment Operating Profit
Grocery Products	$	47,295		$	42,858		$	97,208		$	86,951
Refrigerated Foods	54,680			53,009			108,470			106,758
Jennie-O Turkey Store	51,999			70,198			110,944			146,960
Specialty Foods	25,967			20,859			49,728			37,506
International & Other	15,618			12,855			32,729			25,326
Total segment operating profit	$	195,559		$	199,779		$	399,079		$	403,501
Net interest and investment expense (income)	2,026			945			3,310			2,569
General corporate expense	9,751			6,088			16,395			14,815
Noncontrolling interest	1,121			1,048			2,450			1,986
Earnings before income taxes	$	184,903		$	193,794		$	381,824		$	388,103