SEGMENT REPORTING

3 Months Ended

Jan. 26, 2014

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 private label shelf stable products, nutritional products, sugar, and condiments to industrial, 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
(in thousands)	January 26, 2014		January 27, 2013
Sales to Unaffiliated Customers
Grocery Products	$	401,520	$	334,140
Refrigerated Foods	1,128,421		1,063,401
Jennie-O Turkey Store	399,400		390,334
Specialty Foods	195,979		233,845
International & Other	117,352		94,521
Total	$	2,242,672	$	2,116,241
Intersegment Sales
Grocery Products	$	-	$	-
Refrigerated Foods	5,746		2,443
Jennie-O Turkey Store	33,129		30,421
Specialty Foods	34		31
International & Other	-		-
Total	$	38,909	$	32,895
Intersegment elimination	(38,909)		(32,895)
Total	$	-	$	-
Net Sales
Grocery Products	$	401,520	$	334,140
Refrigerated Foods	1,134,167		1,065,844
Jennie-O Turkey Store	432,529		420,755
Specialty Foods	196,013		233,876
International & Other	117,352		94,521
Intersegment elimination	(38,909)		(32,895)
Total	$	2,242,672	$	2,116,241
Segment Operating Profit
Grocery Products	$	56,342	$	49,913
Refrigerated Foods	85,299		53,790
Jennie-O Turkey Store	59,545		58,945
Specialty Foods	21,255		23,761
International & Other	22,557		17,111
Total segment operating profit	$	244,998	$	203,520
Net interest and investment expense (income)	1,921		1,284
General corporate expense	8,916		6,644
Noncontrolling interest	1,110		1,329
Earnings before income taxes	$	235,271	$	196,921