SEGMENT REPORTING

6 Months Ended

Apr. 27, 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 (including Saag’s Products, Inc.), Burke Corporation, Dan’s Prize,  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.

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 27, 2014		April 28, 2013		April 27, 2014		April 28, 2013
Sales to Unaffiliated Customers
Grocery Products	$	392,030	$	393,505	$	793,550	$	727,645
Refrigerated Foods	1,111,244		1,011,370		2,239,665		2,074,771
Jennie-O Turkey Store	380,425		384,739		779,825		775,073
Specialty Foods	217,176		245,691		413,155		479,536
International & Other	143,991		117,381		261,343		211,902
Total	$	2,244,866	$	2,152,686	$	4,487,538	$	4,268,927
Intersegment Sales
Grocery Products	$	-	$	-	$	-	$	-
Refrigerated Foods	6,601		3,296		12,347		5,739
Jennie-O Turkey Store	36,870		29,562		69,999		59,983
Specialty Foods	18		22		52		53
International & Other	-		-		-		-
Total	$	43,489	$	32,880	$	82,398	$	65,775
Intersegment elimination	(43,489)		(32,880)		(82,398)		(65,775)
Total	$	-	$	-	$	-	$	-
Net Sales
Grocery Products	$	392,030	$	393,505	$	793,550	$	727,645
Refrigerated Foods	1,117,845		1,014,666		2,252,012		2,080,510
Jennie-O Turkey Store	417,295		414,301		849,824		835,056
Specialty Foods	217,194		245,713		413,207		479,589
International & Other	143,991		117,381		261,343		211,902
Intersegment elimination	(43,489)		(32,880)		(82,398)		(65,775)
Total	$	2,244,866	$	2,152,686	$	4,487,538	$	4,268,927
Segment Operating Profit
Grocery Products	$	54,890	$	47,295	$	111,232	$	97,208
Refrigerated Foods	75,397		54,680		160,696		108,470
Jennie-O Turkey Store	52,808		51,999		112,353		110,944
Specialty Foods	19,134		25,967		40,389		49,728
International & Other	20,863		15,618		43,420		32,729
Total segment operating profit	$	223,092	$	195,559	$	468,090	$	399,079
Net interest and investment expense (income)	3,399		2,026		5,320		3,310
General corporate expense	7,152		9,751		16,068		16,395
Noncontrolling interest	616		1,121		1,726		2,450
Earnings before income taxes	$	213,157	$	184,903	$	448,428	$	381,824