SEGMENT REPORTING

9 Months Ended

Jul. 27, 2014

SEGMENT REPORTING

SEGMENT REPORTING

NOTE MSEGMENT 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						Nine Months Ended
(in thousands)	July 27, 2014			July 28, 2013			July 27, 2014			July 28, 2013
Sales to Unaffiliated Customers
Grocery Products	$	359,549		$	370,297		$	1,153,099		$	1,097,942
Refrigerated Foods	1,192,624			1,068,587			3,432,289			3,143,358
Jennie-O Turkey Store	382,647			367,125			1,162,472			1,142,198
Specialty Foods	216,406			240,512			629,561			720,048
International & Other	133,721			113,004			395,064			324,906
Total	$	2,284,947		$	2,159,525		$	6,772,485		$	6,428,452
Intersegment Sales
Grocery Products	$	-		$	-		$	-		$	-
Refrigerated Foods	3,451			4,654			15,798			10,393
Jennie-O Turkey Store	35,128			29,559			105,127			89,542
Specialty Foods	47			23			99			76
International & Other	-			-			-			-
Total	$	38,626		$	34,236		$	121,024		$	100,011
Intersegment elimination	(38,626		)	(34,236		)	(121,024		)	(100,011		)
Total	$	-		$	-		$	-		$	-
Net Sales
Grocery Products	$	359,549		$	370,297		$	1,153,099		$	1,097,942
Refrigerated Foods	1,196,075			1,073,241			3,448,087			3,153,751
Jennie-O Turkey Store	417,775			396,684			1,267,599			1,231,740
Specialty Foods	216,453			240,535			629,660			720,124
International & Other	133,721			113,004			395,064			324,906
Intersegment elimination	(38,626		)	(34,236		)	(121,024		)	(100,011		)
Total	$	2,284,947		$	2,159,525		$	6,772,485		$	6,428,452

Segment Operating Profit
Grocery Products	$	33,781	$	52,962	$	145,013	$	150,170
Refrigerated Foods	90,028		44,769		250,724		153,239
Jennie-O Turkey Store	64,756		45,623		177,109		156,567
Specialty Foods	17,378		23,170		57,767		72,898
International & Other	18,696		16,692		62,116		49,421
Total segment operating profit	$	224,639	$	183,216	$	692,729	$	582,295
Net interest and investment expense (income)	1,522		3,577		6,842		6,887
General corporate expense	11,174		2,833		27,242		19,228
Noncontrolling interest	1,039		270		2,765		2,720
Earnings before income taxes	$	212,982	$	177,076	$	661,410	$	558,900