SEGMENT REPORTING

9 Months Ended

Jul. 24, 2016

SEGMENT REPORTING

SEGMENT REPORTING

NOTE NSEGMENT 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 consists primarily of the processing, marketing, and sale of branded and unbranded pork and beef products for retail, foodservice, and fresh product customers.  This segment includes the results of Applegate and Affiliated Foods.

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 consists of the packaging and sale of private label shelf-stable and nutritional products to industrial, retail, and foodservice customers.  This segment included the portion of DCB classified as held for sale at the end of fiscal 2015 through the date of sale on May 9, 2016.  See additional discussion regarding the Company’s assets held for sale in Note E.

The International & Other segment includes Hormel Foods International which manufactures, markets, and sells Company products internationally.  This segment also includes the results from the Company’s international joint ventures.

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 24, 2016		July 26, 2015		July 24, 2016		July 26, 2015
Sales to Unaffiliated Customers
Grocery Products	$	399,342	$	388,094	$	1,193,032	$	1,195,110
Refrigerated Foods	1,155,297		1,056,125		3,409,897		3,222,851
Jennie-O Turkey Store	403,953		336,533		1,199,559		1,215,464
Specialty Foods	212,197		282,774		722,460		833,472
International & Other	131,587		125,061		370,335		396,108
Total	$	2,302,376	$	2,188,587	$	6,895,283	$	6,863,005
Intersegment Sales
Grocery Products	$	-	$	-	$	-	$	-
Refrigerated Foods	1,648		2,440		7,635		10,183
Jennie-O Turkey Store	27,921		27,241		88,604		99,023
Specialty Foods	8		18		17		64
International & Other	-		-		-		-
Total	$	29,577	$	29,699	$	96,256	$	109,270
Intersegment elimination	(29,577)		(29,699)		(96,256)		(109,270)
Total	$	-	$	-	$	-	$	-
Net Sales
Grocery Products	$	399,342	$	388,094	$	1,193,032	$	1,195,110
Refrigerated Foods	1,156,945		1,058,565		3,417,532		3,233,034
Jennie-O Turkey Store	431,874		363,774		1,288,163		1,314,487
Specialty Foods	212,205		282,792		722,477		833,536
International & Other	131,587		125,061		370,335		396,108
Intersegment elimination	(29,577)		(29,699)		(96,256)		(109,270)
Total	$	2,302,376	$	2,188,587	$	6,895,283	$	6,863,005
Segment Operating Profit
Grocery Products	$	53,344	$	53,108	$	185,727	$	149,810
Refrigerated Foods	120,702		97,692		417,612		313,681
Jennie-O Turkey Store	56,147		35,374		237,128		202,990
Specialty Foods	27,089		31,190		90,735		70,910
International & Other	20,308		19,251		58,839		55,018
Total segment operating profit	$	277,590	$	236,615	$	990,041	$	792,409
Net interest and investment expense (income)	673		2,941		5,663		6,836
General corporate expense	2,922		5,473		32,111		18,550
Noncontrolling interest	122		18		215		964
Earnings before income taxes	$	274,117	$	228,219	$	952,482	$	767,987