Note P

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 (JOTS), 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, beef, chicken, and turkey products for retail, foodservice, and fresh product customers.

The JOTS 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 processing, marketing, and sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial customers.

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.

(in thousands)	2017		2016		2015
Net Sales (to unaffiliated customers)
Grocery Products	$	1,761,105	$	1,684,756	$	1,617,680
Refrigerated Foods	4,403,732		4,647,173		4,372,347
Jennie-O Turkey Store	1,663,160		1,740,968		1,635,776
Specialty Foods	794,508		939,134		1,103,359
International & Other	545,014		511,193		534,701

Total	$	9,167,519	$	9,523,224	$	9,263,863

Intersegment Sales
Grocery Products	$	–	$	–	$	–
Refrigerated Foods	7,832		11,341		13,058
Jennie-O Turkey Store	113,384		120,742		128,195
Specialty Foods	32		26		64
International & Other	–		–		–

Total	121,248		132,109		141,317
Intersegment elimination	(121,248)		(132,109)		(141,317)

Total	$	–	$	–	$	–

Segment Net Sales
Grocery Products	$	1,761,105	$	1,684,756	$	1,617,680
Refrigerated Foods	4,411,564		4,658,514		4,385,405
Jennie-O Turkey Store	1,776,544		1,861,710		1,763,971
Specialty Foods	794,540		939,160		1,103,423
International & Other	545,014		511,193		534,701
Intersegment elimination	(121,248)		(132,109)		(141,317)

Total	$	9,167,519	$	9,523,224	$	9,263,863

Segment Operating
Profit
Grocery Products	$	290,809	$	268,461	$	228,582
Refrigerated Foods	587,929		585,652		424,968
Jennie-O Turkey Store	247,322		329,427		276,217
Specialty Foods	96,828		110,917		93,258
International & Other	85,304		78,409		78,318

Total segment operating profit	$	1,308,192	$	1,372,866	$	1,101,343
Net interest and investment expense (income)	1,824		6,680		10,177
General corporate expense	28,091		49,436		35,199
Noncontrolling interest	368		465		1,176

Earnings Before Income Taxes	$	1,278,645	$	1,317,215	$	1,057,143

(in thousands)	2017		2016		2015
Assets
Grocery Products	$	1,445,658	$	1,472,316	$	1,214,988
Refrigerated Foods	2,324,749		1,999,821		1,973,424
Jennie-O Turkey Store	942,369		882,812		811,693
Specialty Foods	769,496		805,597		956,945
International & Other	675,878		510,904		477,674
Corporate	817,758		698,617		705,107

Total	$	6,975,908	$	6,370,067	$	6,139,831

Additions to Property,
Plant and Equipment
Grocery Products	$	14,432	$	15,830	$	18,104
Refrigerated Foods	79,836		93,430		54,074
Jennie-O Turkey Store	88,063		61,340		32,250
Specialty Foods	2,011		5,372		5,309
International & Other	33,124		44,407		18,576
Corporate	3,820		35,145		15,750

Total	$	221,286	$	255,524	$	144,063

Depreciation and
Amortization
Grocery Products	$	31,739	$	29,725	$	26,972
Refrigerated Foods	45,911		53,229		53,325
Jennie-O Turkey Store	31,611		29,225		28,262
Specialty Foods	5,357		5,165		11,075
International & Other	4,042		3,969		3,372
Corporate	12,317		10,655		10,428

Total	$	130,977	$	131,968	$	133,434

The Company’s products primarily consist of meat and other food products. Perishable includes fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamole, and bacon (excluding JOTS products). Shelf-stable includes canned luncheon meats, peanut butter, chilies, shelf-stable microwave-able meals, hash, stews, meat spreads, flour and corn tortillas, salsas, tortilla chips, and other items that do not require refrigeration. The Poultry category is composed primarily of JOTS products. The Miscellaneous category primarily consists of nutritional food products and supplements, dessert and drink mixes, and industrial gelatin products. The percentages of total revenues contributed by classes of similar products for the last three fiscal years are as follows:

	Fiscal Year Ended
	October 29,	October 30,	October 25,
	2017	2016	2015
Perishable	53.7%	53.1%	53.0%
Shelf-stable	20.2	18.2	18.4
Poultry	19.1	20.5	18.6
Miscellaneous	7.0	8.2	10.0

Total	100.0%	100.0%	100.0%

Revenues from external customers are classified as domestic or foreign based on the destination where title passes. No individual foreign country is material to the consolidated results. Additionally, the Company’s long-lived assets located in foreign countries are not significant. Total revenues attributed to the U.S. and all foreign countries in total for the last three fiscal years are as follows:

	Fiscal Year Ended
	October 29,	October 30,	October 25,
(in thousands)	2017	2016	2015

United States	$ 8,631,325	$ 9,012,797	$ 8,721,722
Foreign	536,194	510,427	542,141

Total	$ 9,167,519	$ 9,523,224	$ 9,263,863

In fiscal 2017, sales to Wal-Mart Stores, Inc. (Wal-Mart) represented $1.5 billion or 14.4 percent of the Company’s consolidated revenues (measured as gross sales less returns and allowances). In fiscal 2016, sales to Wal-Mart represented $1.5 billion or 13.7 percent of the Company’s consolidated revenues. Wal-Mart is a customer for all five segments of the Company.