-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, HrAJmB1v2tRc+SrQRE+iKN+3iHLhnvomp0l5tjEKqOh6r+AxEiors7C24ZsfFnEW 2yhbkHvZUW3UfGnAbNL/HQ== 0000048465-95-000008.txt : 19950616 0000048465-95-000008.hdr.sgml : 19950616 ACCESSION NUMBER: 0000048465-95-000008 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950127 FILED AS OF DATE: 19950127 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORMEL GEO A & CO CENTRAL INDEX KEY: 0000048465 STANDARD INDUSTRIAL CLASSIFICATION: 2011 IRS NUMBER: 410319970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-02402 FILM NUMBER: 95503464 BUSINESS ADDRESS: STREET 1: 1 HORMEL PL CITY: AUSTIN STATE: MN ZIP: 55912-3680 BUSINESS PHONE: 5074375737 MAIL ADDRESS: STREET 1: 1 HORMEL PLACE CITY: AUSTIN STATE: MN ZIP: 55912-3680 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended October 29, 1994, Commission File No. 1-2402 GEO A. HORMEL & COMPANY (Exact name of registrant as specified in its charter) Delaware 41- 0319970 (State or other Jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 1 Hormel Place Austin, Minnesota 55912-3680 (Address of principal executive offices) (zip Code) Registrant's telephone number, including area code (507) 437-5737 Securities registered pursuant to Section 12 (b) of the Act: Name of Each Exchange on Title of Each Class Which Registered Common Stock, $.1172 Par Value New York Stock Exchange Securities registered pursuant to Section 12 (g) of the Act: None (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No State the aggregate market value of the voting stock held by non- affiliates of the registrant as of December 1, 1994. Common Stock-- $1,076,060,436 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date covered by this report. Common Stock, $.1172 Par Value--76,700,180 shares at December 1, 1994 Common Stock Non-Voting, $.01 Par Value--0 shares at December 1, 1994 DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Stockholders' Report for the year ended October 29, 1994, are incorporated by reference into Part II and included as a separate section in the electronic filing to the SEC. Portions of the proxy statement for the Annual Meeting of the Stockholders to be held January 31, 1995, are incorporated by reference into Part II and included as a separate section in the electronic filing to the SEC. PART I Item 1. BUSINESS General Development of Business (a) Geo. A. Hormel & Company, a Delaware corporation, was founded by George A. Hormel in 1891 in Austin, Minnesota. The Company started as a processor of meat and food products and continues in this line of business. The parent company operating under the trade name Hormel Foods Corporation is primarily engaged in the production of a variety of meat and food products and the marketing of those products throughout the United States. Although pork remains the major raw material for Hormel products, the Company has been emphasizing for several years the manufacture and distribution of branded, consumer packaged items rather than the commodity fresh meat business closely associated with the industry in the past. The emphasis of new product introductions the past few years has been in shelf stable, microwaveable entrees such as Top Shelf, Kid's Kitchen and Micro-Cup single-serving entrees, a variety of branded turkey products produced and sold under the Jennie-O label, and ethnic foods such as the Chi-Chi's line of Mexican foods and House of Tsang oriental sauces and food products. The Company's larger subsidiaries include Jennie-O Foods, Inc.; Dubuque Foods, Inc.; Farm Fresh Catfish Company and Hormel Foods International Corporation. Jennie-O, a Willmar, Minnesota based turkey processor, was acquired in December 1986. Jennie-O markets its products nationwide through its own sales force and brokers, providing the Company with a significant presence in this important, fast growing segment of the industry. Dubuque Foods, Inc. formerly called FDL Marketing was formed in 1985 to be the exclusive marketer of the production of FDL Foods, Inc., a Dubuque, Iowa, meat packer. In July of 1993, the Company acquired through two subsidiaries, Dubuque Foods, Inc. and Rochelle Foods, Inc., a portion of the assets of FDL Foods. Dubuque Foods acquired the brands and trademarks, and Rochelle Foods, Inc. acquired the operations at Rochelle, Illinois of FDL Foods. FDL Foods has a co-packing agreement to produce product for Dubuque Foods, Inc. with the acquired brands and trademarks. Farm Fresh Catfish Company, acquired in 1983, competes in another growing segment of the food industry. Farm Fresh raises, slaughters and distributes farm raised catfish primarily in the southeastern section of the United States through a network of brokers. The Company markets its products internationally through Hormel Foods International Corporation. Hormel Foods International has a domestic subsidiary, Vista International Packaging,Inc., which imports, customizes, and distributes, a variety of natural and artificial casings for the meat and food processing industry. -2- Item 1. BUSINESS--Continued The Company has not been involved in any bankruptcy, receivership or similar proceedings during its history. Substantially all of the assets of the Company have been acquired in the ordinary course of business. The Company had no significant change in the type of products produced or services rendered, nor in the markets or methods of distribution since the beginning of the fiscal year. Industry Segment (b) Hormel Foods Corporation is engaged in a single industry segment "meat and food processing". The meat and food processing industry is very competitive with respect to price, marketing and customer service. In addition to meat processing firms, the Company competes with consumer packaged food manufacturers as well as seafood, poultry and vegetable protein processors. Description of Business (c) The principal products of the Company are meat and food products which are sold fresh, frozen, cured, smoked, cooked and canned. The percentage of total revenues contributed by classes of similar products for the last three fiscal years of the Company are as follows: Year Ended October October October 29,1994 30,1993 31,1992 Meat Products 57.3% 57.0% 58.7% Prepared Foods 26.0 26.9 27.7 Poultry, Fish, Other 16.7 16.1 13.6 100.0% 100.0% 100.0% Meat Products includes fresh meats, sausages, hams, wieners and bacon. Prepared Foods products include canned luncheon meats, shelf stable microwaveable entrees, stews, chilies, hash, meat spreads and frozen processed products. Jennie-O turkey and Farm Fresh catfish products are included in the Poultry, Fish and Other category. Hormel Foods has numerous trademarks and patents which are important to the Company's business. Some of the trademarks are registered and some are not. The more -3- Item 1. BUSINESS--Continued significant trademarks are: HORMEL, BLACK LABEL, BY GEORGE, CURE 81, CUREMASTER, DI LUSSO, DINTY MOORE, FRANK 'N STUFF, HOMELAND, LAYOUT PACK, LIGHT & LEAN, LIGHT & LEAN 97, LITTLE SIZZLERS, MARY KITCHEN, RANGE BRAND, ROSA GRANDE, SANDWICH MAKER, SPAM, WRANGLERS, TOP SHELF, JENNIE-O, FARM FRESH, KID'S KITCHEN, FAST 'N EASY, DUBUQUE, QUICK MEAL, and OLD SMOKEHOUSE. The Company holds 19 foreign and 23 U. S. patents. The Company for the past several years has been concentrating on processed, consumer branded products with year round demand to minimize the seasonal variation experienced with commodity type products. Pork continues to be the primary raw material for Company products and although live pork producers are moving toward larger and year round confinement operations, there is still a seasonal variation in the supply of fresh pork materials. The expanding line of processed items has reduced but not eliminated the sensitivity of Company results to raw material supply and price fluctuations. Quarterly results for fiscal 1994 and 1993 are reported on page 50, Note J to the financial statements in the Annual Report to Stockholders for 1994. On October 29, 1994, the Company had unused lines of credit of $10,000,000. A fee is paid for the availability of fixed credit lines. The parent company has no long-term debt except for Industrial Revenue Bonds with varying maturities and a $5,000,000 loan used for an investment in an affordable housing project. There was no commercial paper outstanding at the end of fiscal 1994. Financial resources and anticipated funds from operations are considered adequate to meet normal operating cash requirements in 1995. The Company has no customers, the loss of which, would have a significant effect on the Company's business. During fiscal year 1994, no customer accounted for more than 6.5% of sales. Backlog orders are not significant due to the perishable nature of a large portion of the products and orders are accepted and shipped on a current basis. The Company continues to develop and introduce new products each year. No new product in 1994 required a material investment of Company assets. Improving and developing new products is the responsibility of task forces including personnel from operations, marketing, administration, engineering, and research and development. Research and development expenditures for fiscal 1994, 1993, and 1992, respectively, were $7,742,973, $6,904,764, and $5,780,399. There are 29 professional employees engaged in full time research, 11 in the area of improving existing products and 18 in developing new products. As of October 29, 1994, the Company had over 9,500 active employees. -4- Item 1. BUSINESS--Continued HORMEL Livestock slaughtered by the parent company is purchased by Company buyers, commission dealers, sale barns and terminal markets located principally in Minnesota, Iowa, Nebraska and South Dakota. The level of pork production in the United States has an impact on Hormel's operations. Any significant decrease in the supply of pork has an adverse effect because of higher costs and lower margins coupled with an under- utilization of Company facilities. A significant increase in the supply of pork normally results in lower costs and higher margins. The live pork industry, to minimize the supply variations which also impact this profitability, is rapidly moving to very large, vertically integrated, year round confinement operations. The Company, as well as its major competitors is analyzing options that will allow it to maximize the benefits of reduced volatility in the supply of fresh pork. Products under the Hormel label are sold in all 50 states by the parent Company. Products are sold by approximately 605 salespeople operating in assigned territories coordinated from district sales offices located in most of the larger United States cities, and by approximately 485 brokers and distributors. Distribution of products to customers is by common carrier. The parent Company has a plant at Fremont, Nebraska, that slaughters livestock for processing. The slaughter facilities at the Austin, Minnesota plant are leased to Quality Pork Processors of Dallas, Texas under a custom slaughter arrangement with the Company. A subsidiary, Rochelle Foods, Inc., Rochelle, Illinois, also provides the Company with needed raw materials and product through its pork slaughter and processing operation. Facilities that produce manufactured items are located in Algona, Iowa; Austin, Minnesota; Beloit, Wisconsin; Aurora, Illinois; Davenport, Iowa; Fremont, Nebraska; Houston, Texas; Knoxville, Iowa; Oklahoma City, Oklahoma; Stockton, California; Tucker, Georgia; and Wichita, Kansas. Custom manufacturing for Hormel is performed by several companies including Owatonna Canning Company, Owatonna, Minnesota; Lakeside Packing Company, Plainview, Minnesota; and Western Steer Mom and Pops of Claremont, North Carolina. JENNIE-O FOODS Jennie-O Foods, Inc., a Willmar, Minnesota, based turkey processor, has turkey raising, slaughter and processing operations at various locations within Minnesota. Jennie-O contracts with turkey growers to supplement the turkeys it raises to meet its raw material requirements for whole birds and processed turkey products. A major multi-year expansion program was completed in 1991, significantly increasing slaughter and processing capacity at the Willmar locations and moderately increasing Jennie-O's turkey raising capacity. -5- Item 1. BUSINESS--Continued Capacity was further increased in 1992 when Jennie-O contracted with West Central Turkeys, Inc. of Pelican Rapids, Minnesota, to co-pack whole birds and processed turkey products. West Central Turkeys, Inc. began an expansion of the Pelican Rapids facility in 1994 due to the increased demand for capacity by Jennie-O. Jennie-O has an option to purchase the assets of West Central Turkeys. HORMEL FOODS INTERNATIONAL Hormel Foods International markets the Company's products in international areas including the Philippines, Japan and various European countries. The Company, through Hormel Foods International, has licensed certain companies to manufacture SPAM luncheon meat overseas on a royalty basis, principally: Newforge Foods Limited in Great Britain, and K. R. Darling Downs in Australia. Hormel Foods International owns a domestic corporation, Vista International Packaging, Inc., a food packaging company located in Kenosha, Wisconsin, and Hormel FSC, Inc., a foreign sales corporation, which engages in export related activities. In 1994, Hormel Foods International opened offices in Mexico and Hong Kong to increase the sales and marketing support in these geographical areas of the international marketplace. FARM FRESH CATFISH Farm Fresh Catfish company continues to operate slaughter and processing plants in Arkansas and Mississippi. Live fish are purchased from independent growers to supplement the supply provided by its own farms in Arkansas and Mississippi. The catfish business continues to be a very competitive commodity oriented market segment. During 1994, Farm Fresh wrote down its live fish inventory which had a negative impact on its operating results. DUBUQUE FOODS, INC. Dubuque Foods, Inc., formerly called FDL Marketing, Inc., purchased the brands and trademarks of FDL Foods, Inc., Dubuque, Iowa, in July of 1993. FDL Foods will produce product to Dubuque Foods' specifications at its Dubuque, Iowa plant under a five year co-packing agreement with Dubuque Foods. FDL Foods also sold its Rochelle, Illinois slaughter and processing operations to Rochelle Foods, Inc., a sister subsidiary of Dubuque Foods. Rochelle Foods will also produce product for Dubuque Foods under a co-packing arrangement, however, following a transition period, it will primarily produce product for Hormel Foods under the Hormel trademark. -6- Item 1. BUSINESS--Continued Executive Officers of the Registrant (d). Year Which First Elected Name Office Age Officer Joel W. Johnson President 51 1991 & Chief Executive Officer Don J. Hodapp Executive Vice President 56 1969 & Chief Financial Officer Gary J. Ray Executive Vice President 48 1988 James W. Cole Group Vice President, 60 1990 Foodservice David N. Dickson Group Vice President, 51 1989 International, Planning and Development Stanley E. Kerber Group Vice President, 56 1977 Meat Products Robert F. Patterson Group Vice President, 54 1984 Prepared Foods Eric A. Brown Senior Vice President, 48 1987 Meat Products Richard W. Schlange Vice President and 59 1969 Controller Mahlon C. Schneider Vice President and 55 1990 General Counsel Robert J. Thatcher Vice President and 64 1968 Treasurer Forrest D. Dryden Vice President, Research 51 1987 & Development Jerry C. Figenskau Vice President, 54 1994 Specialty Products James A. Jorgenson Vice President, 49 1990 Human Resources Marvin F. Moes Vice President, 59 1983 Frozen Foods Division Gary C. Paxton Vice President, 49 1992 Manufacturing -7- Item 1. BUSINESS--Continued Year Which First Elected Name Office Age Officer Ronald E. Plath Vice President, Hormel 60 1989 and President Hormel Foods International Corp. Don L. Pohlman Vice President, 58 1988 Foodservice Sales Kenneth P. Regner Vice President, 57 1989 Engineering James N. Rieth Vice President, Hormel 54 1981 and President Jennie-O Foods, Inc. Robert A. Slavik Vice President, 49 1993 Meat Products Sales Robert G. Wells Vice President, Pork, 58 1982 Provisions and Refineries Thomas J. Leake Corporate Secretary 49 1990 No family relationship exists among the executive officers. All of the above executive officers have been employed by the Registrant in an officer capacity for more than the past five years except Mr. James W. Cole, President and Chief Operating Officer of Farm Fresh Catfish Company until July 4, 1988 when he was appointed President, FDL Marketing, Inc., on November 21, 1988 he was appointed Chairman, President and Chief Executive Officer of FDL Marketing until being elected Group Vice President Foodservice Group on August 27, 1990; Mr. Mahlon C. Schneider, employed December 11, 1989 as Senior Attorney until being appointed Assistant General Counsel on January 29, 1990, on November 19, 1990 he was elected Vice President and General Counsel; Mr. James A. Jorgenson, General Manager of the Fremont plant until August 31, 1987 when he became General Manager of the Austin plant, on November 19, 1990 he was elected Vice President, Manufacturing, and on December 30, 1991, he was elected Vice President, Human Resources; Mr. Joel W. Johnson, Executive -8- Item 1. BUSINESS--Continued Vice President and General Manager of Oscar Mayer Foods until being employed by the Company as Executive Vice President, Sales and Marketing on June 27, 1991, on July 27, 1992 he was elected President of the Company, and on September 30, 1993, he was elected to the additional post of Chief Executive Officer; Mr. Gary Paxton, Director Sausage Production until November 19, 1990 when he was named Plant Manager of the Austin Plant, on January 28, 1992 he was elected Vice President, Manufacturing; Mr. Robert A. Slavik, Director Meat Products Sales until January 26, 1993 when he was elected Vice President, Meat Products Sales; Mr. Jerry C. Figenskau, Director of Marketing Services until December 30, 1991 when he was named Director Specialty Products, on January 24, 1994 he was elected Vice President, Specialty Products. The executive officers are elected annually by the Board of Directors at the first meeting following the Annual Meeting of Stockholders. Vacancies may be filled and additional officers elected at any regular or special meeting. Item 2. PROPERTIES Approximate Floor Space (Square Feet) Owned or Expiration Location Unless Noted Leased Date Hormel Foods Corporation Slaughtering and Processing Plants Austin, Minnesota Slaughter 212,000 Owned Leased Out Processing 912,000 Owned Fremont, Nebraska 534,000 Owned Rochelle, Illinois 425,000 Owned (Rochelle Foods, Inc.) -9- Item 2. PROPERTIES--continued Processing Plants Algona, Iowa 152,000 Owned Austin, Minnesota Annex 82,000 Owned Beloit, Wisconsin 338,000 Owned Davenport, Iowa 117,000 Owned Houston, Texas 93,000 Owned Knoxville, Iowa 130,000 Owned Oklahoma City, Oklahoma 56,000 Owned Ottumwa, Iowa 135,000 Owned Closed Stockton, California 139,000 Owned Tucker, Georgia 259,000 Owned Wichita, Kansas 75,000 Owned (Dold Foods, Inc.) Long Prairie, Minnesota 78,000 Owned (Dan's Prize, Inc.) Aurora, Illinois 70,000 Leased January 1998 (Creative Contract Packaging Corp.) Aurora, Illinois 70,000 Leased (Herb-Ox Plant) Research and Development Center Austin, Minnesota 56,000 Owned Corporate Offices Austin, Minnesota 119,000 Owned Jennie-O Foods, Inc. Willmar, Minnesota Airport Plant location 282,000 Owned Willmar, Minnesota Benson Ave. Plant 79,000 Owned Melrose, Minnesota Plant 119,000 Owned Turkey farms - acres 7,600 Owned Henning, Minnesota 5,200 Owned Feed Mill Atwater, Minnesota 14,000 Owned Feed Mill Farm Fresh Catfish, Inc. Hollandale, Mississippi Plant 50,000 Owned Lake Village, Arkansas Plant 21,000 Owned Fish farms - water acres 4,700 Leased Various Vista International Packaging, Inc. Kenosha, Wisconsin Plant 61,000 Owned -10- Item 2. PROPERTIES--continued Algona Food Equipment Company (AFECO) Algona, Iowa Plant 45,000 Owned The Company has started major expansion or renovation projects at the Fremont, Nebraska plant, and the Davenport, Iowa plant. The Company believes its operating facilities are well maintained and suitable for current production volumes, and after the completion of the expansion and renovation projects, for all volumes which are anticipated in the foreseeable future. During 1994 the Company established a reserve for a probable loss on disposition of the remaining facility at Ottumwa, Iowa, which is closed and available for sale. Item 3. LEGAL PROCEEDINGS The Company, its wholly-owned subsidiary Farm Fresh Catfish Company, and Farm Fresh Catfish Company's principal competitors are defendants in a civil class action suit in the United States District Court for the Northern District of Mississippi, Delta Division, filed on February 7, 1992, on behalf of all purchasers of catfish products in the United States 1980- 1990. The suit alleges a conspiracy by the defendants to fix prices of all farm- raised catfish products in violation of the antitrust laws, and demands unspecified monetary damages, costs of suit, and attorneys' fees. Management believes the plaintiffs' claim will be a very large amount. Any damages awarded would be trebled in accordance with the antitrust laws. Similar suits have been pending in California and Alabama state courts since 1992 as well. Management believes that plaintiffs' claims in each suit are without merit and intends to vigorously defend against each allegation. While the outcome of commercial litigation cannot be predicted with certainty, management believes that the ultimate resolution of this matter will not have a material effect on the Company's consolidated financial condition. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to stockholders during the fourth quarter of the 1994 fiscal year. -11- PART II Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Information about Common Stock market prices, dividends, principal market of trade and number of stockholders on pages 37 and 38 of the Annual Stockholders' Report for the year ended October 29, 1994, is incorporated herein by reference. The Company's Common Stock has been listed on the New York Stock Exchange since January 16, 1990. Item 6. SELECTED FINANCIAL DATA Selected Financial Data for the ten years ended October 29, 1994, on pages 40 and 41 of the Annual Stockholders' Report for the year ended October 29, 1994, is incorporated herein by reference. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Management's Discussion and Analysis of Financial Condition and Results of Operations on pages 52 and 53 of the Annual Stockholders' Report for the year ended October 29, 1994, is incorporated herein by reference. -12- Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Financial Statements, including unaudited quarterly data, on pages 42 through 50 and Report of Independent Auditors on page 51 of the Annual Stockholders' Report for the year ended October 29, 1994 are incorporated herein by reference. Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information under "Election of Directors", contained on pages 3 through 6 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 1995, is incorporated herein by reference. Information concerning Executive Officers is set forth in Item 1(d) of Part I pursuant to Instruction 3, Paragraph (b) of Item 401 of Regulation S-K. Item 11. EXECUTIVE COMPENSATION Information for the year ended October 29, 1994, under "Executive Compensation" on pages 8 through 13 and "Compensation of Directors" on page 5 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 1995, is incorporated herein by reference. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Ownership of securities of the Company by certain beneficial owners and management for the year ended October 29, 1994, as set forth on pages 6 through 8 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 1995, is incorporated herein by reference. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information under "Other Information Relating to Directors, Nominees, and Executive Officers" for the year ended October 29, 1994, as set forth on pages 14 and 15 of the definitive proxy statement for the Annual Meeting of Stockholders to be held January 31, 1995, is incorporated herein by reference. -13- PART IV Item 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) and (2)--The response to this portion of Item 14 is submitted as a separate section of this report. (3) --List of Exhibits--The response to this portion of Item 14 is submitted as a separate section of this report. (c) The response to this portion of Item 14 is submitted as separate section of this report. (d) The response to this portion of Item 14 is submitted as separate section of this report. -14- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GE0. A. HORMEL & COMPANY By /s/ Joel W. Johnson 1/27/95 Joel W. Johnson, President, Date and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated: /s/ Richard L. Knowlton 1/27/95 Chairman of the Board Richard L. Knowlton Date and Director President,Chief Executive /s/Joel W. Johnson 1/27/95 Officer and Director Joel W. Johnson Date (Principal Executive Officer) Executive Vice President & Chief Financial Officer and Director /s/ Don J. Hodapp 1/27/95 Principal Financial and Don J. Hodapp Date Accounting Officer) /s/ Gary J. Ray 1/27/95 Executive Vice President Gary J. Ray Date and Director /s/ James W. Cole 1/27/95 Group Vice President James W. Cole Date Foodservice and Director Group Vice President International, /s/ David N. Dickson 1/27/95 Planning & Development David N. Dickson Date and Director /s/ Stanley E. Kerber 1/27/95 Group Vice President Meat Stanley E. Kerber Date Products and Director Group Vice President /s/ Robert F. Patterson 1/27/95 Prepared Foods Robert F. Patterson Date and Director -15- /s/ John W. Allen 1/27/95 Director John W. Allen Date /s/ William S. Davila 1/27/95 Director William S. Davila Date /s/ Luella G. Goldberg 1/27/95 Director Luella G. Goldberg Date /s/ Geraldine M. Joseph 1/27/95 Director Geraldine M. Joseph Date /s/ Earl B. Olson 1/27/95 Director Earl B. Olson Date /s/ Ray V. Rose 1/27/95 Director Ray V. Rose Date /s/ Dr. Robert R. Waller 1/27/95 Director Dr. Robert R. Waller Date -16- F-1 ANNUAL REPORT ON FORM 10-K ITEM 14 (a) (1), (2), AND (3) AND ITEM 14 (c) AND (d) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES FINANCIAL STATEMENT SCHEDULES LIST OF EXHIBITS YEAR ENDED OCTOBER 29, 1994 GEO. A. HORMEL & COMPANY Austin, Minnesota F-2 Item 14(a) (1), (2) and (3) and Item 14 (c) and (d) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES GEO. A. HORMEL & COMPANY October 29, 1994 The following consolidated financial statements of Hormel Foods Corporation included in the Annual Report of the Registrant to its stockholders for the year ended October 29, 1994, are incorporated herein by reference in Item 8 of Part II of this report: Consolidated Statements of Financial Position--October 29, 1994, Consolidated Statements of Operations--Years Ended October 29, 1994, October 30, 1993 and October 31, 1992. Consolidated Statements of Changes in Stockholders' Investment--Years Ended October 29, 1994, October 30, 1993, and October 31, 1992 Consolidated Statements of Cash Flows--Years Ended October 29, 1994, October 30, 1993 and October 31, 1992 Notes to Financial Statements--October 29, 1994 Report of Independent Auditors The following consolidated financial statement schedules of HOrmel Foods Corporation required pursuant to Item 14(d) are submitted herewith: Schedule II Valuation and Qualifying Accounts and Reserves..F-3 All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. FINANCIAL STATEMENTS AND SCHEDULES OMITTED Condensed parent company financial statements of the registrant are omitted pursuant to Rule 5-04(c) of Article 5 of Regulation S-X. LIST OF EXHIBITS GEO. A. HORMEL & COMPANY Number Description of Document * (3) A-1 Certification of Incorporation as amended to date. (filed as Exhibit 3A-1 to Annual Report on Form 10-K for fiscal year ended October 27, 1990.) * (3) B-1 By-laws as amended to date (filed as Exhibit 3B-1 to Annual Report on Form 10-K for fiscal year ended October 30, 1993.) (4) Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, copies of instruments defining the rights of holders of long-term debt are not filed. The Company agrees to furnish a copy thereof to the Securities and Exchange Commission upon request. (9) None. (10) None. (11) None. (12) None. **(13) Pages 37 through 54 of the Annual Report to Stockholders for fiscal year ended October 29, 1994. (18) None. (19) None. (22) None. **(23) Consent of Independent Auditors. (24) None. (25) None. **(27) Financial Data Schedule (28) None. * Document has previously been filed with the Securities and Exchange Commission and is incorporated herein by reference. ** These Exhibits transmitted via EDGAR. EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference to this Annual Report (Form 10K) of Hormel Foods Corporation of our report dated November 22, 1994, included in the 1994 Annual Report to Stockholders of Hormel Foods Corporation. Our audits also included the financial statement schedule of Hormel Foods Corporation listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in Post- Effective Amendment Number 2 to Registration Statement Number 33-14614 on Form S-8 dated December 6, 1988, in Registration Statement Number 33-14615 on Form S-8 dated May 20, 1987, in Post-Effective Amendment Number 1 to Registration Number 33-29053 dated January 26, 1990, in Registration Statement Number 33-43246 on Form S-8 dated October 9, 1991, and in Registration Statement Number 33-45408 on Form S-8 dated January 30, 1992 of our report dated November 22, 1994, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this annual Report (Form 10- K) of Hormel Foods Corporation. /s/ ERNST & YOUNG LLP Minneapolis, Minnesota January 27, 1995 F-3
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES HORMEL FOODS CORPORATION (Dollars in Thousands) COL. A | COL. B | COL. C | COL. D | COL. E | | Additions | | | | (1) (2) | | | Balance at | Charged to Charged to | | Balance at | Beginning | Costs and Other Accounts-| Deductions-- | End of Classification | of Period | Expense Describe | Describe | Period - - ------------------------------------------------------------ - - ------------------------------------------ Valuation reserve deduction from assets account: Fiscal year ended October 29, 1994: Allowance for doubtful accounts $ 0 $ 471 (1) $1,413 (116)(2) Fiscal year ended October 30, 1993: Allowance for doubtful accounts receivable $1,375 $912 $ 38 (3) $1,069 (1) $1,413 (157)(2) Fiscal year ended October 31, 1992: Allowance for doubtful accounts receivable $1,375 $998 $ 0 $1,350 (1) $1,375 (352)(2)
Note (1)-Uncollectible accounts written off. Note (2)-Recoveries on accounts previously written off. Note (3)-Reserve on records of Dan's Prize, Inc. at the date consolidated into Hormel Foods Corporation. 1 Stockholder Information New and longstanding owners of Hormel Foods Corporation oftentimes have questions regarding stock certificates and duplicate mailings. Corporate Headquarters Hormel Foods Corporation 1 Hormel Place Austin, Minn. 55912-3680 (507) 437-5611 Independent Auditors Ernst & Young 1400 Pillsbury Center Minneapolis, Minn. 55402 Stock Listing New York Stock Exchange The corporation's daily trading activity, stock price and dividend information can be found in the financial section of most newspapers under the New York Stock Exchange listing "Hormel." Transfer Agent and Registrar Norwest Bank Minnesota, N.A. 161 North Concord Exchange P.O. Box 738 South St. Paul, Minn. 55075 For the convenience of stockholders, Norwest Bank Minnesota, N.A., is providing a toll-free number (1-800-468-9716) that can be used whenever questions arise regarding changes in registered ownership, lost or stolen certificates, address changes or other matters pertaining to the transfer of stock or stockholder records. Representatives of Norwest Bank Minnesota, N.A., are available to assist stockholders from 8:00 a.m. to 5:00 p.m. (Central standard time) every business day. When requesting information, stockholders must provide their tax identification number, the name(s) in which their stock is registered and their record address. 2 Dividend Policy Hormel Foods Corporation's Board of Directors typically declares the payment of a cash dividend each quarter. Since becoming a public company in 1928, Hormel Foods has never failed to make a quarterly dividend - a payout record that now extends to 66 years. Stockholder Record Data Usually the third week in January, April, July and October which is approximately 25 days before the payable date. Dividend Payment Dates The fifteenth of February, May, August and November. Postal delays may cause receipt dates to vary. Dividend Reinvestment Hormel Foods Corporation's Dividend Reinvestment Plan provides stockholders of record a cost-free method of purchasing additional shares of Company stock without paying brokerage commission or other service fees. Participants in the plan may choose to have all their dividends automatically reinvested, make optional additional cash payments or do both in purchasing shares of Hormel Foods common stock. All brokerage expenses are paid by Hormel Foods Corporation. Personal recordkeeping is simplified by an account statement that is mailed to participants by Norwest Bank Minnesota, N.A., plan administrator, after each investment. To enroll in the plan or to obtain additional information, contact Norwest Bank Minnesota, N.A., using the address or telephone number provided with their listing in this section as Company transfer agent and registrar. Tax Reports on Dividend Income Hormel Foods Corporation is required to report to the Internal Revenue Service the total amount of dividends paid to each stockholder during the preceding year on Form 1099. This information is supplied by the transfer agent to the IRS for each stockholder account. This form, 3 which may be used as a convenient reference and record when personal income taxes are filed, is mailed to stockholders after the end of each calendar year. Reports and Publications The objective in this 1994 Annual Report is to provide a single, comprehensive document describing the corporation's business and financial results. Additional sources of information about the Company include the following: Form 10-K Report Filed annually with the Securities and Exchange Commission, this report is available without charge in January, upon request, to stockholders of record and/or beneficial owners of the Company's common stock. Form 10-Q Filed quarterly with the Securities and Exchange Commission, these reports are available in March, June and September. Notice of Annual Meeting and Proxy Statement Mailed in January, accompanying the Notice of Annual Meeting and Proxy Statement, is the proxy card. The proxy card should be signed, dated and returned promptly to ensure all shares are represented at the meeting and voted in accordance with instructions of their holder. Quarterly Reports Mailed to each stockholder in February, May, August and November. Report on Annual Meeting Mailed to each stockholder in February, shortly after the Annual Meeting of Stockholders. 4 Duplicate Mailings Sometimes several accounts are established for an individual stockholder due to variations in name, initials or address. Stockholders are encouraged to consolidate multiple accounts to avoid duplicate mailings to the same address. To consolidate multiple accounts, write to Norwest Bank Minnesota, N.A., or call their toll-free number. (Use the address and/or telephone number provided with their listing in this section as Company transfer agent and registrar.) If possible, labels or label information indicating which name(s) are to be deleted should accompany your request. This procedure provides a significant cost reduction in production and mailing of reports and saves stockholders the annoyance of receiving duplicate mail. This will not in any way affect dividend check mailings. Each registered stockholder will continue to receive regular quarterly dividends. Questions About Hormel Foods From Stockholders, call or write: Thomas J. Leake Corporate Secretary Hormel Foods Corporation 1 Hormel Place Austin, Minn. 55912-3680 (507) 437-5669 From Security Analysts, call or write: Robert J. Thatcher Vice President and Treasurer Hormel Foods Corporation 1 Hormel Place Austin, Minn. 55912-3680 (507) 437-5950 From the Media, call or write: V. Allan Krejci Director of Public Relations Hormel Foods Corporation 1 Hormel Place Austin, Minn. 55912-3680 (507) 437-5345 Annual Meeting Invitation 5 All Hormel Foods Corporation stockholders are encouraged to attend this year's Annual Meeting. The meeting is held each year on the last Tuesday in January. The 1995 Annual Meeting will be held Tuesday, January 31, in the Austin (Minn.) High School Auditorium. The meeting will convene at 8:00 p.m. Common Stock Data The high and low closing price of the Company's common stock and the dividends per share declared for each fiscal quarter of 1994 and 1993, respectively, are shown below. 1994 High Low Dividend First Quarter 23 20 1/2 $.125 Second Quarter 21 3/8 19 $.125 Third Quarter 23 19 $.125 Fourth Quarter 24 1/2 21 1/2 $.125 1993 High Low Dividend First Quarter 24 1/4 20 7/8 $.11 Second Quarter 25 1/4 20 3/8 $.11 Third Quarter 22 1/8 20 1/2 $.11 Fourth Quarter 22 5/8 20 7/8 $.11 Page 1 1994 Financial Section 40 Selected Financial Data 42 Consolidated Statements of Financial Position 44 Consolidated Statements of Operations 45 Consolidated Statements of Changes in Stockholders' Investment 46 Consolidated Statements of Cash Flows 47 Notes to Consolidated Financial Statements 51 Report of Independent Auditors Responsibilities for Financial Statements 52 Management's Discussion and Analysis of Financial Condition and Results of Operations 54 A Corporate Profile Selected Financial Data
(In Thousands, Except Per Share Amounts) 1994 1993 *1992 1991 1990 1989 1988 *1987 1986 1985 Operations Net Sales $3,064,793 $2,853,997$2,813,651 $2,836,222$2,681,180$2,340,513 $2,292,847$2,314,082 $1,960,237 $1,502,235 Net Earnings Before Cumulative Effect of Accounting Changes 117,975 100,770 95,174 86,393 77,124 70,114 60,192 45,944 39,079 38,618 Percent of Sales 3.85% 3.53% 3.38% 3.05% 2.88% 3.00% 2.63% 1.99% 1.99% 2.57% Cumulative Effect of Accounting Changes (127,529)** Net Earnings (Loss) 117,975 (26,759) 95,174 86,393 77,124 70,114 60,192 45,944 39,079 38,618 Wage Costs 351,096 325,115 304,696 278,537 267,391 254,449 253,937 255,429 222,535 233,512 Total Taxes (excluding Payroll Tax) 82,915 70,026 64,968 60,035 51,990 48,983 44,541 41,797 38,297 40,500 Depreciation and Amortization 36,611 32,174 38,972 36,269 35,554 36,863 35,517 33,535 30,741 28,087 Financial Position Working Capital $443,298 $392,846 $401,216 $346,164 $293,818 $232,941 $156,476 $147,969 $196,199 $152,985 Properties (net) 270,886 244,987 216,390 231,817 235,026 244,362 263,056 263,917 255,159 264,679 Total Assets 1,196,718 1,093,559 913,015 856,835 799,422 727,429 706,548 697,970 584,744 560,939 Long-Term Debt Less Current Maturities 10,300 5,700 7,624 22,833 24,535 19,228 20,399 48,831 63,264 64,334 Stockholders' Investment 661,089 570,888 644,284 583,408 513,832 470,929 418,716 373,120 339,925 311,605 Per Share of Common Stock Net Earnings Before Cumulative Effect of Accounting Changes $1.54 $1.31 $1.24 $1.13 $1.01 $0.91 $0.79 $0.60 $0.51 $0.50 Page 3 Cumulative Effect of Accounting Changes (1.66) Net Earnings (Loss) 1.54 (0.35) 1.24 1.13 1.01 0.91 0.79 0.60 0.51 0.50 Dividends 0.50 0.44 0.36 0.30 0.26 0.22 0.18 0.15 0.14 0.13 Stockholders' Investment 8.62 7.45 8.41 7.61 6.70 6.14 5.46 4.86 4.42 4.05 *53 Weeks **Adoption of SFAS No. 106 and SFAS No. 109 Consolidated Statements of Financial Position
(In Thousands) October 29, 1994 October 30, 1993 Assets Current Assets Cash and cash equivalents $248,599 $157,558 Short-term marketable securities at cost which approximates market 11,360 14,862 Accounts receivable 228,369 218,487 Inventories 199,243 208,101 Deferred income taxes 14,213 12,393 Prepaid expenses 6,431 8,503 Total current assets 708,215 619,904 Deferred Income Taxes 70,791 79,872 4 Intangibles 79,302 72,508 Investments and Other Assets 67,524 76,288 Property, Plant and Equipment Land 6,658 6,025 Buildings 152,786 143,222 Equipment 451,301 422,485 Construction in progress 26,476 13,589 637,221 585,321 Less allowance for depreciation (366,335) (340,334) 270,886 244,987 $1,196,718 $1,093,559 (In Thousands, Except Share and Per Share Amounts) October 29, 1994 October 30, 1993 Liabilities and Stockholders' Investment Current Liabilities Accounts payable $112,851 $98,357 Accrued expenses 29,320 30,212 Accrued advertising 31,863 24,587 Employee compensation 41,989 40,195 Taxes, other than federal income taxes 17,606 14,011 5 Dividends payable 9,585 8,434 Federal income taxes 21,303 11,262 Current maturities of long-term debt 400 Total current liabilities 264,917 227,058 Long-Term Debt - less current maturities 10,300 5,700 Accumulated Postretirement Benefit Obligation 235,124 233,326 Accrued Pension Costs 12,265 48,363 Other Long-Term Liabilities 13,023 8,224 Stockholders' Investment Preferred Stock, par value $.01 a share - authorized 40,000,000 shares; issued - none Common stock, nonvoting, par value $.01 a share - authorized 40,000,000 shares; issued - none Common Stock, par value $.1172 a share - authorized 200,000,000 shares; issued 76,852,128 shares 9,007 9,007 Additional paid-in capital 15,696 14,513 Shares held in treasury (3,632) (4,103) 21,071 19,417 Earnings reinvested in business 640,018 551,471 661,089 570,888 $1,196,718 $1,093,559 6 See notes to consolidated financial statements. Consolidated Statements of Operations Fiscal Year Ended (In Thousands, Except Per Share Amounts) October 29, 1994 October 30, 1993 October 31, 1992 Sales, less returns and allowances $3,064,793 $2,853,997 $2,813,651 Cost of products sold 2,345,492 2,206,945 2,192,154 Gross profit 719,301 647,052 621,497 Expenses: Selling and delivery 467,062 424,432 412,458 Administrative and general 65,184 67,302 62,535 Operating income 187,055 155,318 146,504 Other income and expenses: Other income - net 6,538 7,199 8,401 Interest expense (2,523) (1,371) (3,851) Earnings before income taxes and cumulative effect of accounting changes 191,070 161,146 151,054 Provision for income taxes 73,095 60,376 55,880 Earnings before cumulative effect of accounting changes 117,975 100,770 95,174 Cumulative effect of accounting changes: Accounting for postretirement benefits, net of tax (140,823) 7 Accounting for income taxes 13,294 Net earnings (loss) $117,975 $(26,759) $95,174 Earnings (loss) per share: Before cumulative effect of accounting changes $1.54 $1.31 $1.24 Cumulative effect of accounting changes (1.66) Net earnings (loss) per share $1.54 $(0.35) $1.24
See notes to consolidated financial statements. Consolidated Statements of Changes in Stockholders' Investment
Additional Earnings Total Common Stock Treasury Stock Paid-In Reinvested Stockholders' (In Thousands, Except Per Share Amounts) Shares Amount Shares Amount Capitalin Business Investment Balance at October 26, 1991 76,852 $9,007 (211) $(4,265) $7,968 $570,698 $583,408 Purchases of Common Stock (327) (6,262) (6,262) Exercise of stock options 283 5,443 (5,828) (385) Tax benefit of stock options 2,404 2,404 Restricted stock grants 30 619 619 Adjustment in minimum pension liability (3,084) (3,084) Net earnings 95,174 95,174 Cash dividends - $.36 per share (27,590) (27,590) Balance at October 31, 1992 76,852 9,007 (225) (4,465) 10,372 629,370 644,284 8 Purchases of Common Stock (437) (9,861) (9,861) Exercise of stock options 481 10,201 (9,808) 393 Tax benefit of stock options 4,141 4,141 Restricted stock grant 1 22 22 Adjustment in minimum pension liability (7,580) (7,580) Net loss (26,759) (26,759) Cash dividends - $.44 per share (33,752) (33,752) Balance at October 30, 1993 76,852 9,007 (180) (4,103) 14,513 551,471 570,888 Purchases of Common Stock (90) (1,851) (1,851) Exercise of stock options 108 2,322 (2,937) (615) Tax benefit of stock options 1,183 1,183 Adjustment in minimum pension liability 11,840 11,840 Net earnings 117,975 117,975 Cash dividends - $.50 per share (38,331) (38,331) Balance at October 29, 1994 76,852 $9,007 (162) $(3,632) $15,696 $640,018 $661,089
See notes to consolidated financial statements. Consolidated Statements of Cash Flows
Fiscal Year Ended (In Thousands) October 29, 1994 October 30, 1993 October 31, 1992 9 Operating Activities Net earnings (loss) $117,975 $(26,759) $95,174 Adjustments to reconcile to net cash provided by operating activities: Depreciation 33,655 30,162 34,260 Amortization of intangibles 2,956 2,012 4,712 Cumulative effect of accounting changes 127,529 Provision for deferred income taxes (5,859) (3,715) (10,081) Loss on investments 4,368 (Gain) loss on property/equipment sales and idle facility 4,312 (93) 1,023 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (9,882) (28,707) 2,689 Decrease (increase) in inventories and prepaid expenses 10,930 (22,778) (11,962) Increase in accounts payable and accrued expenses 40,686 22,101 16,413 Net cash provided by operating activities 199,141 99,752 132,228 Investing Activities Sale of short-term marketable securities 3,309 Purchase of short-term marketable securities (357) (14,862) Acquisitions of businesses (9,750) (33,791) Purchases of property/equipment (65,441) (59,725) (22,942) 10 Proceeds from sales of property/equipment 1,575 1,058 3,085 (Increase) in investments and other assets (3,973) (20,754) (9,518) Net cash used in investing activities (74,637) (128,074) (29,375) Financing Activities Proceeds from long-term borrowings 5,000 3,100 Principal payments on long-term debt (2,141) (22,440) Dividends paid on Common Stock (37,178) (32,213) (26,445) Other (1,285) (5,305) (3,624) Net cash used in financing activities (33,463) (39,659) (49,409) Increase (decrease) in cash and cash equivalents 91,041 (67,981) 53,444 Cash and cash equivalents at beginning of year 157,558 225,539 172,095 Cash and cash equivalents at end of year $248,599 $157,558 $225,539
See notes to consolidated financial statements. Notes to Consolidated Financial Statements October 29, 1994 Note A: Summary of Significant Accounting Policies Principles of Consolidation: The consolidated financial statements include the accounts of Hormel Foods Corporation and all of its majority-owned subsidiaries after elimination of all significant 11 intercompany accounts, transactions and profits. Segment Information: Hormel Foods is engaged in a single business segment designated as "meat and food processing." As a federally inspected food processor, Hormel Foods is engaged in the processing of meat and poultry products, production of a variety of prepared foods and the marketing of those products. Inventories: Inventories are valued at the lower of cost or market. Livestock and the materials portion of products are valued on the first- in, first-out method with the exception of the materials portion of turkey products which are valued on the last-in, first-out method. Substantially all inventoriable expenses, packages and supplies are valued by the last-in, first-out method. Property, Plant and Equipment: Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the related assets, primarily on a straight- line basis. Amortization of Intangibles: Goodwill and other intangibles are being amortized over periods up to 40 years. Accumulated amortization at October 29, 1994, and October 30, 1993, was $11,966,000 and $9,010,000, respectively. 12 Statement of Cash Flows: The Company considers all short- term marketable securities with maturities of less than 90 days to be cash equivalents. All short-term marketable securities are carried at cost which approximates market values. Acquisitions: The Company acquired several businesses during fiscal 1994 and 1993 which are included in the Company's results of operations since the respective acquisition dates. The results of these acquired businesses, either individually or in the aggregate, were not significant to the Company's results of operations. Accounting Changes: The Company adopted Statements of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 109, "Accounting for Income Taxes," in 1993 (see Notes E and F). SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," is effective for fiscal 1995 and will not have a significant effect on the Company when adopted. Earnings Per Share: Earnings per share of Common Stock are based on the weighted average number of shares outstanding during the year. The dilutive effects of Common Stock equivalents were not significant in any year presented. 13 Fiscal Year: The Company's fiscal year ends on the last Saturday in October. Fiscal year 1994 and 1993 consisted of 52 weeks and fiscal year 1992 consisted of 53 weeks. Note B: Inventories Inventoriable expenses, packages and supplies amounting to approximately $48,700,000 at October 29, 1994, and $47,200,000 at October 30, 1993, are stated at cost determined by the last-in, first-out method, and are $21,900,000 and $21,600,000 lower in the respective years than such inventories determined under the first-in, first-out method. Turkey products amounting to $9,500,000 at October 29, 1994, and $7,000,000 at October 30, 1993, are stated at cost determined by the last- in, first- out method and are $200,000 lower in 1994 and $600,000 lower in 1993 than such inventories determined under the first-in, first- out method. Note C: Long-Term Debt and Other Borrowing Arrangements Long-term debt consists of:
October 29, October 30, (In Thousands) 1994 1993 14 Industrial revenue bonds with variable interest rates, due 1999 to 2005 $5,700 $5,700 Other 5,000 10,700 5,700 Less current maturities 400 $10,300 $5,700
At October 29, 1994, the Company had unused lines of credit of $10,000,000 for short-term borrowing. A fixed fee is paid for the availability of credit lines. Total interest paid during fiscal 1994, 1993 and 1992 was $1,791,000, $1,386,000 and $4,082,000, respectively. Note D: Benefit Plans The Company and its subsidiaries have several noncontributory defined benefit plans and defined contribution plans covering most employees. Total costs associated with the Company's defined contribution benefit plans in 1994, 1993 and 1992 were $7,880,000, $7,119,000 and $6,560,000, respectively. Benefits for defined benefit pension plans covering hourly employees are provided based on stated amounts for each year of service while plan benefits covering salaried employees are based on final 15 average compensation. The Company's funding policy is to make annual contributions of not less than the minimum required by applicable regulations. A summary of the components of net periodic pension cost for defined benefit plans is as follows: (In Thousands) 1994 1993 1992
Service cost - benefits earned during the year $7,839 $7,068 $7,017 Interest cost on projected benefit obligation 30,201 30,039 30,488 Actual return on plan assets (25,298) (32,949) (30,228) Net amortization and deferral (3,912) 6,244 812 Net pension costs $8,830 $10,402 $8,089 Assumptions used in accounting for the defined benefit plans were: 1994 1993 1992 Weighted average discount rates 8.25% 7.75% 8.25% Rates of increase in compensation levels 5.50 5.25 6.00 Expected long-term rate of return on assets 9.50 9.25 9.75
The following table sets forth the plans' funded status and amounts recognized in the statements of financial position: 16
October 29, 1994 October 30, 1993 Plans Whose Plans Whose Plans Whose Plans Whose Assets Exceed Accrued Benefits Assets Exceed Accrued Benefits (In Thousands) Accrued Benefits Exceed Assets Accrued Benefits Exceed Assets Actuarial present value of benefit obligations: Vested benefit obligation $313,197 $17,490 $150,576 $191,639 Nonvested benefit obligation 20,031 6,547 14,197 13,697 Accrued benefits 333,228 24,037 164,773 205,336 Effects of estimated future pay increases 35,457 6,795 38,236 3,264 Projected benefit obligations 368,685 30,832 203,009 208,600 Plan assets at fair value 365,210 184,775 166,881 Projected benefit obligations in excess of benefit plan assets 3,475 30,832 18,234 41,719 Unrecognized prior service cost (11,024) (1,699) (9,214) (4,520) Unrecognized net loss (3,663) (6,614) (2,951) (22,868) Remaining net asset (obligation) at transition (560) (6,400) 3,839 (11,601) Adjustment required to recognize minimum liability 7,918 35,725 Net pension liability (asset) in statements of financial position $(11,772) $24,037 $9,908 $38,455
As of the 1994 valuation date, plan assets included Common Stock of the Company having a market value of $68,962,000. 17 Note E: Postretirement Benefits Other Than Pensions The Company provides medical and life insurance benefits to certain retired employees. Eligible employees who retired prior to January 1, 1987, remain on the medical plan in effect when they retired. The medical plan for eligible employees who retired after January 1, 1987, is automatically modified to incorporate plan benefit and plan provision changes whenever they are made to the active employee plan. Employees hired after January 1, 1990, are eligible for postretirement medical coverage, but must pay the full cost of the coverage. In fiscal 1993, the Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." This statement requires the accrual of the postretirement benefit costs of health care and life insurance during the years an employee provides services. The unfunded cumulative obligation of $227.2 million ($140.8 million after tax) was charged against earnings, effective as of the beginning of fiscal 1993. The effect of the new rule on fiscal 1993 was to increase postretirement benefit costs by $6,128,000 and reduce net earnings before the cumulative effect of accounting changes by $3,900,000. The cost of these benefits as recorded under the previous pay as you go accounting policy was $14.2 million in fiscal 1992, which year has not 18 been restated. The postretirement benefit costs for fiscal 1994 and 1993 under SFAS No. 106 were as follows:
1994 1993 Postretirement benefit cost - Service cost of benefits earned $2,007,000 $1,948,000 Interest cost of benefit obligation 15,623,000 18,133,000 Net amortization of deferred gains (750,000) $16,880,000 $20,081,000
The actuarial present value of postretirement benefit obligations and the amount reported in the Consolidated Statements of Financial Position as of October 29, 1994, and October 30, 1993, were as follows: Accumulated postretirement benefit obligations as of the August 1 measurement date:
1994 1993 Retirees $148,481,000 $158,945,000 Fully eligible active participants 15,039,000 14,838,000 Other active participants 34,993,000 35,205,000 198,513,000 208,988,000 Unrecognized net gains 41,103,000 27,826,000 19 Benefit payments subsequent to measurement date (4,492,000) (3,488,000) Accrued postretirement benefit cost $235,124,000 $233,326,000
Assumptions used in determining the accumulated postretirement benefit obligation:
1994 1993 Medical plan cost trend rate 7.5% declining 8.0% declining to 5.5% in to 5.5% in year 1998 year 1998 Weighted average discount rate 8.25% 7.75%
The health care cost trend rate assumption has a significant effect on the amount reported. For example, a one percent increase in the health care cost trend rate would increase the accumulated postretirement benefit obligation by $16.7 million at October 29, 1994, and the net periodic cost by $1.2 million for the year. Note F: Income Taxes The Company adopted SFAS No. 109, "Accounting for Income Taxes," as of the beginning of fiscal 1993, changing its method of accounting for income taxes from the deferred method to the liability method. As permitted under SFAS No. 109, prior years' financial statements have not 20 been restated. The cumulative effect of adopting SFAS No. 109 as of November 1, 1992, was to increase net income by $13.3 million. The components of the provision for income taxes attributable to income before the change in accounting principle were as follows:
Deferred Liability Method Method (In Thousands) 1994 1993 1992 Current: U.S. Federal $65,808 $52,883 $55,823 State 13,146 11,208 10,138 78,954 64,091 65,961 Deferred: U.S. Federal (5,067) (3,481) (8,680) State (792) (234) (1,401) (5,859) (3,715) (10,081) $73,095 $60,376 $55,880
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company believes that, based upon its lengthy and 21 consistent history of profitable operations, it is probable that the net deferred tax assets of $85 million will be realized on future tax returns, primarily from the generation of future taxable income. Significant components of the deferred income tax liabilities and assets were as follows:
October 29, October 30, 1994 1993 Deferred tax liabilities- Tax over book depreciation $(26,847) $(28,407) Prepaid pension (8,371) Other, net (2,815) (3,929) Deferred tax assets- Vacation accrual 3,259 3,275 Insurance accruals 4,510 4,309 Deferred compensation 4,601 3,558 Postretirement benefits 91,157 90,717 Pension accrual 6,528 12,547 Other, net 12,982 10,195 Net deferred tax assets $85,004 $92,265
Reconciliation of the statutory federal income tax rate to the Company's 22 effective tax rate is as follows:
1994 1993 1992 U.S. statutory rate 35.0% 34.8% 34.0% State taxes on income, net of federal tax benefit 4.2 4.3 3.8 All other, net (.9) (1.6) (.8) Effective tax rate 38.3% 37.5% 37.0%
Included in the provision for deferred federal income taxes for fiscal year ended 1992 are the effects of timing differences as follows: (In Thousands) 1992 Depreciation $(2,436) Employee benefit plans (2,760) All other, net (3,484) $(8,680) Total income taxes paid during fiscal 1994, 1993 and 1992 were $56,298,000, $67,750,000 and $57,161,000, respectively. Note G: Arrangement With FDL Foods, Inc. In accordance with a five-year copacking agreement with FDL Foods, Inc. (FDL), Dubuque, Iowa, facility, the Company has a revolving credit 23 agreement secured by substantially all of the assets of FDL. The Company may lend up to $30,000,000 to FDL at one percent over the prime rate through July 1, 1995. Borrowings under the agreement at October 29, 1994, and October 30, 1993, were $19,200,000 and $25,300,000, respectively, and are included in Investments and Other Assets. The Company also acts as an agent of FDL for the purchase of livestock, which purchases may be up to $15,000,000 and are repayable in full on a weekly basis under a credit agreement. The balances at October 29, 1994, and October 30, 1993, are $4,300,000 and $6,400,000, respectively, and are included in accounts receivable. Note H: Commitments In order to ensure a steady supply of livestock and turkeys and to keep the cost of products stable, the Company and its subsidiary, Jennie-O Foods, Inc., have entered into contracts with producers for the purchase of hogs and turkeys at formula based prices over periods of up to 12 years. Under these contracts, the Company and Jennie-O are committed at October 29, 1994, to purchase hogs and live turkeys, assuming current price levels, as follows: 1995 $247,852,000 24 1996 173,638,000 1997 174,187,000 1998 174,874,000 1999 154,025,000 Later years 433,765,000 Total $1,358,341,000 The Company has commitments to expend approximately $38,915,000 to complete construction in progress at various locations at October 29, 1994. Note I: Stock Options Under the Company's stock option plans, the Company may grant employees and nonemployee directors options to purchase Common Stock of the Company at 100 percent of the market value on the date of grant. Options outstanding expire at various dates ranging from fiscal 1995 through 2004. Options are exercisable upon grant and are outstanding as follows:
Shares Price per Share Balance October 26, 1991 2,205,000 $7.50 to $19.75 Granted 512,000 20.75 to 21.38 Exercised (542,000) 7.50 to 15.06 25 Balance October 31, 1992 2,175,000 9.31 to 21.38 Granted 537,000 23.50 to 23.88 Exercised (850,000) 9.31 to 20.75 Balance October 30, 1993 1,862,000 9.31 to 23.88 Granted 374,000 20.50 Exercised (383,000) 9.31 to 15.06 Balance October 29, 1994 1,853,000 $15.06 to $23.88
Note J: Quarterly Results of Operations (Unaudited) The following tabulation reflects the unaudited quarterly results of operations for the years ended October 29, 1994, and October 30, 1993:
(In Thousands, First Quarter Second Quarter Third Quarter Fourth Quarter Total Year Except Per Share Data) 1994 1993 1994 1993 1994 1993 1994 1993 1994 1993 Net sales $716,169 $682,102 $767,018 $676,686 $741,144 $677,835 $840,462 $817,374 $3,064,793$2,853,997 Gross profit* 158,760 148,296 169,288 152,985 161,170 152,273 230,083 193,498 719,301 647,052 Earnings before cumulative effect of accounting changes 20,550 18,279 23,026 20,661 20,162 18,168 54,237 43,662 117,975 100,770 Cumulative effect of accounting changes, net of taxes (127,529) (127,529) Net earnings (loss) $20,550 $(109,250) $23,026 $20,661 $20,162 $18,168 $54,237 $43,662 $117,975 $(26,759) 26 Earnings (loss) per share: Before cumulative effect of accounting change $0.27 $0.24 $0.30 $0.27 $0.26 $0.23 $0.71 $0.57 $1.54 $1.31 Cumulative effect of accounting change (1.66) (1.66) Net earnings (loss) per share $0.27 $(1.42) $0.30 $0.27 $0.26 $0.23 $0.71 $0.57 $1.54 $(0.35)
*1993 amounts have been restated to reflect the adoption of SFAS No. 106 as of the beginning of the year. Report of Independent Auditors To the Stockholders and Board of Directors Hormel Foods Corporation Austin, Minnesota We have audited the accompanying consolidated statements of financial position of Hormel Foods Corporation as of October 29, 1994 and October 30, 1993, and the related consolidated statements of operations, changes in stockholders' investment and cash flows for each of the three years in the period ended October 29, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to 27 obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hormel Foods Corporation at October 29, 1994 and October 30, 1993, and the results of its operations and its cash flows for each of the three years in the period ended October 29, 1994 in conformity with generally accepted accounting principles. As discussed in the notes to the consolidated financial statements, in 1993 the Company changed its methods of accounting for income taxes and postretirement benefits other than pensions. Minneapolis, Minnesota November 22, 1994 Responsibilities for Financial Statements 28 The accompanying financial statements were prepared by the management of Hormel Foods Corporation which is responsible for their integrity and objectivity. These statements have been prepared in accordance with generally accepted accounting principles appropriate in the circumstances and, as such, include amounts that are based on our best estimates and judgments. Hormel Foods Corporation has developed a system of internal controls designed to assure that the records reflect the transactions of the Company and that the established policies and procedures are adhered to. This system is augmented by well-communicated written policies and procedures, a strong program of internal audit and well- qualified personnel. These financial statements have been audited by Ernst & Young LLP, independent auditors, and their report appears on this page. Their audit is conducted in accordance with generally accepted auditing standards and includes a review of the Company's accounting and financial controls and tests of transactions. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with the independent auditors, management and the internal auditors to assure that each is carrying out 29 its responsibilities. Both Ernst & Young LLP and our internal auditors have full and free access to the Audit Committee, with or without the presence of management, to discuss the results of their audit work and their opinions on the adequacy of internal controls and the quality of financial reporting. R.W. Schlange Vice President and Controller Joel W. Johnson President Chief Executive Officer Management's Discussion and Analysis of Financial Condition and Results of Operations Fiscal Years 1994 and 1993 Earnings for the year were a record $117,975,000, an increase of 17.1 percent over 1993 earnings of $100,770,000 reported before the 1993 cumulative effects of adopting SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 109, "Accounting for Income Taxes." Fiscal 1993 results after cumulative effects of accounting changes were a net loss of $26,759,000. The 30 comparative discussion of fiscal 1994 and 1993 results will exclude the cumulative effects of the noncash accounting changes adopted in 1993. This will accurately reflect the Company's operating results in 1993 and the outstanding performance and growth that continued for the 11th straight year in 1994. Net sales in 1994 were $3,064,793,000, an increase of 7.4 percent, or $210,796,000, over the previous record of $2,853,997,000 recorded in 1993. Tonnage volume was also at record levels and increased 9.4 percent over last year. Earnings for the fourth quarter of 1994 were $54,237,000, an increase of 24.2 percent over the same period one year ago. Net sales increased 2.8 percent to $840,462,000, compared to $817,374,000 in the fourth quarter of 1993. Tonnage volume for the quarter increased 8.3 percent compared to last year. The Company continues to focus attention on improving its core businesses, expanding market share of mature consumer- branded products and introducing new products in the convenience and ethnic market segments. Pork remains a primary raw material for Company products and the supply of live hogs has an impact on Company results. Pork raw material prices declined by more than 20 percent toward the end of the 31 fourth quarter in 1994. Lower raw material prices and a product mix that included a larger proportion of higher margin processed items increased gross profit as a percent of sales to 27.4 percent for the quarter and 23.5 percent for the year from 23.7 percent and 22.7 percent for the same periods last year. Farm Fresh Catfish Company, a wholly owned subsidiary, wrote down its live fish inventory which had a negative impact on its operating results. Selling and delivery expenses for the quarter and year were $122,175,000 and $467,062,000 as compared to $105,776,000 and $424,432,000 for the same periods in 1993. As a percentage of sales, selling and delivery expenses increased to 15.2 percent from 14.9 percent in 1993 which primarily reflects increased spending on advertising and promotions. Administrative and general expenses were $21,894,000 and $65,184,000 for the quarter and year to date, compared to $19,244,000 and $67,302,000 last year. At the end of 1994, the Company established reserves for the impairment in value of two investments. A reserve was established for a probable loss on disposition of the Company's remaining facility at Ottumwa, Iowa, which is idle and available for sale. The Company also established a reserve for the carrying value of an investment in an affiliated 32 business. Neither of these reserves was considered material. Advertising and promotional expenses increased to $46,609,000 for the quarter and $184,368,000 for the year, compared to $36,889,000 and $162,308,000 in 1993. These expenditures emphasize the Company's commitment to expanding its base of branded consumer products. The parent company and its larger subsidiaries, which include Jennie-O Foods, Inc., and Dubuque Foods, Inc., plan to continue aggressive advertising and promotional activities in 1995. Research and development continues to be an integral part of the Company's strategy to extend existing brands and expand its offerings of new consumer-branded items in both existing and new food market segments. An important part of research and development efforts include packaging which effectively protects the product, is convenient for the consumer and minimizes cost while using environmentally friendly materials. As a result of rising interest rates during 1994, the Company increased its key pension and other postretirement plan actuarial assumptions as of the August 1, 1994, measurement date, including an increase in the discount rate to 8.25 percent (see Note D to the Consolidated Financial Statements). The net effect of these changes resulted in a decrease in 33 the minimum pension liability recorded under SFAS No. 87 at October 29, 1994. The Company's effective tax rate increased to 38.3 percent from 37.5 percent in 1993. This reflects the remaining effect of the increase in the federal statutory rate to 35 percent and an increase in state income taxes. The Company anticipates pork raw material prices to continue at favorable levels, at least through the first quarter of 1995. Raw material supplies are expected to be adequate, and the Company has aggressive marketing plans in place to meet 1995 profit plans. Fiscal Years 1993 and 1992 Higher pork raw material prices experienced in 1993 and large supplies of competing protein sources resulted in heavy competition and pressure on selling prices. These conditions required all areas of the Company to aggressively market their products while implementing cost efficiencies to meet profit projections. Despite operating results that produced record operating earnings and dollar sales, a one-time net charge for accounting changes resulted in a net loss for fiscal 1993. The net loss for 1993 was $26,759,000, compared to 1992 earnings of $95,174,000. The loss was a result of the adoption of Statement of 34 Financial Accounting Standards (SFAS) No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." SFAS No. 106 requires companies to accrue the cost of future retiree health care benefits in the year earned instead of the year paid. The Company also adopted SFAS No. 109, "Accounting for Income Taxes," under which deferred income taxes are adjusted to reflect tax rates currently in effect. Adopting the new accounting standards resulted in a net cumulative charge of $127,529,000 for 1993 and reduced current year operating earnings before cumulative effect of accounting changes by $3,900,000. Results from continuing operations before adoption of the noncash accounting changes more accurately reflect the Company's outstanding performance in 1993. Excluding the current year and cumulative effect of accounting changes, the Company earned $104,670,000, an improvement of $9,496,000 over 1992 results. Record sales of $2,853,997,000 exceeded 1992 sales by $40,346,000, or 1.4 percent. Sales tonnage volume for 1993 decreased 5.5 percent from 1992, reflecting reduced supplies of fresh pork available to Dubuque Foods, Inc., a wholly owned subsidiary, for a portion of the year when supplier FDL Foods, Inc., closed its Rochelle, Ill., pork slaughtering operation. The increase in sales dollar volume on reduced tonnage volume highlights the increase in pork raw material 35 prices and a product mix with significant increases in higher priced consumer-branded items. Earnings for the fourth quarter of 1993 were $43,662,000, compared to $42,021,000 last year. Earnings for the quarter include the current year effect of the accounting changes of $975,000. Dollar sales for the quarter were down 2.9 percent to $817,374,000 from $841,665,000 last year. The 1992 quarter included 14 weeks while the 1993 quarter included 13 weeks which accounts for the lower sales volume. Sales tonnage volume for the quarter decreased by 11.5 percent compared to last year, also reflecting the extra week in 1992 and the reduced pork supply at Dubuque Foods mentioned previously. Selling and delivery expenses for the quarter and year were $105,776,000 and $424,432,000, compared to $109,325,000 and $412,458,000 for the same periods in 1992. The decrease in the selling and delivery expenses for the fourth quarter of 1993 reflects reduced quarter sales compared to 1992. As a percentage of sales, selling and delivery expenses increased slightly to 14.9 percent from 14.7 percent in 1992. Administrative and general expenses were $19,244,000 and $67,302,000 for the quarter and to date, compared to $17,891,000 and $62,535,000 last year. The majority of this increase reflects the adoption of SFAS No. 106 in the fourth 36 quarter of 1993. Advertising and promotional expenses increased to $36,889,000 for the quarter and $162,308,000 for the year, compared to $32,700,000 and $144,553,000 in 1992. This emphasizes the Company's intent to expand its branded consumer products. Consistent with the favorable interest rate and inflationary environment in 1993, the Company reduced its key pension and other postretirement plan actuarial assumptions as of the August 1, 1993, measurement date, including a reduction in the discount rate to 7.75 percent (see Note D to the Consolidated Financial Statements). The net effect of these changes resulted in an increase in the minimum pension liability recorded under SFAS No. 87 at October 30, 1993. The Company's effective tax rate increased to 37.5 percent from 37 percent in 1992. As shown in Note F to the Consolidated Financial Statements, this reflects an increase in the federal statutory rate from 34 percent to 35 percent, effective January 1, 1993 (the Company's blended federal rate for 1993 was 34.83 percent). Liquidity and Sources of Capital The Company continues to have an exceptionally strong balance sheet. Cash and short-term marketable securities were $259,959,000 at the end 37 of 1994, compared to $172,420,000 last year. Long-term debt increased to $10,300,000 from $5,700,000 at the end of 1993. Long-term debt consists of industrial revenue bonds with varying maturities and a loan to finance an investment in an affordable housing fund. This liquidity and low debt load provide the Company with the ability to take advantage of expansion or acquisition opportunities that may arise. During 1994, items providing or requiring cash for operating activities were normal and in the ordinary course of business. Cash provided by operating activities was $199,141,000, compared to $99,752,000 in 1993. Cash required for investing activities in 1994 declined to $74,637,000 from $128,074,000 last year. There were no material acquisitions of businesses in 1994. Major construction projects during 1994 included pork slaughter and cutting renovations at the Hormel Foods plant in Fremont, Neb.; expansion of the gelatin processing operations at Davenport, Iowa, and a major expansion of the warehouse and shipping facilities at Jennie-O Foods, Inc. The Fremont and Davenport projects will continue into 1995. Additional projects being considered for 1995 are renovations at Rochelle Foods, Rochelle, Ill., and additional projects supporting the growth of Jennie-O Foods' business. Financial ratios for 1994 and 1993 are presented below: 38
Liquidity Ratios 1994 1993 Current ratio 2.7 2.7 Receivables turnover 13.7 14.0 Days sales in receivables 27.2 27.9 Inventory turnover 11.5 11.2 Days sales in inventory 31.0 34.4 Leverage Ratio Long-term debt to equity 1.6% 1.0% Operating Ratios Pretax profit* to net worth 31.0% 26.5% Pretax profit* to total assets 16.7% 16.1%
*Computed without cumulative effect of accounting changes for 1993. A Corporate Profile Having served the needs of generations of consumers for more than a century, Hormel Foods Corporation continues to successfully build upon its role as one of the leading processors and marketers of branded, value-added meat and food products. The broad industry arena in which Hormel Foods now competes nationally and internationally creates many new avenues of opportunity for long-term growth. 39 Hormel Foods and its family of subsidiaries manufacture, market and distribute thousands of processed food products which are known and respected by consumers, retail grocers, foodservice operators and industrial customers. Many of the Company's products are among the best known and trusted in the food industry. They not only enjoy strong brand identification and leading market shares but address important customer and consumer priorities for high standards of quality, taste, nutrition, convenience and value. Principal products of the Company are branded, processed meat and food entrees which are sold fresh, frozen, cured, smoked, cooked and canned. Included are sausages, hams, franks, bacon, canned luncheon meats, shelf-stable microwaveable entrees, stews, chilies, hash, meat spreads and frozen processed products. These and other products are sold in all 50 states by sales representatives coordinated from district and/or area sales offices located in most of the larger United States cities. These efforts are supported by brokers and distributors. A majority of the Company's products is sold under the Hormel brandmark. Other well-established trademarks which are familiar to consumers and have contributed to the Company's established reputation for uncompromising quality and value are as follows: 40 Black Label Layout Pack By George Light & Lean Cure 81 Light & Lean 97 Curemaster Little Sizzlers Di Lusso Mary Kitchen Dinty Moore Old Smokehouse Dubuque Quick Meal Farm Fresh Range Brand Fast'N Easy Rosa Grande Frank'N Stuff Sandwich Maker Homeland SPAM Jennie-O Top Shelf Kid's Kitchen Wranglers The Company's Corporate Offices are headquartered in Austin, Minn., as are its Research & Development Center and its 1,122,043 square foot "flagship" plant. Facilities for pork operations at the Austin plant are leased to Quality Pork Processors, Inc., under a custom slaughter arrangement which provides the Company with needed raw materials for production operations. A Hormel Foods plant in Fremont, Neb., is also a pork slaughtering and processing operation. A wholly owned subsidiary, 41 Rochelle Foods, Inc., Rochelle, Ill., provides the Company with additional raw materials through its pork slaughtering and processing operation. Facilities producing manufactured meat and food products are located in Algona, Iowa; Austin, Minn.; Beloit, Wis.; Davenport, Iowa; Fremont, Neb.; Houston, Texas; Knoxville, Iowa; Oklahoma City, Okla.; Stockton, Calif.; Tucker, Ga., and Wichita, Kan. Custom manufacturing of selected Hormel Foods products is performed by several companies adhering to strict Company specifications and quality guidelines. Dubuque Foods, Inc., a wholly owned subsidiary headquartered in Dubuque, Iowa, has a custom manufacturing agreement with FDL Foods, Inc., also based in Dubuque, whereby various consumer-branded and foodservice meat products are produced. Through two other wholly owned subsidiaries, Jennie-O Foods, Inc., Willmar, Minn., and Farm Fresh Catfish Company, Hollandale, Miss., Hormel Foods is a leading producer of whole and processed turkey products and grain-fed, farm-raised catfish which are sold through retail grocery stores and foodservice outlets. Another wholly owned subsidiary, Dan's Prize, Inc., headquartered in Cornelia, Ga., but with a manufacturing plant in Long Prairie, Minn., produces roast beef, corned beef, pastrami, prime rib and other cooked meats for 42 the foodservice and deli industries. Hormel Foods Corporation also operates in international areas, including the Philippines, Japan, Korea, Australia, England, Panama and other countries through Hormel Foods International Corporation (HFIC). With exports to more than 40 countries, HFIC continues to expand its presence around the globe. Hormel Foods Corporation is owned by approximately 10,500 stockholders and comprised of more than 9,500 employees, including subsidiaries. References appearing in boldface in this 1994 Annual Report to Stockholders represent valuable trademarks important to and owned by Hormel Foods Corporation or its subsidiaries. _ Hormel Foods Corporation 1995 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. EX-27
5 [TEXT]This schedule contains summary financial information extracted Geo. A. Hormel & Company consolidated financial statements and is qualified in its entirety by reference to such financial statements. 1,000 Oct-29-1994 12-MOS [FISCAL-YEAR-END] OCT-29-1994 NOV-1-1993 OCT-29-1994 248,599 11,360 228,369 0 199,243 708,215 637,221 366,335 1,196,718 264,917 10,300 9,007 0 0 12,064 1,196,718 3,064,793 3,064,793 2,345,492 2,345,492 0 0 2,523 191,070 73,095 117,975 0 0 0 117,975 1.54 1.54 -----END PRIVACY-ENHANCED MESSAGE-----