UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January ~~29, 2023~~28, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~___________________________________~~_______________ to ~~________________________________________~~_______________

Commission File Number: 1-2402

HORMEL FOODS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware						41-0319970
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


1 Hormel Place, Austin Minnesota						55912-3680
(Address of principal executive offices)						(Zip Code)

(507) 437-5611

(Registrant’s telephone number, including area code)

~~None~~Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock

$0.01465

par value

HRL

New York Stock Exchange

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

Outstanding at February 26, 2023

Common Stock

$.01465

par value

546,532,923

Common Stock Non-Voting

$.01

par value

Common Stock

Common Stock Nonvoting

Table of Contents

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Condensed Statements of Financial Position	5
	Consolidated Statements of Changes in ~~Shareholders'~~Shareholders’ Investment	6
	Consolidated Condensed Statements of Cash Flows	7
	Notes to ~~Consolidated~~the Co nsolidated Financial Statements
8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
	Results of Operations	20
		Overview	20
		Consolidated Results	20
		Segment Results	22
		Related Party Transactions	24
	Non-GAAP Financial Measures	24
	Liquidity and Capital Resources	26
	Critical Accounting Estimates	27
	Forward-looking Statements
28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
28
Item 4.	Controls and Procedures
~~PART II - OTHER INFORMATION~~29
PART II - OTHER INFORMATION		29
Item 1.	Legal Proceedings
29
Item 1A.	Risk Factors
30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
30
Item 6.3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	30
SIGNATURES		31

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

~~In thousands, except per share amounts~~

Unaudited

Quarter Ended

January 29, 2023

January 30, 2022

In thousands, except per share amounts

Net Sales

2,970,992

3,044,358

Cost of Products Sold

2,475,043

2,505,610

Cost of Products Sold

Gross Profit

495,949

538,749

Gross Profit

Selling, General, and Administrative

222,056

225,972

Equity in Earnings of Affiliates

15,559

6,898

Equity in Earnings of Affiliates

Operating Income

289,452

319,675

Interest and Investment Income

10,096

3,869

Interest and Investment Income

Interest Expense

18,347

14,640

Earnings Before Income Taxes

281,201

308,904

Earnings Before Income Taxes

Provision for Income Taxes

63,551

69,194

Net Earnings

217,651

239,710

Net Earnings

Less: Net Earnings (Loss) Attributable to Noncontrolling Interest

(69)

139

Less: Net Earnings (Loss) Attributable to Noncontrolling Interest

Net Earnings Attributable to Hormel Foods Corporation

217,719

239,571

Net Earnings Per Share

Basic

0.40

0.44

Basic

Diluted

0.40

0.44

Weighted-average Shares Outstanding

Basic

546,384

542,680

Diluted

550,031

547,928

Diluted

See Notes to the Consolidated Financial Statements

Table of Contents

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

~~In thousands~~

Unaudited

Quarter Ended

January 29, 2023

January 30, 2022

In thousands

Net Earnings

217,651

239,710

Other Comprehensive Income (Loss), Net of Tax:

Foreign Currency Translation

15,046

925

Pension and Other Benefits

2,990

2,535

Deferred Hedging

(14,514)

8,404

Pension and Other Benefits

Derivatives and Hedging

Equity Method Investments

Total Other Comprehensive Income (Loss)

3,522

11,864

Comprehensive Income

221,173

251,574

Comprehensive Income

Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest

154

258

Comprehensive Income Attributable to Hormel Foods Corporation

221,019

251,316

Comprehensive Income Attributable to Hormel Foods Corporation

See Notes to the Consolidated Financial Statements

Table of Contents

~~CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION~~

~~In thousands, except share and per share amounts~~

~~Unaudited~~

January 29, 2023 October 30, 2022
Assets
Cash and Cash Equivalents $ 599,789 $ 982,107
Short-term Marketable Securities 17,792 16,149
Accounts Receivable (Net of Allowance for Doubtful Accounts of
$3,481 at January 29, 2023, and $3,507 at October 30, 2022)
787,213 867,593
Inventories 1,730,086 1,716,059
Taxes Receivable 7,145 7,177
Prepaid Expenses 40,063 31,481
Other Current Assets 13,218 16,559
Total Current Assets 3,195,306 3,637,125
Goodwill 4,927,923 4,925,829
Other Intangibles 1,798,732 1,803,027
Pension Assets 242,358 245,566
Investments In and Receivables from Affiliates 701,629 271,058
Other Assets 292,697 283,169
Property, Plant, and Equipment
Land 73,952 74,303
Buildings 1,405,861 1,398,255
Equipment 2,641,581 2,636,660
Construction in Progress 226,908 216,246
Less: Allowance for Depreciation (2,223,900) (2,184,319)
Net Property, Plant, and Equipment 2,124,402 2,141,146
Total Assets $ 13,283,047 $ 13,306,919

~~See Notes to Consolidated Financial Statement~~s

~~Table of Contents~~

HORMEL FOODS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION

~~In thousands, except share and per share amounts~~

Unaudited

In thousands, except share and per share amounts

January 28, 2024

October 29, 2023

Assets

Cash and Cash Equivalents

Short-term Marketable Securities

Accounts Receivable (Net of Allowance for Doubtful Accounts of

$3,651 at January 28, 2024, and $3,557 at October 29, 2023)

Inventories

Prepaid Expenses and Other Current Assets

Total Current Assets

January 29, 2023

October 30, 2022

Liabilities and Shareholders' Investment

Goodwill

Other Intangibles

Pension Assets

Investments in Affiliates

Other Assets

Property, Plant, and Equipment

Land

Buildings

Equipment

Construction in Progress

Less: Allowance for Depreciation

Net Property, Plant, and Equipment

Total Assets

Liabilities and Shareholders’ Investment

Accounts Payable and Accrued Expenses

764,525

875,405

Accrued Marketing Expenses

133,240

113,105

Employee Related Expenses

213,540

279,072

Accrued Marketing Expenses

Employee-related Expenses

Interest and Dividends Payable

158,376

163,963

Taxes Payable

94,775

32,925

Current Maturities of Long-term Debt

8,929

8,796

Total Current Liabilities

1,373,385

1,473,266

Long-term Debt Less Current Maturities

3,292,559

3,290,549

Pension and Post-retirement Benefits

389,423

385,832

Deferred Income Taxes

471,457

475,212

Other Long-term Liabilities

137,230

141,840

Shareholders' Investment

Preferred Stock, Par Value $0.01 a Share–

—

Authorized 160,000,000 Shares: Issued–None

Common Stock, Non-voting, Par Value $0.01 a Share–

—

Authorized 400,000,000 Shares: Issued–None

Common Stock, Par Value $0.01465 a Share–

8,006

8,002

Authorized 1,600,000,000 Shares:

Shares Issued as of January 29, 2023: 546,465,522

Shares Issued as of October 30, 2022: 546,237,051

Shareholders’ Investment

Preferred Stock, Par Value $0.01 a Share —

Authorized 160,000,000 Shares; Issued — None

Preferred Stock, Par Value $0.01 a Share —

Authorized 160,000,000 Shares; Issued — None

Preferred Stock, Par Value $0.01 a Share —

Authorized 160,000,000 Shares; Issued — None

Common Stock, Nonvoting, Par Value $0.01 a Share —

Authorized 400,000,000 Shares; Issued — None

Common Stock, Par Value $0.01465 a Share — Authorized 1,600,000,000 Shares;

Shares Issued as of January 28, 2024: 547,595,988

Shares Issued as of October 29, 2023: 546,599,420

Additional Paid-in Capital

477,470

469,468

Accumulated Other Comprehensive Loss

(252,261)

(255,561)

Retained Earnings

7,380,689

7,313,374

Hormel Foods Corporation Shareholders' Investment

7,613,904

7,535,284

Hormel Foods Corporation Shareholders’ Investment

Noncontrolling Interest

5,089

4,936

Total Shareholders' Investment

7,618,993

7,540,219

Total Liabilities and Shareholders' Investment

13,283,047

13,306,919

Total Shareholders’ Investment

Total Liabilities and Shareholders’ Investment

See Notes to the Consolidated Financial Statements

Table of Contents

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ INVESTMENT

~~In thousands, except per share amounts~~

Unaudited


	Quarter Ended January 29, 2023																										Quarter Ended January 29, 2023
		Quarter Ended January 30, 2022																					Hormel Foods Corporation Shareholders

		Common Stock			Treasury Stock			Additional Paid-in Capital				Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non- controlling Interest		Total Shareholders’ Investment
		Shares	Amount		Shares	Amount
Balance at October 31, 2021		542,412	$	7,946	—	$	—			$	360,336			$	6,881,870	$	(277,269)	$	5,478	$	6,978,360
Net Earnings												239,571				139		239,710
	Common Stock																					Common Stock		Treasury Stock	Additional Paid-in Capital	Retained Earnings		Accumulated Other Comprehensive Income (Loss)	Non- controlling Interest	Total Shareholders’ Investment
In thousands, except per share amounts
Balance at October 30, 2022
Balance at October 30, 2022
Balance at October 30, 2022
Net Earnings (Loss)
Other Comprehensive Income (Loss)	Other Comprehensive Income (Loss)													11,745		119		11,864

Stock-based Compensation Expense	Stock-based Compensation Expense							6,328										6,328
Exercise of Stock Options/Restricted Shares		599	9					11,044										11,053

Declared Dividends – $0.2600 per Share												(140,990)						(140,990)
Balance at January 30, 2022		543,012	$	7,955	—	$	—	$	377,708			$	6,980,451	$	(265,524)	$	5,736	$	7,106,325

		Quarter Ended January 29, 2023

		Common Stock			Treasury Stock			Additional Paid-in Capital				Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non- controlling Interest		Total Shareholders’ Investment
		Shares	Amount		Shares	Amount
Balance at October 30, 2022		546,237	$	8,002	—	$	—			$	469,468			$	7,313,374	$	(255,561)	$	4,936	$	7,540,219
Net Earnings												217,719				(69)		217,651
Other Comprehensive Income (Loss)														3,300		222		3,522

Stock-based Compensation Expense

Stock-based Compensation Expense	Stock-based Compensation Expense							5,202										5,202
Exercise of Stock Options/Restricted Shares	Exercise of Stock Options/Restricted Shares	228	3					2,632										2,635

Declared Dividends – $0.2750 per Share	Declared Dividends – $0.2750 per Share							169				(150,405)						(150,236)
Declared Dividends – $0.2750 per Share
Declared Dividends – $0.2750 per Share
Balance at January 29, 2023	Balance at January 29, 2023	546,466	$	8,006	—	$	—	$	477,470			$	7,380,689	$	(252,261)	$	5,089	$	7,618,993

		Quarter Ended January 28, 2024
		Quarter Ended January 28, 2024
		Quarter Ended January 28, 2024
																							Hormel Foods Corporation Shareholders
	Common Stock																					Common Stock		Treasury Stock	Additional Paid-in Capital	Retained Earnings		Accumulated Other Comprehensive Income (Loss)	Non- controlling Interest	Total Shareholders’ Investment
In thousands, except per share amounts
Balance at October 29, 2023
Balance at October 29, 2023
Balance at October 29, 2023
Net Earnings (Loss)
Other Comprehensive Income (Loss)
Contribution from Noncontrolling Interest

Stock-based Compensation Expense
Stock-based Compensation Expense
Stock-based Compensation Expense
Exercise of Stock Options/Restricted Shares

Declared Dividends – $0.2825 per Share
Declared Dividends – $0.2825 per Share
Declared Dividends – $0.2825 per Share
Balance at January 28, 2024

See Notes to the Consolidated Financial Statements

Table of Contents

HORMEL FOODS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

~~In thousands~~

Unaudited

Quarter Ended

January 29, 2023

January 30, 2022

Quarter Ended

In thousands

January 28, 2024

January 29, 2023

Operating Activities

Net Earnings

217,651

239,710

Adjustments to Reconcile to Net Cash Provided by (Used in) Operating Activities:

Depreciation and Amortization

70,893

64,280

Depreciation and Amortization

Equity in Earnings of Affiliates

(15,559)

(6,898)

Distributions Received from Equity Method Investees

3,652

18,039

Provision for Deferred Income Taxes

(311)

366

Loss (Gain) on Property/Equipment Sales and Plant Facilities

(2,496)

1,593

Non-cash Investment Activities

Stock-based Compensation Expense

Non-cash Investment Activities

(7,839)

5,956

Stock-based Compensation Expense

5,202

6,328

Changes in Operating Assets and Liabilities, Net of Acquisitions:

Operating Lease Cost

Other Non-cash, Net

Changes in Operating Assets and Liabilities:

Decrease (Increase) in Accounts Receivable

79,561

85,079

Decrease (Increase) in Inventories

(11,766)

(16,251)

Decrease (Increase) in Prepaid Expenses and Other Assets

(34,538)

10,143

Increase (Decrease) in Pension and Post-retirement Benefits

10,710

(2,533)

Increase (Decrease) in Accounts Payable and Accrued Expenses

(171,368)

(85,554)

Increase (Decrease) in Net Income Taxes Payable

59,837

63,498

Net Cash Provided by (Used in) Operating Activities

203,629

383,756

Investing Activities

Net (Purchase) Sale of Securities

(833)

(1,611)

Net Sale (Purchase) of Securities

Purchases of Property and Equipment

(37,052)

(49,747)

Proceeds from Sales of Property and Equipment

5,016

388

Decrease (Increase) in Investments, Equity in Affiliates, and Other Assets

(418,616)

1,290

Purchases of Property, Plant, and Equipment

Proceeds from Sales of Property, Plant, and Equipment

Proceeds from (Purchases of) Affiliates and Other Investments

Proceeds from Company-owned Life Insurance

—

Net Cash Provided by (Used in) Investing Activities

(451,469)

(49,680)

Financing Activities

Repayments of Long-term Debt and Finance Leases

(2,189)

(2,163)

Dividends Paid on Common Stock

(142,017)

(132,909)

Proceeds from Exercise of Stock Options

2,635

11,053

Proceeds from Exercise of Stock Options

Proceeds from Noncontrolling Interest

Net Cash Provided by (Used in) Financing Activities

(141,570)

(124,019)

Effect of Exchange Rate Changes on Cash

7,093

846

Increase (Decrease) in Cash and Cash Equivalents

(382,318)

210,904

Cash and Cash Equivalents at Beginning of Year

982,107

613,530

Cash and Cash Equivalents at End of Quarter

599,789

824,434

Cash and Cash Equivalents at End of Period

See Notes to the Consolidated Financial Statements

Table of Contents

HORMEL FOODS CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation:The accompanying unaudited consolidated financial statements of Hormel Foods Corporation (the Company) have been prepared in accordance with accounting principles generally accepted in the United States (U.S.) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include certain information and footnotes required by U.S. generally accepted accounting principles (GAAP) for comprehensive financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results and cash flows for the interim period are not necessarily indicative of the results that may be expected for the full year.

These statements should be reviewed in conjunction with the consolidated financial statements and associated notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended October ~~30, 2022.~~29, 2023. The significant accounting policies used in preparing these interim consolidated financial statements are consistent with those described in Note A - Summary of Significant Accounting Policies to the consolidated financial statements in the Form 10-K. The Company has determined there have been no material changes in the Company’s significant accounting policies, including estimates and assumptions, as disclosed in its Annual Report on Form 10-K for the fiscal year ended October ~~30, 2022.~~29, 2023.

Rounding: Certain amounts in the Consolidated Financial Statements and associated notes may not foot due to rounding. All percentages have been calculated using unrounded amounts.

Reclassifications: Certain reclassifications of previously reported amounts have been made to conform to the current year presentation.

~~Reportable Segments:~~ As Amortization related to operating leases and debt issuance costs were reclassified from Amortization to separate line items within the operating activities section of ~~October 30, 2022,~~ the ~~Company had four operating and reportable segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store and International and Other. At the beginning~~Consolidated Condensed Statements of fiscal 2023, the Company transitioned to a new strategic operating model, which aligns its businesses to be more agile, consumer and customer focused, and market driven. Effective on October 31, 2022, the Company operates with the following three operating and reportable segments: Retail, Foodservice, and International, which are consistent with how the Company's chief operating decision maker assesses performance and allocates resources. This changeCash Flows. These reclassifications had no impact on the ~~consolidated results~~Consolidated Statements of ~~operations, financial position, shareholders' investment,~~Operations, Consolidated Condensed Statements of Financial Position, or ~~cash flows. Prior period segment results have been retrospectively recast to reflect~~ the ~~new reportable segments.~~Increase (Decrease) in Cash and Cash Equivalents in the Consolidated Condensed Statements of Cash Flows.

Accounting Changes and Recent Accounting Pronouncements:

New Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and requires retrospective application to all prior periods presented in the financial statements. The Company is currently assessing the timing and impact of adopting the updated provisions.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The update is intended to enhance transparency and decision usefulness of income tax disclosures. This ASU updates income tax disclosure requirements by requiring specific categories and greater disaggregation within the rate reconciliation and disaggregation of income taxes paid by jurisdiction. The update is effective for fiscal years beginning after December 15, 2024 with early adoption permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.

Recently issued accounting standards or pronouncements not disclosed have been excluded as they are currently not relevant to the Company.

Table of Contents

NOTE B - GOODWILL AND INTANGIBLE ASSETS

Goodwill:As a result of the organizational changes referenced in Note A - Summary of Significant Accounting Policies, the Company conducted an assessment of its operating segments and reporting units. Based on this analysis, goodwill was reallocated using the relative fair value approach. Subsequent to the goodwill reclassification, the Company completed quantitative impairment testing on each reporting unit. The fair value of each reporting unit exceeded its carrying amount, therefore, no impairment charges were recorded. The change in the carrying ~~amounts~~amount of goodwill for the quarter ended January ~~29, 2023, are:~~28, 2024, is:

in thousands Retail Foodservice International Total
Balance at October 30, 2022 $ 2,916,796 $ 1,750,594 $ 258,440 $ 4,925,829
Foreign Currency Translation — — 2,093 2,093
Balance at January 29, 2023 $ 2,916,796 $ 1,750,594 $ 260,533 $ 4,927,923


In thousands	Retail		Foodservice		International		Total





Balance at October 29, 2023	$	2,916,796	$	1,750,594	$	261,074	$	4,928,464

Foreign Currency Translation	—		—		2,793		2,793
Balance at January 28, 2024	$	2,916,796	$	1,750,594	$	263,867	$	4,931,257

Intangible Assets:The carrying amounts for indefinite-lived intangible assets are:


in thousands		January 29, 2023		October 30, 2022
Brands/Tradenames/Trademarks		$	1,665,190	$	1,665,190
In thousands						In thousands	January 28, 2024	October 29, 2023
Brands/Trade Names/Trademarks
Other Intangibles	Other Intangibles	184		184
Foreign Currency Translation	Foreign Currency Translation	(6,372)		(6,599)
Total	Total	$	1,659,002	$	1,658,775

The gross carrying amount and accumulated amortization for definite-lived intangible assets are:


		January 29, 2023				October 30, 2022
in thousands		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization

										January 28, 2024	October 29, 2023
In thousands
Customer Lists/Relationships
Customer Lists/Relationships
Customer Lists/Relationships	Customer Lists/Relationships	$	168,239	$	(72,995)	$	168,239	$	(69,779)
Other Intangibles	Other Intangibles	59,241		(12,669)		59,241		(11,606)
Tradenames/Trademarks		6,540		(4,161)		10,536		(7,828)
Other Intangibles
Other Intangibles
Trade Names/Trademarks
Trade Names/Trademarks
Trade Names/Trademarks

Foreign Currency Translation

Foreign Currency Translation

Foreign Currency Translation	Foreign Currency Translation	—		(4,465)		—		(4,551)
Total	Total	$	234,020	$	(94,290)	$	238,016	$	(93,764)
Total
Total

Amortization expense ~~was $4.6 million for the quarter ended January 29, 2023, compared to $4.8 million for the quarter ended January 30, 2022.~~on intangible assets is as follows:


	Quarter Ended
In thousands	January 28, 2024		January 29, 2023
Amortization Expense	$	4,463	$	4,607

Estimated annual amortization expense on intangible assets for the five fiscal years after October ~~30, 2022,~~29, 2023, is as follows:


in thousands		Amortization Expense
2023		$	18,320
In thousands				In thousands	Amortization Expense
2024	2024	16,331
2025	2025	14,628
2026	2026	14,172
2027	2027	13,940
2028

~~NOTE C - INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES~~

The Company accounts for its majority-owned operations under the consolidation method. Investments in which the Company owns a minority interest and for which there are no other indicators of control are accounted for under the equity method. These investments, along with any related receivables from affiliates, are included in the Consolidated Condensed Statements of Financial Position as Investments In and Receivables From Affiliates. Financial results for certain foreign entities are reported on a lag. The Company reviewed the investments in affiliates as of January 29, 2023, and did not recognize any other-than-temporary impairment.

109

Table of Contents

NOTE C - INVESTMENTS IN AFFILIATES

Equity in Earnings of Affiliates consists of:


		Quarter Ended
In thousands	% Owned	January 28, 2024		January 29, 2023
MegaMex Foods, LLC(1)	50%	$	8,091	$	13,681
Other Equity Method Investments(2)	Various (20-50%)	8,000		1,878
Total Equity in Earnings of Affiliates		$	16,091	$	15,559

(1) MegaMex, Foods, LLC, is reflected in the Retail Segment.

(2) Other Equity Method Investments are primarily reflected in the International Segment but also include corporate venturing investments.

Distributions received from equity method investees include:


	Quarter Ended
In thousands	January 28, 2024		January 29, 2023
Dividends	$	15,731	$	3,652

On December 15, 2022, the Company purchased from various minority shareholders a 29% common stock interest in PT Garudafood Putra Putri Jaya Tbk (Garudafood), a food and beverage company in Indonesia. On April 12, 2023, the Company purchased additional shares increasing the ownership interest to 30%. This investment expands the ~~Company's~~Company’s presence in Southeast Asia and supports the global execution of the entertaining and snacking ~~and entertaining strategic priority.~~strategy. The Company has the ability to exercise significant influence, but not control, over Garudafood; therefore, the investment is accounted for under the equity method.

The Company obtained ~~the~~its Garudafood interest ~~from various minority shareholders~~ for a purchase price of ~~$410.6~~$425.8 million, including associated transaction costs. The transaction was funded using the ~~Company's~~Company’s cash on hand. Based on a ~~preliminary~~third-party valuation, ~~as of January 29, 2023,~~ the ~~Company estimated the initial~~Company’s basis difference between the fair value of the investment and proportionate share of the carrying value of ~~Garudafood's~~Garudafood’s net assets is ~~approximately $300~~$324.8 million. The basis difference related to inventory, property, plant and equipment, and ~~other~~certain intangible assets ~~will be~~is being amortized through Equity in Earnings of Affiliates over the associated useful ~~lives~~lives. As of January 28, 2024, the ~~assets. The Company expects to finalize the valuation, allocation, and applicable amortization of~~remaining basis difference inwas $324.9 million, which includes the ~~second quarter~~impact of ~~fiscal 2023 and does not anticipate any material impact to the consolidated financial statements.~~foreign currency translation. Based on quoted market prices, the fair value of the common stock held in Garudafood was $279.4 million as of January ~~27, 2023, was $338.7 million.~~

~~Equity in Earnings of Affiliates consists of:~~

Quarter Ended
in thousands % Owned

Segment
January 29, 2023 January 30, 2022
MegaMex Foods, LLC 50% Retail $ 13,681 $ 6,995
Other Joint Ventures Various (20-50%) International 1,878 (97)
Total $ 15,559 $ 6,898

~~For the quarter ended January 29, 2023, $3.7 million of dividends were received from affiliates, compared to $18.0 million of dividends received for the quarter ended January 30, 2022.~~26, 2024.

The Company recognized a basis difference of $21.3 million associated with the formation of MegaMex Foods, LLC, of which ~~$9.9~~$9.1 million is remaining as of January ~~29, 2023.~~28, 2024. This difference is being amortized through Equity in Earnings of Affiliates.

NOTE D - INVENTORIES

Principal components of inventories are:


in thousands		January 29, 2023		October 30, 2022
In thousands						In thousands	January 28, 2024	October 29, 2023
Finished Products	Finished Products	$	981,588	$	974,160
Raw Materials and Work-in-Process	Raw Materials and Work-in-Process	447,675		440,193
Operating Supplies	Operating Supplies	201,743		206,289
Maintenance Materials and Parts	Maintenance Materials and Parts	99,079		95,417
Total		$	1,730,086	$	1,716,059
Total Inventories

NOTE E - DERIVATIVES AND HEDGING

The Company uses hedging programs to manage risk associated with commodity purchases and interest rates. These programs utilize futures, swaps, and options contracts to manage the Company’s exposure to market fluctuations. The Company has determined its designated hedging programs to be highly effective in offsetting the changes in fair value or cash flows generated by the items hedged. Effectiveness testing is performed on a quarterly basis to ascertain a high level of effectiveness for cash flow and fair value hedging programs. If the requirements of hedge accounting are no longer met, hedge accounting is discontinued immediately and any future changes to fair value are recorded directly through earnings.

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Cash Flow Commodity Hedges: The Company ~~designates grain, lean hog, and natural gas~~uses futures, swaps, and options ~~used~~contracts to offset price fluctuations in the ~~Company’s~~Company's future purchases of ~~these commodities~~grain, lean hogs, natural gas, and diesel fuel. These contracts are designated as cash flow ~~hedges. Effective~~hedges; therefore, effective gains or losses related to these cash flow hedges are reported in Accumulated Other Comprehensive Loss (AOCL) and reclassified into earnings, through Cost of Products Sold, in the periods in which the hedged transactions affect earnings. The Company typically does not hedge its grain, or natural gas, or diesel fuel exposure beyond the next two upcoming fiscal years and its lean hog exposure beyond the next fiscal year.

Fair Value Commodity Hedges:The Company designates the futures it uses to minimize the price risk assumed when fixed forward priced contracts are offered to the Company’s ~~commodity~~lean hog and grain suppliers as fair value hedges. The ~~intent of the program is~~programs are intended to make the forward priced commodities cost nearly the same as cash market purchases at the date of delivery. Changes in the fair value of the futures contracts and the gain or loss on the hedged purchase commitment are marked-to-market through earnings and recorded on the Consolidated Condensed Statements of Financial Position as a Current Asset and Current Liability, respectively. Gains or losses related to these fair value hedges are recognized through Cost of Products Sold in the periods in which the hedged transactions affect earnings.

Cash Flow Interest Rate Hedges:In the second quarter of fiscal 2021, the Company designated two separate interest rate locks as cash flow hedges to manage interest rate risk associated with the anticipated debt transactions required to fund the acquisition of the Planters® snack nuts business. The total notional amount of the ~~Company's~~Company’s locks was $1.25 billion. In the third quarter of fiscal 2021, the associated unsecured senior notes were issued with a tenor of seven and thirty years and both locks were lifted (See Note IJ - Long-Term Debt and Other Borrowing Arrangements). Mark-to-market gains and losses on these instruments were deferred as a component of AOCL. The resulting gain in AOCL is reclassified to Interest Expense in the period in which the hedged transactions affect earnings.

Fair Value Interest Rate Hedge: In the first quarter of fiscal 2022, the Company entered into an interest rate swap to protect against changes in the fair value of a portion of previously issued senior unsecured notes attributable to the change in the benchmark interest rate. The hedge specifically designated the last $450 million of the notes due June 2024 (the 2024 Notes). The Company terminated the swap in the fourth quarter of fiscal 2022. The loss related to the swap was recorded as a fair value hedging adjustment to the hedged debt and will be amortized ~~into~~through earnings over the remaining life of the debt.

Other Derivatives:The Company holds certain futures ~~contract positions as part of a merchandising program~~ and swap contracts to manage the Company’s exposure to fluctuations in grain and pork commodity markets. The Company has not applied hedge accounting to these positions. Activity related to derivatives not designated as hedges is immaterial to the consolidated financial statements.

Volume: The Company's outstanding contracts related to its commodity hedging programs include:


	~~Volume~~
inIn millions	January ~~29, 2023~~28, 2024	October ~~30, 2022~~29, 2023
Corn	~~30.4~~24.8 bushels	~~34.3~~30.7 bushels
Lean Hogs	~~205.6~~158.2 pounds	~~177.5~~144.2 pounds
Natural Gas	~~0.1~~3.5 MMBtu	3.0 MMBtu
Diesel Fuel	0.3 gallons	— ~~MMBtu~~gallons

Fair Value of Derivatives: The gross fair values of the Company’s derivative instruments designated as hedges are:

Gross Fair Value

in thousands

Location on Consolidated Condensed Statements of Financial Position

January 29, 2023

October 30, 2022

In thousands

Location on Consolidated Condensed Statements of Financial Position

January 28, 2024

October 29, 2023

Commodity Contracts(1)

Other Current Assets

7,407

13,504

(1)Amounts represent the gross fair value of commodity derivative assets and liabilities. The Company nets the derivative assets and liabilities for each of its commodity hedging programs, including cash collateral, when a master netting arrangement exists between the Company and the counterparty to the derivative contract. The amount or timing of cash collateral balances may impact the classification of the commodity derivative inon the Consolidated Condensed Statements of Financial Position. The gross ~~asset~~liability position as of January ~~29, 2023, includes~~28, 2024, is offset by the right to reclaim net cash collateral of ~~$8.0~~$24.5 million contained within the master netting arrangement. The gross ~~asset~~liability position as of October ~~30, 2022,~~29, 2023, is offset by the ~~obligation~~right to ~~return~~reclaim net cash collateral of ~~$1.3~~$32.2 million. See Note H - Fair Value Measurements for a discussion of these net amounts as reported inon the Consolidated Condensed Statements of Financial Position.

~~Table of Contents~~

Fair Value Hedge - Assets (Liabilities): The carrying amount of the ~~Company's~~Company’s fair value hedged assets (liabilities) are:

Carrying Amount of Hedged
Assets/(Liabilities)

in thousands

Location on Consolidated Condensed Statements of Financial Position

January 29, 2023

October 30, 2022

In thousands

Location on Consolidated Condensed Statements of Financial Position

January 28, 2024

October 29, 2023

Commodity Contracts

Accounts Payable(1)

(513)

5,725

Interest Rate Contracts

Long-term Debt - Less Current Maturities(2)

(433,174)

(430,050)

(1) Represents the carrying amount of fair value hedged assets and liabilities, which are offset by other assets included in master netting arrangements described above.

(2) Represents the carrying amount of the hedged portion of the 2024 Notes. As of January ~~29, 2023,~~28, 2024, the carrying amount of the 2024 Notes included a cumulative fair value hedging adjustment of ~~$16.8~~$4.3 million from discontinued hedges.

Table of Contents

Accumulated Other Comprehensive Loss Impact: As of January ~~29, 2023,~~28, 2024, the Company included in AOCL hedging ~~gains~~losses (before tax) of ~~$7.1~~$17.3 million on commodity contracts and ~~$13.2~~gains (before tax) of $12.2 million related to interest rate settled positions. The Company expects to recognize the majority of the ~~gains~~losses on commodity contracts over the next twelve months. Gains on interest rate contracts offset the hedged interest payments over the tenor of the associated debt instruments.

The effect ofon AOCL for gains or losses (before tax) related to the Company's derivative instruments are:

Gain/(Loss)
Recognized
in AOCL (1)
Gain/(Loss)
Reclassified from
AOCL into Earnings (1)
Location on
Consolidated
Statements
of Operations
Quarter Ended Quarter Ended
in thousands January 29, 2023 January 30, 2022 January 29, 2023 January 30, 2022
Cash Flow Hedges:
Commodity Contracts $ (8,390) $ 20,279 $ 10,859 $ 7,746 Cost of Products Sold
Excluded Component (2)
345 (1,172) — —
Interest Rate Contracts — — 247 247 Interest Expense


	Gain/(Loss) Recognized in AOCL(1)				Gain/(Loss) Reclassified from AOCL into Earnings(1)				Location on Consolidated Statements of Operations
	Quarter Ended				Quarter Ended
In thousands	January 28, 2024		January 29, 2023		January 28, 2024		January 29, 2023
Cash Flow Hedges
Commodity Contracts	$	(5,613)	$	(8,390)	$	(11,601)	$	10,859	Cost of Products Sold
Excluded Component(2)	1,156		345		—		—
Interest Rate Contracts	—		—		247		247		Interest Expense

(1) See Note G - Accumulated Other Comprehensive Loss for the after-tax impact of these gains or losses on Net Earnings.

(2) Represents the time value of ~~corn~~commodity options excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in AOCL.

~~Table of Contents~~

Consolidated Statements of Operations Impact: The effect on the Consolidated Statements of Operations for gains or losses (before tax) related to the ~~Company's~~Company’s derivative instruments are:

Consolidated Statements of Operations Impact
Quarter Ended
in thousands January 29, 2023 January 30, 2022
Net Earnings Attributable to Hormel Foods Corporation $ 217,719 $ 239,571
Cash Flow Hedges - Commodity Contracts
Gain (Loss) Reclassified from AOCL 10,859 7,746
Amortization of Excluded Component from Options (1,412) (825)
Fair Value Hedges - Commodity Contracts
Gain (Loss) on Commodity Futures (1)
(3,022) (3,650)
Total Gain (Loss) on Commodity Contracts (2)
$ 6,425 $ 3,271
Cash Flow Hedges - Interest Rate Locks
Gain (Loss) Reclassified from AOCL 247 247
Fair Value Hedge - Interest Rate Swap
Gain (Loss) on Interest Rate Swap — 792
Amortization of Loss Due to Discontinuance of Fair Value Hedge (3)
(3,125) —
Total Gain (Loss) on Interest Rate Contracts (4)
$ (2,878) $ 1,039
Total Gain (Loss) Recognized in Earnings $ 3,547 $ 4,310


	Quarter Ended
In thousands	January 28, 2024		January 29, 2023
Net Earnings Attributable to Hormel Foods Corporation	$	218,863	$	217,719

Cash Flow Hedges - Commodity Contracts
Gain (Loss) Reclassified from AOCL	(11,601)		10,859
Amortization of Excluded Component from Options	(1,156)		(1,412)

Fair Value Hedges - Commodity Contracts
Gain (Loss) on Commodity Futures(1)	3,595		(3,022)
Total Gain (Loss) on Commodity Contracts(2)	(9,163)		6,425

Cash Flow Hedges - Interest Rate Contracts
Gain (Loss) Reclassified from AOCL	247		247
Fair Value Hedge - Interest Rate Contracts

Amortization of Loss Due to Discontinuance of Fair Value Hedge(3)	(3,125)		(3,125)
Total Gain (Loss) on Interest Rate Contracts(4)	(2,878)		(2,878)

Total Gain (Loss) Recognized in Earnings	$	(12,040)	$	3,547

(1) Represents gains or losses on commodity contracts designated as fair value hedges that were closed during the quarter ended January 28, 2024, and January 29, 2023, which were offset by a corresponding gain or loss on the underlying hedged purchase commitment. Additional gains or losses related to changes in the fair value of open commodity contracts, along with the offsetting gain or loss on the hedged purchase commitment, are also marked-to-market through earnings with no impact on a net basis.

(2)Total Gain (Loss) on Commodity Contracts is recognized in earnings through Cost of Products Sold.

(3) Represents the fair value hedging adjustment amortized ~~into~~through earnings.

(4) Total Gain (Loss) on Interest Rate Contracts is recognized in earnings through Interest Expense.

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NOTE F - PENSION AND OTHER POST-RETIREMENT BENEFITS

Net periodic ~~benefit~~ cost for pension and other post-retirement benefit plans consists of:

Pension Benefits

Quarter Ended

in thousands

January 29, 2023

January 30, 2022

Pension Benefits

In thousands

Service Cost

8,902

10,019

Interest Cost

17,157

12,640

Interest Cost

Expected Return on Plan Assets

(19,571)

(27,062)

Amortization of Prior Service Cost

(460)

(374)

Amortization of Prior Service Cost

Recognized Actuarial (Gain) Loss

3,325

3,132

Net Periodic Cost

9,353

(1,645)

Net Periodic Cost

Post-retirement Benefits

Quarter Ended

in thousands

January 29, 2023

January 30, 2022

Post-retirement Benefits

In thousands

Service Cost

117

Interest Cost

3,014

1,919

Interest Cost

Amortization of Prior Service Cost

Recognized Actuarial (Gain) Loss

(7)

610

Net Periodic Cost

3,070

2,648

Net Periodic Cost

Non-service cost components of net pension and ~~postretirement~~post-retirement benefit cost are presented within Interest and Investment Income onin the Consolidated Statements of Operations.

NOTE G - ACCUMULATED OTHER COMPREHENSIVE LOSS

Components of Accumulated Other Comprehensive Loss are as follows:


in thousands	Foreign Currency Translation		Pension & Other Benefits			Derivatives & Hedging			Accumulated Other Comprehensive Loss
Balance at October 30, 2022	$	(89,793)	$	(195,624)		$	29,856		$	(255,561)
Unrecognized Gains (Losses)
Gross	14,824		1,100			(8,044)			7,879
Tax Effect			(266)			1,953			1,687
Reclassification into Net Earnings									0
Gross			2,860		(1)	(11,106)		(2)	(8,247)
Tax Effect			(703)			2,684			1,980
Net of Tax Amount	14,824		2,990			(14,514)			3,300
Balance at January 29, 2023	$	(74,969)	$	(192,635)		$	15,343		$	(252,261)
In thousands											In thousands	Foreign Currency Translation	Pension & Other Benefits	Derivatives & Hedging	Equity Method Investments	Accumulated Other Comprehensive Loss

Balance at October 29, 2023

Balance at October 29, 2023

Balance at October 29, 2023
Unrecognized Gains (Losses)
Gross
Gross
Gross
Tax Effect
Reclassification into Net Earnings
Gross
Gross
Gross
Tax Effect
Change Net of Tax
Balance at January 28, 2024

(1) Included in ~~the~~ computation of net periodic cost. See Note F - Pension and Other Post-Retirement Benefits for additional information.

(2) Included in Cost of Products Sold and Interest Expense in the Consolidated Statements of Operations. See Note E - Derivatives and Hedging for additional information.

(3) Included in Equity in Earnings of Affiliates in the Consolidated Statements of Operations.

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NOTE H - FAIR VALUE MEASUREMENTS

Accounting guidance establishes a fair value hierarchy which requires assets and liabilities measured at fair value to be categorized into one of the three levels below based on the inputs used in the valuation.

Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Observable inputs, other than those included in Level 1, based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets.

Level 3: Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances.

The Company’s financial assets and liabilities carried at fair value on a recurring basis ~~as of January 29, 2023, and October 30, 2022,~~ and their level within the fair value hierarchy are presented in the ~~table~~tables below.

Fair Value Measurements at January 29, 2023
in thousands
Total Fair
Value
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets at Fair Value
Cash and Cash Equivalents (1)
$ 599,789 $ 599,204 $ 586 $ —
Short-term Marketable Securities (2)
17,792 9,419 8,373 —
Other Trading Securities (3)
193,273 — 193,273 —
Commodity Derivatives (4)
11,607 11,619 (12) —
Total Assets at Fair Value $ 822,461 $ 620,242 $ 202,220 $ —
Liabilities at Fair Value
Deferred Compensation (3)
$ 60,205 $ — $ 60,205 $ —
Total Liabilities at Fair Value $ 60,205 $ — $ 60,205 $ —


	Fair Value Measurements at January 28, 2024
In thousands	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at Fair Value
Cash and Cash Equivalents(1)	$	963,212	$	957,910	$	5,302	$	—
Short-term Marketable Securities(2)	18,712		3,459		15,253		—
Other Trading Securities(3)	199,690		—		199,690		—
Commodity Derivatives(4)	5,365		7,767		(2,402)		—
Total Assets at Fair Value	$	1,186,979	$	969,136	$	217,844	$	—
Liabilities at Fair Value
Deferred Compensation(3)	$	60,658	$	—	$	60,658	$	—
Total Liabilities at Fair Value	$	60,658	$	—	$	60,658	$	—

Fair Value Measurements at October 30, 2022
in thousands
Total Fair
Value
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets at Fair Value
Cash and Cash Equivalents (1)
$ 982,107 $ 980,730 $ 1,377 $ —
Short-term Marketable Securities (2)
16,149 8,763 7,386 —
Other Trading Securities (3)
186,243 — 186,243 —
Commodity Derivatives (4)
12,448 12,228 220 —
Total Assets at Fair Value $ 1,196,947 $ 1,001,721 $ 195,226 $ —
Liabilities at Fair Value
Deferred Compensation (3)
$ 57,790 $ — $ 57,790 $ —
Total Liabilities at Fair Value $ 57,790 $ — $ 57,790 $ —


	Fair Value Measurements at October 29, 2023
In thousands	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at Fair Value
Cash and Cash Equivalents(1)	$	736,532	$	735,387	$	1,145	$	—
Short-term Marketable Securities(2)	16,664		2,499		14,164		—
Other Trading Securities(3)	188,162		—		188,162		—
Commodity Derivatives(4)	9,330		9,603		(273)		—
Total Assets at Fair Value	$	950,688	$	747,489	$	203,199	$	—
Liabilities at Fair Value
Deferred Compensation(3)	$	55,222	$	—	$	55,222	$	—
Total Liabilities at Fair Value	$	55,222	$	—	$	55,222	$	—

The following methods and assumptions were used to estimate the fair value of the financial assets and liabilities above:

(1) The Company’s cash equivalents considered Level 1 consist primarily of bank deposits, money market funds rated AAA, or other highly liquid investment accounts, and have a maturity date of three months or less. Cash equivalents considered Level 2 are funds holding agency bonds or securities recognized at amortized cost.

(2) The Company holds securities as part of a portfolio maintained to generate investment income and to provide cash for operations of the Company, if necessary. The portfolio is managed by a third party who is responsible for daily trading activities, and all assets within the portfolio are highly liquid. The cash, U.S. government securities, and money market funds rated AAA held by the portfolio are classified as ~~Level 1. The current investment portfolio also includes corporate~~

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Level 1. The current investment portfolio also includes corporate bonds and other asset backed securities for which there is an active, quoted market. Market prices are obtained from a variety of industry providers, large financial institutions, and other third-party sources to calculate a representative daily market value, and therefore, these securities are classified as Level 2.

(3) The Company maintains a rabbi trust to fund certain supplemental executive retirement plans and deferred compensation plans. The majority of the funds held in the rabbi trust relate to supplemental executive retirement plans and have been invested primarily in fixed income funds managed by a third party. The declared rate on these funds is set based on a formula using the yield of the general account investment portfolio supporting the fund as adjusted for expenses and other charges. The rate is guaranteed for one year at issue and may be reset annually on the policy anniversary, subject to a guaranteed minimum rate. As the value is based on adjusted market rates and the fixed rate is only reset on an annual basis, these funds are classified as Level 2.

Under the ~~Company's~~Company’s deferred compensation plans, participants can defer certain types of compensation and elect to receive a return based on the changes in fair value of various investment options, which include equity securities, money market accounts, bond funds, or other portfolios for which there is an active quoted market. The Company also offers a fixed rate investment option to participants. The rate earned on these investments is adjusted annually based on a specified ~~percentage~~percent of the ~~I.R.S.~~U.S. Internal Revenue Service (IRS) applicable federal rates. These liabilities are classified as Level 2. The Company maintains funding in the rabbi trust generally mirroring the selections within the deferred compensation plans. These funds are managed by a third-party insurance policy, the values of which represent their cash surrender value based on the fair value of the underlying investments in the account. These policies are classified as Level 2.

The rabbi trust is included in Other Assets and deferred compensation liabilities in Other Long-term Liabilities on the Consolidated Condensed Statements of Financial Position. Securities held by the rabbi trust are classified as trading securities. Unrealized gains and losses associated with these investments are included in the Company's earnings. During the quarter ended January ~~29, 2023,~~28, 2024, securities held by the rabbi trust generated gains of ~~$7.0~~$11.5 million, compared to ~~losses~~gains of ~~$5.4~~$7.0 million for the quarter ended January ~~30, 2022.~~29, 2023.

(4) The Company’s commodity derivatives represent futures, swaps, and options contracts used in its hedging or other programs to offset price fluctuations associated with purchases of corn, natural gas, diesel fuel, hogs, and ~~hogs,~~pork, and to minimize the price risk assumed when forward priced contracts are offered to the Company’s commodity suppliers. The Company’s futures and options contracts for corn are traded on the Chicago Board of Trade, while futures contracts for lean hogs are traded on the Chicago Mercantile Exchange. These are active markets with quoted prices available, and these contracts are classified as Level 1. The ~~Company’s~~Company holds natural gas, diesel fuel, and pork swap contracts that are over-the-counter instruments classified as Level ~~2 whose~~2. The value of the natural gas and diesel fuel swap contracts is calculated using ~~natural gas future~~quoted prices ~~quoted~~ from the New York Mercantile ~~Exchange.~~Exchange, and the value of the pork swap contracts are calculated using a futures implied USDA estimated pork cut-out value. All derivatives are reviewed for potential credit risk and risk of nonperformance. The net balance for commodity derivatives is included in Other Current Assets or Accounts Payable, as appropriate, inon the Consolidated Condensed Statements of Financial Position. As of January ~~29, 2023,~~28, 2024, the Company has recognized the right to reclaim net cash collateral of ~~$8.0~~$24.5 million from various counterparties (including cash of ~~$7.4~~$22.3 million plus ~~$0.6~~$2.2 million of realized gain). As of October ~~30, 2022,~~29, 2023, the Company had recognized the ~~obligation~~right to ~~return~~reclaim net cash collateral of ~~$1.3~~$32.2 million from various counterparties (including cash of ~~$27.5~~$42.6 million less ~~$26.2~~$10.4 million of realized ~~gain)~~loss).

The Company’s financial assets and liabilities include accounts receivable, accounts payable, and other liabilities, for which carrying value approximates fair value. The Company does not carry its long-term debt at fair value ~~in its~~on the Consolidated Condensed Statements of Financial Position. The fair value of long-term debt, utilizing discounted cash flows (Level 2), was $2.8 billion as of January ~~29, 2023,~~28, 2024, and $2.7 billion as of October ~~30, 2022.~~29, 2023. See Note IJ - Long-Term Debt and Other Borrowing Arrangements for additional information.

The Company measures certain nonfinancial assets and liabilities at fair value, which are recognized or disclosed on a nonrecurring basis (e.g., goodwill, intangible assets, and property, plant, and equipment). ~~During the quarter ended January 29, 2023, and January 30, 2022, there~~There were no material remeasurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial ~~recognition.~~recognition during the quarter ended January 28, 2024, and January 29, 2023.

NOTE I - COMMITMENTS AND CONTINGENCIES

Except as described below, there were no material changes outside the ordinary course of business during the quarter ended January 28, 2024, to the contractual obligations and other commitments last disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October 29, 2023.

Legal Proceedings: The Company is a party to various legal proceedings related to the ongoing operation of its business, including claims both by and against the Company. At any time, such proceedings typically involve claims related to product liability, labeling, contracts, antitrust regulations, intellectual property, competition laws, employment practices, or other actions brought by employees, customers, consumers, competitors, or suppliers. The Company establishes accruals for its potential exposure, as appropriate, for claims against the Company when losses become probable and reasonably estimable. However, future developments or settlements are uncertain and may require the Company to change such accruals as proceedings progress. Resolution of any currently known matter, either individually or in the aggregate, is not expected to have a material effect on the Company’s financial condition, results of operations, or liquidity.

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Pork Antitrust Litigation

Beginning in June 2018, a series of putative class action complaints were filed against the Company, as well as several other pork-processing companies and a benchmarking service called Agri Stats in the United States District Court for the District of Minnesota styled In re Pork Antitrust Litigation (the Pork Antitrust Civil Litigation). The plaintiffs allege, among other things, that beginning in January 2009, the defendants conspired and combined to fix, raise, maintain, and stabilize the price of pork and pork products—including through the use of Agri Stats—in violation of federal antitrust laws. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs seek treble damages, injunctive relief, pre-and post-judgment interest, costs, and attorneys’ fees. Since the original filing, certain direct-action plaintiffs have opted out of class treatment and are proceeding with individual direct actions making similar claims, and others may do so in the future. The Company has not recorded any liability for these matters as it does not believe a loss is probable, and it cannot reasonably estimate any reasonably possible loss as the Company believes that it has valid and meritorious defenses against the allegations.

The Offices of the Attorney General in New Mexico and Alaska have filed complaints against the Company and certain of its pork subsidiaries, as well as several other pork processing companies and Agri Stats. The complaints are based on allegations similar to those asserted in the Pork Antitrust Civil Litigation and allege violations of state antitrust, unfair trade practice, and unjust enrichment laws based on allegations of conspiracies to exchange information and manipulate the supply of pork. The Company has not recorded any liability for these matters as it does not believe a loss is probable, and it cannot reasonably estimate any reasonably possible loss as the Company believes that it has valid and meritorious defenses against the allegations.

Turkey Antitrust Litigation

Beginning in December 2019, a series of putative class action complaints were filed against the Company, as well as several other turkey-processing companies and a benchmarking service called Agri Stats, in the U.S. District Court for the Northern District of Illinois styled In re Turkey Antitrust Litigation. The plaintiffs allege, among other things, that from at least 2010 to 2017, the defendants conspired and combined to fix, raise, maintain, and stabilize the price of turkey products—including through the use of Agri Stats—in violation of federal antitrust laws. The complaints on behalf of the putative classes of indirect purchasers also include causes of action under various state unfair competition laws, consumer protection laws, and unjust enrichment common laws. The plaintiffs seek treble damages, injunctive relief, pre-and post-judgment interest, costs, and attorneys’ fees. Since the original filing, certain direct-action plaintiffs have opted out of class treatment and are proceeding with individual direct actions making similar claims, and others may do so in the future. The Company has not recorded any liability for these matters as it does not believe a loss is probable, and it cannot reasonably estimate any reasonably possible loss as the Company believes that it has valid and meritorious defenses against the allegations.

Poultry Wages Antitrust Litigation

In December 2019, a putative class of non-supervisory production and maintenance employees at poultry-processing plants in the continental United States filed an amended consolidated class action complaint against the Company and various other poultry processing companies in the United States District Court for the District of Maryland styled Jien, et al. v. Perdue Farms, Inc., et al. The plaintiffs allege that since 2009, the defendants directly and through a wage survey and benchmarking service exchanged information regarding compensation in an effort to depress and fix wages and benefits for employees at poultry-processing plants, feed mills, and hatcheries in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre-and post-judgment interest, as well as declaratory and injunctive relief. In July 2022, the Court partially granted the Company’s motion to dismiss, and dismissed plaintiffs’ per se wage-fixingclaim as to the Company. The Company has not recorded any liability for this matter as it does not believe a loss is probable, and it cannot reasonably estimate any reasonably possible loss as the Company believes that it has valid and meritorious defenses against the allegations.

Red Meat Wages Antitrust Litigation

In November 2022, a putative class of non-supervisory production and maintenance employees at “red meat” processing plants in the continental United States filed a class action complaint against the Company and various other beef- and pork-processing companies in the United States District Court for the District of Colorado styled Brown, et al. v. JBS USA Food Co., et al. The plaintiffs allege that since 2014, the defendants directly and through a wage survey and benchmarking service exchanged information regarding compensation in an effort to depress and fix wages and benefits for employees at beef- and pork-processing plants in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre-and post-judgment interest, as well as declaratory and injunctive relief. The Company has not recorded any liability for this matter as it does not believe a loss is probable, and it cannot reasonably estimate any reasonably possible loss as the Company believes that it has valid and meritorious defenses against the allegations.

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NOTE J - LONG-TERM DEBT AND OTHER BORROWING ARRANGEMENTS

Long-term Debt consists of:


in thousands		January 29, 2023		October 30, 2022
In thousands						In thousands	January 28, 2024	October 29, 2023
Senior Unsecured Notes, with Interest at 3.050% Interest Due Semi-annually through June 2051 Maturity Date	Senior Unsecured Notes, with Interest at 3.050% Interest Due Semi-annually through June 2051 Maturity Date	$	600,000	$	600,000
Senior Unsecured Notes, with Interest at 1.800% Interest Due Semi-annually through June 2030 Maturity Date	Senior Unsecured Notes, with Interest at 1.800% Interest Due Semi-annually through June 2030 Maturity Date	1,000,000		1,000,000
Senior Unsecured Notes, with Interest at 1.700% Interest Due Semi-annually through June 2028 Maturity Date	Senior Unsecured Notes, with Interest at 1.700% Interest Due Semi-annually through June 2028 Maturity Date	750,000		750,000
Senior Unsecured Notes, with Interest at 0.650% Interest Due Semi-annually through June 2024 Maturity Date	Senior Unsecured Notes, with Interest at 0.650% Interest Due Semi-annually through June 2024 Maturity Date	950,000		950,000

Unamortized Discount on Senior Notes
Unamortized Discount on Senior Notes
Unamortized Discount on Senior Notes	Unamortized Discount on Senior Notes	(7,566)		(7,750)
Unamortized Debt Issuance Costs	Unamortized Debt Issuance Costs	(18,962)		(19,856)
Interest Rate Swap Liabilities(1)	Interest Rate Swap Liabilities(1)	(16,826)		(19,950)
Finance Lease Liabilities	Finance Lease Liabilities	42,513		44,473
Other Financing Arrangements	Other Financing Arrangements	2,329		2,429
Total	Total	$	3,301,488	$	3,299,345
Less: Current Maturities of Long-term Debt	Less: Current Maturities of Long-term Debt	8,929		8,796
Long-term Debt Less Current Maturities	Long-term Debt Less Current Maturities	$	3,292,559	$	3,290,549

(1) See Note E - Derivatives and Hedging for additional information.

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Senior Unsecured Notes: On June 3, 2021, the Company issued $950.0 million aggregate principal amount of its 0.650% notes due 2024 ~~(the 2024~~(2024 Notes), $750.0 million aggregate principal amount of its 1.700% notes due 2028 ~~(the 2028~~(2028 Notes), and $600.0 million aggregate principal amount of its 3.050% notes due 2051 ~~(the 2051~~(2051 Notes). The 2024 Notes may be redeemed in whole or in part one year after their issuance without penalty for early partial payments or full redemption. The 2028 Notes and 2051 Notes may be redeemed in whole or in part at any time at the applicable redemption price. Interest will accrue per annum at the stated rates with interest on the notes being paid semi-annually in arrears on June 3 and December 3 of each year, commencing December 3, 2021. Interest rate risk was hedged utilizing interest rate locks on the 2028 Notes and 2051 Notes. The Company lifted the hedges in conjunction with the issuance of these notes. See Note E - Derivatives and Hedging for additional information. If a change of control triggering event occurs, the Company must offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

On June 11, 2020, the Company issued senior notes in an aggregate principal amount of $1.0 billion due ~~June 11,~~ 2030. The notes bear interest at a fixed rate of 1.800% per annum, with interest paid semi-annually in arrears on June 11 and December 11 of each year, commencing December 11, 2020. The notes may be redeemed in whole or in part at any time at the applicable redemption price set forth in the prospectus supplement. If a change of control triggering event occurs, the Company must offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

Subsequent to the end of the first quarter of fiscal 2024, the Company's Board of Directors approved up to $500 million of new long-term financing which is intended, along with cash on hand, to pay the 2024 Notes upon maturity.

Unsecured Revolving Credit Facility: On May 6, 2021, the Company entered into an unsecured revolving credit agreement with Wells Fargo Bank, National Association as administrative agent, swingline lender and issuing lender, U.S. Bank National Association, JPMorgan Chase Bank, N.A. and BofA Securities, Inc. as syndication agents and the lenders party thereto. The revolving credit agreement provides for an unsecured revolving credit facility with an aggregate principal commitment amount at any time outstanding of up to $750.0 million with an uncommitted increase option of an additional $375.0 million upon the satisfaction of certain conditions.

On April 17, 2023, the Company entered into a first amendment (Amendment) to the Company’s $750.0 million revolving credit agreement. The Amendment provides for, among other things (i) the replacement of London Interbank Offered Rate (LIBOR) with Term Secured Overnight Financing Rate (SOFR) and Daily Simple Singapore Overnight Rate Average (SORA) for the Eurocurrency Rate for U.S. Dollars and Singapore Dollars, including applicable credit spread adjustments and relevant SOFR benchmark provisions, (ii) permitting two one-year extension options to be exercised at any anniversary, (iii) removing the change in debt ratings notice requirement, (iv) shortening the notice period requirements for Base Rate Loans to allow for same day notice, and (v) increasing the number of permitted interest periods from 8 to 15.

The unsecured revolving line of credit bears interest, at the Company’s election, at either a Base Rate plus margin of 0.0% to 0.150% or the Adjusted Term SOFR, Adjusted Daily Simple Risk-Free Rate (RFR) or Eurocurrency Rate plus margin of 0.575%

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to 1.150% and a variable fee of 0.050% to 0.100% is paid for the availability of this credit line. Extensions of credit under the facility may be made in the form of revolving loans, swingline loans, and letters of credit. The lending commitments under the agreement are scheduled to expire on May 6, 2026, at which time the Company will be required to pay in full all obligations then outstanding. As of January ~~29, 2023,~~28, 2024, and October ~~30, 2022,~~29, 2023, the Company had no outstanding draws from this facility.

Debt Covenants: The Company is required by certain covenants in its debt agreements to maintain specified levels of financial ratios and financial position. As of January ~~29, 2023,~~28, 2024, the Company was in compliance with all ~~of these~~ covenants.

NOTE JK - INCOME TAXES

The ~~Company's~~Company’s tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. The effects of tax legislation are recognized in the period in which the law is enacted. The deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years the related temporary differences are anticipated to reverse.

The ~~Company's~~Company’s effective tax rate for the quarter ended January ~~29, 2023,~~28, 2024, was ~~22.6 percent~~23.4% compared to ~~22.4 percent~~22.6% for the corresponding period a year ago. The Company benefited from the impact of certain discrete items and higher ~~effective tax rate~~federal deductions in the ~~current quarter is due primarily to the decrease in tax benefits from stock option exercises.~~prior year.

~~The amount of unrecognized~~Unrecognized tax benefits, including interest and penalties, isare recorded in Other Long-term Liabilities. If recognized as of January ~~29, 2023, and January 30, 2022, $18.2 million and $20.2 million, respectively,~~28, 2024, these benefits would impact the Company’s effective tax ~~rate.~~rate by $17.7 million compared to $18.2 million as of January 29, 2023. The Company includes accrued interest and penalties related to uncertain tax positions in ~~income tax expense. Interest and penalties~~Provision for Income Taxes, with immaterial losses included ~~in income tax expense was immaterial for~~during the quarter ended January ~~29, 2023,~~28, 2024, and January ~~30, 2022.~~29, 2023. The amount of accrued interest and penalties ~~at January 29, 2023, and January 30, 2022,~~ associated with unrecognized tax benefits was $2.7 million at January 28, 2024, and $2.6 million ~~and $5.2 million, respectively.~~at January 29, 2023.

The Company is regularly audited by federal and state taxing authorities. The ~~U.S. Internal Revenue Service ( I.R.S.) has~~IRS concluded its examination of fiscal 2021 in the second quarter of fiscal 2023. The IRS placed the Company in the Bridge phase of the Compliance Assurance Process (CAP) for fiscal ~~2020.~~years 2020 and 2023. In this phase, the ~~I.R.S.~~IRS will not accept any disclosures, conduct any reviews, or provide any assurances. The Company has elected to participate in CAP for fiscal years through ~~2023.~~2025. The objective of CAP is to contemporaneously work with the ~~I.R.S.~~IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. The Company may elect to continue participating in CAP for future tax years; the Company may withdraw from the program at any time.

The Company is in various stages of audit by several state taxing authorities on a variety of fiscal years, as far back as 2015. While it is reasonably possible that one or more of these audits may be completed within the next 12 months and the related unrecognized tax benefits may change based on the status of the examinations, it is not possible to reasonably estimate the effect of any amount of such change to previously recorded uncertain tax positions.

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~~The Inflation Reduction Act of 2022 was signed into law on August 16, 2022. The 15% corporate minimum tax will not apply to the Company until fiscal year 2024.~~

NOTE KL - EARNINGS PER SHARE DATA

The reported net earnings attributable to the Company were used when computing basic and diluted earnings per share. Diluted earnings per share was calculated using the treasury stock method. The ~~following table sets forth the~~ shares used as the denominator for those ~~computations:~~computations are as follows:

Quarter Ended
in thousands January 29, 2023 January 30, 2022
Basic Weighted-Average Shares Outstanding 546,384 542,680
Dilutive Potential Common Shares 3,647 5,247
Diluted Weighted-Average Shares Outstanding 550,031 547,928
Antidilutive Potential Common Shares 3,239 3,501


	Quarter Ended
In thousands	January 28, 2024	January 29, 2023
Basic Weighted-average Shares Outstanding	547,020	546,384
Dilutive Potential Common Shares	900	3,647
Diluted Weighted-average Shares Outstanding	547,920	550,031

Antidilutive Potential Common Shares	17,892	3,239

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NOTE LM - SEGMENT REPORTING

The Company develops, processes, and distributes a wide array of food products in a variety of markets. ~~As discussed in Note A - Summary of Significant Accounting Policies, the~~The Company ~~transitioned to a new operating model in the first quarter of fiscal 2023 and now~~ reports its results in the following three segments: Retail, Foodservice, and International, which ~~are~~is consistent with how the Company's chief operating decision maker (CODM) assesses performance and allocates resources. ~~Prior period segment results have been retrospectively recast to reflect the new reportable segments.~~

The Retail segment consists primarily of the processing, marketing, and sale of food products sold predominantly in the retail market. This segment also includes the results from the Company’s MegaMex Foods, LLC joint venture.

The Foodservice segment consists primarily of the processing, marketing, and sale of food and nutritional products for foodservice, convenience store, and commercial customers.

The International segment processes, markets, and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures, equity method investments, and royalty arrangements.

Intersegment sales are eliminated in consolidation and are not reviewed when evaluating segment performance. The Company does not allocate deferred compensation, expenses associated with the transformation and modernization initiative, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in Earnings of Affiliates is included in segment profit; however, earnings attributable to the Company’s corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.

Financial measures for each of the Company’s reportable segments and reconciliation to consolidated Earnings Before Income Taxes are set forth below. ~~The Company's CODM reviews assets at a consolidated level and does not use assets by segment to evaluate performance or allocate resources. Therefore, the Company does not disclose assets by segment.~~ 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 profit and other financial information shown below.

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Quarter Ended
in thousands January 29, 2023 January 30, 2022
Net Sales
Retail $ 1,957,797 $ 1,995,896
Foodservice 834,750 854,194
International 178,445 194,268
Total Net Sales $ 2,970,992 $ 3,044,358
Segment Profit
Retail $ 154,677 $ 169,702
Foodservice 136,442 134,758
International 19,905 27,239
Total Segment Profit 311,025 331,699
Net Unallocated Expense 29,755 22,933
Noncontrolling Interest (69) 139
Earnings Before Income Taxes $ 281,201 $ 308,904


	Quarter Ended
In thousands	January 28, 2024		January 29, 2023
Net Sales
Retail	$	1,911,272	$	1,957,797
Foodservice	913,087		834,750
International	172,552		178,445
Total Net Sales	$	2,996,911	$	2,970,992

Segment Profit
Retail	$	149,505	$	154,677
Foodservice	150,164		136,442
International	20,031		19,905
Total Segment Profit	319,700		311,025
Net Unallocated Expense	34,020		29,755

Noncontrolling Interest	(134)		(69)
Earnings Before Income Taxes	$	285,547	$	281,201

The Company’s products primarily consist ~~primarily~~ of meat and other food products. Total revenue contributed by classes of similar products are:

Quarter Ended

in thousands

January 29, 2023

January 30, 2022

Quarter Ended

In thousands

Perishable

2,080,461

2,128,248

Perishable

Shelf-stable

890,531

916,111

Total Net Sales

2,970,992

3,044,358

Total Net Sales

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Perishable includes fresh meats, frozen items, refrigerated meal solutions, bacon, sausages, hams, ~~and~~ guacamole, and other items that require refrigeration. Shelf-stable includes canned luncheon meats, nut butters, snack nuts, chili, shelf-stable microwaveable meals, hash, stews, tortillas, salsas, tortilla chips, nutritional food supplements, and other items that do not require refrigeration.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Overview

The Company is a global manufacturer and marketer of branded food products. ~~Effective October 31, 2022, the Company transitioned to three operating segments – Retail, Foodservice, and International.~~ The ~~Company provided certain recast financial information for fiscal years 2021 and 2022 in a Form 8-K filed with the U.S. Securities and Exchange Commission on February 28, 2023. The Company's~~Company’s three reportable segments are described in Note LM - Segment Reporting in the Notes to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

The Company reported diluted net earnings per ~~diluted~~ share of $0.40 for the first quarter of fiscal ~~2023, down 9 percent~~2024, flat compared to last year. Adjusted diluted net earnings per share(1) was $0.41. Significant factors impacting the quarter were:

•Net sales for the first quarter ~~decreased,~~increased 1 percent. The benefit from higher volumes in each segment and strong results in Foodservice more than offset lower sales in the Retail and International segments.

•Segment profit for the first quarter increased 3 percent, driven primarily by improved results in the Foodservice segment.

•Earnings before income taxes for the first quarter increased 2 percent, as the benefit from ~~pricing actions to mitigate inflationary pressures was unable to overcome~~higher net sales, lower logistics expenses, and higher interest and investment income more than offset higher selling, general, and administrative expenses. Adjusted earnings before income taxes(1), excluding the impact of expenses related to the Company's transformation and modernization initiative, increased 5 percent compared to last year.

•Foodservice segment profit increased primarily due to higher sales and favorable logistics expenses.

•International segment profit increased due to the inclusion of our investment in Indonesia and significantly higher results from our partnership in the Philippines, which more than offset the impact from lower branded export demand and lower sales in China.

•Retail segment profit declined, as the benefit from higher sales in the snacking and entertaining vertical and lower logistics expenses was more than offset by the impact from lower commodity turkey pricing and lower equity in earnings from MegaMex Foods, LLC (MegaMex Foods).

•Year-to-date cash flow from operations was $404 million, up 98 percent compared to the prior year.

Consolidated Results

Volume, Net Sales, Earnings, and Diluted Earnings Per Share


	Quarter Ended
In thousands, except per share amounts	January 28, 2024		January 29, 2023		% Change
Volume (lbs.)	1,101,554		1,062,211		3.7
Net Sales	$	2,996,911	$	2,970,992	0.9
Earnings Before Income Taxes	285,547		281,201		1.5
Net Earnings Attributable to Hormel Foods Corporation	218,863		217,719		0.5
Diluted Earnings Per Share	0.40		0.40		—
Adjusted Diluted Earnings Per Share (1)	0.41		0.40		2.5

(1) See the “Non-GAAP Financial Measures” section below for a description of the Company's use of measures not defined by United States Generally Accepted Accounting Principles (GAAP).

Net Sales

Net sales for the first quarter increased, led by the benefit from higher volumes in each ~~business segment.~~segment and strong growth in Foodservice, more than offsetting lower sales in the Retail and International segments.

In Retail, net sales increased in the global flavors and snacking and entertaining verticals, and declined in the value-added meats, convenient meals and proteins, and bacon verticals. Demand was strong for many products, including Skippy® peanut

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•butter, Consistent with the Company's long-term strategy to better align resources to value-added growth, the overall decline in volume was primarily due to lower commodity sales resulting from the Company's new pork supply agreementPlanters® snack nuts, Wholly® dips, Herdez® salsas and ~~lower~~sauces, La Victoria® salsas, Jennie-O® ground turkey, ~~volumes due to the ongoing impacts of highly pathogenic avian influenza (HPAI).~~

•~~Segment profit for the quarter decreased 6 percent. Improved results in the Foodservice segment were more than offset by declines in the Retail and International segments.~~

•Earnings before income taxes for the quarter decreased 9 percent compared to the prior year. The impact of lower sales, unfavorable mix, and higher operating costs were partially offset by higher equity in earnings, higher investment income, and lower selling, general, and administrative expenses.

•~~Foodservice segment profit increased due to improved mix across the portfolio.~~

•International segment profit declined, as strong results from the Company's joint venture in the Philippines did not overcome significantly lower turkey and fresh pork export sales, lower sales in China, and elevated logistics expenses.

•Retail segment profit declined due to the impact from lower net sales, unfavorable mix and higher operating costs, partially offset by the benefit from pricing actions across the portfolio, higher equity in earnings from MegaMex and improved results for the bacon business.

•~~Year-to-date cash flow from operations was $204 million, down 47 percent compared to the prior year.~~

•On December 15, 2022, the Company purchased approximately 29% of the common stock interest in PT Garudafood Putra Putri Jaya Tbk (Garudafood), one of the largest food and beverage companies in Indonesia. This investment expands the Company's presence in Southeast Asia and further supports the global execution of the snacking and entertaining strategic priority.

~~Consolidated Results~~

~~Volume, Net Sales, Earnings, and Diluted Earnings per Share~~

Quarter Ended
in thousands, except per share amounts January 29, 2023 January 30, 2022
%
Change
Volume (lbs.) 1,062,211 1,204,872 (11.8)
Net Sales $ 2,970,992 $ 3,044,358 (2.4)
Earnings Before Income Taxes 281,201 308,904 (9.0)
Net Earnings Attributable to Hormel Foods Corporation 217,719 239,571 (9.1)
Diluted Earnings per Share 0.40 0.44 (9.1)

~~Net Sales~~

Net sales for the first quarter decreased, as the benefit from pricing actions to mitigate inflationary pressures was more than offset by the impact of lower volumes in each segment. The primary drivers of lower volume were declines in commodity pork availability as a result of the Company's new pork supply agreement and lower turkey supply from the ongoing impacts of HPAI.

~~Strong demand continued across many of the Company's center-store, refrigerated, and premium items at retail, including~~ Hormel® ~~Black Label~~®Square Table™ ~~bacon,~~ ~~Columbus~~® ~~charcuterie,~~ ~~Hormel~~® ~~chili,~~entrees and Hormel® pepperoni, which each delivered volume and net sales improvement during the quarter. Foodservice net sales growth was broad-based, led by the Heritage Premium meats business and growth from~~Applegate~~ Hormel® ~~breaded chicken,~~ Bacon 1™~~Herdez~~ precooked bacon, premium prepared proteins, Jennie-O ® ~~products,Hormel~~®~~Square Table~~TM ~~entrees,~~branded turkey items, and ~~Mary Kitchen~~® ~~hash. Solutions-based items~~pepperoni. International net sales declined due to lower branded export sales and lower sales in ~~the Foodservice segment also had another strong quarter, with volume growth in sliced meats and from brands such as~~ China.

~~Cafe H~~®, ~~Hormel~~®~~Fire Braised~~TM, ~~Hormel~~® ~~Bacon 1~~TM~~, and~~ ~~Austin Blues~~®.

Cost of Products Sold

Quarter Ended

in thousands

January 29, 2023

January 30, 2022

Change

In thousands

Cost of Products Sold

2,475,043

2,505,610

(1.2)

Cost of Products Sold

~~Cost~~Total cost of products sold for the first quarter of fiscal ~~2023 decreased~~2024 increased due primarily to ~~lower~~higher sales. On a ~~volume~~per pound basis, cost of products sold ~~increased 12 percent. This increase was driven primarily by continued inflationary pressures stemming from, among other inputs, raw materials, packaging, logistics, and labor.~~decreased 3 percent, consistent with the Company's assumption for cost moderation in fiscal 2024.

Costs are expected to ~~remain elevated due~~continue to moderate relative to the ~~continued impacts~~high levels of ~~broad-based~~ inflation ~~and higher warehousing costs. In general, raw~~the business has absorbed since the beginning of fiscal 2021. Raw material input costs for ~~protein~~pork, beef, and feed are anticipated to remain volatile and above historical levels. The Company expects its transformation and modernization initiative to deliver cost savings throughout fiscal 2024, targeting packaging, logistics, and production costs.

Gross Profit


	Quarter Ended
In thousands	January 28, 2024			January 29, 2023			% Change
Gross Profit	$	508,733		$	495,949		2.6
Percent of Net Sales	17.0		%	16.7		%

Gross profit as a percent of net sales for the first quarter of fiscal 2024 increased due to improvement in the Foodservice and Retail segments, more than offsetting a decline in International. Both the Foodservice and Retail segments benefited from lower logistics expenses on a volume basis. Lower logistics expenses are due to lower industrywide freight rates and savings realized as part of our transformation and modernization initiative.

Looking ahead to the second quarter of fiscal 2024, the Company expects gross profit as a percent of net sales to be comparable to last year. The Company expects gross profit as a percent of net sales to increase for the International segment but decline for the Retail and Foodservice segments.

Selling, General, and Administrative (SG&A)


	Quarter Ended
In thousands	January 28, 2024			January 29, 2023			% Change
SG&A	$	240,386		$	222,056		8.3
Percent of Net Sales	8.0		%	7.5		%
Adjusted SG&A(1)	$	231,671		$	222,056		4.3
Adjusted Percent of Net Sales(1)	7.7		%	7.5		%

(1) See the “Non-GAAP Financial Measures” section below for a description of the Company's use of measures not defined by GAAP.

For the first quarter of fiscal 2024, SG&A and SG&A as a percent of net sales increased. This was due to higher employee and external expenses, driven in part by the Company's transformation and modernization initiative. Adjusted SG&A as a percent of net sales(1) increasedmarginally compared to last year.

Advertising investments in the first quarter were $44 million, a decrease of 5 percent compared to last year. The Company expects full-year advertising expense to increase compared to the prior year.

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~~Gross Profit~~

Quarter Ended
in thousands January 29, 2023 January 30, 2022
%
Change
Gross Profit $ 495,949 $ 538,749 (7.9)
Percentage of Net Sales 16.7 % 17.7 %

Gross profit as a percentage of net sales for the first quarter of fiscal 2023 declined, driven primarily by unfavorable mix and the persistent impact of inflationary pressures. Pricing actions helped mitigate some of the impact from inflationary pressures. Gross profit as a percentage of net sales increased for the Foodservice segment but declined for the Retail and International segments during the first quarter.

Looking ahead to the second quarter of fiscal 2023, the Company expects gross profit as a percentage of net sales to decline compared to last year. Actions to combat higher inventory levels and warehousing costs are expected to result in short-term margin compression. Similar to the first quarter of fiscal 2023, the Company expects gross profit as a percentage of net sales to increase for the Foodservice segment but decline for the Retail and International segments.

~~Selling, General, and Administrative (SG&A)~~

Quarter Ended
in thousands January 29, 2023 January 30, 2022
%
Change
SG&A $ 222,056 $ 225,972 (1.7)
Percentage of Net Sales 7.5 % 7.4 %

~~For the first quarter, SG&A expenses as a percent of net sales increased marginally.~~

~~Advertising investments in the first quarter were $47 million, comparable to last year. The Company plans to continue to invest in its leading brands.~~

Equity in Earnings of Affiliates

Quarter Ended

in thousands

January 29, 2023

January 30, 2022

Change

In thousands

Equity in Earnings of Affiliates

15,559

6,898

125.6

Equity in Earnings of Affiliates

Equity in earnings of affiliates for the first quarter of fiscal ~~2023~~2024 increased ~~significantly~~ due to the inclusion of our investment in Indonesia and significantly higher results from our partnership in the Philippines, offsetting lower results for MegaMex Foods.

Interest and Investment Income and Interest Expense


	Quarter Ended
In thousands	January 28, 2024		January 29, 2023		% Change
Interest and Investment Income	$	19,434	$	10,096	92.5
Interest Expense	18,326		18,347		(0.1)

Interest and investment income for the first quarter of fiscal 2024 increased primarily due to improved ~~results~~performance from the ~~Company's joint venture in the Philippines. MegaMex results reflect a benefit from pricing actions~~rabbi trust and ~~lower avocado input costs.~~higher interest income.

Effective Tax Rate

Quarter Ended
January 29, 2023 January 30, 2022
Effective Tax Rate 22.6 % 22.4 %


	Quarter Ended
	January 28, 2024		January 29, 2023
Effective Tax Rate	23.4	%	22.6	%

The higher effective tax rate ~~for~~in the first quarter ~~increased as~~of fiscal 2024 is primarily due to the impact of certain discrete items and higher federal deductions last ~~year's tax rate reflected higher stock option exercise benefits.~~year. The effective tax rate for fiscal ~~2023~~2024 is expected to be between 21.0% and 23.0%. For further information, refer to Note JK - Income ~~Taxes.~~Taxes of the Notes to the Consolidated Financial Statements.

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Segment Results

Net sales and segment profit for each of the Company’s reportable segments are set forth below. The Company does not allocate deferred compensation, expenses associated with the transformation and modernization initiative, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in Earnings of Affiliates is included in segment profit; however, earnings attributable to the Company’s corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.

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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 profit and other financial information shown below.

Quarter Ended
in thousands January 29, 2023 January 30, 2022 % Change
Net Sales
Retail $ 1,957,797 $ 1,995,896 (1.9)
Foodservice 834,750 854,194 (2.3)
International 178,445 194,268 (8.1)
Total $ 2,970,992 $ 3,044,358 (2.4)
Segment Profit
Retail $ 154,677 $ 169,702 (8.9)
Foodservice 136,442 134,758 1.2
International 19,905 27,239 (26.9)
Total Segment Profit 311,025 331,699 (6.2)
Net Unallocated Expense 29,755 22,933 29.7
Noncontrolling Interest (69) 139 (149.4)
Earnings Before Income Taxes $ 281,201 $ 308,904 (9.0)

Volume and net sales declined for each segment for the first quarter of fiscal 2023 due to lower fresh pork availability resulting from the Company's new pork supply agreement and lower turkey volumes due to the ongoing impacts of ~~HPAI in the Company's vertically integrated turkey supply chain.~~


	Quarter Ended
In thousands	January 28, 2024		January 29, 2023		% Change
Net Sales
Retail	$	1,911,272	$	1,957,797	(2.4)
Foodservice	913,087		834,750		9.4
International	172,552		178,445		(3.3)
Total	$	2,996,911	$	2,970,992	0.9

Segment Profit
Retail	$	149,505	$	154,677	(3.3)
Foodservice	150,164		136,442		10.1
International	20,031		19,905		0.6
Total Segment Profit	319,700		311,025		2.8
Net Unallocated Expense	34,020		29,755		14.3
Noncontrolling Interest	(134)		(69)		(95.4)
Earnings Before Income Taxes	$	285,547	$	281,201	1.5

Retail

Quarter Ended

in thousands

January 29, 2023

January 30, 2022

%
Change

In thousands

Volume (lbs.)

752,887

868,939

(13.4)

Net Sales

1,957,797

1,995,896

(1.9)

Net Sales

Segment Profit

154,677

169,702

(8.9)

Segment Profit

For the first quarter ~~net sales~~of fiscal 2024, volume growth ~~from the bacon, global flavors, convenient meals and proteins, and emerging brands verticals~~ was ~~offset~~driven by ~~lower sales in~~ the value-added meats, global flavors, emerging brands and ~~snacking and entertaining~~bacon verticals. Net sales ~~increased~~declined primarily due to lower contract manufacturing volume and lower commodity turkey pricing. Demand was strong for many products, ~~such as~~including ~~Hormel~~Skippy® ~~Black Label~~peanut butter, Planters® ~~bacon,~~snack nuts, ~~Columbus~~Wholly® ~~charcuterie,~~ ~~Hormel~~® ~~chili,~~dips, Herdez® ~~salsa~~salsas and sauces,La Victoria® salsas, Jennie-O® ground turkey, Hormel® Square ~~Table~~TMTable™ entrees and ~~Mary Kitchen~~Hormel® ~~hash. Lower~~pepperoni, which each delivered volume and net sales ~~of snack nuts and peanut butter offset a majority of these gains.~~improvement during the quarter.

Segment profit declined, ~~for~~as the ~~first quarter~~ ~~due to~~benefit from higher sales in the snacking and entertaining vertical and lower logistics expenses was more than offset by the impact from lower ~~net sales, unfavorable mix,~~commodity turkey pricing and ~~higher operating costs, partially offset by the benefit from pricing actions across the portfolio, higher~~lower equity in earnings from MegaMex ~~and improved results for the bacon business.~~Foods.

Looking to the second quarter of fiscal 2024, the Retail segment expects lower ~~sales and significantly lower~~ segment ~~profit. The impact of strong demand for the Company's center store items~~profit compared to last year. Segment profit is expected to be ~~offset~~pressured by ~~among other factors,~~ lower pricing ~~across the bacon portfolio. Declines~~ in ~~segment profit are expected~~whole bird turkey markets and higher SG&A. Risks to this outlook include a further slowing in consumer demand, a higher-than-expected impact from elasticities as a result of ~~unfavorable mix and higher operating expenses, partially offset by~~ pricing actions, ~~across~~and greater-than-expected pricing headwinds in the ~~portfolio.~~whole bird turkey business.

Foodservice


	Quarter Ended
In thousands	January 28, 2024		January 29, 2023		% Change
Volume (lbs.)	256,007		237,087		8.0
Net Sales	$	913,087	$	834,750	9.4
Segment Profit	150,164		136,442		10.1

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~~Foodservice~~

Quarter Ended
in thousands January 29, 2023 January 30, 2022 %
Change
Volume (lbs.) 237,087 252,249 (6.0)
Net Sales $ 834,750 $ 854,194 (2.3)
Segment Profit 136,442 134,758 1.2

~~Products in the sliced meats, pepperoni, premium prepared proteins, and premium bacon and breakfast sausage categories grew volume~~Volume and net sales growth for the first ~~quarter. Net~~quarter of fiscal 2024 was broad-based and across numerous categories, led by Jennie-O® turkey and double-digit gains for products such as Hormel®Bacon 1™ cooked bacon, pepperoni, Austin Blues® smoked meats and Café H® globally inspired proteins. Additionally, the Company's Heritage Premium Meats group drove strong volume and double-digit net sales ~~declines can be partially attributed to lower net pricing reflecting commodity relief in certain categories.~~improvement for the quarter.

Segment profit increased ~~during the first quarter~~primarily due to ~~improved mix across the portfolio.~~higher sales and favorable logistics expenses.

For the second quarter, the Foodservice segment expects higher ~~volumes~~segment profit compared to the prior year. Continued volume growth is expected to be offset by lower margins and ~~favorable mix to drive increases in net sales and segment profit~~higher SG&A compared to last year. Risks to ~~the~~this outlook include ~~lower demand across the~~a softening of foodservice industry demand and higher-than-expected operating costs.

International

Quarter Ended

in thousands

January 29, 2023

January 30, 2022

Change

In thousands

Volume (lbs.)

72,237

83,684

(13.7)

Net Sales

178,445

194,268

(8.1)

Net Sales

Segment Profit

19,905

27,239

(26.9)

Segment Profit

~~Volume and net sales declined during~~

During the first quarter ~~as growth from~~of fiscal 2024, higher commodity exports led to volume gains compared to last year. Net sales declined due to lower branded ~~exports, including the~~ ~~SPAM~~®export sales and~~SKIPPY~~® ~~brands, and improved results in Brazil, were partially offset by~~ lower sales in China. Also in China, ~~due to ongoing~~foodservice results improved as we lapped COVID-related ~~disruption.~~disruption last year. This benefit was more than offset by continued weakness in the retail channel.

Segment profit increased for the ~~first~~ quarter ~~declined, as strong~~due to the inclusion of our investment in Indonesia and significantly higher results from ~~the Company's joint venture~~our partnership in the Philippines, ~~did not overcome significantly~~which offset the impact from lower ~~turkey~~branded export demand and ~~fresh pork export sales,~~ lower sales in ~~China, and elevated logistics expenses.~~China.

~~The~~In the second quarter of fiscal 2024, the International segment anticipates ~~higher sales and lower~~ segment profit ~~in the second quarter. Net sales gains are~~to increase significantly compared to last year. This recovery is expected to be driven by ~~strong demand for~~improvement across the business, including from its branded exports, partnership in the Philippines, and ~~growth~~multinational business in Brazil. ~~Segment profit is expected~~The Company also expects a benefit from the inclusion of its investment in Indonesia. Risks to ~~be impacted by lower turkey~~this outlook include continued softness in China and ~~fresh pork~~commodity headwinds impacting the export ~~sales and ongoing COVID-related disruption in China.~~business.

Unallocated Income and ~~Expenses~~Expense


	Quarter Ended
In thousands	January 28, 2024		January 29, 2023
Net Unallocated Expense	$	34,020	$	29,755
Noncontrolling Interest	(134)		(69)

The Company does not allocate deferred compensation, investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and unallocated expenses at the corporate level. Equity in earnings of affiliates is included in Segment Profit; however, earnings attributable to the Company’s noncontrolling interests are excluded. These items are included in the segment table for the purpose of reconciling segment results to earnings before income taxes.

Quarter Ended
in thousands January 29, 2023 January 30, 2022
Net Unallocated Expense $ 29,755 $ 22,933
Noncontrolling Interest (69) 139

For the first quarter of fiscal 2024, net unallocated expense increased ~~due to~~driven by transformation and modernization initiative costs and higher ~~non-service pension cost,~~ employee-related expenses, ~~and outside consulting fees, which were~~ partially offset by ~~improved~~favorable rabbi trust ~~results~~performance and higher interest income.

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Related Party Transactions

There has been no material change in the information regarding Related Party Transactions as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October ~~30, 2022.~~29, 2023.

(1)Non-GAAP Financial Measures

This filing includes measures of financial performance that are not defined by GAAP. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. These measures may also be used when making decisions regarding resource allocation and in determining incentive compensation. The Company believes these non-GAAP financial measures provide useful information to investors because they facilitate year-over-year comparison and comparison with peer companies as well as provide additional information about trends in the Company’s operations. Non-GAAP measures are not intended to be a substitute for GAAP measures in analyzing financial performance. These non-GAAP

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measures are not in accordance with generally accepted accounting principles and may be different from non-GAAP measures used by other companies.

In the fourth quarter of fiscal 2023, the Company announced a multi-year transformation and modernization initiative. The strategic investments in this initiative are expected to cease at the end of the investment period, are not expected to recur in the foreseeable future and are not considered representative of the Company's underlying operating performance. The Company does not believe such costs to be reflective of the ongoing operating cost structure; therefore, the Company is excluding certain discrete costs related to the transformation and modernization initiative from the non-GAAP financial measures. Expenses for this initiative are comprised primarily of non-recurring charges for consulting fees, which are reflected in SG&A, and charges related to portfolio optimization, which are reflected in Cost of Products Sold. This presentation is consistent with the information the Company’s management is using to evaluate performance and allocate resources and facilitates comparison of operating performance across multiple periods.

Adjusted cost of products sold, adjusted SG&A, adjusted operating income, adjusted earnings before income taxes, adjusted net earnings attributable to Hormel Foods Corporation, adjusted diluted net earnings per share, adjusted SG&A as a percent of net sales, and adjusted operating margin exclude certain costs associated with the transformation and modernization initiative. The tax impact was calculated using the effective tax rate for the quarter in which the expense was incurred.

The table below shows the calculations to reconcile from the GAAP measures to the non-GAAP financial measures.


	Quarter Ended
In thousands, except per share amounts	January 28, 2024			January 29, 2023
Cost of Products Sold (GAAP)	$	2,488,178		$	2,475,043
Transformation and Modernization Initiative	(1,598)			—
Adjusted Cost of Products Sold (Non-GAAP)	$	2,486,580		$	2,475,043





SG&A (GAAP)	$	240,386		$	222,056
Transformation and Modernization Initiative	(8,715)			—
Adjusted SG&A (Non-GAAP)	$	231,671		$	222,056

Operating Income (GAAP)	$	284,438		$	289,452
Transformation and Modernization Initiative	10,313			—
Adjusted Operating Income (Non-GAAP)	$	294,751		$	289,452

Earnings Before Income Taxes (GAAP)	$	285,547		$	281,201
Transformation and Modernization Initiative	10,313			—
Adjusted Earnings Before Income Taxes (Non-GAAP)	$	295,859		$	281,201









Net Earnings Attributable to Hormel Foods Corporation (GAAP)	$	218,863		$	217,719
Transformation and Modernization Initiative	7,900			—
Adjusted Net Earnings Attributable to Hormel Foods Corporation (Non-GAAP)	$	226,763		$	217,719

Diluted Net Earnings Per Share (GAAP)	$	0.40		$	0.40
Transformation and Modernization Initiative	0.01			—
Adjusted Diluted Net Earnings Per Share (Non-GAAP)	$	0.41		$	0.40

SG&A as a Percent of Net Sales (GAAP)	8.0		%	7.5		%
Transformation and Modernization Initiative	(0.3)			—
Adjusted SG&A as a Percent of Net Sales (Non-GAAP)	7.7		%	7.5		%

Operating Margin (GAAP)	9.5		%	9.7		%
Transformation and Modernization Initiative	0.3			—
Adjusted Operating Margin (Non-GAAP)	9.8		%	9.7		%

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LIQUIDITY AND CAPITAL RESOURCES

When assessing liquidity and capital resources, the Company evaluates cash and cash equivalents, short-term and long-term investments, income from operations, and borrowing capacity.

Cash Flow Highlights

Quarter Ended

in thousands

January 29, 2023

January 30, 2022

Quarter Ended

In thousands

January 28, 2024

January 29, 2023

Cash and Cash Equivalents

599,789

824,434

Cash Provided by (Used in) Operating Activities

203,629

383,756

Cash Provided by (Used in) Investing Activities

(451,469)

(49,680)

Cash Provided by (Used in) Financing Activities

(141,570)

(124,019)

Increase (Decrease) in Cash and Cash Equivalents

Cash and cash equivalents ~~decreased $382~~increased $227 million infor the first quarter of fiscal ~~2023 primarily due~~2024, as cash from operating activities was sufficient to ~~the~~cover dividend payments and capital expenditures. The purchase of a minority interest in PT Garudafood ~~for $411 million.~~Putra Putri Jaya Tbk (Garudafood) was the primary driver of the decline in cash and cash equivalents in the prior year. Additional details related to significant drivers of cash flows are provided below.

Cash Provided by (Used in) Operating Activities

•Cash flows from operating activities were largely impacted by changes in operating assets and liabilities.

–Inventory decreased $104 million for the first quarter of fiscal 2024 compared to an increase of $12 million in the prior year. The decrease in inventory during fiscal 2024 was due to improvement in the Company's supply chain and the negative impact of Highly Pathogenic Avian Influenza on turkey operations. The increase in inventory during fiscal 2023 was due to production outpacing sales.

–Accounts receivable decreased $68 million and $80 million during the first quarter of fiscal 2024 and fiscal 2023, ~~and $85 million during the first quarter of fiscal 2022~~respectively primarily due to lower sales.

–Accounts payable and accrued expenses decreased $132 million and $171 million in the first quarter of fiscal 2024 and fiscal 2023, ~~and decreased $86 million in the first quarter of fiscal 2022~~respectively, due to annual incentive payments, feed and livestock deferral payments, and general timing of payments.

Cash Provided by (Used in) Investing Activities

•InCapital expenditures were $47 million and $37 million in the first quarter of fiscal 2024, and fiscal 2023, respectively. The largest spend in the first quarter of fiscal 2024 was for the transition from harvest to value-added capacity at our facility in Barron, Wisconsin and wastewater infrastructure to support our operations in Austin, Minnesota. The largest spend in the first quarter of fiscal 2023 was related to capacity expansion for pepperoni and the SPAM® family of products.

•During the first quarter of fiscal 2023, the Company purchased a minority interest in Garudafood for $411 million.

•Capital expenditures were $37 million and $50 million in the three months ended January 29, 2023, and January 30, 2022, respectively. The largest spend in both years was related to capacity expansion for pepperoni products in Omaha, Nebraska, and the ~~SPAM~~® ~~family of products in Dubuque, Iowa.~~

Cash Provided by (Used in) Financing Activities

•Cash dividends paid to the Company’s shareholders ~~continue to be~~are an ongoing financing activity for the Company with payments totaling $150 million during the first quarter of fiscal 2024, compared to $142 million in the first quarter of fiscal ~~2023 compared to $133~~2023.

•Proceeds from the exercise of stock options were $19 million in the ~~comparable period~~first quarter of fiscal ~~2022.~~2024, compared to $3 million in the first quarter of fiscal 2023. The increase in proceeds was due to more options exercised during fiscal 2024 compared to fiscal 2023.

Sources and Uses of Cash

The ~~Company's~~Company’s balanced business model, with diversification across raw material inputs, channels, and categories, provides stability in ~~ever changing~~ever-changing economic environments. The Company maintains a disciplined capital allocation strategy by applying a waterfall approach, which focuses first on required uses of cash, such as capital expenditures to maintain facilities, dividend returns to investors, mandatory debt repayments, and pension obligations. Next, the Company looks to strategic items in support of growth initiatives, such as capital projects, acquisitions, additional dividend increases, and working capital investments. Finally, the Company evaluates opportunistic uses, including incremental debt repayment and share repurchases.

The Company believes its anticipated income from operations, cash on hand, ~~and~~ borrowing capacity under the current credit facility, and access to capital markets will be adequate to meet all short-term and long-term commitments. The Company continues to look for opportunities to make investments and acquisitions that align with its strategic priorities. The Company's ability to leverage its balance sheet through the issuance of debt provides the flexibility to pursue strategic opportunities which may require additional funding.

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Dividend Payments

The Company remains committed to providing returns to investors through cash dividends. The Company has paid ~~378~~382 consecutive quarterly dividends since becoming a public company in 1928. The annual dividend rate for fiscal ~~2023~~2024 increased to ~~$1.10~~$1.13 per share, representing the ~~57th~~58th consecutive annual dividend increase.

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Capital Expenditures

Capital expenditures are first allocated to required maintenance and then growth opportunities based on the needs of the business. Capital expenditures supporting growth opportunities in fiscal ~~2023 will~~2024 are expected to focus on projects ~~for~~related to value-added capacity, ~~innovation, automation,~~infrastructure, and new technology. Capital expenditures for fiscal ~~2023~~2024 are estimated to be ~~$350~~$280 million.

Debt

As of January ~~29, 2023,~~28, 2024, the Company’s outstanding debt included $3.3 billion of fixed rate unsecured senior notes due in fiscal 2024, 2028, 2030, and 2051 with interest payable semi-annually. During the first quarter of fiscal ~~2023,~~2024, the Company made $28 million of interest payments and expects to make an additional $28 million of interest payments during fiscal ~~2023~~2024 on these notes. On January 30, 2024, the Company's Board of Directors approved up to $500 million of new long-term financing which is intended, along with cash on hand, to pay the $950 million notes due June 2024 upon maturity. See Note IJ - Long-Term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.

Borrowing Capacity

As a source of short-term financing, the Company maintains a $750 million unsecured revolving credit facility. The maximum commitment under this credit facility may be further increased by $375 million, generally by mutual agreement of the lenders and the Company, subject to certain customary conditions. Funds drawn from this facility may be used by the Company to refinance existing debt, for working capital or other general corporate purposes, and for funding acquisitions. The lending commitments under the facility are scheduled to expire on May 6, 2026, at which time the Company will be required to pay in full all obligations then outstanding. As of January ~~29, 2023,~~28, 2024, the Company had no outstanding draws from this facility.

Debt Covenants

The Company’s debt and credit agreements contain customary terms and conditions including representations, warranties, and covenants. These debt covenants limit the ability of the Company to, among other things, incur debt for borrowed money secured by certain liens, ~~and~~ engage in certain sale and leaseback transactions, and require maintenance of certain consolidated leverage ratios. As of January ~~29, 2023,~~28, 2024, the Company was in compliance with all covenants and expects to maintain compliance in the future.

Cash Held by International Subsidiaries

As of January ~~29, 2023,~~28, 2024, the Company had ~~$180~~$190 million of cash and cash equivalents held by international subsidiaries. The Company maintains all undistributed earnings as permanently reinvested. The Company evaluates the balance and uses of cash held internationally based on the needs of the business.

Share Repurchases

The Company is authorized to repurchase ~~3,987,494~~3,677,494 shares of common stock as part of an existing plan approved by the Company’s Board of Directors. During the first quarter of fiscal ~~2023,~~2024, the Company did not repurchase any shares of stock. The Company continues to evaluate share repurchases as part of its capital allocation strategy.

Commitments

There have been no material changes to the information regarding the Company’s future contractual financial obligations previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October ~~30, 2022.~~29, 2023.

TRADEMARKS

References to the Company’s brands or products in italics within this report represent valuable trademarks owned or licensed by Hormel Foods, LLC or other subsidiaries of Hormel Foods Corporation.

CRITICAL ACCOUNTING ESTIMATES

~~This~~Management's discussion and analysis of financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. The significant accounting policies used in preparing these Consolidated Financial Statements are consistent with those described in Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements in the Form 10-K.

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Critical accounting estimates are defined as those reflective of significant judgments, estimates, and uncertainties, which may result in materially different results under different assumptions and conditions. There have been no material changes in the Company’s Critical Accounting Estimates as disclosed in its Annual Report on Form 10-K for the fiscal year ended October ~~30, 2022.~~29, 2023.

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FORWARD-LOOKING STATEMENTS

This report contains “forward-looking” information within the meaning of the federal securities laws. The “forward-looking” information may include statements concerning the Company’s outlook for the future as well as other statements of beliefs, future plans, strategies, or anticipated events and similar expressions concerning matters that are not historical facts.

The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information. The Company is filing this cautionary statement in connection with the Reform Act. When used in this Quarterly Report on Form 10-Q, the Company’s Annual Report to Stockholders, other filings by the Company with the Securities and Exchange Commission, the Company’s press releases, and oral statements made by the Company’s representatives, the words or phrases “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” or similar expressions are intended to identify forward-looking statements within the meaning of the Reform Act. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those anticipated or projected.

In connection with the “safe harbor” provisions of the Reform Act, the Company is identifying risk factors that could affect financial performance and cause the Company’s actual results to differ materially from opinions or statements expressed with respect to future periods. The discussions of risk factors in the Company's most recent Annual Report on Form 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q contain certain cautionary statements regarding the Company’s business, which should be considered by investors and others. Such risk factors should be considered in conjunction with any discussions of operations or results by the Company or its representatives, including any forward-looking discussion, as well as comments contained in press releases, presentations to securities analysts or investors, or other communications by the Company.

In making these statements, the Company is not undertaking, and specifically declines to undertake, any obligation to address or update each or any factor in future filings or communications regarding the Company’s business or results, and is not undertaking to address how any of these factors may have caused changes to discussions or information contained in previous filings or communications. Though the Company has attempted to list comprehensively these important cautionary risk factors, the Company wishes to caution investors and others that other factors may in the future prove to be important in affecting the Company’s business or results of operations.

The Company cautions readers not to place undue reliance on forward-looking statements, which represent current views as of the date made. Forward-looking statements are inherently at risk to changes in the national and worldwide economic environment, which could include, among other things, risks related to the deterioration of economic conditions; ~~the COVID-19 pandemic;~~ risks associated with acquisitions, joint ventures, equity investments, and divestitures; potential disruption of operations, including at co-manufacturers, suppliers, logistics providers, customers, or other third-party service providers; failure to realize anticipated cost savings or operating efficiencies associated with strategic initiatives; risk of loss of a material contract; the Company’s inability to protect information technology systems against, or effectively respond to, cyber attacks or security breaches; deterioration of labor relations, labor availability or increases to labor costs; general risks of the food industry, including food contamination; outbreaks of disease among livestock and poultry flocks; fluctuations in commodity prices and availability of raw materials and other inputs; fluctuations in market demand for the Company’s products; damage to the ~~Company's~~Company’s reputation or brand image; climate change, or legal, regulatory, or market measures to address climate change; risks of litigation; potential sanctions and compliance costs arising from government regulation; compliance with stringent environmental regulations and potential environmental litigation; and risks arising from the Company’s foreign operations.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to various forms of market risk as a part of its ongoing business practices. The Company utilizes derivative instruments to mitigate earnings fluctuations due to market volatility.

Commodity Price Risk: The Company is subject to commodity price risk primarily through ~~the~~ grain, ~~live~~lean hog, ~~and~~ natural gas, and diesel fuel markets. To reduce these exposures and offset the fluctuations caused by changes in market conditions, the Company employs hedging programs. These programs utilize futures, swaps, and options contracts and are accounted for as cash flow hedges. The fair value of the Company’s cash flow commodity contracts as of January ~~29, 2023,~~28, 2024 was ~~$7.6~~$(10.5) million, compared to ~~$21.6~~$(17.1) million as of October ~~30, 2022.~~29, 2023. The Company measures its market risk exposure on its cash flow commodity contracts using a sensitivity analysis, which considers a hypothetical 10 percent change in the market prices. A 10 percent decrease in the market price would have negatively impacted the fair value of the Company's cash flow commodity

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contracts as of January ~~29, 2023,~~28, 2024 by ~~$31.6~~$25.4 million, which in turn would lower the Company's future cost on purchased commodities by a similar amount.

Interest Rate Risk: The Company is subject to interest rate risk primarily from changes in fair value of long-term fixed rate debt. As of January ~~29, 2023,~~28, 2024, the Company’s long-term debt had a fair value of $2.8 billion compared to $2.7 billion as of October ~~30, 2022.~~29, 2023. The Company measures its market risk exposure of long-term fixed rate debt using a sensitivity analysis, which considers a 10 percent change in interest rates. A 10 percent decrease in interest rates would have positively impacted the fair value of the

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Company’s long-term debt as of January ~~29, 2023,~~28, 2024 by ~~$83.6~~$76.9 million. A 10 percent increase would have negatively impacted the long-term debt by ~~$78.4~~$71.6 million.

Foreign Currency Exchange Rate Risk:The fair values of certain ~~Company~~ assets are subject to fluctuations in foreign currency exchange rates. The Company's net asset position in foreign currencies as of January 28, 2024 and October 29, 2023 was ~~$1,068.8 million, compared to $652.4 million as of October 30, 2022,~~$1.1 billion, with most of the exposure existing in Indonesian rupiah, Chinese yuan, ~~Indonesian rupiah,~~ and Brazilian real. The Company currently does not use market risk sensitive instruments to manage this risk.

Investment Risk: The Company has corporate-owned life insurance policies classified as trading securities as part of a rabbi trust to fund certain supplemental executive retirement plans and deferred income plans. As of January ~~29, 2023,~~28, 2024, the balance of these securities totaled ~~$193.3~~$199.7 million compared to ~~$186.2~~$188.2 million as of October ~~30, 2022.~~29, 2023. The rabbi trust is invested primarily in fixed income funds. The Company is subject to market risk due to fluctuations in the value of the remaining investments as unrealized gains and losses associated with these securities are included in the Company’s net earnings on a mark-to-market basis. A 10 percent decline in the value of the investments not held in fixed income funds would have negatively impacted the Company’s pretax earnings by approximately ~~$8.2~~$8.9 million, while a 10 percent increase in value would have a positive impact of the same amount.

Item 4. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.

As of the end of the period covered by this report (the Evaluation Date), the Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information the Company is required to disclose in reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Internal Controls.

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) ~~during~~through the first quarter of fiscal ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

~~The Company is a party to various~~Information regarding legal proceedings ~~related~~is available in Note I - Commitments and Contingencies of the Notes to the ongoing operation of its business, including claims both by and against the Company. At any time, such proceedings typically involve claims related to product liability, labeling, contracts, antitrust regulations, intellectual property, competition laws, employment practices, or other actions brought by employees, customers, consumers, competitors, or suppliers. The Company establishes accruals for its potential exposure, as appropriate, for claims against the Company when losses become probable and reasonably estimable. However, future developments or settlements are uncertain and may require the Company to change such accruals as proceedings progress. Resolution of any currently known matters, either individually or in the aggregate, is not expected to have a material effect on the Company’s financial condition, results of operations, or liquidity.

The Company is a defendant in four sets of antitrust lawsuits broadly targeting the pork and turkey industries. None of these cases involve allegations of bid rigging or other criminal conduct. The Company has not established reserves as it does not believe it will have liability in any of these cases.Consolidated Financial Statements.

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Item 1A. RISK FACTORS

The ~~Company's~~Company’s business, operations, and financial condition are subject to various risks and uncertainties. There have been no material changes to the risk factors previously disclosed in Part I, Item 1A. Risk Factors in the ~~Company's~~Company’s Annual Report on Form 10-K for the fiscal year ended October ~~30, 2022.~~29, 2023.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no issuer purchases of equity securities in the quarter ended January ~~29, 2023. The maximum number of shares that may yet be purchased under the plans or programs as of January 29, 2023, is 3,987,494.~~28, 2024. On January 29, 2013, the ~~Company's~~Company’s Board of Directors authorized the repurchase of 10,000,000 shares of its common stock with no expiration date. On January 26, 2016, the Board of Directors approved a two-for-one split of the Company’s common stock to be effective January 27, 2016. As part of the stock split resolution, the number of shares remaining to be repurchased was adjusted proportionately. The maximum number of shares that may yet be purchased under the repurchase plans or programs as of January 28, 2024, is 3,677,494.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

None.

Item 5. OTHER INFORMATION

During the fiscal quarter ended January 28, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as the terms are defined in Item 408(a) of Regulation S-K.

Item 6. EXHIBITS


3.1			Restated Certificate of Incorporation of Hormel Foods Corporation, as restated January 31 , 20 24 .

10.1			Hormel Foods Corporation Long-Term Incentive Plan Award Agr eement Under the 2018 Incentive Compensation Plan.

10.2			Hormel Foods Corporation Stock Option Agreement Under the 2018 Incentive Compensation Plan.

10.3			Hormel Foods Corporation Restricted Stock Unit Agreement Under the 2018 Incentive Compensation Plan.

31.1			Certification Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification Pursuant to 18 ~~U.S.C~~U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101			The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended January ~~29, 2023,~~28, 2024, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Condensed Statements of Financial Position, (iv) Consolidated Statements of Changes in ~~Shareholders'~~Shareholders’ Investment, (v) Consolidated Condensed Statements of Cash Flows, and (vi) Notes to the Consolidated Financial Statements.

104			The cover page from the ~~Company's~~Company’s Quarterly Report on Form 10-Q for the quarter ended January ~~29, 2023,~~28, 2024, formatted in Inline XBRL (included as Exhibit 101).

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SIGNATURES

Pursuant to the requirements 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.


		HORMEL FOODS CORPORATION
		(Registrant)

Date: ~~March 2, 2023~~February 29, 2024	ByBy:	/s/ JACINTH C. SMILEY
		JACINTH C. SMILEY
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)



Date: ~~March 2, 2023~~February 29, 2024	ByBy:	/s/ PAUL R. KUEHNEMAN
		PAUL R. KUEHNEMAN
		Vice President and Controller
		(Principal Accounting Officer)

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	Gain/(Loss) Recognized in AOCL (1)				Gain/(Loss) Reclassified from AOCL into Earnings (1)				Location on Consolidated Statements of Operations
	Quarter Ended				Quarter Ended
in thousands	January 29, 2023		January 30, 2022		January 29, 2023		January 30, 2022
Cash Flow Hedges:
Commodity Contracts	$	(8,390)	$	20,279	$	10,859	$	7,746	Cost of Products Sold
Excluded Component (2)	345		(1,172)		—		—
Interest Rate Contracts	—		—		247		247		Interest Expense