Exhibit 99
INVESTOR CONTACT: | | MEDIA CONTACT: |
Fred Halvin | | Julie Craven |
(507) 437-5007 | | (507) 437-5345 |
fdhalvin@hormel.com | | jhcraven@hormel.com |
HORMEL FOODS REPORTS FOURTH QUARTER RESULTS
AUSTIN, Minn., November 23, 2005 (BUSINESS WIRE) – Hormel Foods Corporation (NYSE: HRL) today reported its performance for the fiscal 2005 fourth quarter.
HIGHLIGHTS
The company’s accounting cycle resulted in a 13-week fourth quarter and 52-week year in fiscal 2005, compared with a 14-week fourth quarter and 53-week year in fiscal 2004.
Fourth Quarter
• Diluted EPS of $.59, up 18 percent from $.50 per share in 2004
• Dollar sales of $1.5 billion increased 10 percent from 2004 (down 2 percent excluding acquisitions)
• Volume up 12 percent compared to last year (down 2 percent excluding acquisitions)
• Jennie-O Turkey Store operating profit up 31 percent; volume down 5 percent; dollar sales down 2 percent
• Refrigerated Foods operating profit even with last year; volume up 22 percent (down 3 percent excluding acquisitions); dollar sales up 14 percent (down 7 percent excluding acquisitions)
• Grocery Products operating profit up 4 percent; volume up 3 percent (down 2 percent excluding acquisitions); dollar sales up 5 percent (up 2 percent excluding acquisitions)
• Specialty Foods operating profit up 46 percent; volume up 19 percent (up 4 percent excluding acquisitions); dollar sales up 23 percent (up 13 percent excluding acquisitions)
• All Other operating profit up 128 percent; volume up 25 percent; dollar sales up 20 percent
Fiscal Year
• Diluted EPS of $1.82, up 17 percent from adjusted earnings from operations of $1.56 per share in 2004 (2004 GAAP earnings were $1.65 per share, which included a $.09 per share gain from infrequently occurring transactions)
• Dollar sales of $5.4 billion increased 13 percent from 2004 (up 4 percent excluding acquisitions/divestitures)
• Volume up 14 percent compared to last year (up 1 percent excluding acquisitions/divestitures)
• Jennie-O Turkey Store operating profit up 74 percent; volume up 2 percent; dollar sales up 3 percent
• Refrigerated Foods operating profit down 8 percent; volume up 26 percent (up 2 percent excluding acquisitions); dollar sales up 22 percent (up 3 percent excluding acquisitions)
• Grocery Products operating profit up 3 percent; volume up 1 percent (down 2 percent excluding acquisitions); dollar sales up 5 percent (up 3 percent excluding acquisitions)
• Specialty Foods operating profit up 6 percent; volume up 7 percent (down 2 percent excluding acquisitions); dollar sales up 11 percent (up 5 percent excluding acquisitions)
• All Other operating profit down 4 percent (up 19 percent excluding Vista divestiture); volume up 5 percent; sales up 3 percent (up 20 percent excluding Vista divestiture)
Hormel Foods Corporation (NYSE: HRL-News), the multinational marketer of consumer-branded meat and food products, today reported fiscal 2005 fourth quarter net earnings of $81.7 million, up 17 percent from earnings of $69.8 million a year earlier. Diluted earnings per share for the quarter were $.59 this year compared to $.50 per share last year and sales totaled $1.5 billion, up from $1.3 billion in fiscal 2004.
For the year ended October 30, 2005, net earnings were $253.5 million (up 16 percent), or $1.82 per diluted share, compared to $218.9 million from adjusted earnings from operations a year ago, or $1.56 per diluted share. In fiscal 2004, GAAP earnings were $231.7 million and $1.65 per share, which includes $12.8 million, or $.09 per share of infrequently occurring transactions. Sales totaled $5.4 billion in fiscal 2005, up 13 percent from $4.8 billion last year.
COMMENTARY AND OUTLOOK
“We had a strong finish to an outstanding year,” said Joel W. Johnson, chairman of the board and chief executive officer. “All five segments reported year-over-year improved earnings in the fourth quarter, despite an extra week in last year’s quarter. The Jennie-O Turkey Store operation led the way with the largest operating profit improvement compared to last year. A combination of high turkey meat markets, lower feed costs and improved production efficiencies all contributed to the excellent performance,” stated Johnson.
“The Grocery Products segment reported another quarter of improved top and bottom line results driven by double-digit growth from our microwave line of products. Also, lower pork costs, which decrease the cost of goods for items like the SPAM family of products, are beginning to benefit this segment. We expect pork costs to be lower in 2006 compared to 2005. Specialty Foods, a segment we have been building over the last couple of years, reported improved operating profits from strong sales of core products like sugar substitutes.” Johnson said.
“Demand for our value-added protein products that are sold through our Refrigerated Foods segment continues to be good and the two acquisitions that were made earlier in the year, Lloyd’s Barbeque Company and Clougherty Packing Co., are meeting expectations. Within the All Other segment, our International division delivered improved operating profits driven by increased sales of the SPAM family of products, STAGG chili and better results from our China operations,” Johnson commented.
“All of our segments have momentum going into the new year,” Johnson said. “We will be adopting FAS 123R, Share-Based Payment, in the first quarter of 2006. This non-cash charge will reduce earnings per share by $.04 in the first quarter,” said Johnson.
“After assessing industry factors and our business plans and prospects, our GAAP earnings guidance for the first quarter of fiscal 2006 is in a range of $.44 to $.50 per share (includes $.04 per share charge for FAS 123R). For the full year of fiscal 2006, we are providing GAAP earnings guidance in a range from $1.86 - $1.96 (includes $.04 per share charge for FAS 123R),” Johnson concluded.
OPERATING HIGHLIGHTS – FOURTH QUARTER
Grocery Products (16% of Net Sales, 32% of Total Segment Operating Profit)
• Dollar sales totaled $233 million, up 5 percent.
• Volume was up 3 percent. Mexican Accent products, SPAM family of products and HORMEL microwave products were key contributors.
• Operating profit was up 4 percent. Profits from Mexican Accent, better margins from the SPAM family of products and HORMEL flavored bacon bits were the key drivers behind the increase.
Refrigerated Foods (50% of Net Sales, 27% of Total Segment Operating Profit)
• Dollar sales totaled $739 million, up 14 percent.
• Volume increased 22 percent.
• Operating profit was even with last year.
• Foodservice items reporting double-digit growth include precooked breakfast sausage, ALWAYS TENDER pork, AUSTIN BLUES BBQ, APPLEWOOD smoked bacon and CAFÉ H.
• Value-added retail areas of growth included HORMEL bacon, hams, party trays and case-ready.
Jennie-O Turkey Store (21% of Net Sales, 29% of Total Segment Operating Profit)
• Dollar sales totaled $311 million, a decrease of 2 percent.
• Volume was down 5 percent.
• Growth was reported for JENNIE-O TURKEY STORE Premium Seasoned, Grand Champion, Rotisserie and frozen turkey burgers.
• Operating profit totaled $41 million compared to $31 million last year. The higher operating profit resulted from a combination of high turkey meat markets, lower feed costs and improved efficiencies in our production facilities.
Specialty Foods (10% of Net Sales, 6% of Total Segment Operating Profit)
• Dollar sales increased 23 percent to $144 million.
• Volume was up 19 percent and operating profit was up 46 percent. The addition of Mark-Lynn Foods and strong sales of sugar substitute, sugar packets, canisters and shakers all contributed to the increases.
All Other (3% of Net Sales, 6% of Total Segment Operating Profit)
• Dollar sales were up 20 percent to $50 million.
• Volume was up 25 percent compared with last year.
• Operating profit was up 128 percent.
• International growth drove the segment. International sales of the SPAM family of products and STAGG chili were key contributors as well as improved results from the China operations.
DIVIDENDS
Effective November 15, 2005, the company paid its 309th consecutive quarterly dividend. The annual rate is $.52 per share.
On November 21, 2005, the Hormel Foods Board of Directors increased the annual dividend rate to $.56 per share from $.52 per share.
CONFERENCE CALL
A conference call will be Webcast at 9 a.m. CT on Wednesday, November 23, 2005. Access is available at www.hormel.com. If you do not have Internet access and want to listen to an audio replay, call 800-642-1687 in the United States and 706-645-9291 internationally and enter conference call ID 2453141. The Webcast replay will be available at 12:00 (noon) CT, November 23, and archived for one year. The audio replay will be available beginning at 10 a.m. CT on Wednesday, November 23, 2005, through 11 p.m. CT on December 23, 2005.
ABOUT HORMEL FOODS CORPORATION
Hormel Foods Corporation, based in Austin, Minn., is a multinational manufacturer and marketer of consumer-branded food and meat products, many of which are among the best known and trusted in the food industry. The company leverages its extensive expertise, innovation and high competencies in pork and turkey processing and marketing to bring quality, value-added brands to the global marketplace. For the past five years, Hormel Foods was named one of “The 400 Best Big Companies in America” by Forbes magazine. The company enjoys a strong reputation among consumers, retail grocers, foodservice and industrial customers for products that are highly regarded for quality, taste, nutrition, convenience and value. For more information, visit www.hormel.com.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking information based on management’s current views and assumptions. Actual events may differ. Please refer to the Cautionary Statement Relevant to Forward-Looking Statements and Information that appears on Exhibit 99.1 of the company’s Annual Report on Form 10-K for the fiscal year ended October 30, 2004, which can be accessed at http://www.hormel.com
Segment Data
Fiscal 2005 Fourth Quarter Segment Operating Results (in Thousands)
| | FOURTH QUARTER ENDED | |
| | October 30, 2005 | | October 30, 2004 | | % Change | |
SALES | | | | | | | |
Grocery Products | | $ | 232,801 | | $ | 222,583 | | 4.6 | |
Refrigerated Foods | | 739,466 | | 646,715 | | 14.3 | |
Jennie-O Turkey Store | | 311,293 | | 317,323 | | (1.9 | ) |
Specialty Foods | | 144,350 | | 116,946 | | 23.4 | |
All Other | | 49,998 | | 41,649 | | 20.0 | |
Total | | $ | 1,477,908 | | $ | 1,345,216 | | 9.9 | |
| | | | | | | |
OPERATING PROFIT | | | | | | | |
Grocery Products | | $ | 45,524 | | $ | 43,950 | | 3.6 | |
Refrigerated Foods | | 38,766 | | 38,713 | | 0.1 | |
Jennie-O Turkey Store | | 41,050 | | 31,415 | | 30.7 | |
Specialty Foods | | 8,303 | | 5,683 | | 46.1 | |
All Other | | 8,658 | | 3,802 | | 127.7 | |
Total segment operating profit | | 142,301 | | 123,563 | | 15.2 | |
Net interest and investment income | | (6,799 | ) | (5,198 | ) | (30.8 | ) |
General corporate expense | | (3,541 | ) | (8,374 | ) | 57.7 | |
Income before tax | | $ | 131,961 | | $ | 109,991 | | 20.0 | |
| | YEAR TO DATE ENDED | |
| | October 30, 2005 | | October 30, 2004 | | % Change | |
SALES | | | | | | | |
Grocery Products | | $ | 799,291 | | $ | 758,256 | | 5.4 | |
Refrigerated Foods | | 2,801,632 | | 2,300,399 | | 21.8 | |
Jennie-O Turkey Store | | 1,088,324 | | 1,052,682 | | 3.4 | |
Specialty Foods | | 518,673 | | 467,581 | | 10.9 | |
All Other | | 206,077 | | 200,957 | | 2.5 | |
Total | | $ | 5,413,997 | | $ | 4,779,875 | | 13.3 | |
| | | | | | | |
OPERATING PROFIT | | | | | | | |
Grocery Products | | $ | 132,047 | | $ | 128,838 | | 2.5 | |
Refrigerated Foods | | 129,831 | | 141,361 | | (8.2 | ) |
Jennie-O Turkey Store | | 136,327 | | 78,593 | | 73.5 | |
Specialty Foods | | 27,310 | | 25,674 | | 6.4 | |
All Other | | 22,384 | | 23,278 | | (3.8 | ) |
Total segment operating profit | | 447,899 | | 397,744 | | 12.6 | |
Net interest and investment income | | (19,213 | ) | (12,779 | ) | (50.3 | ) |
General corporate expense | | (23,800 | ) | (20,400 | ) | (16.7 | ) |
Income before tax | | $ | 404,886 | | $ | 364,565 | | 11.1 | |
HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
| | Quarter Ended | | Year Ended | |
| | 10-30-2005 | | 10-30-2004 | | 10-30-2005 | | 10-30-2004 | |
| | | | | | | | | |
Net sales | | $ | 1,477,908 | | $ | 1,345,216 | | $ | 5,413,997 | | $ | 4,779,875 | |
| | | | | | | | | |
Cost of products sold | | 1,110,548 | | 1,026,334 | | 4,131,389 | | 3,658,870 | |
| | | | | | | | | |
GROSS PROFIT: | | 367,360 | | 318,882 | | 1,282,608 | | 1,121,005 | |
| | | | | | | | | |
Expenses: | | | | | | | | | |
Selling and delivery | | 156,517 | | 143,647 | | 577,289 | | 521,164 | |
| | | | | | | | | |
Marketing | | 24,215 | | 22,549 | | 114,503 | | 100,530 | |
| | | | | | | | | |
Administrative & general | | 48,567 | | 38,779 | | 172,242 | | 146,488 | |
| | | | | | | | | |
Gain on sale of business | | 0 | | 0 | | 0 | | (18,063 | ) |
| | | | | | | | | |
TOTAL EXPENSES AND GAIN ON SALE OF BUSINESS: | | 229,299 | | 204,975 | | 864,034 | | 750,119 | |
| | | | | | | | | |
Equity in earnings of affiliates | | 699 | | 1,282 | | 5,525 | | 6,458 | |
| | | | | | | | | |
OPERATING INCOME: | | 138,760 | | 115,189 | | 424,099 | | 377,344 | |
| | | | | | | | | |
Other income & expenses: | | | | | | | | | |
Interest & investment income | | 142 | | 1,866 | | 8,531 | | 14,363 | |
| | | | | | | | | |
Interest expense | | (6,941 | ) | (7,064 | ) | (27,744 | ) | (27,142 | ) |
| | | | | | | | | |
EARNINGS BEFORE INCOME TAXES: | | 131,961 | | 109,991 | | 404,886 | | 364,565 | |
| | | | | | | | | |
Provision for income taxes | | 50,228 | | 40,148 | | 151,427 | | 132,902 | |
(effective tax rate) | | 38.06 | % | 36.50 | % | 37.40 | % | 36.45 | % |
| | | | | | | | | |
NET EARNINGS | | $ | 81,733 | | $ | 69,843 | | $ | 253,459 | | $ | 231,663 | |
| | | | | | | | | |
NET EARNINGS PER SHARE (Basic) | | $ | .59 | | $ | .50 | | $ | 1.84 | | $ | 1.67 | |
NET EARNINGS PER SHARE (Diluted) | | $ | .59 | | $ | .50 | | $ | 1.82 | | $ | 1.65 | |
HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| | October 30, 2005 | | October 30, 2004 | |
| | (In Thousands) | |
ASSETS | | | | | |
| | | | | |
CURRENT ASSETS | | | | | |
Cash and cash equivalents | | $ | 131,046 | | $ | 179,881 | |
Short-term marketable securities | | 38,500 | | 109,000 | |
Accounts receivable | | 301,001 | | 272,738 | |
Inventories | | 495,978 | | 425,655 | |
Deferred income taxes | | 53,868 | | 29,254 | |
Prepaid expenses & other current assets | | 20,691 | | 12,875 | |
| | | | | |
TOTAL CURRENT ASSETS | | 1,041,084 | | 1,029,403 | |
| | | | | |
INTANGIBLES | | 641,686 | | 512,942 | |
| | | | | |
OTHER ASSETS | | 261,960 | | 287,386 | |
| | | | | |
PROPERTY, PLANT & EQUIPMENT, NET | | 877,676 | | 704,237 | |
| | | | | |
TOTAL ASSETS | | $ | 2,822,406 | | $ | 2,533,968 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ INVESTMENT | | | | | |
| | | | | |
TOTAL CURRENT LIABILITIES | | $ | 583,172 | | $ | 464,366 | |
| | | | | |
LONG-TERM DEBT – LESS CURRENT MATURITIES | | 350,430 | | 361,510 | |
| | | | | |
OTHER LONG-TERM LIABILITIES | | 314,228 | | 308,844 | |
| | | | | |
SHAREHOLDERS’ INVESTMENT | | 1,574,576 | | 1,399,248 | |
| | | | | |
TOTAL LIAB. & SHAREHOLDERS’ INVESTMENT | | $ | 2,822,406 | | $ | 2,533,968 | |
HORMEL FOODS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | Year Ended | |
| | 10-30-2005 | | 10-30-2004 | |
| | (In Thousands) | |
OPERATING ACTIVITIES | | | | | |
Net earnings | | $ | 253,459 | | $ | 231,663 | |
Adjustments to reconcile to net cash provided by operating activities: | | | | | |
Depreciation | | 105,774 | | 87,675 | |
Amortization of intangibles | | 9,415 | | 7,070 | |
Equity in earnings of affiliates | | (5,797 | ) | (5,884 | ) |
Provision for deferred income taxes | | (30,834 | ) | (15,654 | ) |
Loss (Gain) on property/equipment sales and plant facilities | | 149 | | (432 | ) |
Gain on sales of business and investment | | 0 | | (24,285 | ) |
Changes in operating assets and liabilities, net of acquisitions: | | | | | |
Decrease in accounts receivable | | 6,463 | | 14,803 | |
Increase in inventories, prepaid expenses, and other current assets | | (13,340 | ) | (28,964 | ) |
Increase in accounts payable and accrued expenses | | 83,516 | | 23,772 | |
Other | | 7,159 | | 4,966 | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | | 415,964 | | 294,730 | |
| | | | | |
INVESTING ACTIVITIES | | | | | |
Sale of available-for-sale securities | | 188,800 | | 86,470 | |
Purchase of available-for-sale securities | | (118,300 | ) | (195,600 | ) |
Acquisitions of businesses/intangibles | | (366,496 | ) | (21,452 | ) |
Purchases of property / equipment | | (107,094 | ) | (80,363 | ) |
Proceeds from sales of property / equipment | | 2,938 | | 2,903 | |
Proceeds from sales of business and investment | | 0 | | 126,774 | |
Decrease (Increase) in investments, equity in affiliates, net pension assets, and other assets | | 31,301 | | (9,413 | ) |
Dividends from affiliates | | 775 | | 0 | |
NET CASH USED IN INVESTING ACTIVITIES | | (368,076 | ) | (90,681 | ) |
| | | | | |
FINANCING ACTIVITIES | | | | | |
Proceeds from short-term debt | | 115,000 | | 0 | |
Principal payments on short-term debt | | (115,000 | ) | 0 | |
Principal payments on long-term debt | | (15,765 | ) | (32,298 | ) |
Dividends paid on common stock | | (69,371 | ) | (61,343 | ) |
Stock repurchase | | (22,977 | ) | (37,525 | ) |
Other | | 11,390 | | 9,022 | |
NET CASH USED IN FINANCING ACTIVITIES | | (96,723 | ) | (122,144 | ) |
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | | (48,835 | ) | 81,905 | |
Cash and cash equivalents at beginning of year | | 179,881 | | 97,976 | |
CASH AND CASH EQUIVALENTS AT END OF YEAR | | $ | 131,046 | | $ | 179,881 | |
