SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 29, 1995 Commission File
Number 1-2402
HORMEL FOODS CORPORATION
Incorporated Under the Laws
of the State of Delaware FEIN #41-0319970
1 Hormel Place
Austin, Minnesota 55912-3680
Telephone - (507) 437-5737
NONE
Former name, former address and former fiscal year, if changed since last
report
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 XXX NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class Outstanding at April 29, 1995
Common Stock - $.1172 par value 76,696,569
Common Stock Non-Voting - $.01 par value -0-
Pages: This report contains nine pages numbered sequentially from this
cover page.
1
FORM 10-Q
PART I - FINANCIAL INFORMATION
STATEMENTS OF FINANCIAL POSITION
HORMEL FOODS CORPORATION
April 29, October 29,
1995 1994
(Unaudited)
(Thousands of Dollars)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 216,324 $ 248,599
Short-term marketable securities--
at cost which approximates market 9,230 11,360
Accounts receivable 188,582 228,369
Inventories 216,766 199,243
Deferred Income Taxes 15,761 14,213
Prepaid expenses 7,343 6,431
TOTAL CURRENT ASSETS 654,006 708,215
DEFERRED INCOME TAXES 67,933 70,791
INTANGIBLES 80,248 79,302
INVESTMENTS AND OTHER ASSETS 74,473 67,524
PROPERTY, PLANT AND EQUIPMENT
Land 7,075 6,658
Buildings 157,398 152,786
Equipment 459,964 451,301
Construction in progress 48,722 26,476
673,159 637,221
Less allowance for depreciation (378,144) (366,335)
295,015 270,886
$1,171,675 $1,196,718
See notes to financial statements
2
FORM 10-Q
STATEMENTS OF FINANCIAL POSITION
HORMEL FOODS CORPORATION
April 29, October 29,
1995 1994
(Unaudited)
(Thousands of Dollars)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 91,674 $ 112,851
Accrued expenses 33,377 29,320
Accrued advertising 16,033 31,863
Employee compensation 38,208 41,989
Taxes other than federal income taxes 15,927 17,606
Dividends payable 11,122 9,585
Federal income taxes 0 21,303
Current maturities of long-term debt 1,323 400
TOTAL CURRENT LIABILITIES 207,664 264,917
LONG-TERM DEBT - less current maturities 17,767 10,300
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION 235,224 235,124
ACCRUED PENSION COSTS 0 12,265
OTHER LONG-TERM LIABILITIES 12,287 13,023
STOCKHOLDERS' INVESTMENT
Preferred Stock, par value $.01 a
share--authorized 40,000,000 shares;
issued - none
Common stock, non-voting, par value
$.01 a share--authorized 40,000,000
shares; issued - none
Common Stock, par value $.1172 a share --
authorized 200,000,000 shares; issued
76,852,128 shares 9,007 9,007
Additional paid-in capital 16,451 15,696
Shares held in treasury. ( 4,088) ( 3,632)
21,370 21,071
Earnings reinvested in business 677,363 640,018
698,733 661,089
$1,171,675 $1,196,718
See notes to financial statements
3
FORM 10-Q
STATEMENTS OF EARNINGS (Unaudited)
GEO. A. HORMEL & COMPANY
(In Thousands of Dollars, Except Per Share Amounts)
Three Months Ended Six Months Ended
April 29, April 30, April 29, April 30,
1995 1994 1995 1994
Sales, less returns and allowances $748,046 $767,018 $1,478,766 $1,483,187
Cost of products sold 566,009 597,730 1,094,584 1,155,139
GROSS PROFIT 182,037 169,288 384,182 328,048
Expenses:
Selling and delivery 126,953 117,478 256,806 230,185
Administrative and general 16,616 14,514 34,398 28,543
OPERATING INCOME 38,468 37,296 92,978 69,320
Other income and expenses:
Other income-net 3,067 977 6,521 2,848
Interest expense ( 438) ( 613) ( 749) (1,204)
EARNINGS BEFORE INCOME TAXES 41,097 37,660 98,750 70,964
Provision for income taxes 15,743 14,634 37,908 27,388
NET EARNINGS $25,354 $ 23,026 $ 60,842 $ 43,576
NET EARNINGS PER SHARE $0.33 $0.30 $0.79 $0.57
See notes to financial statements
4
FORM 10-Q
STATEMENTS OF CASH FLOWS (Unaudited)
HORMEL FOODS CORPORATION
Six Months Six Months
Ended Ended
April 29, April 30,
1995 1994
(Thousands of Dollars)
OPERATING ACTIVITIES
Net earnings $ 60,842 $ 43,576
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation 16,473 15,896
Amortization of intangibles 1,853 1,350
Provision for deferred income taxes 1,310 (2,089)
(Gain) loss on property/equipment sales (150) 6
Changes in operating assets and
liabilities:
Decrease in accounts receivable 39,787 30,996
(Increase) in inventories
and prepaid expenses (18,435) (15,510)
Decrease in accounts
payable and accrued expenses (72,614) (13,396)
NET CASH PROVIDED BY OPERATING ACTIVITIES 29,066 60,829
INVESTING ACTIVITIES
Sale of short-term marketable securities 2,130 142
Acquisitions of businesses (2,799)
Purchases of property/equipment (41,993) (29,958)
Proceeds from sales of property/equipment 1,539 363
(Increase) decrease in investments
and other assets ( 6,949) 4,114
NET CASH USED IN INVESTING ACTIVITIES (48,072) (25,339)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 10,000
Principal payments on long-term debt (1,610)
Dividends paid on Common Stock (20,706) (18,021)
Other (953) (1,611)
NET CASH USED IN FINANCING ACTIVITIES (13,269) (19,632)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (32,275) 15,858
Cash and cash equivalents
at beginning of year 248,599 157,558
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $216,324 $173,416
See notes to financial statements
5
FORM 10-Q
NOTES TO FINANCIAL STATEMENTS (Unaudited)
HORMEL FOODS CORPORATION
NOTE A
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal re-
curring accruals) necessary for a fair presentation.
The accounting policies followed by the Company are set forth in
Note A to the Company's Financial Statements in the 1994 Geo. A.
Hormel & Company Annual Report to Stockholders, which is incorporated
by reference on Form 10-K.
NOTE B
The results of operations for the six month periods ended April 29,
1995, and April 30, 1994 are not necessarily indicative of the
results to be expected for the full year.
6
FORM 10-Q
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
HORMEL FOODS CORPORATION
RESULTS OF OPERATIONS
Net earnings in the second quarter increased 10.1% to $25,354,000
from $23,026,000 during the same quarter of 1994. Sales for the
quarter decreased 2.5 percent to $748,046,000 from $767,018,000
last year. Sales tonnage for the period decreased by .5 percent
compared to the same quarter of 1994.
During the quarter live pork and pork raw material prices returned
to more normal levels which reduced the volume and margins for the
commodity fresh pork business. The Company's emphasis on higher
margin branded consumer items provided a product mix which enabled
the Company to maintain average margins and report record
earnings as sales dollars and tonnage volume declined.
Earnings for the first six months increased 39.6 to $60,842,000
compared to $43,576,000 for the same period last year. Net sales
for the first half of 1995 decreased .3 percent to $1,478,766,000.
from $1,483,187,000 in 1994. Tonnage volume increased 3.0 percent
over the same period of 1994.
The Company's core Hormel processed foods business continues to be the major
contributor to earnings and sales results. Sales and tonnage
growth by the Meat Products and Foodservice Groups was especially
good and the Grocery Products Division of the Prepared Foods
Group maintained a strong market share for established brands while
volume growth by products in the fast growing ethnic foods category
exceeded the category growth.
Jennie-O Foods Inc. made a substantial contribution to Company
results in the second quarter. Jennie-O's business plan for the
third and fourth quarters projects a continued strong performance.
Construction of a new turkey processing plant at Montevideo,
Minnesota, was started in the second quarter and will be completed
in May of 1996.
Jennie-O has exercised an option to purchase the
assets of West Central Turkeys which include a slaughter and
processing plant in Pelican Rapids, Minnesota. The purchase will
close in June of 1995. The acquisition of West Central Turkeys and
the new plant construction project is a reflection of the Company's
of continued investment in new and existing plant facilities due to
sales tonnage and profit growth at Jennie-O.
Results at Dubuque Foods, Inc. and Farm Fresh Catfish Company
continued to be negatively impacted by market conditions. Fresh
pork prices were the main problem at Dubuque while Farm Fresh was
hurt by a shortage of live fish due to poor growing weather
7
FORM 10-Q
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
HORMEL FOODS CORPORATION
RESULTS OF OPERATIONS
in the southeast. It will be difficult for Dubuque Foods and Farm
Fresh Catfish to meet their business plans for 1995 even though some
improvement is expected in the pork and fish commodity markets during
the remainder of the year.
Advertising and promotional expenses for the quarter and first six
months wer $52,527,000 and $108,205,000 compared to $46,527,000
and $92,336,000 for the same periods of 1994. The Company's
strategy on advertising and promotion of it's product lines is to
aggressively introduce new products while promoting its older more
mature product lines to maintain and increase market share.
Other income is primarily interest income and the increase compared
to last year is reflective of the interest rate increases
throughout the year.
The effective tax rate for the quarter and first half was 38.3 and
38.4 percent, respectively, compared to 38.9 and 38.6 percent last
year.
8
FORM 10-Q
FINANCIAL CONDITION
Ratio comparisons for the first quarter of 1995 and 1994, which
demonstrate the Company's financial strength, are as follows:
End of Quarter
2nd Quarter 2nd Quarter
1995 1994
Liquidity Ratios
Current ratio 3.1 2.9
Receivables turnover 14.2 14.6
Days sales in receivables 23.3 days 23.1 days
Inventory turnover 10.5 10.7
Days sales in inventory 36.1 days 35.4 days
Leverage Ratio
Long-term debt to equity 2.7% 1.0%
Operating Ratios
Pre-tax profit to net worth 29.0% 24.4%
Pre-tax profit to total assets 16.7% 12.9%
Changes during the first six months in current asset and liability
balances followed normal seasonal patterns. Inventory levels are
adequate for the traditional promotional activities that occur
during the third and fourth quarters.
The Company continues to invest heavily in plant and equipment to
achieve the best productivity, utilization and return on
investment. The Company has major renovation or expansion projects
in progress at its Fremont, Nebraska, Davenport, Iowa and Austin,
Minnesota plants. Jennie-O Foods has started construction of a new
turkey processing plant at Montevideo, Minnesota and will complete
a major expansion project at West Central Turkeys during the third
quarter.
The Company continues to keep excess funds invested short term as
it examines acquisition opportunities that meet its long-term
operating goals. Long-term debt consists of small issue Industrial
Revenue Bonds of varying maturities and debt used to invest in the
federal affordable housing program. The leverage ratio reflects
the significant borrowing capacity available to the Company if
needed to take advantage of any business opportunities that may
arise.
9
FORM 10-Q
PART II - OTHER INFORMATION
Item 4. NONE
Item 6. Exhibits and Reports on Form 8-K
None.
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
Date: By: s/s
D. J. HODAPP
Executive Vice President
& Chief Financial Officer
Date: By: s/s
R. J. THATCHER
Vice President and
Treasurer
10
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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