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 January 28, 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
NAME CHANGED 1/31/95 - FORMER NAME GEO. A. HORMEL & COMPANY
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 January 28, 1995
Common Stock - $.1172 par value 76,743,026
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
January 28, October 29,
1995 1994
(Unaudited)
(Thousands of Dollars)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 248,461 $ 248,599
Short-term marketable securities--
at cost which approximates market 9,525 11,360
Accounts receivable 191,256 228,369
Inventories 220,354 199,243
Deferred Income Taxes 15,055 14,213
Prepaid expenses 5,054 6,431
TOTAL CURRENT ASSETS 689,705 708,215
DEFERRED INCOME TAXES 67,933 70,791
INTANGIBLES 79,591 79,302
INVESTMENTS AND OTHER ASSETS 78,314 67,524
PROPERTY, PLANT AND EQUIPMENT
Land 6,405 6,658
Buildings 155,777 152,786
Equipment 450,853 451,301
Construction in progress 36,859 26,476
649,894 637,221
Less allowance for depreciation (371,134) (366,335)
278,760 270,886
$1,194,303 $1,196,718
See notes to financial statements
2
FORM 10-Q
STATEMENTS OF FINANCIAL POSITION
HORMEL FOODS CORPORATION
January 28, October 29,
1995 1994
(Thousands of Dollars)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 95,762 $ 112,851
Accrued expenses 30,858 29,320
Accrued advertising 34,057 31,863
Employee compensation 30,344 41,989
Taxes other than federal income taxes 17,914 17,606
Dividends payable 11,121 9,585
Federal income taxes 21,870 21,303
Current maturities of long-term debt 1,610 400
TOTAL CURRENT LIABILITIES 243,536 264,917
LONG-TERM DEBT - less current maturities 19,090 10,300
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION 234,982 235,124
ACCRUED PENSION COSTS 12,265
OTHER LONG-TERM LIABILITIES 12,072 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 15,898 15,696
Shares held in treasury. ( 4,364) ( 3,632)
20,541 21,071
Earnings reinvested in business 664,082 640,018
684,623 661,089
$1,194,303 $1,196,718
See notes to financial statements
3
FORM 10-Q
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
HORMEL FOODS CORPORATION
(In Thousands of Dollars, Except Per Share Amounts)
Three Months Ended
January 28, January 29,
1995 1994
Sales, less returns and allowances $ 730,720 $ 716,169
Cost of products sold 528,575 557,409
GROSS PROFIT 202,145 158,760
Expenses:
Selling and delivery 129,853 112,707
Administrative and general 17,782 14,029
OPERATING INCOME 54,510 32,024
Other income and expenses:
Other income-net 3,454 1,871
Interest expense ( 311) ( 591))
EARNINGS BEFORE INCOME TAXES 57,653 33,304
Provision for income taxes 22,165 12,754
NET EARNINGS $ 35,488 $ 20,550
EARNINGS PER SHARE $ 0.46 $ 0.27
See notes to financial statements
4
FORM 10-Q
STATEMENTS OF CASH FLOWS (Unaudited)
HORMEL FOODS CORPORATION
Three Months Three Months
Ended Ended
January 30, January 25,
1995 1994
(Thousands of Dollars)
OPERATING ACTIVITIES
Net earnings (loss) $ 35,488 $ 20,550
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation 8,178 7,883
Amortization of intangibles 870 675
Provision for deferred income taxes 2,015 (1,429)
(Gain) loss on property/equipment sales (97) 6
Changes in operating assets and
liabilities:
Decrease in accounts receivable 37,113 33,786
(Increase) in inventories
and prepaid expenses (19,734) (13,338)
Decrease in accounts
payable and accrued expenses (37,485) (11,988)
NET CASH PROVIDED BY OPERATING ACTIVITIES 26,348 36,145
INVESTING ACTIVITIES
Sale of short-term marketable securities 1,835 64
Acquisitions of businesses (1,159)
Purchases of property/equipment (17,254) (13,101)
Proceeds from sales of property/equipment 1,299 285
(Increase) decrease in investments
and other assets (10,790) (1,336)
NET CASH USED IN INVESTING ACTIVITIES (26,069) (11,416)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 10,000
Dividends paid on Common Stock (9,586) (8,530)
Other (831) (1,029)
NET CASH PROVIDED BY IN FINANCING ACTIVITIES (417) (9,559)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (138) 15,170
Cash and cash equivalents
at beginning of year 248,599 157,558
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $248,461 $172,728
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 three month periods ended January 28,
1995, and January 29, 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
Sales and net earnings for the first quarter of 1995 were
$730,720,000 and $35,488,000 compared to $716,169,000 and
$20,550,000, respectively, last year. Tonnage volume increased 6.7
percent for the quarter compared to the same period in 1994. Pork
raw material prices dropped to their lowest level in two decades
toward the end of the fourth quarter of 1994 and did not start to
rise until late in the first quarter of 1995. These low raw
material prices were a major factor in producing a gross profit as
a percentage of sales of 27.7 percent compared to 22.2 percent last
year. An increase in the sales volume of manufactured consumer
branded items, which are not as sensitive to the fluctuations of
the live pork market, also contributed to the increased gross
margin. Advertising expenses increased during the first quarter to
$55,678,000 from $45,399,000 in 1994. The Company continues to
emphasize both its older mature base of products and its newer
product introductions in its promotional programs. Total operating
expenses increased, with the volume and implementation of new
marketing and promotional programs, to 20.2 percent of sales from
17.7 percent last year producing operating income of 7.5 percent
compared to 4.5 percent in 1994.
The Company's core Hormel business continues to be the major
contributor to earnings with increases experienced in all major
divisions. Jennie-O Foods, Inc., and Hormel Foods International
Corporation, two of the Company's best known subsidiaries continued
to make substantial contributions to Company results. Jennie-O, a
leading turkey processor reported record earnings for the quarter
despite an increasingly competitive environment.
The effective tax rate for the first three months of 1995 was 38.5
percent compared to 38.3 percent last year.
During the first quarter, the Company announced that Jennie-O
Foods, Inc. will build a 75,000 square foot processing plant in
Montevideo, Minnesota as part of an aggressive expansion plan. It
was also announced that Hormel Foods International Corporation has
signed a joint venture with a Chinese partner to process pork and
produce selected Hormel-branded meat products in China.
7
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
1st Quarter 1st Quarter
1995 1994
Liquidity Ratios
Current ratio 2.8 2.9
Receivables turnover 13.9 14.2
Days sales in receivables 23.8 days 23.5 days
Inventory turnover 10.1 10.4
Days sales in inventory 38.0 days 36.3 days
Leverage Ratio
Long-term debt to equity 3.0% 1.0%
Operating Ratios
Pre-tax profit to net worth 34.3% 23.1%
Pre-tax profit to total assets 19.3% 12.2%
Changes during the first quarter in current asset and liability
balances followed normal seasonal patterns. Inventory levels
continue to be high due to promotional activities planned for later
in the second quarter.
The Company evaluates plant and equipment, on an ongoing basis to
achieve the best productivity, utilization and return on
investment. During the first quarter, the Company invested
$17,254,000 in new plant and equipment. The Company has major
renovation or expansion projects in progress at its Fremont,
Nebraska, Davenport, Iowa and Austin, Minnesota plants. Jennie-O
Foods has a major expansion project in progress at West Central
Turkeys, Inc., a co-packer located at Pelican Rapids, Minnesota.
Jennie-O has an option to purchase West Central Turkeys, Inc. in
1995 and has provided notice to West Central that it intends to
exercise that option. Investment in plant and equipment continues
to emphasize productivity gains while improving ergonomics and
safety conditions for employees.
The Company continues to keep excess funds invested short term as
it examines acquisitions that meet its long-term operating goals.
Long-term debt consists of small issue Industrial Revenue Bonds of
varying maturities and debt used for investment in the federal
affordable housing program. The leverage ratio indicates the
significant borrowing capacity available to take advantage of any
business opportunities that may arise through acquisition or
internal expansion.
8
FORM 10-Q
PART II - OTHER INFORMATION
Item 4. Results of Votes of Security Holders.
At the Annual Meeting of Stockholders on January 31, 1995
the proposal to amend the Company's Certificate of
Incorporation to change the Company's name from Geo. A.
Hormel & Company to HORMEL FOODS CORPORATION was
approved.
FOR 68,055,044 AGAINST 555,035
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:
D. J. HODAPP
Executive Vice President
& Chief Financial Officer
Date: By:
R. J. THATCHER
Vice President and
Treasurer
9
