<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended January 29, 2000 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.
<TABLE>
<CAPTION>
Class Outstanding at January 29, 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stock $.0586 par value 141,507,800 (post split)
Common Stock Non-Voting $.01 par value -0-
</TABLE>
Pages: This report contains eleven pages numbered sequentially from this cover
page.
<PAGE>
FORM 10-Q
STATEMENTS OF FINANCIAL POSITION
(In Thousands of Dollars)
HORMEL FOODS CORPORATION
<TABLE>
<CAPTION>
January 29, October 30,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 150,354 $ 188,310
Short-term marketable securities--
at cost which approximates market 67,576 60,252
Accounts receivable 232,621 266,059
Inventories 267,150 270,239
Deferred income taxes 10,019 9,526
Prepaid expenses 37,106 5,757
----------- -----------
TOTAL CURRENT ASSETS 764,826 800,143
DEFERRED INCOME TAXES 61,204 60,051
INTANGIBLES 97,023 98,544
INVESTMENTS IN AFFILIATES 141,135 142,879
OTHER ASSETS 86,835 78,344
PROPERTY, PLANT AND EQUIPMENT
Land 13,385 13,108
Buildings 289,014 286,662
Equipment 664,191 652,723
Construction in progress 53,607 49,693
----------- -----------
1,020,197 1,002,186
Less allowance for depreciation
(507,541) (496,562)
----------- -----------
512,656 505,624
$ 1,663,679 $ 1,685,585
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
FORM 10-Q
STATEMENTS OF FINANCIAL POSITION
(In Thousands of Dollars)
HORMEL FOODS CORPORATION
<TABLE>
<CAPTION>
January 29, October 30,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 164,688 $ 162,585
Accrued expenses 31,238 37,255
Accrued marketing 42,170 34,882
Employee compensation 36,698 73,050
Taxes, other than federal income taxes 0 12,333
Dividends payable 12,547 11,902
Federal income tax 35,636 12,186
Current maturities of long-term debt 39,315 41,214
----------- -----------
TOTAL CURRENT LIABILITIES 362,292 385,407
LONG-TERM DEBT--less current maturities 177,070 184,723
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION 252,523 252,236
OTHER LONG-TERM LIABILITIES 25,007 22,077
SHAREHOLDERS' INVESTMENT
Preferred Stock, par value $.01 a share--
authorized 80,000,000 shares; issued--none
Common Stock, non-voting, par value $.01 a share--
authorized 80,000,000 shares; issued--none
Common Stock, par value $.0586 a share--
authorized 400,000,000 shares;
issued 141,507,800 shares Jan. 29, 2000
issued 142,724,870 shares Oct. 30, 1999 8,292 8,364
Accumulated other comprehensive loss (7,231) (6,305)
Retained earnings 845,726 839,083
----------- -----------
TOTAL SHAREHOLDERS' INVESTMENT 846,787 841,142
----------- -----------
$ 1,663,679 $ 1,685,585
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
FORM 10-Q
STATEMENTS OF EARNINGS
(In Thousands, Except Per Share Amounts)
HORMEL FOODS CORPORATION
<TABLE>
<CAPTION>
Three Three
Months Ended Months Ended
January 29, January 30,
2000 1999
--------------- ---------------
<S> <C> <C>
Sales, less returns and allowances $ 903,913 $ 799,005
Cost of products sold 640,832 557,240
--------- ---------
GROSS PROFIT 263,081 241,765
Expenses:
Selling and delivery 94,889 86,799
Marketing 84,977 78,014
Administrative and general 16,494 18,535
--------- ---------
OPERATING INCOME 66,721 58,417
Other income and expenses:
Other income--net 6,052 5,474
Equity in earnings of affiliates (666) 4,760
Interest expense
(3,561) (2,933)
--------- ---------
EARNINGS BEFORE INCOME TAXES 68,546 65,718
Provision for income taxes 24,698 23,338
--------- ---------
NET EARNINGS $ 43,848 $ 42,380
========= =========
NET EARNINGS PER SHARE (BASIC) $ 0.31 $ 0.29
========= =========
NET EARNINGS PER SHARE (DILUTED) $ 0.30 $ 0.29
========= =========
</TABLE>
See notes to financial statements
<PAGE>
FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
HORMEL FOODS CORPORATION
<TABLE>
<CAPTION>
Three Three
Months Ended Months Ended
January 29, January 30,
2000 1999
--------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 43,848 $ 42,380
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation 14,584 14,997
Amortization of intangibles 1,521 1,737
Equity in earnings of affiliates 666 (4,760)
Provision for deferred income taxes (1,646) (422)
(Gain) loss on property/equipment sales 240 275
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 33,438 13,783
(Increase) decrease in inventories
and prepaid expenses (28,260) (22,467)
Increase (decrease) in accounts payable
and accrued expenses (18,644) 3,985
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 45,747 49,508
INVESTING ACTIVITIES
Sale of held-to-maturity securities 14,589 11,720
Purchase of held-to-maturity securities (21,913) (21,444)
Purchases of property/equipment (22,298) (12,062)
Proceeds from sales of property/equipment 442 281
(Increase) in investments, equity in affiliates, and other assets (8,339) (27,850)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (37,519) (49,355)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 1,838 22,616
Principal payments on long-term debt (9,601) (29)
Dividends paid on Common Stock (11,844) (11,756)
Stock Repurchase (25,030) (2,046)
Other (1,547) 170
--------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (46,184) 8,955
--------- ---------
(DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (37,956) 9,108
Cash and cash equivalents at beginning of year 188,310 203,934
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF QUARTER $ 150,354 $ 213,042
========= =========
</TABLE>
See notes to financial statements
<PAGE>
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 recurring 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 1999 Hormel Foods Corporation Annual
Report to Shareholders, which is incorporated by reference on Form 10-K.
NOTE B
The results of operations for the three month periods ended January 29, 2000 and
January 30, 1999 are not necessarily indicative of the results to be expected
for the full year.
NOTE C
The Company reports comprehensive income as defined by the Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income". Total comprehensive income (net income plus other comprehensive income)
was $42,922 and $42,410 for the three month periods ended January 29, 2000 and
January 30, 1999, respectively.
NOTE D
The following table sets forth the denominator for the computation of basic and
diluted earnings per share:
<TABLE>
<CAPTION>
Three Months Ended
------------------
January 29, 2000 January 30, 1999
---------------- ----------------
<S> <C> <C>
Denominator for basic earnings per
share - weighted-average shares 142,341,751 146,899,396
Dilutive potential common shares 1,447,948 874,874
------------- -------------
Denominator for diluted earnings per
share - adjusted weighted-average
shares and assumed conversions 143,789,699 147,774,270
============= =============
</TABLE>
<PAGE>
FORM 10-Q
MANAGEMENTS' DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In Thousands except share amounts)
HORMEL FOODS CORPORATION
RESULTS OF OPERATIONS
Operating earnings for the first quarter of fiscal 2000 increased 13.7 percent
to $43,848 from $38,572 in 1999. Including a one-time gain, net of taxes, from
the sale of land by Campofrio Alimentacion, S.A., a Spanish food company in
which Hormel has a 21.4 percent ownership interest, total reported earnings for
the first quarter of 1999 were $42,380. Dollar sales for the quarter increased
$104,908 to $903,913 on a tonnage volume gain of 5.4 percent when compared to
the same period last year.
The Company's core Hormel business continues to be the major contributor to
earnings and volume growth.
Hog processing levels within the Company increased 2.1 percent for the current
quarter compared to 1999 despite a 4.3 percent decline in the total National
Federally Inspected processing numbers for the same period. Hog contracts
continued to ensure a quality supply of hogs during a period of some herd
liquidation and enabled the Company to operate facilities at optimum capacity.
Any difference between the prices for hogs purchased under procurement contracts
compared to prices paid on the quoted spots market are reflected in current
operating results.
The Refrigerated Group which includes the Pork Operations unit, Meat Products
unit and Foodservice unit experienced volume growth across all units. The
Meat Products unit tonnage volume increased 11.3 percent compared to last
year with the expansion of the Always Tender-Registered Trademark- fresh pork
brand a major contributor with tonnage up 27.0 percent. Record ham sales for
the Christmas holiday contributed to a 14.0 percent increase for processed
meats for the quarter over 1999. The introduction of Always Tender-Registered
Trademark- entrees during the quarter was well received and added to the
Company's already strong position in the refrigerated meat case.
The Foodservice unit of the Refrigerated Group had volume growth of 17.0
percent for the first quarter compared to last year. Branded tonnage
increased 13.8 percent over 1999. Significant category gains during the
quarter included precooked bacon up 19.0 percent, Bread Ready Meats up 18.0
percent, pork sausage up 24.0 percent and premium bacon up 16.0 percent.
In the Prepared Foods Group, the Grocery Products unit tonnage volume
increased 10.7 percent over 1999. Mass merchandisers and club store business
remained very strong with first quarter sales volume up 45.0 percent. The El
Torito-Registered Trademark- brand continues to perform well in southern
California. The product offerings of the El Torito-Registered Trademark- line
is being expanded to include Sweet Corn Cake and Fajitas in a frozen state
for club stores. Introduction of El Torito-Rsalsas has begun in northern
California.
In January, two new microwave items were introduced in the Dinty Moore
American Classics-Registered Trademark- line and one new microwave item under
the Kid's Kitchen-Registered Trademark- brand.
The Carapelli-Registered Trademark- Olive Oil launch is proceeding as
planned. The acceptance rate is higher than projected with most accounts
placing 6 to 7 items. Product should be on store shelves by mid-March.
<PAGE>
FORM 10-Q
Turkey volume for Jennie-O in the first quarter increased slightly from last
year as the Company continued to focus on increasing its mix of value-added
products. Jennie-O-Registered Trademark- turkey franks have moved past Louis
Rich as the national leader in the turkey frank category.
Breeder hen inventories, turkey egg sets and poult placements are expected to
be relatively flat for the remainder of the year. This could place further
pressure on industry freezer inventories which have been running 10-14
percent below year-ago levels.
International sales volume increased 53 percent for the quarter compared to
1999. The growth was across most product categories and was led by a 67
percent increase in fresh and frozen pork volume. Chinese style hams were
introduced in the Beijing and Shanghai markets in January and are receiving a
good acceptance.
Selling and delivery expenses for the quarter were 10.5 percent of sales
compared to 10.9 percent in 1999. Marketing expenses for the quarter were
$84,977 or 9.4 percent of sales compared to $78,014 or 9.8 percent of sales
last year. The change in both expense classifications reflects the effect of
sales dollar growth in 2000.
Administrative and general expenses were $16,494 or 1.8 percent of sales
compared to $18,535 or 2.3 percent of sales for the same period of 1999. The
decline in actual dollars was due primarily to a write-down of an idle
facility during the first quarter last year. Sales dollar growth in 2000 also
impacted the percentage of sales change.
The effective tax rate for the first quarter of 2000 was 36.0 percent
compared to 35.5 percent last year. The Company expects the rate to hold
relatively stable for the remainder of the year.
<PAGE>
FORM 10-Q
LIQUIDITY AND CAPITAL RESOURCES
Ratio comparisons for the first quarter of 2000 and 1999, which demonstrate the
Company's financial strength, are as follows:
<TABLE>
<CAPTION>
End of Quarter
-----------------------------
1st Quarter 1st Quarter
2000 1999
-------------- -------------
<S> <C> <C>
Liquidity Ratios
Current ratio 2.1 2.7
Receivables turnover 14.5 14.8
Days sales in receivables 23.5 days 23.9 days
Inventory turnover 9.5 9.2
Days sales in inventory 38.0 days 40.2 days
Leverage Ratio
Long-term debt to equity 25.6% 27.8%
Operating Ratios
Pre-tax profit to net worth 32.5% *31.8%
Pre-tax profit to total assets 16.4% *16.6%
</TABLE>
* Includes $3,808 in pre-tax profit from sale of land by Campofrio.
Changes during the first quarter in current asset and liability balances
followed normal seasonal patterns. Accounts receivable and inventory balances
are consistent with the price levels for pork and past and future sales volumes.
During the quarter, the Company invested $22,298 in new plant and equipment
primarily in Houston, Texas; Austin, Minnesota; and Rochelle, Iowa. Investment
in plant and equipment continues to emphasize productivity gains and efficient
product flow while improving ergonomics and safety conditions for employees.
The Company continues to keep excess funds invested short-term. The leverage
ratio indicates that significant borrowing capacity remains to take advantage of
business opportunities that may arise through acquisition or internal expansion.
During the first quarter of fiscal 2000, 1,234,400 shares (post split) were
purchased under the share repurchase program at an average price per share of
$20.27.
<PAGE>
FORM 10-Q
FORWARD-LOOKING STATEMENTS
The Company and its representatives may from time to time make written or oral
statements with respect to annual or long-term goals and expectations of the
Company. These statements include but are not limited to the Company's filings
with the Securities and Exchange Commission and in its reports to shareholders.
The Company cautions readers not to place undue reliance on forward-looking
statements, which represent current views as of the date made.
Exhibit 99 to the Annual Report on Form 10-K for year ended October 30, 1999
provides the full text of the Company's cautionary statement relevant to
forward-looking statements and information for the purpose of "Safe Harbor"
provisions of the Private Securities Litigations Reform Act of 1995.
<PAGE>
FORM 10-Q
PART II - OTHER INFORMATION
HORMEL FOODS CORPORATION
Item 4. Results of Votes of Security Holders.
At the Annual Meeting of Shareholders on January 25, 2000 the proposal to
approve the Hormel Foods Corporation 2000 Stock Incentive Plan was approved.
FOR AGAINST ABSTAIN
---------- --------- ---------
49,598,244 8,073,111 3,737,399
At the Annual Meeting of Shareholders on January 25, 2000 the proposal to amend
the Company's Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock and reduce the par value to effect a stock
split, and to increase the number of authorized shares of Nonvoting Common Stock
and Preferred Stock was approved.
FOR AGAINST ABSTAIN
---------- --------- ---------
48,722,716 9,191,094 3,494,944
Item 6. Exhibits and Reports on Form 8-K
The Company filed a Form 8-K on December 9, 1999 announcing that the Board of
Directors at their November 22, 1999 regular meeting authorized a two-for-one
split of its Common Stock subject to shareholder approval at the Annual Meeting.
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 14, 2000 By /s/ D. J. HODAPP
---------------------- ------------------------------
D. J. HODAPP
Executive Vice President
and Chief Financial Officer
Date: MARCH 14, 2000 By /s/ J. N. SHEEHAN
---------------------- ------------------------------
J. N. SHEEHAN
Treasurer
<PAGE>
<TABLE>
<CAPTION>
Hormel Foods Corporation
Exhibit 27 -- Financial Data Schedule
Article 5 of Regulation S-X
<S> <C>
Multiplier 1,000
Period Type 3 months
Fiscal Year-End 10/28/00
Period End 1/29/00
Cash $150,354
Securities 67,576
Receivables 232,621
Allowances 0
Inventory 267,150
Current Assets 764,826
P P & E 1,020,197
Acc. Depreciation (507,541)
Total Assets 1,663,679
Current Liabilities 362,292
Bonds & Debt 177,070
Common Stock 8,292
Preferred - mandatory 0
Preferred Stock 0
Other Shareholder Equity 0
Total Liabilities & Equity 1,663,679
Sales 903,913
Total Revenues 903,913
COGS 640,832
Total Costs 640,832
Other Expenses 0
Loss Provision 0
Interest Expense 3,561
Interest on Debt Discount 0
Income - Pretax 68,546
Income Taxes 24,698
Income from Cont. Op. 43,848
Discontinued Oper. 0
Extraordinary Items 0
Cumulative Eff. Changes 0
Net Income 43,848
EPS - Basic $0.31
EPS - Diluted $0.30
</TABLE>
