Hormel Foods (HRL) 10-K risk factor changes: FY2020 vs FY2019

[removed: | ▪ | food] [added: ▪food] spoilage; [removed: |]

[removed: | ▪ | food] [added: ▪food] contamination caused by disease-producing organisms or pathogens, such as *Listeria monocytogenes*, *Salmonella*, and pathogenic *E coli*.; [removed: |]

[removed: | ▪ | food] [added: ▪food] allergens; [removed: |]

[removed: | ▪ | nutritional] [added: ▪nutritional] and health-related concerns; [removed: |]

[removed: | ▪ | federal,] [added: ▪federal,] state, and local food processing controls; [removed: |]

[removed: | ▪ | consumer] [added: ▪consumer] product liability claims; [removed: |]

[removed: | ▪ | product] [added: ▪product] tampering; and [removed: |]

[removed: | ▪ | the] [added: ▪the] possible unavailability and/or expense of liability insurance. [removed: |]

These pathogens can also be introduced to our products as a result of improper handling [removed: or cooking] by customers or consumers.

Deterioration of economic conditions could harm the Company’s business. The Company's business may be adversely affected by changes in national or global economic conditions, including inflation, interest rates, [added: tax rates,] availability of capital, energy availability and costs (including fuel surcharges), [added: political developments, civil unrest,] and the effects of governmental initiatives to manage economic conditions.

[removed: | ▪ | The] [added: ▪The] financial stability of our customers and suppliers may be compromised, which could result in additional bad debts for the Company or non-performance by suppliers; and [removed: |]

[removed: | ▪ | The] [added: ▪The] value of our investments in debt and equity securities may decline, including most significantly the Company’s trading securities held as part of a rabbi trust to fund supplemental executive retirement plans and deferred income plans, and the Company’s assets held in pension plans. [removed: |]

Fluctuations in commodity prices and availability of pork, poultry, beef, feed grains, avocados, peanuts, [removed: energy,] and [removed: whey] [added: energy] could harm the Company’s earnings. The Company’s results of operations and financial condition are largely dependent upon the cost and supply of pork, poultry, beef, feed grains, avocados, [removed: peanuts,] and [removed: whey] [added: peanuts] as well as energy costs and the selling prices for many of our products, which are determined by constantly changing market forces of supply and demand.

[removed: This has resulted] [added: Typically, this results] in fewer hogs being available on the cash spot market.

Consequently, the Company uses long-term supply contracts [removed: based] [added: priced] on market-based formulas or the cost of production to ensure a stable supply of raw materials while minimizing extreme fluctuations in costs over the long-term.

This may result, in the short-term, in higher live hog costs compared to the cash spot [removed: market] [added: market,] depending on the relationship of the cash spot market to contract prices.

Results in these operations are affected by the cost and supply of feed grains, which [removed: fluctuate] [added: fluctuates] due to climate conditions, production forecasts, and supply and demand conditions at local, regional, national, and worldwide [removed: markets.]

[removed: | ▪ | price; |][added: ▪price;]

[removed: | ▪ | product] [added: ▪product] quality and attributes; [removed: |]

[removed: | ▪ | brand] [added: ▪brand] identification; [removed: |]

[removed: | ▪ | breadth] [added: ▪breadth] of product line; and [removed: |]

[removed: | ▪ | customer] [added: ▪customer] service. [removed: |]

The Company’s operations are subject to the general risks associated with acquisitions and divestitures. The Company has made several acquisitions and divestitures in recent [removed: years] [added: years, most recently the acquisition of Sadler's Smokehouse,] that align with the Company’s strategic initiative of delivering long-term value to shareholders.

Potential risks associated with these transactions include the [removed: the] inability to consummate a transaction on favorable terms, the diversion of management's attention from other business concerns, the potential loss of key employees and customers of current or acquired companies, the inability to integrate or divest operations successfully, the possible assumption of unknown liabilities, potential disputes with buyers or sellers, potential impairment charges if purchase assumptions are not achieved, and the inherent risks in entering markets or lines of business in which the Company has limited or no prior experience.

The Company is subject to disruption of operations at [removed: co-packers] [added: co-manufacturers, suppliers,] or other [removed: suppliers.] [added: third-party service providers.] Disruption of operations at [removed: co‑packers] [added: co‑manufacturers] or other suppliers may impact the Company’s product or raw material supply, which could have an adverse effect on the Company’s financial results.

Trends in litigation may include class actions involving employees, consumers, competitors, suppliers, shareholders, or injured persons, and claims relating to product liability, contract disputes, [added: antitrust regulations,] intellectual property, advertising, labeling, wage and hour laws, employment [removed: practices,] [added: practices] or environmental matters.

[removed: Litigation] [added: Neither litigation] trends [removed: and] [added: nor] the [removed: outcome] [added: outcomes] of litigation [removed: cannot] [added: can] be predicted with certainty and adverse litigation trends and outcomes could negatively affect the Company’s financial results.

The Company is subject to the loss of a material contract. The Company is a party to several supply, distribution, contract [removed: packaging,] [added: packaging] and other material contracts.

Government regulation, present and future, exposes the Company to potential sanctions and compliance costs that could adversely affect the Company’s business. The Company’s operations are subject to extensive regulation by the U.S. Department of Homeland Security, the U.S. Department of Agriculture, the U.S. Food and Drug Administration, federal and state taxing [removed: authorities,] [added: authorities] and other federal, state, and local authorities [removed: who] [added: which] oversee workforce [removed: immigration laws, tax regulations,] [added: immigration, taxation,] animal welfare, food [removed: safety standards,] [added: safety,] and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products.

The Company’s manufacturing facilities and products are subject to [removed: continuous] [added: ongoing] inspection by federal, [removed: state,] [added: state] and local authorities.

The Company’s failure or inability to comply with such requirements could subject the Company to civil remedies, including fines, injunctions, [removed: recalls,] [added: recalls] or seizures, as well as potential criminal sanctions.

The occurrence of any of these events, the implementation of new laws and [removed: regulations,] [added: regulations] or stricter interpretation of existing laws or regulations could adversely affect the Company’s financial results.

In addition, the Company is in the [removed: middle] [added: midst] of a [added: multi-year] transformation project (Project Orion) to achieve better analytics, customer service, and process efficiencies through the use of Oracle Cloud Solutions.

Deterioration of labor relations or increases in labor costs could harm the Company’s Business. As of October [removed: 27, 2019, the Company had] [added: 25, 2020,] approximately [removed: 18,800 employees worldwide,] [added: 3,470] of [removed: which approximately 3,310] [added: the Company's employees] were represented by labor unions, principally the United Food and Commercial Workers Union.

A significant increase in labor costs or a deterioration of labor relations at any of the Company’s facilities or [removed: contracted hog processing] [added: co-manufacturing] facilities resulting in work slowdowns or stoppages could harm the Company’s financial results.

BUSINESS AND OPERATIONAL RISKS

The Company's goodwill and indefinite lived intangible assets are initially recorded at fair value and are not amortized, but are reviewed for impairment annually or more frequently if impairment indicators arise.

Impairment testing requires judgement around estimates and assumptions and is impacted by factors such as revenue growth rates, operating margins, tax rates, royalty rates, and discount rates.

An unfavorable change in these factors may lead to the impairment of goodwill and/or intangible assets.

The uncertain and rapidly changing COVID-19 pandemic could adversely affect the Company’s business, financial condition and results of operations. The ongoing COVID-19 global pandemic has had, and will likely continue to have, negative impacts across many of the Company's business units and facilities.

The Company's operations and business have been impacted directly and indirectly by various government actions taken to stop or slow the spread of COVID-19, including travel restrictions, border shutdowns, stay-at-home and shelter-in-place orders, shutdowns of non-essential businesses, and emergency declarations.

The near- and long-term impacts of COVID-19 are unknown and impossible to predict with any level of certainty.

At this time, the following potential risk factors arising from COVID-19 pandemic have had and/or may continue to cause one or more of the following impacts on the Company's operations:

- One or more of the Company's manufacturing facilities may be shut down or have their operations significantly impacted due to employee illnesses, increased absenteeism, and/or actions by government agencies.

Capital projects may be delayed as additional capacity is no longer currently needed.

The Company's co-manufacturers and material suppliers may face similar impacts.

- Regulatory restrictions and measures taken at the Company's facilities to prevent or slow down the spread of COVID-19 may impact facilities’ efficiency.

- Operating costs may increase as measures are put in place to prevent or slow down the spread of COVID-19, such as facility improvements, employee testing, short-term disability policies, and manufacturing employee bonus payments.

- Any new or additional measures required by national, state or local governments to combat COVID-19 may similarly add additional operational costs.

- Ongoing closure or reduced operations at foodservice establishments may impact results for the Company's foodservice business.

Bankruptcy filings and/or delinquent payments from foodservice industry or other customers may negatively impact cash flow.

- A national and/or global economic downturn may impact consumer purchase behavior, such as reduced foodservice volume, lower volume in premium brands, and potential loss of business to private label.

- It may become more difficult and/or expensive to obtain debt or equity financing necessary to sustain the Company's operations, make capital expenditures, and/or finance future acquisitions.

- The Company may face litigation by stockholders, employees, suppliers, customers, consumers, and others relating to COVID-19 and its effects.

- The Company relies on its dedicated employees, many of whom have a long tenure with the Company.

Operations may be negatively impacted if members of the Company's leadership team, or other key employees, become ill with COVID-19 or otherwise terminate their employment as a result of COVID-19.

Further, the Company may face challenges hiring, onboarding, and training new employees, including leadership, which may impact results.

The Company also may face operational challenges if government quarantine orders restrict movement of employees.

- It is possible that the COVID-19 pandemic could negatively affect the Company's labor availability, relations, or labor costs.

- In accordance with recommendations to reduce large gatherings and increase social distancing, many of the Company's office-based employees are working remotely, which may bring additional information technology and data security risks.

- Supply chain disruptions of various types arising from COVID-19 may impact the Company's ability to make products, the cost for such products, and the ability to deliver products to customers.

Closure or reduced operations of material suppliers could result in shortages of key raw materials, as well as impact prices for those materials.

The volatility in the market for raw material and supplies could impact the Company's profitability.

- National, state, and local government orders closing or limiting operation of borders and ports, or imposing quarantine, could impact the Company's ability to obtain raw materials and to deliver finished goods to customers.

- COVID-19 has wide-reaching impacts to society and the business making all decisions, interactions, and transactions significantly more complex.

- The Company is committed to being transparent through communications to inform shareholders, employees, customers, consumers, and others about the enhanced safety protocols implemented.

The Company must keep pace with a rapidly changing media environment.

If the Company's public relations efforts are not effective or if consumers perceive them to be irresponsible, the Company's competitive position, reputation, and market share may suffer.

The Company has already seen several of these risks materialize.

The extent of the impact on the Company’s business, financial condition and results of operations is dependent on the length and severity of the pandemic.

The COVID-19 pandemic is an unprecedented situation and the Company's understanding of its impacts is changing and evolving.

The additional risk factors identified here are based upon information known at this time.

The COVID-19 pandemic may adversely impact the Company's operations in one or more ways not identified to date.

The Company regularly engages third-party service providers to support various business functions such as benefit plan administration, payroll processing, information technology, and cloud computing services.

A disruption in services from these partners could have an adverse effect on the Company's business.

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Most recently, the outbreak of ASF in China has eliminated over 30 percent of that country's hog herd compared to last year, according to the Ministry of Agriculture and Rural Affairs of the People's Republic of China.

The disease has also spread to additional countries in Asia and Europe.

Implementation is expected to occur in phases over the next several years, beginning in fiscal 2020.

The union contract at one of the Company's facilities will expire during fiscal 2020, covering less than 200 employees.

Negotiations are expected to begin in December 2019.

Fiscal [removed: 2019:] [added: 2020:] Sales for the year were [removed: $9.5] [added: a record $9.6] billion, a 1 percent [removed: decline] [added: increase] from last [removed: year.][added: year, as all four business segments delivered sales growth.]

Organic net sales1 [removed: were up 1] [added: increased 2] percent.

Diluted earnings per share for fiscal [removed: 2019] [added: 2020] were [removed: $1.80, a 3] [added: $1.66, an 8] percent decrease compared to [removed: $1.86] [added: $1.80] per share last year.

[removed: Our] [added: Additionally, the] Company continued to reinvest into the business through capital expenditures while returning cash back to shareholders in the form of [removed: dividends and share repurchases.][added: dividends.]

Capital expenditures were [removed: $293.8] [added: $367.5] million in fiscal [removed: 2019.][added: 2020.]

Notable projects included the [removed: preliminary phases] [added: completion] of the Burke pizza toppings plant expansion, [added: significant work on] a new dry sausage facility in Nebraska, Project Orion, and many other [removed: items] [added: projects] to support growth of branded products.

The annual dividend for [removed: 2020] [added: 2021] will be [removed: $0.93] [added: $0.98] per share and marks the [removed: 54th] [added: 55th] consecutive year of dividend increases, representing an increase of [removed: 11 percent after a 12 percent increase in fiscal 2019.][added: 5 percent.]

At the beginning of fiscal 2019, the [removed: Hormel Deli Solutions division combined] [added: Company aligned] all deli businesses, including the Jennie-O Turkey Store deli division, into [removed: one division] [added: Hormel Deli Solutions reporting] within the Refrigerated Foods segment.

Periods presented herein have been recast to reflect [removed: this change.][added: these changes.]

See Note A - Summary of Significant Accounting Policies [removed: for more] [added: additional] information.

| Segment | [added: | |] Business Conducted | [added: | |]

| Grocery Products | [added: | |] This segment consists primarily of the processing, marketing, and sale of shelf-stable food products sold predominantly in the retail market, along with the sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial customers. This segment also includes the results from the Company’s MegaMex Foods, LLC (MegaMex) joint venture. | [added: | |]

| Refrigerated Foods | [added: | |] This segment consists primarily of the processing, marketing, and sale of branded and unbranded pork, beef, [removed: chicken,] [added: chicken] and turkey products for retail, foodservice, [removed: deli, and] [added: deli and,] commercial customers. | [added: | |]

| Jennie-O Turkey Store | [added: | |] This segment consists primarily of the processing, marketing, and sale of branded and unbranded turkey products for retail, foodservice, and commercial customers. | [added: | |]

| International & Other | [added: | |] This segment includes Hormel Foods International, which manufactures, [removed: markets,] [added: markets] and sells Company products internationally. This segment also includes the results from the Company’s international joint ventures and royalty arrangements. | [added: | |]

The Company’s fiscal year consisted of 52 weeks in fiscal years [added: 2020,] 2019, [removed: 2018,] and [removed: 2017.][added: 2018.]

FISCAL YEARS [removed: 2019] [added: 2020] AND [removed: 2018][added: 2019]

| | | [added: | | | |] Fourth Quarter Ended | | | | | | | | | | | [added: | | | | | | |] Year Ended | | | | | | | | | | [added: | | | | |]

| (in thousands, except per share amounts) | | [added: | | | |] October [removed: 27, 2019] [added: 25, 2020] | | | | [added: | |] October [removed: 28, 2018] [added: 27, 2019] | | | | [added: | |] % Change | | | [added: | | |] October [removed: 27, 2019] [added: 25, 2020] | | | | [added: | |] October [removed: 28, 2018] [added: 27, 2019] | | | | [added: | |] % Change | | [added: |]

| Diluted Earnings Per Share | | [removed: 0.47] | | | | [removed: 0.48] [added: 0.43] | | | | [removed: (2.1] | [removed: )] | [added: 0.47] | [removed: 1.80] | | | | [removed: 1.86] | [added: (8.5)] | | | [removed: (3.2] | [removed: )] | [added: | 1.66 | | | | | | 1.80 | | | | | | (7.8) | | |]

[removed: Volume and Net] [added: | Net] Sales [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| (in thousands) | | [added: | | | |] October [removed: 27, 2019] [added: 25, 2020] | | | | [added: | |] October [removed: 28, 2018] [added: 27, 2019] | | | | [added: | |] % Change | | | [added: | | |] October [removed: 27, 2019] [added: 25, 2020] | | | | [added: | |] October [removed: 28, 2018] [added: 27, 2019] | | | | [added: | |] % Change | | [added: |]

| Volume (lbs.) | | [removed: 1,236,877] | | | | [removed: 1,265,292] [added: 1,209,434] | | | | [removed: (2.2] | [removed: )] | [added: 1,236,877] | [removed: 4,737,281] | | | | [removed: 4,798,178] | [added: (2.2)] | | | [removed: (1.3] | [removed: )] | [added: | 4,794,706 | | | | | | 4,737,281 | | | | | | 1.2 | | |]

The non-GAAP adjusted financial measurements of organic [removed: volume and organic] net sales [added: and organic volume] are presented to provide investors [added: with] additional information to facilitate the comparison of past and present operations.

Organic net sales and organic volume are defined as net sales and [removed: volume] [added: volume,] excluding the impact of acquisitions and divestitures.

Organic net sales and organic volume exclude the impacts of the [added: Sadler's Smokehouse acquisition (March 2020) in the Refrigerated Foods segment and the] CytoSport divestiture (April 2019) in the Grocery [removed: Products] [added: Products,] and International & Other segments.

The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP adjusted [removed: measures in the fourth quarter and year-to-date of fiscal 2019 and fiscal 2018.][added: measures.]

| (in thousands) | | [removed: Reported (GAAP)] | | | [added: | Reported (GAAP) | | | | | | Acquisitions | | | | | | | | | | | | Organic (Non-GAAP) | | | | | |] Reported (GAAP) | | | [added: | | |] Divestitures | | | [added: | | |] Organic (Non-GAAP) | | | [added: | | |] Organic % change | | [added: |]

| Jennie-O Turkey Store | | [removed: 242,421] | | | [removed: 231,180] | [added: 237,435] | | [added: | | | | — | | | | | | | | | | | | 237,435 | | | | | | 242,421 | | | | | |] — | | | [removed: 231,180] | | | [removed: 4.9] [added: 242,421] | | [added: | | | | (2.1) | | |]

| (in thousands) | | [removed: Reported (GAAP)] | | | | [added: Reported (GAAP) | | | | | | Acquisitions | | | | | | | | | | | | Organic (Non-GAAP) | | | | | |] Reported (GAAP) | | | | [added: | |] Divestitures | | | | [added: | |] Organic (Non-GAAP) | | | | [added: | |] Organic % change | | [added: |]

| Jennie-O Turkey Store | | [removed: 398,512] | | | | [removed: 388,278] [added: 373,471] | | | | [added: | | — | | | | | | | | | | | | 373,471 | | | | | | 398,512 | | | | | |] — | | | | [removed: 388,278] | | [added: 398,512] | | [removed: 2.6] | | [added: | | (6.3) | | |]

| (in thousands) | [removed: Reported (GAAP)] | | [added: Reported (GAAP)] | | [added: | | | | | | | Acquisitions | | | | | | | | | | | | Organic (Non-GAAP) | | | | | |] Reported (GAAP) | | | [added: | | |] Divestitures | | | [added: | | |] Organic (Non-GAAP) | | | [added: | | |] Organic % change | | [added: |]

| Jennie-O Turkey Store | | [removed: 789,337] | | | [removed: 784,655] | [added: 815,425] | | [added: | | | | — | | | | | | | | | | | | 815,425 | | | | | | 789,337 | | | | | |] — | | | [removed: 784,655] | | | [removed: 0.6] [added: 789,337] | | [added: | | | | 3.3 | | |]

| Jennie-O Turkey Store | | [removed: 1,323,783] | | | | [removed: 1,331,013] [added: 1,333,459] | | | | [added: | | — | | | | | | | | | | | | 1,333,459 | | | | | | 1,323,783 | | | | | |] — | | | | [removed: 1,331,013] | | [added: 1,323,783] | | [removed: (0.5] | [removed: )] | [added: | | 0.7 | | |]

The deli division is expected to continue to grow the [removed: *Columbus®* brand.][added: *Columbus* *®* brand as new capacity comes online.]

The International & Other segment [removed: plans to show growth] [added: expects stronger sales] in [removed: China, Brazil,] [added: China] and [removed: through increased branded export sales] [added: continued growth] of *SPAM®* luncheon meat and [removed: *Skippy®*] [added: *Skippy* *®*] peanut butter.

| | | [added: | | | |] Fourth Quarter Ended | | | | | | | | | | [added: | | | | | | | |] Year Ended | | | | | | | | | [added: | | | | | |]

| | | [added: | | | |] October [removed: 27,] [added: 25,] | | | | [added: | |] October [removed: 28,] [added: 27,] | | | | | | [added: | | | | | |] October [removed: 27,] [added: 25,] | | | | [added: | |] October [removed: 28,] [added: 27,] | | | | | [added: | | | |]

| (in thousands) | | [removed: 2019] | | | | [removed: 2018] [added: 2020] | | | | [added: | | 2019 | | | | | |] % Change | | [removed: 2019] | | | | [removed: 2018] [added: 2020] | | | | [added: | | 2019 | | | | | |] % Change | [added: | |]

| | | [added: | | | |] October [removed: 27,] [added: 25,] | | | | [added: | |] October [removed: 28,] [added: 27,] | | | | | | | [added: | | | | |] October [removed: 27,] [added: 25,] | | | | [added: | |] October [removed: 28,] [added: 27,] | | | | | | [added: | | |]

Due to the impact of the COVID-19 pandemic on the last three fiscal quarters of 2020, the Company experienced significant demand shifts from its domestic foodservice business to its domestic retail business.

Net sales increased for the year due to higher branded retail sales from all business segments, higher commodity sales in Refrigerated Foods and Jennie-O Turkey Store, and the acquisition of the Sadler's Smokehouse business.

These gains offset a dramatic decline in foodservice sales and the impact of the CytoSport divestiture last year.

Earnings before tax declined 8 percent, as the Company absorbed approximately $80 million in incremental costs related to the COVID-19 pandemic.

The 7 percent decrease in net earnings attributable to the Company was driven by COVID-19 related expenses in addition to the impact of the gain on the CytoSport divestiture last year.

Grocery Products segment profit for the full year increased as improved center store retail sales and favorable product mix more than overcame the divestiture of CytoSport and the benefit from a legal settlement in fiscal 2019.

International & Other segment results increased significantly for the full year of fiscal 2020 due to higher income from the Company's partners in the Philippines, South Korea and Europe, branded export growth, and improved results in China.

Earnings for the Jennie-O Turkey Store segment deceased primarily due to lower foodservice earnings and increased supply chain costs related to the COVID-19 impacts on manufacturing and live production.

Refrigerated Foods segment results declined for the full year as lower foodservice sales and incremental supply chain costs related to COVID-19 more than offset excellent performances from the retail businesses.

In response to the COVID-19 pandemic, the Company committed to making investments necessary to keep its team members safe.

These investments included: enhanced safety procedures across the Company's facilities; providing personal protective equipment for all production team members; frequent disinfecting of high-touch areas; reconfiguration of common areas and workstations; temperature and wellness screenings; revised shift scheduling; reduced production line speeds; new guidelines on carpooling; more extensive social distancing measures throughout each facility; and where possible, providing remote work opportunities and facilitating access to rapid testing for employees.

The Company also paid over $11 million in bonuses to full- and part-time plant production team members during the year.

In March, the Company acquired Sadler's Smokehouse for $270.8 million.

In June, the Company issued $1.0 billion, ten-year notes at an annual interest rate of 1.8 percent.

The proceeds from the offering is expected to provide liquidity and allow the business to take advantage of strategic opportunities.

Fiscal 2021 Outlook: We are optimistic about our ability to grow sales and earnings in fiscal 2021.

Sales for our retail products is expected to remain strong but not to the level of growth seen in fiscal 2020.

Sales momentum for products such as *SKIPPY*® peanut butter, *Herdez*® salsas and sauces, *Hormel*® *Black Label*® bacon, *Applegate®* brands, and *Jennie-O*® lean ground turkey is expected to continue.

Key product lines are expected to benefit from structurally higher capacity compared to last year.

We anticipate a modest recovery in the foodservice industry but likely not back to 2019 levels.

Brands like *Hormel®* *Bacon 1TM*, *Hormel®* *Fire BraisedTM*, *Sadler’s®*, and *Café H®* are well-positioned to grow as the industry recovers.

Additional restrictions related to on-premise dining and regional lockdowns could impact the recovery of the foodservice industry.

We expect the COVID-19 related higher cost structure in our domestic operations to continue through the first half of fiscal 2021 and for the majority of COVID-19 costs to subside as the pandemic comes under control.

The availability of labor to staff our domestic production facilities and higher input costs present risk to our sales and profitability.

Barring any unforeseen trade issues, the International & Other segment expects continued growth from the China business and the *SPAM*® and *SKIPPY*® brands.

Due to consistent cash flow, liquidity, and a strong balance sheet, the Company remains in a position of strength heading into fiscal 2021.

We plan to invest our capital to support the growth of the value-added businesses and advertise our numerous iconic brands.

We plan to open a new dry sausage facility for the *Columbus®* brand in the second quarter as well as invest in additional capacity to support our pepperoni business.

Additionally, we are committed to returning cash to shareholders in the form of dividends.

A detailed review of the Company's fiscal 2020 performance compared to fiscal 2019 appears in following section.

A detailed review of the fiscal 2019 performance compared to fiscal 2018 is set forth in Part II, Item 7 of the Company's Form 10-K for the fiscal year ended October 27, 2019 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by reference.

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Fiscal 2021 will consist of 53 weeks.

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Sales decreased primarily due to the divestiture of CytoSport.

Pretax earnings increased 2 percent to $1,209.7 million.

Profit growth from the value-added businesses in Refrigerated Foods and lower selling, general and administrative expenses more than offset a significant decline in commodity profits and lower equity in earnings of affiliates.

A higher effective tax rate drove net earnings attributable to the Company lower by 3 percent to $978.8 million, compared to net earnings of $1,012.1 million last year.

The effective tax rate in fiscal 2019 increased primarily due to the impact of the Tax Cuts and Jobs Act (Tax Act) recognized in fiscal 2018.

Refrigerated Foods segment results exceeded last year due to growth from the value-added businesses, including strong results from foodservice products such as *Hormel®* *FirebraisedTM* meats and pizza toppings.

Retail sales of *Hormel®* *Black Label®* convenience bacon and *Columbus®* deli items also contributed to overall growth, helping to offset a significant decline in commodity profits.

The Jennie-O Turkey Store segment was negatively impacted by lost retail distribution due to two voluntary product recalls in the first quarter of fiscal 2019 and low commodity prices resulting from continued industry oversupply.

Grocery Products segment financial performance was down due to lower *Skippy*® peanut butter pricing and a reduction in MegaMex Foods, LLC (MegaMex) equity in earnings compared to fiscal 2018.

International & Other segment results declined primarily by the impact of tariffs and global trade uncertainty affecting fresh pork exports.

We repurchased 4.3 million shares of common stock in fiscal 2019, spending $174.2 million.

In December, the Company completed the sale of its Fremont, Nebraska, processing facility to Wholestone Farms, LLC, for $30.6 million.

Additionally, in April, the Company completed the sale of its CytoSport business to PepsiCo, Inc., for $479.8 million.

Fiscal 2020 Outlook: We expect to grow sales and pretax profits in fiscal 2020.

Our branded, value-added businesses within Refrigerated Foods continue to be well-positioned for growth in the foodservice, retail, and deli channels.

Positive momentum in brands such as *Hormel®* *Bacon 1TM*, *Hormel®* *Natural Choice®*, *Applegate®, Columbus®* *and Hormel®* *Fire BraisedTM* should help mitigate the risk of higher input prices and volatility due to African swine fever.

Operational improvements, continued industry recovery, and regained lean ground turkey distribution at Jennie-O Turkey Store are expected to return the segment to growth.

The International & Other segment plans to grow sales and earnings while managing through challenges due to African swine fever and global trade uncertainty.

We expect contributions from branded items such as the *SPAM*® family of products, *Wholly*® guacamole dips, *Herdez*® salsas and sauces, and *Skippy*® peanut butter to help offset the impact of the CytoSport sale to the Grocery Products segment in fiscal 2019.

Additionally, we expect continued cost reductions from our supply chain organization and will begin implementation of Project Orion during fiscal 2020.

We plan to support our numerous iconic brands with continued advertising in fiscal 2020.

Strong cash flow, along with a solid balance sheet, will enable us to continue to return cash to shareholders while investing capital into our value-added businesses.

We will open a new $150 million expansion at our Burke facility in the third quarter of fiscal 2020, which will provide much needed capacity to grow our pizza toppings business in foodservice.

| | |

| --- | --- |

CONSOLIDATED RESULTS

Net Earnings and Diluted Earnings Per Share

| | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net Earnings | | $ | 255,503 | | | $ | 261,406 | | | (2.3 | ) | | $ | 978,806 | | | $ | 1,012,140 | | | (3.3 | ) |

| Organic Volume(1) | | 1,236,877 | | | | 1,226,641 | | | | 0.8 | | | 4,737,281 | | | | 4,721,637 | | | | 0.3 | |

| Net Sales | | $ | 2,501,513 | | | $ | 2,524,697 | | | (0.9 | ) | | $ | 9,497,317 | | | $ | 9,545,700 | | | (0.5 | ) |

| Organic Net Sales(1) | | 2,501,513 | | | | 2,451,049 | | | | 2.1 | | | 9,497,317 | | | | 9,399,603 | | | | 1.0 | |

(1) COMPARISON OF U.S. GAAP TO NON-GAAP FINANCIAL MEASUREMENTS

The Company believes these non-GAAP financial measurements provide useful information to investors because they are the measurements used to evaluate performance on a comparable year-over-year basis.

Non-GAAP measurements are not intended to be a substitute for U.S. GAAP measurements in analyzing financial performance.

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

4th Quarter

Volume (lbs.)

| | | | | | | | | | | | | | | | |

Hogs purchased under contract accounted for [removed: 93] [added: 95] percent and [removed: 96] [added: 93] percent of the total hogs purchased by the Company during fiscal [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively.

The fair value of the Company’s open futures contracts in this program as of October [removed: 27, 2019,] [added: 25, 2020,] was [removed: $5.8 million, before tax,] [added: $3.1 million] compared to [removed: $0.7 million, before tax,] [added: $5.8 million] as of October [removed: 28, 2018.][added: 27, 2019.]

A 10 percent decrease in the market price for lean hogs would have negatively impacted the fair value of the Company’s October [removed: 27, 2019,] [added: 25, 2020,] open lean hog contracts by [removed: $19.5] [added: $9.3] million, which in turn would lower the Company’s future cost on purchased hogs by a similar amount.

The fair value of the Company’s open futures contracts as of October [removed: 27, 2019,] [added: 25, 2020,] was [removed: $(2.2) million, before tax,] [added: $(0.1) million] compared to [removed: $(1.3) million, before tax,] [added: $(2.2) million] as of October [removed: 28, 2018.][added: 27, 2019.]

A 10 percent decrease in the market price for grain would have negatively impacted the fair value of the Company’s October [removed: 27, 2019,] [added: 25, 2020,] open grain contracts by [removed: $9.5] [added: $7.2] million, which in turn would lower the Company’s future cost on purchased grain by a similar amount.

As of October [removed: 27, 2019,] [added: 25, 2020,] the balance of these securities totaled [removed: $157.5] [added: $173.1] million compared to [removed: $137.3] [added: $157.5] million as of October [removed: 28, 2018.][added: 27, 2019.]

A 10 percent decline in the value of the investments not held in fixed income funds would have a negative impact to the Company’s pretax earnings of approximately [removed: $7.0] [added: $8.4] million, while a 10 percent increase in value would have a positive impact of the same amount.

The Company’s net asset position in foreign currencies as of October [removed: 27, 2019,] [added: 25, 2020,] was [removed: $543.8] [added: $541.2] million, compared to [removed: $687.7] [added: $543.8] million as of October [removed: 28, 2018,] [added: 27, 2019,] with most of the exposure existing in Chinese yuan and Brazilian real.

The Company measures its foreign currency exchange risk by using a 10 percent sensitivity analysis on the Company’s primary foreign net asset position, the Chinese yuan and the Brazilian real, as of October [removed: 27, 2019.][added: 25, 2020.]

A 10 percent strengthening in the value of the [added: Chinese] yuan relative to the U.S. dollar would result in other comprehensive income of approximately [removed: $33.7] [added: $40.7] million pretax.

A 10 percent weakening in the value of the [added: Chinese] yuan relative to the U.S. dollar would result in other comprehensive loss of approximately [removed: $27.6] [added: $33.3] million pretax.

A 10 percent strengthening in the value of the [added: Brazilian] real relative to the U.S. dollar would result in other comprehensive income of approximately [removed: $13.0] [added: $10.4] million pretax.

A 10 percent weakening in the value of the [added: Brazilian] real relative to the U.S. dollar would result in other comprehensive loss of approximately [removed: $10.7] [added: $8.5] million pretax.

The Company’s name was changed to Hormel Foods Corporation [removed: on January 31,] [added: in] 1995.

Although pork and turkey remain the major raw materials for its products, the Company has emphasized for several years the manufacturing and distribution of branded, value-added consumer items rather than [removed: the] commodity fresh meat [removed: business.][added: products.]

The Company had no [removed: other] significant change in the type of products produced or services rendered, or in the markets or methods of distribution, since the beginning of the [removed: 2019] [added: 2020] fiscal year.

The Company has not been involved in any bankruptcy, [removed: receivership,] [added: receivership] or similar proceedings during its history.

Net sales to unaffiliated customers, operating profit, total [removed: assets,] [added: assets] and the presentation of certain other financial information by [removed: segment,] [added: segment] are reported in Note P - Segment Reporting of the Notes to Consolidated Financial Statements and in the Management's Discussion and Analysis of Financial Condition and Results of Operations.

The Company’s products are sold through its sales personnel, operating in assigned territories or as dedicated teams serving major [removed: customers,] [added: customers] coordinated from sales offices [added: predominately] located in [removed: most of the larger] [added: major] U.S. cities.

The Company has, for the past several years, been concentrating on branded products [removed: for consumers] with year-round demand to minimize the seasonal variation experienced with commodity-type products.

The Company’s contracts [removed: are based on] [added: utilize] market-based formulas and/or markets of certain [removed: swine] [added: hog] production [removed: inputs,] [added: inputs] to better balance input costs with customer [removed: pricing, and all contract costs are fully reflected in the Company’s reported financial statements.][added: pricing.]

In fiscal [removed: 2019,] [added: 2020,] the Company purchased [removed: 93] [added: 95] percent of its hogs under supply contracts.

In fiscal [removed: 2019,] [added: 2020,] Jennie-O Turkey Store raised turkeys representing approximately [removed: 79] [added: 78] percent of the volume needed to meet its raw material requirements for branded turkey products and whole birds.

To manage this risk, the Company [removed: hedges] [added: uses futures contracts to hedge] a portion of its anticipated purchases of [removed: grain using futures contracts.][added: grain.]

The Company purchases other [removed: commodity based] [added: commodity-based] raw materials such as beef, pork, and chicken for use across all segments.

The Company has [removed: long standing] [added: longstanding] relationships with its [removed: sources] [added: suppliers] of raw materials and expects to have an adequate supply for its present needs.

Additionally, the cost and supply of [removed: avocados, peanuts,] [added: avocados] and [removed: whey] [added: peanuts] are impacted by the changing market forces of supply and demand, which can impact the cost of the Company’s products.

The Company manufactures its products through various [removed: harvest and] processing facilities [removed: along with custom manufacturers.][added: and trusted co-manufacturers.]

[removed: Environmental] [added: Governmental Regulation and Environmental] Matters

The Company holds 34 U.S. [removed: issued] and [removed: 9] [added: six] foreign patents.

HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI’S, COLUMBUS, COMPLEATS, CURE 81, DAN’S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST ‘N EASY, FIRE BRAISED, FONTANINI, [added: HAPPY LITTLE PLANTS,] HERDEZ, HORMEL GATHERINGS, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTIN’S, LA VICTORIA, LAYOUT, LLOYD’S, MARY KITCHEN, NATURAL CHOICE, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, ROSA GRANDE, [added: SADLER'S,] SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, and WHOLLY.

During fiscal [removed: 2019,] [added: 2020,] sales to Walmart Inc. (Walmart) represented approximately [removed: 13.5] [added: 14.6] percent of the Company’s revenues (measured as gross sales less returns and allowances), compared to [removed: 13.6] [added: 13.5] percent in fiscal [removed: 2018.][added: 2019.]

The five largest customers in each segment make up approximately the following percentage of segment sales: [removed: 45] [added: 44] percent of Grocery Products, 35 percent of Refrigerated Foods, [removed: 52] [added: 54] percent of Jennie-O Turkey Store, and [removed: 16] [added: 15] percent of International & Other.

The Company competes with manufacturers of pork and turkey [removed: products,] [added: products] as well as national and regional producers of other meat and protein sources, such as beef, chicken, fish, peanut butter, [added: whey,] and [removed: whey.][added: plant-based proteins.]

Through [removed: aggressive] [added: effective] marketing and strong quality assurance programs, the Company’s strategy is to provide [removed: higher] [added: high] quality products that possess strong brand recognition, which [removed: then supports] [added: support] higher value perceptions [removed: from] [added: with] customers.

As of October [removed: 27, 2019,] [added: 25, 2020,] the Company had approximately [removed: 18,800] [added: 19,100] active domestic and foreign employees.

Refer to Note B - Acquisitions and Divestitures for information on the Company's recent acquisitions and divestitures.

All contract costs are fully reflected in the Company’s reported financial statements.

Human Capital

Employees are the cornerstone of the Company and its purpose: *Inspired People.

Inspired Food*™.

The Company is committed to supporting employees' professional development as well as providing competitive benefits and a safe, inclusive workplace.

Employee safety remains the Company's top priority.

The Company develops and administers company-wide policies to ensure the safety of each team member and compliance with Occupational Safety and Health Administration (OSHA) standards.

This includes monthly safety training and assessments as well as annual safety audits.

The Company believes a diverse workforce fosters innovation and cultivates an environment filled with unique perspectives.

As a result, diversity and inclusion help the Company meet the needs of customers and consumers around the world.

Respect for human rights is fundamental to the Company's business and its commitment to ethical business conduct.

The Company measures employee engagement on an ongoing basis as it believes an engaged workforce leads to a more innovative, productive and profitable company.

The results from engagement surveys are used to implement programs and processes designed to keep employees connected with the Company.

The Company’s operations are subject to regulation by various governmental agencies which oversee areas such as food safety, workforce immigration, environmental laws, animal welfare, tax regulations, and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products.

The Company believes it is in compliance with such laws and regulations and does not expect continued compliance to have a material impact on capital expenditures, earnings, or competitive position.

The Company continues to monitor existing and pending laws and regulations and while the impact of regulatory changes cannot be predicted with certainty, the Company does not expect compliance to have a material adverse effect.

Customers

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 the Company’s Annual Report to Stockholders, other filings by the Company with the U.S. 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 following discussion of risk factors contains 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 any changes in the national and worldwide economic environment, which could include, among other things, changes resulting from the COVID-19 pandemic, economic conditions, political developments, civil unrest, currency exchange rates, interest and inflation rates, accounting standards, taxes, laws, and regulations affecting the Company and its markets.

On April 15, 2019, the Company completed the sale of CytoSport, Inc. (CytoSport), which includes the *Muscle Milk®* and *Evolve®* brands, to PepsiCo, Inc., and received final proceeds of $479.8 million.

The divestiture resulted in a pretax gain of $16.5 million recognized in Selling, General and Administrative expense and a tax benefit of $17.0 million recognized within the Provision for Income Taxes on the Consolidated Statements of Operations.

On December 3, 2018, the Company completed the sale of its Fremont, Nebraska, processing facility to Wholestone Farms, LLC, for a final purchase price of $30.6 million.

On November 27, 2017, the Company acquired Columbus Manufacturing, Inc. (Columbus), an authentic premium deli meat and salami company, from Chicago-based Arbor Investments, for a final purchase price of $857.4 million.

The transaction was funded with cash on hand along with borrowing $375.0 million under a term loan facility and $375.0 million under a revolving credit facility.

Columbus specializes in authentic premium deli meat and salami and allows the Company to enhance its scale in the deli by broadening its portfolio of products, customers, and consumers.

On August 22, 2017, the Company acquired Cidade do Sol (Ceratti) for a final purchase price of $103.3 million.

The transaction was funded by the Company with cash on hand.

The acquisition of the *Ceratti*® brand allows the Company to establish a full in-country presence in the fast-growing Brazilian market with a premium brand.

On August 16, 2017, the Company acquired Fontanini Italian Meats and Sausages (Fontanini), a branded foodservice business, from Capitol Wholesale Meats, Inc. for a final purchase price of $425.7 million.

The transaction was funded by the Company with cash on hand and by utilizing short-term financing.

Fontanini specializes in authentic Italian meats and sausages, as well as a variety of other premium meat products including pizza toppings and meatballs and allows the Company to expand its foodservice business.

On January 3, 2017, the Company completed the sale of Clougherty Packing, LLC, parent company of Farmer John and Saag’s Specialty Meats, along with PFFJ, LLC, farm operations in California, Arizona, and Wyoming.

The closing price was $145.0 million in cash.

On May 26, 2016, the Company acquired Justin’s, LLC (Justin’s) of Boulder, Colorado, for a purchase price of $280.9 million.

The purchase price was funded by the Company with cash on hand and by utilizing short-term financing.

This acquisition allowed the Company to enhance its presence in the specialty natural and organic nut butter category.

On May 9, 2016, the Company completed the sale of Diamond Crystal Brands resulting in proceeds of $110.1 million, net of selling costs.

On July 13, 2015, the Company acquired Applegate Farms, LLC (Applegate) of Bridgewater, New Jersey, for a final purchase price of $774.1 million in cash.

This acquisition allows the Company to expand the breadth of its protein offerings to provide consumers more choice in this fast growing category.

As of October 27, 2019, the Company had approximately 970 direct sales representatives engaged in selling its products globally.

Manufacturing

In addition to creating economic value, the Company is committed to building social value.

The Company recently launched its corporate responsibility platform, *Our Food JourneyTM*.

This journey consists of producing food responsibly for customers and consumers around the world by focusing on investing in people and partners, improving communities around the world, and creating products to improve the lives of others.

The capital expenditures associated with these commitments are not material with respect to the Company’s capital expenditures, earnings, or competitive position.

Customers and Backlog Orders

Backlog orders are not significant due to the perishable nature of a large portion of the products.

Orders are accepted and shipped on a current basis.

The Company believes its largest domestic competitors for its Refrigerated Foods segment in 2019 were Tyson Foods, Inc. and Smithfield Foods, Inc.; for its Grocery Products segment, Conagra Brands, Inc., General Mills, Inc., Campbell Soup Co., J. M. Smucker Co., and Treehouse Foods Inc.; and for Jennie-O Turkey Store, Cargill, Inc. and Butterball, LLC.

Employees

Information About Executive Officers

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | CURRENT OFFICE AND PREVIOUS | | |

| NAME | | AGE | | FIVE YEARS EXPERIENCE | | DATES |

| James P. Snee | | 52 | | Chairman of the Board, President and Chief Executive Officer | | 11/20/17 to Present |

| | | | | President and Chief Executive Officer | | 10/31/16 to 11/19/17 |

| | | | | President and Chief Operating Officer | | 10/26/15 to 10/30/16 |

| | | | | Group Vice President/President Hormel Foods International Corporation | | 10/29/12 to 10/25/15 |

At any time, such proceedings typically involve claims related to product liability, [added: labeling, contracts, antitrust regulations,] intellectual property, [removed: contract disputes, wage and hour] [added: competition] laws, employment practices, or other actions brought by employees, [added: customers,] consumers, [removed: competitors,] [added: competitors] or suppliers.

Resolution of any currently known matters, either individually or in the aggregate, [removed: is] [added: are] not expected to have a material effect on the Company’s financial condition, results of operations, or liquidity.

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.

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year ended October [removed: 27, 2019][added: 25, 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

| Delaware | | [added: | | | |] 41-0319970 | [added: | |]

| (State or other jurisdiction of incorporation or organization) | | [added: | | | |] (I.R.S. Employer Identification No.) | [added: | |]

| 1 Hormel [removed: Place] [added: Place, Austin Minnesota] | [removed: Austin] | [removed: Minnesota] | [added: | | |] 55912-3680 | [added: | |]

| (Address of principal executive offices) | | | [added: | | |] (Zip Code) | [added: | |]

| Title of each class | | | | [added: | |] Trading Symbol | | [added: | | | |] Name of each exchange on which registered | [added: | |]

| Common [removed: Stock] [added: Stock $0.01465 par value] | [removed: $0.01465] | [removed: par value] | | [added: | |] HRL | | [added: | | | |] New York Stock Exchange | [added: | |]

| Large accelerated filer | [added: | |] ☒ | [added: | |] Accelerated filer | [added: | |] ☐ | [added: | |]

| Non-accelerated filer | [added: | |] ☐ | [added: | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | [added: | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of April [removed: 28, 2019,] [added: 26, 2020,] was [removed: $11,072,534,818] [added: $13,086,349,866] based on the closing price of [removed: $39.94] [added: $46.61] on the last business day of the registrant’s most recently completed second fiscal quarter.

As of November 29, [removed: 2019,] [added: 2020,] the number of shares outstanding of each of the registrant’s classes of common stock was as follows:

Common Stock, $0.01465 – Par Value [removed: 534,736,743] [added: 539,918,117] shares

Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held January [removed: 28, 2020,] [added: 26, 2021,] are incorporated by reference into Part III, Items 10-14.

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| [Item [removed: 3.](#sE1BFF74EF79055669E21C115E7816DF8)] [added: 3.](#iba1060ab4f9b49a1988b5bf489654c4b_25)] | [added: | |] [LEGAL [removed: PROCEEDINGS](#sE1BFF74EF79055669E21C115E7816DF8)] [added: PROCEEDINGS](#iba1060ab4f9b49a1988b5bf489654c4b_25)] | [removed: [10](#sE1BFF74EF79055669E21C115E7816DF8)] | [added: | [10](#iba1060ab4f9b49a1988b5bf489654c4b_25) | | |]

| [Item [removed: 4.](#s344B551F77795946AFAB8BE8CEBDA199)] [added: 4.](#iba1060ab4f9b49a1988b5bf489654c4b_28)] | [added: | |] [MINE SAFETY [removed: DISCLOSURES](#s344B551F77795946AFAB8BE8CEBDA199)] [added: DISCLOSURES](#iba1060ab4f9b49a1988b5bf489654c4b_28)] | [removed: [10](#s344B551F77795946AFAB8BE8CEBDA199)] | [added: | [10](#iba1060ab4f9b49a1988b5bf489654c4b_28) | | |]

| [Item [removed: 5.](#sA85F6DC2D069579DADF6DAFBEA603ECE)] [added: 5.](#iba1060ab4f9b49a1988b5bf489654c4b_34)] | [added: | |] [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER [removed: MATTERS AND] [added: MATTERS](#iba1060ab4f9b49a1988b5bf489654c4b_34)[,](#iba1060ab4f9b49a1988b5bf489654c4b_34) [AND] ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#sA85F6DC2D069579DADF6DAFBEA603ECE)] [added: SECURITIES](#iba1060ab4f9b49a1988b5bf489654c4b_34)] | [removed: [11](#sA85F6DC2D069579DADF6DAFBEA603ECE)] | [added: | [12](#iba1060ab4f9b49a1988b5bf489654c4b_34) | | |]

| [Item [removed: 6.](#s89303979D0F15BE8B69418571350BECC)] [added: 6.](#iba1060ab4f9b49a1988b5bf489654c4b_37)] | [added: | |] [SELECTED FINANCIAL [removed: DATA](#s89303979D0F15BE8B69418571350BECC)] [added: DATA](#iba1060ab4f9b49a1988b5bf489654c4b_37)] | [removed: [12](#s89303979D0F15BE8B69418571350BECC)] | [added: | [13](#iba1060ab4f9b49a1988b5bf489654c4b_37) | | |]

| [Item [removed: 7.](#sD64B644FC9EE562FB2D84831C551D30A)] [added: 7.](#iba1060ab4f9b49a1988b5bf489654c4b_40)] | [added: | |] [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#sD64B644FC9EE562FB2D84831C551D30A)] [added: OPERATIONS](#iba1060ab4f9b49a1988b5bf489654c4b_40)] | [removed: [13](#sD64B644FC9EE562FB2D84831C551D30A)] | [added: | [14](#iba1060ab4f9b49a1988b5bf489654c4b_40) | | |]

| [Item [removed: 7A.](#sBF1149BCC7A05B82A042D9761C6D7402)] [added: 7A.](#iba1060ab4f9b49a1988b5bf489654c4b_58)] | [added: | |] [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#sBF1149BCC7A05B82A042D9761C6D7402)] [added: RISK](#iba1060ab4f9b49a1988b5bf489654c4b_58)] | [removed: [29](#sBF1149BCC7A05B82A042D9761C6D7402)] | [added: | [25](#iba1060ab4f9b49a1988b5bf489654c4b_58) | | |]

| [Item [removed: 8.](#s648E1A0BF2E75E17B96D68C71F04A8DF)] [added: 8.](#iba1060ab4f9b49a1988b5bf489654c4b_61)] | [added: | |] [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#s648E1A0BF2E75E17B96D68C71F04A8DF)] [added: DATA](#iba1060ab4f9b49a1988b5bf489654c4b_61)] | [removed: [29](#s648E1A0BF2E75E17B96D68C71F04A8DF)] | [added: | [25](#iba1060ab4f9b49a1988b5bf489654c4b_61) | | |]

| [Item [removed: 9.](#s1C7F9BB5C4F550E19DA17B688299B98B)] [added: 9.](#iba1060ab4f9b49a1988b5bf489654c4b_172)] | [added: | |] [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE](#s1C7F9BB5C4F550E19DA17B688299B98B)] [added: DISCLOSURE](#iba1060ab4f9b49a1988b5bf489654c4b_172)] | [removed: [66](#s1C7F9BB5C4F550E19DA17B688299B98B)] | [added: | [64](#iba1060ab4f9b49a1988b5bf489654c4b_172) | | |]

| [Item [removed: 9A.](#s7262288306205C51858C89DC7F8BB832)] [added: 9A.](#iba1060ab4f9b49a1988b5bf489654c4b_175)] | [added: | |] [CONTROLS AND [removed: PROCEDURES](#s7262288306205C51858C89DC7F8BB832)] [added: PROCEDURES](#iba1060ab4f9b49a1988b5bf489654c4b_175)] | [removed: [66](#s7262288306205C51858C89DC7F8BB832)] | [added: | [64](#iba1060ab4f9b49a1988b5bf489654c4b_175) | | |]

| [Item [removed: 9B.](#sA43B558414BD56B5BFC5D3EE8060B97E)] [added: 9B.](#iba1060ab4f9b49a1988b5bf489654c4b_178)] | [added: | |] [OTHER [removed: INFORMATION](#sA43B558414BD56B5BFC5D3EE8060B97E)] [added: INFORMATION](#iba1060ab4f9b49a1988b5bf489654c4b_178)] | [removed: [66](#sA43B558414BD56B5BFC5D3EE8060B97E)] | [added: | [64](#iba1060ab4f9b49a1988b5bf489654c4b_178) | | |]

| [removed: [PART III](#sF68B695AC4F459BCB8E56B4BFF90F8FC)] [added: [PART III](#iba1060ab4f9b49a1988b5bf489654c4b_181)] | | | [added: | | | | | |]

| [Item [removed: 10.](#s593DAC4CDF0154B59F61A2423DEA8FAC)] [added: 10.](#iba1060ab4f9b49a1988b5bf489654c4b_184)] | [added: | |] [DIRECTORS, EXECUTIVE [removed: OFFICERS AND] [added: OFFICERS](#iba1060ab4f9b49a1988b5bf489654c4b_184)[,](#iba1060ab4f9b49a1988b5bf489654c4b_184) [AND] CORPORATE [removed: GOVERNANCE](#s593DAC4CDF0154B59F61A2423DEA8FAC)] [added: GOVERNANCE](#iba1060ab4f9b49a1988b5bf489654c4b_184)] | [removed: [67](#s593DAC4CDF0154B59F61A2423DEA8FAC)] | [added: | [65](#iba1060ab4f9b49a1988b5bf489654c4b_184) | | |]

| [Item [removed: 11.](#s12040A4DB36F5C58B2E9479A1909E607)] [added: 11.](#iba1060ab4f9b49a1988b5bf489654c4b_187)] | [added: | |] [EXECUTIVE [removed: COMPENSATION](#s12040A4DB36F5C58B2E9479A1909E607)] [added: COMPENSATION](#iba1060ab4f9b49a1988b5bf489654c4b_187)] | [removed: [67](#s12040A4DB36F5C58B2E9479A1909E607)] | [added: | [65](#iba1060ab4f9b49a1988b5bf489654c4b_187) | | |]

| [Item [removed: 12.](#sFC5ACED1D235533C8CF19DFE9DCFA3D2)] [added: 12.](#iba1060ab4f9b49a1988b5bf489654c4b_190)] | [added: | |] [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#sFC5ACED1D235533C8CF19DFE9DCFA3D2)] [added: MATTERS](#iba1060ab4f9b49a1988b5bf489654c4b_190)] | [removed: [67](#sFC5ACED1D235533C8CF19DFE9DCFA3D2)] | [added: | [65](#iba1060ab4f9b49a1988b5bf489654c4b_190) | | |]

| [Item [removed: 13.](#s6E41AE58880C5F02A32CE93352775860)] [added: 13.](#iba1060ab4f9b49a1988b5bf489654c4b_193)] | [added: | |] [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#s6E41AE58880C5F02A32CE93352775860)] [added: INDEPENDENCE](#iba1060ab4f9b49a1988b5bf489654c4b_193)] | [removed: [67](#s6E41AE58880C5F02A32CE93352775860)] | [added: | [65](#iba1060ab4f9b49a1988b5bf489654c4b_193) | | |]

| [Item [removed: 14.](#s5B26EDEF7B4D5DE1B280EB7634995414)] [added: 14.](#iba1060ab4f9b49a1988b5bf489654c4b_196)] | [added: | |] [PRINCIPAL ACCOUNTING FEES AND [removed: SERVICES](#s5B26EDEF7B4D5DE1B280EB7634995414)] [added: SERVICES](#iba1060ab4f9b49a1988b5bf489654c4b_196)] | [removed: [68](#s5B26EDEF7B4D5DE1B280EB7634995414)] | [added: | [66](#iba1060ab4f9b49a1988b5bf489654c4b_196) | | |]

| [Item [removed: 15.](#s9EBB2B1DBBFD56869DF4DD48A7689C3D)] [added: 15.](#iba1060ab4f9b49a1988b5bf489654c4b_202)] | [added: | |] [EXHIBITS, FINANCIAL STATEMENT [removed: SCHEDULES](#s9EBB2B1DBBFD56869DF4DD48A7689C3D)] [added: SCHEDULES](#iba1060ab4f9b49a1988b5bf489654c4b_202)] | [removed: [68](#s9EBB2B1DBBFD56869DF4DD48A7689C3D)] | [added: | [66](#iba1060ab4f9b49a1988b5bf489654c4b_202) | | |]

| [Item [removed: 16.](#sA66C234910D55D1E8E181957C4DDCD53)] [added: 16.](#iba1060ab4f9b49a1988b5bf489654c4b_205)] | [added: | |] [FORM 10-K [removed: SUMMARY](#sA66C234910D55D1E8E181957C4DDCD53)] [added: SUMMARY](#iba1060ab4f9b49a1988b5bf489654c4b_205)] | [removed: [71](#sA66C234910D55D1E8E181957C4DDCD53)] | [added: | [69](#iba1060ab4f9b49a1988b5bf489654c4b_205) | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| [PART I](#iba1060ab4f9b49a1988b5bf489654c4b_13) | | | | | | | | |

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| [PART II](#iba1060ab4f9b49a1988b5bf489654c4b_31) | | | | | | | | |

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| [PART IV](#iba1060ab4f9b49a1988b5bf489654c4b_199) | | | | | | | | |

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| [PART I](#s487395E306715A3FB4A541E8E46245CF) | | |

| [PART II](#s988331F1266D5E4F9D822694CCA976D0) | | |

| [PART IV](#s67B40D6D3BC956A689E14C7E058AB3D6) | | |

| [SIGNATURES](#s46288E0A48DE58F3AE5EA4E82B9309A1) | | [72](#s46288E0A48DE58F3AE5EA4E82B9309A1) |

The Company has various processing plants, [removed: warehouses,] [added: warehouses] and operational facilities, mainly in the states of Iowa, Minnesota, Illinois, and Wisconsin.

| Area* (Square feet) | | [added: | | | |] Refrigerated Foods | | | [added: | | |] Grocery Products | | | [added: | | |] Jennie-O Turkey Store | | | [added: | | |] International & Other | | | [added: | | |] Corporate | | | [added: | | |] Total | | [added: |]

| Processing Plants | | [removed: 4,528,000] | | | [added: | 4,971,000 | | | | | |] 1,648,000 | | | [added: | | |] 1,987,000 | | | [added: | | |] 1,243,000 | | | | | | [removed: 9,406,000] | | [added: | | | | 9,849,000 | | |]

| Warehouse/Distribution Centers | | [added: | | | |] 497,000 | | | [removed: 832,000] | | | [added: 885,000 | | | | | |] 140,000 | | | [added: | | |] 79,000 | | | | | | [removed: 1,548,000] | | [added: | | | | 1,601,000 | | |]

| Administrative/Sales/Research | | [added: | | | |] 65,000 | | | [added: | | |] 6,000 | | | [added: | | |] 66,000 | | | [added: | | |] 34,000 | | | [removed: 559,000] | | | [removed: 730,000] [added: 563,000] | | [added: | | | | 734,000 | | |]

These facilities are reflected in the [removed: principal] [added: principle] segment for presentation purposes.

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| Live Production | | | | | | 816,000 | | | | | | | | | | | | 314,000 | | | | | | | | | | | | | | | | | | 1,130,000 | | |

| Total | | | | | | 6,349,000 | | | | | | 2,539,000 | | | | | | 2,507,000 | | | | | | 1,356,000 | | | | | | 563,000 | | | | | | 13,314,000 | | |

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| Live Production | | 815,000 | | | | | | 313,000 | | | | | | | | | 1,128,000 | |

| Total | | 5,905,000 | | | 2,486,000 | | | 2,506,000 | | | 1,356,000 | | | 559,000 | | | 12,812,000 | |

Information About Executive Officers

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| | | | | | | | | | | | | CURRENT OFFICE AND PREVIOUS | | | | | | | | |

| NAME | | | | | | AGE | | | | | | FIVE YEARS EXPERIENCE | | | | | | DATES | | |

| James P. Snee | | | | | | 53 | | | | | | Chairman of the Board, President and Chief Executive Officer | | | | | | 11/20/17 to Present | | |

| | | | | | | | | | | | | President and Chief Executive Officer | | | | | | 10/31/16 to 11/19/17 | | |

| | | | | | | | | | | | | President and Chief Operating Officer | | | | | | 10/26/15 to 10/30/16 | | |

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| James N. Sheehan | | | | | | 65 | | | | | | Executive Vice President and Chief Financial Officer | | | | | | 01/29/19 to Present | | |

| | | | | | | | | | | | | Senior Vice President and Chief Financial Officer | | | | | | 10/31/16 to 01/28/19 | | |

| | | | | | | | | | | | | Vice President and Chief Accounting Officer | | | | | | 05/30/16 to 10/30/16 | | |

| | | | | | | | | | | | | Vice President and Controller | | | | | | 05/01/00 to 05/29/16 | | |

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| Deanna T. Brady | | | | | | 55 | | | | | | Executive Vice President (Refrigerated Foods) | | | | | | 10/28/19 to Present | | |

| | | | | | | | | | | | | Group Vice President/President Consumer Product Sales | | | | | | 10/26/15 to 10/27/19 | | |

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| Glenn R. Leitch | | | | | | 60 | | | | | | Executive Vice President (Supply Chain) | | | | | | 12/04/17 to Present | | |

| | | | | | | | | | | | | Group Vice President/President Jennie-O Turkey Store, Inc. | | | | | | 10/31/11 to 12/03/17 | | |

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| PJ Connor | | | | | | 51 | | | | | | Group Vice President/President Consumer Product Sales | | | | | | 10/28/19 to Present | | |

| | | | | | | | | | | | | Vice President (Senior Vice President Consumer Product Sales) | | | | | | 10/31/11 to 10/27/19 | | |

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| Luis G. Marconi | | | | | | 54 | | | | | | Group Vice President (Grocery Products) | | | | | | 10/31/16 to Present | | |

| | | | | | | | | | | | | Vice President (Grocery Products Marketing) | | | | | | 03/05/12 to 10/30/16 | | |

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| Swen Neufeldt | | | | | | 47 | | | | | | Group Vice President (Hormel Foods International Corporation) | | | | | | 06/29/20 to Present | | |

| | | | | | | | | | | | | Vice President (Meat Products) | | | | | | 10/31/16 to 06/28/20 | | |

| | | | | | | | | | | | | President Asia Pacific (Hormel Foods International Corporation) | | | | | | 10/27/14 to 10/30/16 | | |

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| Mark A. Coffey | | | | | | 58 | | | | | | Senior Vice President (Supply Chain and Manufacturing) | | | | | | 03/28/17 to Present | | |

| | | | | | | | | | | | | Vice President (Supply Chain) | | | | | | 02/06/17 to 03/27/17 | | |

| | | | | | | | | | | | | Vice President (Affiliated Businesses) | | | | | | 10/31/11 to 02/05/17 | | |

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| Janet L. Hogan | | | | | | 56 | | | | | | Senior Vice President (Human Resources) | | | | | | 03/28/17 to Present | | |

| | | | | | | | | | | | | Vice President (Human Resources) | | | | | | 01/18/17 to 03/27/17 | | |

| | | | | | | | | | | | | Senior Vice President (Human Resources), ProQuest LLC | | | | | | 10/10/16 to 01/17/17 | | |

| | | | | | | | | | | | | Executive Vice President, Chief Human Resources Officer, Oshkosh Corporation | | | | | | 05/12/14 to 02/20/16 | | |

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| Pierre M. Lilly | | | | | | 49 | | | | | | Senior Vice President and Chief Compliance Officer | | | | | | 10/26/20 to Present | | |

There were no issuer purchases of equity securities in the fourth quarter of fiscal [removed: 2019.][added: 2020.]

The maximum number of shares that may yet be purchased under the plans or programs as of October [removed: 27, 2019] [added: 25, 2020] is [removed: 4,758,235.][added: 4,456,320.]

The Company has paid dividends for [removed: 365] [added: 369] consecutive quarters.

The annual dividend rate for fiscal [removed: 2020] [added: 2021] was increased [removed: 11 percent] [added: 5] percent to [removed: $0.93] [added: $0.98] per share, representing the [removed: 54th] [added: 55th] consecutive annual dividend increase.

The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend-reinvested basis, for the Company, the S&P 500 Index, and the S&P 500 Packaged Foods & Meats Index for the five years ended October [removed: 27, 2019.][added: 25, 2020.]

The graph assumes $100 was invested in each, as of the market close on October [removed: 27, 2014.][added: 26, 2015.]

[removed: ][added: ]

The information set forth below for the five years ended October [removed: 27, 2019,] [added: 25, 2020,] is not necessarily indicative of results of future operations.

| (in thousands, except per share amounts) | | [removed: 2019] | | | | [added: 2020 | | | | | | 2019 | | | | | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016*] | | | | [removed: 2015] [added: 2016*] | | |

| Operations | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Net Sales | | [added: | | | |] $ | [removed: 9,497,317] [added: 9,608,462] | | | [added: | |] $ | [removed: 9,545,700] [added: 9,497,317] | | | [added: | |] $ | [removed: 9,167,519] [added: 9,545,700] | | | [added: | |] $ | [removed: 9,523,224] [added: 9,167,519] | | | [added: | |] $ | [removed: 9,263,863] [added: 9,523,224] | |

| Net Earnings Attributable to Hormel Foods Corporation | | [removed: 978,806] | | | | [added: 908,082 | | | | | | 978,806 | | | | | |] 1,012,140 | | | | [removed: 846,735] | | [added: 846,735] | | [removed: 890,052] | | | | [removed: 686,088] [added: 890,052] | | |

| EBIT(1) | | [removed: 1,195,923] | | | | [added: 1,099,948 | | | | | | 1,195,923 | | | | | |] 1,179,519 | | | | [removed: 1,276,374] | | [added: 1,276,374] | | [removed: 1,312,918] | | | | [removed: 1,055,612] [added: 1,312,918] | | |

| EBITDA(2) | | [removed: 1,361,132] | | | | [added: 1,305,729 | | | | | | 1,361,132 | | | | | |] 1,341,377 | | | | [removed: 1,407,351] | | [added: 1,407,351] | | [removed: 1,444,886] | | | | [removed: 1,189,046] [added: 1,444,886] | | |

| Financial Position | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Total Assets | | [added: | | | |] $ | [removed: 8,109,004] [added: 9,908,282] | | | [added: | |] $ | [removed: 8,142,292] [added: 8,109,004] | | | [added: | |] $ | [removed: 6,975,908] [added: 8,142,292] | | | [added: | |] $ | [removed: 6,370,067] [added: 6,975,908] | | | [added: | |] $ | [removed: 6,139,831] [added: 6,370,067] | |

| [removed: Long-term Obligations, including capital leases] [added: Total Debt, Including Finance Leases] | | [removed: 269,713] | | | | [removed: 624,840] [added: 1,303,627] | | | | [removed: 250,000] | | [added: 269,713] | | [added: | | | | 624,840 | | | | | |] 250,000 | | | | [added: | |] 250,000 | | |

| Hormel Foods Corporation Shareholders’ Investment | | [removed: 5,921,458] | | | | [added: 6,425,548 | | | | | | 5,921,458 | | | | | |] 5,600,811 | | | | [removed: 4,935,907] | | [added: 4,935,907] | | [removed: 4,448,006] | | | | [removed: 3,998,198] [added: 4,448,006] | | |

| Cash Flows | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Capital Expenditures | | [removed: 293,838] | | | | [added: 367,501 | | | | | | 293,838 | | | | | |] 389,607 | | | | [removed: 221,286] | | [added: 221,286] | | [removed: 255,524] | | | | [removed: 144,063] [added: 255,524] | | |

| Acquisitions of Businesses [added: and Intangibles] | | [removed: —] | | | | [added: 270,789 | | | | | | — | | | | | |] 857,668 | | | | [removed: 520,463] | | [added: 520,463] | | [removed: 280,889] | | | | [removed: 770,587] [added: 280,889] | | |

| Proceeds from Sale of Business | | [removed: 479,806] | | | | [removed: —] [added: —] | | | | [removed: 135,944] | | [added: 479,806] | | [removed: 110,149] | | | | — | | | [added: | | | 135,944 | | | | | | 110,149 | | |]

| Share Repurchase | | [removed: 174,246] | | | | [added: 12,360 | | | | | | 174,246 | | | | | |] 46,898 | | | | [removed: 94,487] | | [added: 94,487] | | [removed: 87,885] | | | | [removed: 24,928] [added: 87,885] | | |

| Dividends Paid | | [removed: 437,053] | | | | [added: 487,376 | | | | | | 437,053 | | | | | |] 388,107 | | | | [removed: 346,010] | | [added: 346,010] | | [removed: 296,493] | | | | [removed: 250,834] [added: 296,493] | | |

| Common Stock | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Weighted-Average Shares Outstanding – Basic | | [removed: 534,578] | | | | [added: 538,007 | | | | | | 534,578 | | | | | |] 530,742 | | | | [removed: 528,363] | | [added: 528,363] | | [removed: 529,290] | | | | [removed: 528,143] [added: 529,290] | | |

| Weighted-Average Shares Outstanding – Diluted | | [removed: 545,232] | | | | [added: 546,592 | | | | | | 545,232 | | | | | |] 543,869 | | | | [removed: 539,116] | | [added: 539,116] | | [removed: 542,473] | | | | [removed: 541,002] [added: 542,473] | | |

| Earnings Per Share – Basic | | [added: | | | |] $ | [removed: 1.83] [added: 1.69] | | | [added: | |] $ | [removed: 1.91] [added: 1.83] | | | [added: | |] $ | [removed: 1.60] [added: 1.91] | | | [added: | |] $ | [removed: 1.68] [added: 1.60] | | | [added: | |] $ | [removed: 1.30] [added: 1.68] | |

| Earnings Per Share – Diluted | | [removed: 1.80] | | | | [added: 1.66 | | | | | | 1.80 | | | | | |] 1.86 | | | | [removed: 1.57] | | [added: 1.57] | | [removed: 1.64] | | | | [removed: 1.27] [added: 1.64] | | |

| Dividends Declared per Share | | [removed: 0.84] | | | | [added: 0.93 | | | | | | 0.84 | | | | | |] 0.75 | | | | [removed: 0.68] | | [added: 0.68] | | [removed: 0.58] | | | | [removed: 0.50] [added: 0.58] | | |

| Hormel Foods Corporation Shareholders’ Investment per Share | | [removed: 11.08] | | | | [added: 11.90 | | | | | | 11.08 | | | | | |] 10.49 | | | | [removed: 9.34] | | [added: 9.34] | | [removed: 8.42] | | | | [removed: 7.57] [added: 8.42] | | |

| (in thousands) | | [removed: 2019] | | | | [added: 2020 | | | | | | 2019 | | | | | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016*] | | | | [removed: 2015] [added: 2016*] | | |

| (1) EBIT: | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Net Earnings Attributable to Hormel Foods Corporation | | [added: | | | |] $ | [removed: 978,806] [added: 908,082] | | | [added: | |] $ | [removed: 1,012,140] [added: 978,806] | | | [added: | |] $ | [removed: 846,735] [added: 1,012,140] | | | [added: | |] $ | [removed: 890,052] [added: 846,735] | | | [added: | |] $ | [removed: 686,088] [added: 890,052] | |

| Plus: Income Tax Expense | | [removed: 230,567] | | | | [added: 206,393 | | | | | | 230,567 | | | | | |] 168,702 | | | | [removed: 431,542] | | [added: 431,542] | | [removed: 426,698] | | | | [removed: 369,879] [added: 426,698] | | |

| Plus: Interest Expense | | [removed: 18,070] | | | | [added: 21,069 | | | | | | 18,070 | | | | | |] 26,494 | | | | [removed: 12,683] | | [added: 12,683] | | [removed: 12,871] | | | | [removed: 13,111] [added: 12,871] | | |

| Less: Interest and Investment [removed: Income*] [added: Income] | | [removed: 31,520] | | | | [added: 35,596 | | | | | | 31,520 | | | | | |] 27,817 | | | | [removed: 14,586] | | [added: 14,586] | | [removed: 16,703] | | | | [removed: 13,466] [added: 16,703] | | |

| EBIT | | [added: | | | |] $ | [removed: 1,195,923] [added: 1,099,948] | | | [added: | |] $ | [removed: 1,179,519] [added: 1,195,923] | | | [added: | |] $ | [removed: 1,276,374] [added: 1,179,519] | | | [added: | |] $ | [removed: 1,312,918] [added: 1,276,374] | | | [added: | |] $ | [removed: 1,055,612] [added: 1,312,918] | |

| (2) EBITDA: | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| EBIT per [removed: (1)] above | | [removed: 1,195,923] | | | | [added: 1,099,948 | | | | | | 1,195,923 | | | | | |] 1,179,519 | | | | [removed: 1,276,374] | | [added: 1,276,374] | | [removed: 1,312,918] | | | | [removed: 1,055,612] [added: 1,312,918] | | |

| Plus: Depreciation and Amortization | | [removed: 165,209] | | | | [added: 205,781 | | | | | | 165,209 | | | | | |] 161,858 | | | | [removed: 130,977] | | [added: 130,977] | | [removed: 131,968] | | | | [removed: 133,434] [added: 131,968] | | |

| EBITDA | | [added: | | | |] $ | [removed: 1,361,132] [added: 1,305,729] | | | [added: | |] $ | [removed: 1,341,377] [added: 1,361,132] | | | [added: | |] $ | [removed: 1,407,351] [added: 1,341,377] | | | [added: | |] $ | [removed: 1,444,886] [added: 1,407,351] | | | [added: | |] $ | [removed: 1,189,046] [added: 1,444,886] | |

| (3) Return on Invested Capital: | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| After-tax EBIT | | [added: | | | |] $ | [removed: 967,860] [added: 896,238] | | | [added: | |] $ | [removed: 1,010,966] [added: 967,860] | | | [added: | |] $ | [removed: 845,470] [added: 1,010,966] | | | [added: | |] $ | [removed: 887,401] [added: 845,470] | | | [added: | |] $ | [removed: 685,831] [added: 887,401] | |

| Divided by: | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| Total Debt, [removed: including capital leases] [added: Including Finance Leases] | | [removed: 269,713] | | | | [removed: 624,840] [added: 1,303,627] | | | | [removed: 250,000] | | [added: 269,713] | | [added: | | | | 624,840 | | | | | |] 250,000 | | | | [removed: 435,000] | | [added: 250,000] | [added: | |]

| Total Debt and Shareholders’ Investment | | [added: | | | |] $ | [removed: 6,191,171] [added: 7,729,175] | | | [added: | |] $ | [removed: 6,225,651] [added: 6,191,171] | | | [added: | |] $ | [removed: 5,185,907] [added: 6,225,651] | | | [added: | |] $ | [removed: 4,698,006] [added: 5,185,907] | | | [added: | |] $ | [removed: 4,433,198] [added: 4,698,006] | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| % of Net Sales | | | | | | 9.5 | | % | | | | 10.3 | | % | | | | 10.6 | | % | | | | 9.2 | | % | | | | 9.3 | | % |

| % of Net Sales | | | | | | 11.4 | | % | | | | 12.6 | | % | | | | 12.4 | | % | | | | 13.9 | | % | | | | 13.8 | | % |

| % of Net Sales | | | | | | 13.6 | | % | | | | 14.3 | | % | | | | 14.1 | | % | | | | 15.4 | | % | | | | 15.2 | | % |

| Return on Invested Capital(3) | | | | | | 11.6 | | % | | | | 15.6 | | % | | | | 16.2 | | % | | | | 16.3 | | % | | | | 18.9 | | % |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| EBIT per above | | | | | | 1,099,948 | | | | | | 1,195,923 | | | | | | 1,179,519 | | | | | | 1,276,374 | | | | | | 1,312,918 | | |

| X (1 – Effective Tax Rate*) | | | | | | 81.5 | | % | | | | 80.9 | | % | | | | 85.7 | | % | | | | 66.2 | | % | | | | 67.6 | | % |

| Hormel Foods Corporation Shareholders’ Investment | | | | | | 6,425,548 | | | | | | 5,921,458 | | | | | | 5,600,811 | | | | | | 4,935,907 | | | | | | 4,448,006 | | |

| Return on Invested Capital | | | | | | 11.6 | | % | | | | 15.6 | | % | | | | 16.2 | | % | | | | 16.3 | | % | | | | 18.9 | | % |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| % of net sales | | 10.31 | | % | | 10.60 | | % | | 9.24 | | % | | 9.35 | | % | | 7.41 | | % |

| % of net sales | | 12.59 | | % | | 12.36 | | % | | 13.92 | | % | | 13.79 | | % | | 11.39 | | % |

| % of net sales | | 14.33 | | % | | 14.05 | | % | | 15.35 | | % | | 15.17 | | % | | 12.84 | | % |

| Return on Invested Capital(3) | | 15.63 | | % | | 16.24 | | % | | 16.30 | | % | | 18.89 | | % | | 15.47 | | % |

| X (1 – Effective Tax Rate) | | 80.93 | | % | | 85.71 | | % | | 66.24 | | % | | 67.59 | | % | | 64.97 | | % |

| Return on Invested Capital | | 15.63 | | % | | 16.24 | | % | | 16.30 | | % | | 18.89 | | % | | 15.47 | | % |

Shares and per share figures have been restated to reflect the two-for-one stock split distributed on February 9, 2016.

See Note A - Summary of Significant Accounting Policies.

This system is augmented by well-communicated written policies and procedures, a strong program of internal [removed: audit,] [added: audit] and well-qualified personnel.

The audit was conducted in accordance with the standards of the [added: U.S.] Public Company Accounting Oversight Board [removed: (United States)] and includes a review of the Company’s accounting and financial controls and tests of transactions.

Based on our evaluation under the framework in *Internal Control - Integrated Framework*, we concluded that our internal control over financial reporting was effective as of October [removed: 27, 2019.][added: 25, 2020.]

Our internal control over financial reporting as of October [removed: 27, 2019,] [added: 25, 2020,] has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

| /s/ James P. Snee | [added: | |] /s/ James N. Sheehan | [added: | |]

| Chairman of the Board, | [added: | |] Executive Vice President | [added: | |]

| President and Chief Executive Officer | [added: | |] and Chief Financial Officer | [added: | |]

We have audited Hormel Foods Corporation’s internal control over financial reporting as of October [removed: 27, 2019,] [added: 25, 2020,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Hormel Foods Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of October [removed: 27, 2019,] [added: 25, 2020,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the accompanying consolidated statements of financial position of [removed: Hormel Foods Corporation (the Company)] [added: the Company] as of October [removed: 27, 2019] [added: 25, 2020] and October [removed: 28, 2018,] [added: 27, 2019,] the related consolidated statements of operations, comprehensive income, changes in shareholders’ investment, and cash flows for each of the three years in the period ended October [removed: 27, 2019] [added: 25, 2020] and the related notes and financial statement schedule listed in the index at Item 15 and our report dated December [removed: 6, 2019] [added: 4, 2020] expressed an unqualified opinion thereon.

We have audited the accompanying consolidated statements of financial position of Hormel Foods Corporation (the Company) as of October [removed: 27, 2019] [added: 25, 2020] and October [removed: 28, 2018,] [added: 27, 2019,] the related consolidated statements of operations, comprehensive income, changes in shareholders’ investment, and cash flows for each of the three years in the period ended October [removed: 27, 2019] [added: 25, 2020] and the related notes and financial statement schedule listed in the index at Item 15 (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October [removed: 27, 2019] [added: 25, 2020] and October [removed: 28, 2018,] [added: 27, 2019,] and the results of its operations and its cash flows for each of the three years in the period ended October [removed: 27, 2019,] [added: 25, 2020,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of October [removed: 27, 2019,] [added: 25, 2020,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated December [removed: 6, 2019] [added: 4, 2020] expressed an unqualified opinion thereon.

The critical audit [removed: matters] [added: matter] communicated below [removed: are matters] [added: is a matter] arising from the current period audit of the financial statements that [removed: were] [added: was] communicated or required to be communicated to the audit committee and that: (1) [removed: relate] [added: relates] to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matters] [added: matter] below, providing [added: a] separate [removed: opinions] [added: opinion] on the critical audit [removed: matters] [added: matter] or on the [removed: accounts] [added: account] or [removed: disclosures] [added: disclosure] to which [removed: they relate.][added: it relates.]

| | [added: | |] Valuation of Alternative Investments - Pension Assets | | | | [added: | | | | | | | |]

| *Description of the Matter* | [added: | |] At October [removed: 27, 2019,] [added: 25, 2020,] the Company had [removed: $1.5] [added: $1.6] billion in plan assets related to the defined benefit pension plans. Approximately [removed: 43%] [added: 48%] of the total pension assets are in global stocks [removed: -] [added: –] collective investment funds, private equity funds, real estate [removed: -] [added: –] domestic funds, [added: hedge funds, fixed income – collective investment funds,] and [added: fixed income –] hedge funds. These types of investments are referred to as “alternative investments.” As documented in Note [removed: G] [added: F] of the financial statements, these alternative investments are valued at net asset value (NAV) or are valued using significant unobservable inputs. | | | | [added: | | | | | | | |]

| | [added: | |] Auditing the fair value of these alternative investments is challenging because of the higher estimation uncertainty of the inputs to the fair value calculations, including the underlying NAVs, discounted cash flow valuations, comparable market valuations, and adjustments for currency, credit liquidity and other risks. Additionally, certain information regarding the fair value of these alternative investments is based on unaudited information available to management at the time of valuation. | | | | [added: | | | | | | | |]

| *How We Addressed the Matter in Our Audit* | [added: | |] We obtained an understanding, evaluated the design and tested the operating effectiveness of controls addressing the risk of material misstatement relating to valuation of alternative investments. This included testing management's review controls over the valuation of alternative investments, for example, a review of fund performance in comparison to the selected benchmark and meetings with the investment advisor on a quarterly basis to review market performance and fund returns in comparison with relevant indices and the investment policy. We also tested [removed: management's] [added: management’s] independent price testing of underlying investments performed for certain investments on [removed: an annual] [added: a quarterly] basis. | | | | [added: | | | | | | | |]

| | [added: | |] Our audit procedures included, among others, inquiring of management and the investment advisor regarding changes to the investment portfolio and investment strategies. We confirmed the fair value of the investments and ownership interest directly with the fund managers. We inspected the trust statement for observable transactions near year end to compare to the estimated fair value. We also obtained the latest audited financial statements for certain investments, performed a rollforward of the investment balance to compute an estimated market return on investment, and compared the market return to relevant benchmarks. | | | | [added: | | | | | | | |]

| | | [added: | | | |] October [removed: 27,] [added: 25,] | | | | [added: | |] October [removed: 28,] [added: 27,] | | |

| (in thousands, except share and per share amounts) | | [removed: 2019] | | | | [removed: 2018] [added: 2020] | | | [added: | | | 2019 | | |]

| Assets | | | | | | | | | [added: | | | | | |]

| Current Assets | | | | | | | | | [added: | | | | | |]

| Cash and Cash Equivalents [added: at Beginning of Year] | | [removed: $] | [added: | | |] 672,901 | | | [removed: $] | [added: | |] 459,136 | | [added: | | | | 444,122 | | |]

| Short-term Marketable Securities | | [removed: 14,736] | | | | [removed: —] [added: 17,338] | | | [added: | | | 14,736 | | |]

| Accounts Receivable (Net of Allowance for Doubtful Accounts of [removed: $4,063] [added: $4,012] at October [removed: 27, 2019,] [added: 25, 2020,] and [removed: $4,051] [added: $4,063] at October [removed: 28, 2018)] [added: 27, 2019)] | | [removed: 574,396] | | | | [removed: 600,438] [added: 702,419] | | | [added: | | | 574,396 | | |]

| Inventories | | [removed: 1,042,362] | | | | [removed: 963,527] [added: 1,072,762] | | | [added: | | | 1,042,362 | | |]

| [removed: Income] Taxes Receivable | | [removed: 19,924] | | | | [removed: 3,995] [added: 41,449] | | | [added: | | | 19,924 | | |]

| Prepaid Expenses | | [removed: 22,637] | | | | [removed: 16,342] [added: 18,349] | | | [added: | | | 22,637 | | |]

| Other Current Assets | | [removed: 14,457] | | | | [removed: 6,662] [added: 12,438] | | | [added: | | | 14,457 | | |]

| Total Current Assets | | [removed: 2,361,413] | | | | [removed: 2,050,100] [added: 3,579,063] | | | [added: | | | 2,361,413 | | |]

| Goodwill | | [removed: 2,481,645] | | | | [removed: 2,714,116] [added: 2,612,727] | | | [added: | | | 2,481,645 | | |]

| Other Intangibles | | [removed: 1,033,862] | | | | [removed: 1,207,219] [added: 1,076,285] | | | [added: | | | 1,033,862 | | |]

| Pension Assets | | [removed: 135,915] | | | | [removed: 195,153] [added: 183,232] | | | [added: | | | 135,915 | | |]