Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS
The Company is a global manufacturer and marketer of branded food products and remains focused on driving long-term growth through a balanced business model, a diverse portfolio, and a commitment to creating value for all stakeholders. The Company reports its results in the following three reportable segments: Retail, Foodservice, and International.
A review of the Company’s fiscal 2025 performance compared to fiscal 2024 appears in the following section. A review of fiscal 2024 performance compared to fiscal 2023 is set forth in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended October 27, 2024, 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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The Company discloses certain measures not defined by U.S. Generally Accepted Accounting Principles (GAAP), including organic volume, organic net sales, adjusted selling, general and administrative (SG&A), adjusted SG&A as a percent of net sales, adjusted operating income, adjusted net earnings, adjusted diluted earnings per share, and adjusted segment profit. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. For additional information and reconciliations to the most closely comparable measures calculated in accordance with GAAP, see the "Non-GAAP Measures" section of this Item. All forward-looking comparisons for fiscal 2026 are comparing fiscal 2025 GAAP figures to projected fiscal 2026 GAAP figures, unless otherwise noted.
Results of Operations
OVERVIEW
Fiscal 2025: The Company believes fiscal 2025 was a challenging year, as strong net sales performance did not translate into net earnings growth. Net sales totaled $12.1 billion, an increase of 2 percent compared to the prior year. Growth was driven by all three segments, and the Company delivered four consecutive quarters of net sales gains.
In fiscal 2025, the Company experienced persistent input cost inflation, primarily related to commodity markets, which significantly pressured earnings. Pork belly, beef, and nut input costs caused the most earnings pressure during the year.
The Company continued to support its strategic programs during fiscal 2025, including its multi-year Transform and Modernize (T&M) initiative. The Company made meaningful progress on the initiative, which is expected to deliver long-term value to the organization. The Company also recognized expenses associated with a corporate restructuring plan designed to reduce administrative expenses, improve efficiencies, and align its workforce to the Company’s future needs, while enabling continued investment in the Company’s growth.
SG&A decreased in fiscal 2025 primarily due to the lapping of antitrust settlements incurred in the prior year, lower advertising spend, and proceeds from a legal settlement. Adjusted SG&A as a percent of net sales was comparable to the prior year.
Operating income decreased 33 percent compared to the prior year, as earnings were significantly impacted by non-cash impairment charges recorded in the International and Retail segments. Adjusted operating income decreased 11 percent.
Net earnings decreased 41 percent compared to the prior year due to the above factors and a higher effective tax rate primarily driven by impairment charges. Adjusted net earnings declined 13 percent. Diluted earnings per share and adjusted diluted earnings per share for fiscal 2025 were $0.87 and $1.37, respectively, compared to $1.47 and $1.58 in the prior year.
Capital expenditures in fiscal 2025 were $311 million, including investments in capacity expansions for Hormel® Fire BraisedTM and Applegate® products, data and technology, people and animal safety, and the Jiaxing, China, facility. The Company continues to prioritize investments in growth, innovation, cost savings, automation, and maintenance.
Dividends paid to shareholders were a record $633 million.
Changes in global trade policies, including tariffs and retaliatory tariffs, had a minor impact on the Company’s results of operations during fiscal 2025. The Company continues to monitor and evaluate the impact of proposed and enacted tariffs, including proposed and enacted retaliatory tariffs, and other trade restrictions, as well as its ability to mitigate their impacts.
Fiscal 2026 Outlook: The Company continues to navigate through a dynamic consumer and operating environment. Organic net salesgrowth of 1 percent to 4 percent is expected in fiscal 2026, which the Company anticipates being driven by growth across a broad range of categories, increased brand support and innovation, market-based pricing actions, and the Company’s current assumptions for raw material costs. From a bottom-line perspective, segment profit growth from all three segments is expected in fiscal 2026. Diluted earnings per share are expected to be $1.29 to $1.39 and adjusted diluted earnings per share are expected to be $1.43 to $1.51. Earnings are expected to decline in the first quarter of the year, followed by growth in each of the remaining three quarters. Major risks to the outlook include incremental inflationary pressures and the impact of deteriorating macroeconomic conditions on the Company’s customers, consumers, and operators.
The Company remains in a strong financial position due to its operating cash flow, liquidity, and solid balance sheet. The Company plans to continue to support the business through increased marketing and advertising investments for its leading brands. Further, continued capital expenditure investments are expected, including investments in data and technology and value-added capacity expansions.
The implied annualized dividend rate for 2026 is $1.17 per share, representing an increase of 1 percent and marking the 60th consecutive year of dividend increases. Returning cash to shareholders in the form of dividends remains a top priority for the Company.
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CONSOLIDATED RESULTS
Volume, Net Sales, Net Earnings (Loss) and Diluted Earnings (Loss) Per Share
Fourth Quarter Ended Fiscal Year Ended
Net sales increased for the fourth quarter and full year of fiscal 2025 while volume declined over both periods.
For the fourth quarter of fiscal 2025, net sales growth across the Retail and Foodservice segments offset declines in the International segment. Net sales growth across the enterprise was driven primarily by the Jennie-O® turkey portfolio, Foodservice customized solutions business, Planters® snack nuts, Applegate® natural and organic meats, and premium prepared proteins, and the SPAM® family of products.
For the full year fiscal 2025, net sales increased in each segment. Net sales growth for the full year was driven primarily by the Jennie-O® turkey portfolio, the SPAM® family of products, Foodservice customized solutions business, Planters® snack nuts, Applegate® natural and organic meats, the bacon portfolio, and the Mexican foods portfolio.
For the fourth quarter of fiscal 2025, volume in the Retail segment was comparable to the prior year and declined in the International segment. For the fourth quarter of fiscal 2025, organic volume increased in the Foodservice segment. For the full year of fiscal 2025, organic volume in the Foodservice segment increased compared to the prior year. Volume declined in the Retail segment and was comparable to the prior year in the International segment for the full year of fiscal 2025.
In fiscal 2026, the Company expects net sales growth, which assumes growth across a broad range of categories, increased brand support and innovation, and market-based pricing actions. Risks to this outlook include slowing consumer demand and commodity price fluctuations.
Cost of Products Sold
Fourth Quarter Ended Fiscal Year Ended
Cost of products sold for the fourth quarter and full year of fiscal 2025 increased due to higher commodity input costs, mainly for pork bellies, beef, and nuts.
In fiscal 2026, the Company expects raw material costs for beef and nuts to remain above historical averages. Pork costs are anticipated to be lower than fiscal 2025 levels; however, they are expected to remain elevated compared to long-term averages. Inflationary pressures on employee-related, packaging, and production expenses are expected to persist at normalized levels. The Company’s T&M initiative is projected to continue delivering cost savings in fiscal 2026, with a focus on procurement of ingredients and supplies, production-related costs, and logistics.
Gross Profit
Fourth Quarter Ended Fiscal Year Ended
Gross profit as a percentage of net sales decreased in both the fourth quarter and full year of fiscal 2025 compared to the prior year. Each segment experienced a decline in gross profit as a percentage of net sales versus fiscal 2024. All segments benefited from cost savings generated through the Company’s T&M initiative, which were more than offset by inflationary pressures.
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In fiscal 2026, the Company expects gross profit as a percent of net sales to increase compared to the prior year. Incremental cost inflation and unfavorable sales mix pose the largest risks to this outlook.
Selling, General, and Administrative (SG&A)
Fourth Quarter Ended Fiscal Year Ended
Percent of Net Sales 7.0 % 7.6 % 8.2 % 8.4 %
Adjusted Percent of Net Sales 6.9 % 7.2 % 7.8 % 7.8 %
SG&A for the fourth quarter of fiscal 2025 decreased due to proceeds from a legal settlement and lower advertising expenses. Adjusted SG&A for the fourth quarter of fiscal 2025 decreased due to lower advertising expenses.
For full year fiscal 2025, SG&A decreased, primarily due to the lapping of antitrust settlements incurred in fiscal 2024, lower advertising spend, and proceeds from a legal settlement recognized in fiscal 2025. These benefits were partially offset by a loss on a non-core sow operation, higher employee-related expenses, and higher external expenses. Adjusted SG&A increased compared to the prior year, as the reduction in advertising spend was more than offset by higher employee-related expenses and higher external expenses.
Advertising investments in fiscal 2025 were $148 million, representing a 9 percent decrease compared to fiscal 2024.
In fiscal 2026, the Company intends to continue investing in its leading brands and for full year advertising expense to increase compared to the prior year.
Equity in Earnings of Affiliates
Fourth Quarter Ended Fiscal Year Ended
Equity in earnings of affiliates decreased for the fourth quarter and full year of fiscal 2025 as growth for MegaMex Foods was more than offset by a $164 million non-cash impairment charge related to a minority investment in Indonesia.
Goodwill and Intangible Impairment
During the fourth quarter of fiscal 2025, the Company recognized $71 million of intangible asset impairments related to thePlanters®trade name, a private label customer relationship, and the Chi-Chi's®trade name, all recorded within the Retail segment.
Interest Income, Interest Expense, and Other Income (Expense), Net
Fourth Quarter Ended Fiscal Year Ended
Interest income declined in both the fourth quarter and full year of fiscal 2025, primarily as a result of lower average cash balances. Interest expense was comparable during the fourth quarter and decreased for the full year of fiscal 2025. Other expense increased in the fourth quarter of fiscal 2025, primarily due to costs related to the Company's recently announced corporate restructuring plan. For the full year of fiscal 2025, other expense increased due to one-time costs related to the corporate restructuring plan and lower rabbi performance, which were partially offset by lower on-going pension costs.
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Effective Tax Rate
Fourth Quarter Ended Fiscal Year Ended
The effective tax rate for fiscal 2025 reflected a detriment related to the non-cash impairment charges on a minority investment recorded in the fourth quarter. The fiscal 2024 effective tax rate included a benefit from the purchase of federal energy tax credits. For additional information, refer to Note O - Income Taxes of the Notes to the Consolidated Financial Statements.
The Company expects the effective tax rate in fiscal 2026 to be between 21.5 and 22.5 percent.
SEGMENT RESULTS
Net sales and segment profit for each of the Company’s reportable segments are set forth below. The Company does not allocate deferred compensation, non-recurring expenses associated with the T&M initiative, corporate restructuring plan costs, and interest and other income and expense to its segments when measuring performance. The Company also retains various other income and expenses at the corporate level. Equity in earnings of affiliates is included in segment profit; however, earnings attributable to the Company’s corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.
The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the profit and other financial information shown below.
Fourth Quarter Ended Fiscal Year Ended
Net Sales
Segment Profit (Loss)
Retail
Fourth Quarter Ended Fiscal Year Ended
Volume results and net sales growth in the Retail segment in the fourth quarter of fiscal 2025 were driven by the turkey portfolio, Planters® snack nuts, and Applegate® products. These gains were partially offset by the strategic decision to discontinue certain offerings of private label snack nuts. Full year fiscal 2025 volume declined, primarily due to contract manufacturing. Full year fiscal 2025 net sales growth was driven by the turkey portfolio, Applegate® products, the Mexican foods portfolio, and the SPAM® family of products.
Retail segment profit declined in the fourth quarter and the full year of fiscal 2025, primarily due to non-cash impairment charges. Adjusted segment profit declined for the fourth quarter and full year of fiscal 2025, as net sales growth was more than offset by input cost pressures, mainly due to elevated commodity markets.
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In fiscal 2026, the Company expects modest net sales growth for its Retail segment. Net sales growth is expected to come from a broad range of categories, higher brand support, and market-based pricing actions. Retail segment profit is expected to grow compared to the prior year. Risks to this outlook include slowing consumer demand, unfavorable sales mix, and higher-than-expected operating costs.
Foodservice
Fourth Quarter Ended Fiscal Year Ended
Organic net sales growth continued to be broad-based in the Foodservice segment in the fourth quarter of fiscal 2025, with significant contributions from the customized solutions business, branded bacon offerings, branded pepperoni, premium prepared proteins, and the Jennie-O®turkey portfolio, while organic volume was flat. Full year fiscal 2025 organic volume and organic net sales increased due to growth across many categories, with significant contributions from the customized solutions business, Jennie-O®turkey portfolio, premium prepared proteins, and branded bacon offerings.
Segment profit declined for the fourth quarter of fiscal 2025, as strong net sales growth was more than offset by impacts from a chicken-product recall and the rise in input costs, mainly due to elevated commodity markets. Segment profit declined for the full year of fiscal 2025 as net sales growth was more than offset by the rise in input costs and margin pressures from non-core businesses. The Foodservice segment continued to benefit from an extensive range of solutions-based products, its direct-selling organization, and a diverse channel presence during fiscal 2025.
In fiscal 2026, the Company anticipates year-over-year growth for volume, net sales, and segment profit in its Foodservice segment. Risks to this outlook include a softening of foodservice industry demand, lower-than-expected raw material markets which through market-based pricing can negatively impact net sales, and higher-than-expected operating costs.
International
Fourth Quarter Ended Fiscal Year Ended
For the International segment, volume and net sales growth for SPAM® luncheon meat and the refrigerated portfolio was more than offset by declines in fresh pork exports and competitive pressures in Brazil in the fourth quarter of fiscal 2025. The China market continued to contribute volume and net sales growth in the fourth quarter. Full year fiscal 2025 volume and net sales growth in the China market, the SPAM® family of products, and the Planters® brand was partially offset by volume and net sales declines due to competitive pressures in Brazil.
Segment profit for the fourth quarter and full year was significantly impacted by the non-cash impairment of a minority investment in Indonesia. Adjusted segment profit declined in the fourth quarter and full year of fiscal 2025, primarily due to commodity input cost pressures and softness in Brazil.
In fiscal 2026, the Company anticipates year-over-year growth for volume, net sales, and segment profit from its International segment. Risks to this outlook include macroeconomic conditions in multinational markets, cost inflation, and global trade dynamics.
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Unallocated Income and Expense
Fourth Quarter Ended Fiscal Year Ended
For the fourth quarter of fiscal 2025, net unallocated expense increased due to corporate restructuring plan expenses, higher external expenses, and the lapping of the gain on sale of Hormel Health Labs, LLC (Hormel Health Labs) in the prior year. These factors were partially offset by proceeds from a legal settlement.
In addition to the fourth quarter impacts, for fiscal 2025, net unallocated expense increased due to lower interest income, the loss on the sale of a non-core sow operation, and higher expenses related to the T&M initiative. These factors were partially offset by the lapping of prior year legal expenses.
NON-GAAP MEASURES
This report includes measures of financial performance that are not defined by GAAP. The Company utilizes these non-GAAP measures to understand and evaluate operating performance on a consistent basis. These measures may also be used when making decisions regarding resource allocation and in determining incentive compensation. The Company believes these non-GAAP measures provide useful information to investors because they aid analysis and understanding of the Company’s results and business trends relative to past performance and the Company’s competitors. Non-GAAP measures are not intended to be a substitute for GAAP measures in analyzing financial performance. These non-GAAP measures are not calculated in accordance with GAAP and may be different from non-GAAP measures used by other companies.
Transform and Modernize (T&M) Initiative
In the fourth quarter of fiscal 2023, the Company announced a multi-year T&M initiative. In presenting non-GAAP measures, the Company adjusts for (i.e., excludes) expenses for this initiative that are non-recurring, which are primarily project-based external consulting fees and expenses related to supply chain and portfolio optimization (e.g., asset write-offs, severance, or relocation-related costs). The Company believes that non-recurring costs associated with the T&M initiative are not reflective of the Company’s ongoing operating cost structure; therefore, the Company is excluding these discrete costs. The Company does not adjust for (i.e., does not exclude) certain costs related to the T&M initiative that are expected to continue after the project ends, such as software license fees and internal employee expenses, because those costs are considered ongoing in nature as a component of normal operating costs. The Company also does not adjust for savings realized through the T&M initiative as these are considered ongoing in nature and reflective of expected future operating performance.
Gain (Loss) on Sale of Business
In the first quarter of fiscal 2025, the Company sold Mountain Prairie, LLC, a non-core sow operation, resulting in a loss on the sale. In the fourth quarter of fiscal 2024, the Company sold the Hormel Health Labs business, resulting in a gain on the sale. The Company believes the one-time benefit or detriment from these sales, including transaction costs, are not reflective of the Company’s ongoing operating cost structure, are not indicative of the Company’s core operating performance, and are not meaningful when comparing the Company’s operating performance against that of prior periods. Thus, the Company has adjusted for (i.e. excluded) these impacts.
Legal Matters
From time to time, the Company receives proceeds or incurs expenses related to discrete legal matters that the Company believes are not indicative of the Company’s core operating performance, do not reflect expected future operating income or costs, and are not meaningful when comparing the Company’s operating performance against that of prior periods. The Company adjusts for (i.e., excludes) these impacts.
Litigation Settlements
In fiscal 2025 and 2024, the Company entered into settlement agreements with certain plaintiffs in pending antitrust litigation. In the fourth quarter of fiscal 2025, the Company received proceeds in settlement of a separate legal matter. See Note K - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information.
Corporate Restructuring Plan
In the fourth quarter of fiscal 2025, the Company commenced a corporate restructuring plan, the focus of which is to reduce administrative expenses, improve efficiencies, and align the workforce to the Company’s future needs, while enabling continued investment in the Company’s growth. The costs incurred to execute the corporate restructuring plan and the charges incurred under the program are primarily related to severance and employee benefit costs. Because the Company believes the charges incurred under the corporate restructuring plan do not reflect future operating costs and are not meaningful when comparing the Company's operating performance against that of prior periods, the Company adjusts for
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(i.e., excludes) these impacts. See Note R - Restructuring of the Notes to the Consolidated Financial Statements for additional information.
Impairments
In the fourth quarter of fiscal 2025, the Company recorded non-cash impairment charges related to certain intangible assets and an equity method investment. See Note C - Goodwill and Intangible Assets and Note D - Investments in Affiliates of the Notes to the Consolidated Financial Statements for additional information. The Company believes these charges are not indicative of the Company’s core operating performance, do not reflect expected future operating income or costs, and are not meaningful when comparing the Company’s operating performance against that of prior periods. The Company adjusts for (i.e., excludes) these impacts.
The tables below show the calculations to reconcile from the GAAP measures to the non-GAAP measures presented in this Annual Report on Form 10-K. The tax provision expense or benefit of each of the pre-tax items excluded from the Company's GAAP results was computed based on the facts and tax implications associated with each item.
Fourth Quarter Ended Fiscal Year Ended
Corporate Restructuring Plan (594) — (594) —
Goodwill and Intangible Impairment (GAAP) $ 70,751 $ — $ 70,751 $ —
Adjusted Goodwill and Intangible Impairment (Non-GAAP) $ — $ — $ — $ —
Corporate Restructuring Plan 594 — 594 —
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Fourth Quarter Ended Fiscal Year Ended
Corporate Restructuring Plan 3,256 — 3,256 —
(Gain) Loss on Sale of Business — (843) 2,469 (843)
Diluted Earnings (Loss) Per Share (GAAP) $ (0.10) $ 0.40 $ 0.87 $ 1.47
Impairment Charges 0.39 — 0.39 —
Corporate Restructuring Plan 0.02 — 0.02 —
(Gain) Loss on Sale of Business — (0.01) 0.02 (0.01)
Fourth Quarter Ended Fiscal Year Ended
SG&A as a Percent of Net Sales (GAAP) 7.0 % 7.6 % 8.2 % 8.4 %
Transform and Modernize Initiative(2) (0.4) (0.5) (0.5) (0.4)
Corporate Restructuring Plan — — — —
Gain (Loss) on Sale of Business — 0.1 (0.1) —
Litigation Settlements 0.3 — 0.1 (0.2)
Adjusted SG&A as a Percent of Net Sales (Non-GAAP) 6.9 % 7.2 % 7.8 % 7.8 %
(1) Comprised primarily of asset write-offs, equipment relocation expenses, and severance related to supply chain and portfolio optimization.
(2) Comprised primarily of project-based external consulting fees.
Organic Volume and Organic Net Sales (Non-GAAP)
The non-GAAP measures of organic volume and organic net sales are presented to provide investors with additional information to facilitate the comparison of past and present operations. Organic volume and organic net sales exclude the impact of the sale of Hormel Health Labs in the Foodservice segment in the fourth quarter of fiscal 2024.
Fourth Quarter Ended
In thousands GAAP GAAP Divestiture Non-GAAP Organic Non-GAAP% Change
Volume (lbs.)
Net Sales
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Fiscal Year Ended
In thousands GAAP GAAP Divestiture Non-GAAP Organic Non-GAAP% Change
Volume (lbs.)
Net Sales
Adjusted Segment Profit (Non-GAAP)
Fourth Quarter Ended
Segment Profit (Loss)
(1) Retail and International segment profit (loss) adjustments in the fourth quarter of fiscal 2025 were due to non-cash impairment charges. Net Unallocated Expense adjustments were comprised of non-recurring T&M initiative costs, corporate restructuring plan charges, and a favorable litigation settlement.
(2) Net Unallocated Expense adjustments in the fourth quarter of fiscal 2024 were comprised of non-recurring T&M initiative costs and the gain on the sale of Hormel Health Labs.
Fiscal Year Ended
Segment Profit (Loss)
(1) Retail and International segment profit (loss) adjustments in fiscal 2025 were due to non-cash impairment charges. Net Unallocated Expense adjustments in fiscal 2025 were comprised of non-recurring T&M initiative costs, corporate restructuring plan charges, the loss on sale of Mountain Prairie, LLC, and litigation settlements.
(2) Net Unallocated Expense adjustments in fiscal 2024 were comprised of non-recurring T&M initiative costs, litigation settlements, and the gain on the sale of Hormel Health Labs.
Forward-looking GAAP to Non-GAAP Measures
Below shows the calculations to reconcile from the estimated fiscal 2026 GAAP measures to the corresponding estimated adjusted non-GAAP measures.
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Fiscal 2026 Outlook - Adjusted Diluted Earnings per Share (Non-GAAP)
The non-GAAP measure of adjusted diluted earnings per share excludes estimated charges associated with the T&M initiative, corporate restructuring plan, and other estimated non-recurring items. The Company’s strategic investments in the T&M initiative are expected to cease at the end of the investment period. T&M charges, corporate restructuring plan expenses, and other estimated non-recurring items are not expected to recur in the foreseeable future and are not considered representative of the Company’s underlying operating performance.
In fiscal 2026, the Company expects:
•Diluted earnings per share (GAAP) in the range of $1.29 to $1.39
•Adjustments for the T&M initiative of $0.06 to $0.07
•Adjustments for corporate restructuring plan-related charges of $0.01
•Adjustments related to other(1) non-recurring items of $0.05 to $0.06
Resulting in an adjusted diluted earnings per share range (non-GAAP) of $1.43 to $1.51.
(1) Includes estimated one-time consulting expenses related to a former executive officer and estimated non-recurring impacts related to the anticipated sale of the Justin’s® branded business.
Supplemental Financial Measures (Non-GAAP)
EBIT and EBITDA (Non-GAAP)
The Company provides earnings before interest and taxes (EBIT) and earnings before interest, taxes, depreciation, and amortization (EBITDA) because it believes these measures are useful to management and investors as indicators of operating performance net of non-operating income and expenses, and because they are commonly used to benchmark the Company’s performance.
Fiscal Year Ended
EBIT (Non-GAAP):
Net Earnings Attributable to Hormel Foods Corporation $ 478,197 $ 805,038
Less: Other Income (Expense), Net (1,344) 8,224
EBITDA (Non-GAAP):
LIQUIDITY AND CAPITAL RESOURCES
When assessing its liquidity and capital resources, the Company evaluates cash and cash equivalents, short-term and long-term investments, income from operations, and borrowing capacity.
Cash Flow Highlights
Fiscal Year Ended
Cash and Cash Equivalents at End of Period $ 671 $ 742
Cash Provided by (Used in) Operating Activities 845 1,267
Cash Provided by (Used in) Investing Activities (299) (237)
Cash Provided by (Used in) Financing Activities (614) (1,030)
Increase (Decrease) in Cash and Cash Equivalents (71) 5
Cash and cash equivalents decreased $71 million during fiscal 2025 due to higher costs and elevated inventory levels. Cash provided by operating activities along with existing cash on hand was sufficient to cover dividend payments and capital expenditures during fiscal 2025. The Company repaid a portion of long-term debt by using existing cash on hand and the proceeds from new long-term debt issued in fiscal 2024. Additional details related to significant drivers of cash flows are provided below.
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Cash Provided by (Used in) Operating Activities
•Cash flows from operating activities were impacted by changes in operating assets and liabilities and lower net earnings.
–In fiscal 2025, inventory increased $172 million primarily due to higher raw material costs, strategic inventory build for certain categories, and recovery of snack nuts inventory levels following the production disruptions at the Suffolk, Virginia manufacturing facility. The $95 million decrease in fiscal 2024 was due to a better alignment of product levels with customer demand as well as less turkey and associated feed supplies.
–In fiscal 2025, accounts receivable decreased $33 million due to the timing of sales and estimated impact from the chicken product recall. In fiscal 2024, accounts receivable was comparable to the prior year, decreasing $2 million.
–Accounts payable and accrued expenses decreased $69 million in fiscal 2025 primarily due to the payment of legal settlements and the timing of payments which was partially offset by feed and livestock payment deferrals. In fiscal 2024, accounts payable and accrued expenses decreased $27 million related to the timing of payments which was partially offset by higher employee-related and promotional expenses.
Cash Provided by (Used in) Investing Activities
•Capital expenditures were $311 million and $256 million in fiscal 2025 and 2024, respectively. Significant projects ongoing during fiscal 2025 and fiscal 2024 were for capacity expansions in Barron, Wisconsin and at the Jiaxing, China facility. Additional projects during fiscal 2025 included manufacturing equipment upgrades in Willmar, Minnesota and investments in data and technology.
•Proceeds from the sale of business were $13 million during fiscal 2025, primarily from the sale of the Company’s equity interest in Mountain Prairie, LLC. In fiscal 2024, the Company received $25 million from the sale of Hormel Health Labs.
Cash Provided by (Used in) Financing Activities
•Cash dividends paid to the Company’s shareholders are an ongoing financing activity for the Company with payments totaling $633 million in fiscal 2025 and $615 million in fiscal 2024. The annualized dividend rate was $1.16 per share in fiscal 2025, compared to $1.13 per share in fiscal 2024.
•The Company paid $950 million of its senior unsecured notes upon maturity on June 3, 2024.
•Proceeds from the issuance of long-term debt were $498 million in fiscal 2024, resulting from the Company's issuance of senior unsecured notes with an aggregate principal amount of $500 million.
Sources and Uses of Cash
The Company believes its balanced business model, with diversification across raw material inputs, channels, and categories, provides stability in ever-changing economic environments. The Company maintains a disciplined capital allocation strategy and uses a waterfall approach, which focuses first on core uses of cash, such as capital expenditures to maintain facilities, dividend returns to investors, mandatory debt repayments, and fulfillment of pension obligations. Next, the Company looks to strategic items in support of growth initiatives, such as other capital projects, acquisitions, additional dividend increases, and working capital investments. Finally, the Company evaluates opportunistic uses, including incremental debt repayment and share repurchases.
The Company believes its anticipated income from operations, cash on hand, borrowing capacity under the current unsecured revolving credit facility, and access to capital markets will be adequate to meet all short-term and long-term commitments. The Company continues to look for opportunities to make investments and acquisitions that align with its strategic priorities. The Company maintains multiple liquidity sources, including its ability to issue debt, which supports strategic investments and acquisitions.
Dividend Payments
The Company remains committed to providing returns to investors through cash dividends on its common stock. The Company has paid 389 consecutive quarterly dividends since becoming a public company in 1928. On November 24, 2025, the Board of Directors authorized a quarterly dividend for the first quarter of fiscal 2026 of $0.2925 per share, a 1% increase from the prior year.
Capital Expenditures
Capital expenditures are allocated to required maintenance and growth opportunities based on the needs of the business. Capital expenditures supporting growth opportunities in fiscal 2026 are expected to focus on projects related to infrastructure, new data and technology, and equipment upgrades. Capital expenditures for fiscal 2026 are estimated to be $260 million to $290 million.
Debt
As of October 26, 2025, the Company’s outstanding debt included $2.9 billion of fixed rate unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051 with interest payable semi-annually. During fiscal 2025, the Company made $73 million of interest payments, and the Company expects to make $73 million of interest payments in fiscal 2026 on these notes. See Note M - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.
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Borrowing Capacity
As a source of short-term financing, the Company maintains a $750 million unsecured revolving credit facility. The maximum commitment under this credit facility may be further increased by $375 million upon the satisfaction of certain conditions. Extensions of credit under the facility may be applied by the Company to refinance existing indebtedness and for working capital and other general corporate purposes, including acquisition funding, and may be made in the form of revolving loans, swing line loans, and letters of credit. The lending commitments under the facility are scheduled to expire on March 25, 2030, at which time the Company will be required to pay in full all obligations then outstanding. As of October 26, 2025, the Company had no outstanding borrowings under this facility.
Debt Covenants
The Company’s debt agreements contain customary terms and conditions including representations, warranties, and covenants. These debt covenants limit the ability of the Company to, among other things, incur debt for borrowed money secured by certain liens, or engage in certain sale and leaseback transactions, and the covenants require the Company to maintain certain consolidated financial ratios. As of October 26, 2025, the Company was in compliance with all covenants in its debt agreements and expects to maintain compliance in the future.
Cash Held by International Subsidiaries
As of October 26, 2025, the Company’s international subsidiaries held $218 million of cash and cash equivalents. During the third quarter of fiscal 2025, the Company repatriated $44 million in cash from an international subsidiary and recognized foreign withholding taxes on the one-time distribution. The Company maintains all undistributed earnings as permanently reinvested. The Company evaluates the balance and uses of cash held internationally based on the needs of the business.
Share Repurchases
The Company is authorized to repurchase 3,677,494 shares of common stock as part of an existing plan approved by the Company’s Board of Directors. Under the share repurchase authorization, the Company may repurchase shares periodically, depending on market conditions and other factors, and may do so in open market purchases or privately negotiated transactions. The share repurchase authorization has no expiration date. The Company did not repurchase any shares of stock during fiscal 2025. The Company continues to evaluate share repurchases as part of its capital allocation strategy.
Contractual Obligations
The Company’s material cash commitments as of October 26, 2025, are as follows:
In millions Payments Due by Periods
Total Less than 1 year 1-3 years 3-5 years More than 5 years
Pension & Other Postretirement Benefit Payments(3) 301 30 63 63 145
(1)The Company commits to purchase quantities of livestock, grain, and other raw materials to ensure a steady supply of production inputs. The Company uses hedging programs to manage price risk associated with a portion of the future grain and hog commitments. The purchase commitments listed above do not reflect the impact of the hedging instruments that manage the risk of fluctuating commodity markets. See Note G - Derivatives and Hedging and Note K - Commitments and Contingencies of the Notes to the Consolidated Financial Statements for additional information.
(2) As of October 26, 2025, the Company’s outstanding debt included unsecured senior notes due in fiscal 2027, 2028, 2030, and 2051. The Company is required by certain covenants in its debt agreements to maintain specified levels of financial ratios and financial position. See Note M - Long-term Debt and Other Borrowing Arrangements of the Notes to the Consolidated Financial Statements for additional information.
(3) Represents pension and other postretirement benefit payments related to the Company’s unfunded defined benefit plans. Benefit payments reflect expectations for the next ten years as estimates are not readily available beyond that point. See Note H - Pension and Other Postretirement Benefits of the Notes to the Consolidated Financial Statements for additional information.
(4) See Note L - Leases of the Notes to the Consolidated Financial Statements for additional detail. Lease payments exclude $6 million of legally binding minimum lease payments for leases signed but not yet commenced.
(5) Includes obligations related to infrastructure improvements supporting various manufacturing facilities, a media advertising agreement, and the construction and lease of an aircraft. Other Commitments excludes $38 million for a 20-year infrastructure improvement agreement entered into subsequent to the end of the fiscal year.
Off Balance Sheet Arrangements
As of October 26, 2025, the Company had $48 million of standby letters of credit issued on its behalf. The standby letters of credit are primarily related to the Company’s self-insured workers' compensation programs. This amount includes revocable standby letters of credit totaling $3 million for obligations of an affiliated party that may arise under workers' compensation claims. Letters of credit are not reflected on the Consolidated Statements of Financial Position.
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During fiscal 2025, the Company entered into a purchase agreement related to the construction and lease of a corporate aircraft. As part of the agreement, a third party will make progress payments to the supplier on the Company's behalf. In exchange, the Company expects to enter into a lease arrangement with the third party once the aircraft is delivered. Progress payments made by the third party are subject to reimbursement through a promissory obligation. As of October 26, 2025, $11.5 million of the approximately $28.7 million commitment has been financed by the third party. The Company expects to take possession of the aircraft in fiscal 2027.
CRITICAL ACCOUNTING ESTIMATES
Management’s discussion and analysis of financial condition and results of operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates, judgments, and assumptions that can have a meaningful effect on the reporting of consolidated financial statements. See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional information.
Critical accounting estimates are defined as those reflective of significant judgments, estimates and uncertainties, which may result in materially different results under different assumptions and conditions. The Company believes the following are its critical accounting estimates:
Trade Promotions
Description: The Company promotes products through consumer incentives and trade promotions. These promotional programs include, but are not limited to, discounts, slotting fees, coupons, rebates, and in-store display incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to revenue and a corresponding accrued liability based on amounts estimated as variable consideration.
Judgments and Uncertainties: The Company estimates variable consideration associated with promotional programs using the expected value method to determine the total expected consideration. Estimating variable consideration requires judgment and is based largely on an assessment of anticipated performance informed by historical experience, expected participation, and current market trends.
Sensitivity of Estimate to Change: The liability relating to these promotional activities is based on a review of the outstanding contracts for which performance has taken place, but which remain unpaid. As of October 26, 2025, the Company had trade promotion liabilities of $85.9 million recorded in Accrued Marketing Expenses.
Income Taxes
Description: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law. Changes in enacted tax rates are reflected in the tax provision as they occur.
Judgments and Uncertainties: The Company computes its provision for income taxes based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it operates. Judgment is required in evaluating the Company’s tax positions and determining its annual tax provision.
Sensitivity of Estimate to Change: While the Company considers all of its tax positions fully supportable, the Company is occasionally challenged by various tax authorities regarding the amount of taxes due. The Company recognizes a tax position in its financial statements when it is more likely than not the position will be sustained upon examination, based on its technical merits. The position is then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. A change in judgment related to the expected ultimate resolution of uncertain tax positions will be recognized in earnings in the quarter of such change. As of October 26, 2025, the Company had $20.2 million of unrecognized tax benefits, including estimated interest and penalties, recorded in Other Long-term Liabilities.
Goodwill and Other Indefinite-Lived Intangibles
Description: Other indefinite-lived intangible assets primarily include trade names obtained through business acquisitions which are originally recorded at their estimated fair values at the date of acquisition. Goodwill is the residual after allocating the purchase price to net assets acquired and is allocated across the Company’s reporting units: Retail, Foodservice, and International. Goodwill and indefinite-lived intangible assets are not amortized but tested annually for impairment, or more frequently if impairment indicators arise. If the carrying value of the reporting unit or indefinite-lived intangible asset exceeds the estimated fair value, it is considered impaired which requires a reduction to earnings. See Note A - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for additional details regarding the Company’s procedures.
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Judgments and Uncertainties: Determining whether impairment indicators exist and estimating the fair value of the Company’s goodwill reporting units and indefinite-lived intangible assets for impairment testing requires significant judgment. Indefinite-lived trade names are evaluated for impairment using an income approach utilizing the relief from royalty method. Significant assumptions include royalty rate, annual projected revenue, discount rate, and estimated long-term growth rate. Estimating the fair value of goodwill reporting units using the discounted cash flow model requires management to make assumptions and projections of future cash flows, revenues, earnings, discount rates, long-term growth rates, and other factors. While sensitivity analysis may be provided for individual assumptions, such analysis may not reflect the combined effect of changes simultaneously impacting multiple assumptions.
Sensitivity of Estimate to Change: The assumptions used to assess impairment consider historical trends, macroeconomic conditions, and projections consistent with the Company’s operating strategy. Changes in these estimates can have a significant impact on the assessment of fair value which could result in material impairment losses. Goodwill reporting units and indefinite-lived intangible assets with less than a 20 percent excess of estimated fair value over carrying amount are considered at heightened risk of impairment.
During the fourth quarter of fiscal 2025, the Company elected to perform a quantitative assessment of goodwill. No goodwill impairment charges were recorded as a result of the testing. The estimated fair value for the Retail and Foodservice reporting units exceeded the calculated carrying value by more than 20 percent. The International reporting unit, with a goodwill carrying value of $258.9 million as of October 26, 2025, was identified as being at heightened risk of impairment. A 10 percent decline in projected cash flow or 100 basis-point increase in the discount rate for any reporting unit would not result in a material impairment.
During the fourth quarter of fiscal 2025, the Company also elected to perform quantitative impairment testing for indefinite-lived intangible assets. As a result of this testing, impairments were recorded on the Planters® and Chi-Chi's® trade names for $59.1 million and $2.9 million, respectively. Additionally, the Justin's® trade name was identified as being at heightened risk of impairment. Fair value estimates used in impairment testing for the Justin's® trade name assumed continued use and did not incorporate potential changes in ownership structure (see Note B - Acquisitions and Divestitures of the Notes to the Consolidated Financial Statements). After the fiscal 2025 quantitative assessments, the carrying value of indefinite-lived intangible assets at heightened risk for impairment, including the assets impaired, totaled $683.3 million. For indefinite-lived intangible assets not at heightened risk of impairment, a 10 percent decline in forecasted revenue or 100 basis-point increase in the discount rate would not result in a material impairment.
Pension and Other Postretirement Benefits
Description: The Company sponsors several defined benefit pension and postretirement health care benefit plans and recognizes the associated expenses, assets, and liabilities.
Judgments and Uncertainties: In accounting for these employment costs and the associated benefit obligations, management must make a variety of assumptions and estimates including mortality rates, discount rates, compensation increases, expected return on plan assets, health care cost trend rates, and interest crediting rates. The Company considers historical data as well as current facts and circumstances when determining these estimates. Expected long-term rate of return on plan assets is based on fair value, composition of the asset portfolio, historical long-term rates of return, and estimates of future performance. Mortality and discount rates used are based on actuarial tables elected at each fiscal year-end. The Company uses third-party specialists to assist in the determination of these estimates and the calculation of certain employee benefit expenses and the outstanding obligation.
Benefit plan assets are reported at fair value. Due to the lack of readily available market prices, fund managers value private equity investments using models that include a combination of available market data and unobservable inputs that consider earnings multiples, discounted cash flows, and other qualitative and quantitative factors. Other benefit plan investments are measured at net asset value (NAV) per share of the fund’s underlying investments as a practical expedient.
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Sensitivity of Estimate to Change: The assumed discount rate, expected long-term rate of return on plan assets, rate of future compensation increase, interest crediting rate, and the health care cost trend rate have a significant impact on the amounts reported for the benefit plans. For the year ended October 26, 2025, the Company had $1.4 billion and $172.6 million in pension benefit obligation and postretirement benefit obligation, respectively. For fiscal 2026, the Company expects pension benefit costs of $32.3 million and postretirement benefit costs of $7.7 million. A one-percentage-point change in these rates would have the following effects:
One-Percentage-Point
Benefit Cost Benefit Obligation
In millions Increase Decrease Increase Decrease
Pension Benefits
Expected Long-term Rate of Return on Plan Assets (13.2) 13.2 — —
Rate of Future Compensation Increase 1.5 (1.2) 2.0 (1.4)
Postretirement Benefits
As of October 26, 2025, the Company had $82.3 million of private equity and real estate funds and $685.8 million of investments carried at NAV. These valuations are subject to judgments and assumptions of the funds which may prove to be incorrect, resulting in risks of incorrect valuation of these investments. The Company seeks to mitigate these risks by performing various procedures, such as comparing the expected returns based on appropriate benchmarks to reported market values and performing price tests on certain underlying investments. Additionally, a look back comparison of values from audited financial statements to unaudited statements and roll forward calculations of known cash activity are completed to obtain further assurance of reporting accuracy. These procedures cover a majority of the value held in the private equity and NAV investments for each investment type. Variances larger than specified thresholds are investigated further to verify the reported values are reasonable.
See Note H - Pension and Other Postretirement Benefits of the Notes to the Consolidated Financial Statements for additional information.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to various forms of market risk as a part of its ongoing business practices including commodity price risk, interest rate risk, foreign currency exchange rate risk, investment risk, and concentration of credit risk, among others. The Company may use derivative financial and commodity instruments to manage these risks and does not enter into these instruments for trading or speculative purposes.
Commodity Price Risk: The Company is subject to commodity price risk through grain, lean hog, natural gas, and diesel fuel markets. To reduce these exposures and offset the fluctuations caused by changes in market conditions, the Company employs hedging programs. These hedging programs utilize futures, swaps, and options contracts and are accounted for as cash flow hedges. The fair value of the Company’s cash flow commodity contracts as of October 26, 2025, was $5.5 million compared to $(5.9) million as of October 27, 2024. The Company measures its market risk exposure on its cash flow commodity contracts using a sensitivity analysis, which considers a hypothetical 10 percent change in the market prices. A 10 percent decrease in the market price would have negatively impacted the fair value of the Company’s cash flow commodity contracts as of October 26, 2025, by $29.3 million, which in turn would have lowered the Company’s future cost on purchased commodities by a similar amount.
Interest Rate Risk: The Company is subject to interest rate risk primarily from changes in fair value of long-term fixed rate debt. The Company’s long-term debt had a fair value of $2.6 billion as of October 26, 2025, compared to $2.5 billion as of October 27, 2024. The Company measures its market risk exposure of long-term fixed rate debt using a sensitivity analysis, which considers a hypothetical 10 percent change in interest rates. A 10 percent decrease in interest rates would have positively impacted the fair value of the Company’s long-term debt as of October 26, 2025, by $62.2 million. A 10 percent increase would have negatively impacted the long-term debt by $57.9 million.
Foreign Currency Exchange Rate Risk: The fair values of certain Company assets and liabilities are subject to fluctuations in foreign currency exchange rates. The Company’s net asset position in foreign currencies was $0.8 billion as of October 26, 2025, and $1.2 billion as of October 27, 2024, with most of the exposure existing in Chinese yuan, Indonesian rupiah, and Philippine peso. The Company does not use market risk sensitive instruments to manage this risk.
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Investment Risk: The Company has corporate-owned life insurance policies classified as trading securities as part of a rabbi trust to fund certain supplemental executive retirement plans and deferred income plans. The rabbi trust is invested primarily in fixed income funds. The Company is subject to market risk due to fluctuations in the value of the remaining investments. As of October 26, 2025, the balance of these securities totaled $219.2 million compared to $209.7 million as of October 27, 2024. A hypothetical 10 percent decline in the value of the investments not held in fixed income funds would have negatively impacted the Company’s pre-tax earnings by approximately $10.6 million, while a 10 percent increase in value would have a positive impact of the same amount.
Concentration of Credit Risk: The Company is exposed to credit risk from its customers. The Company regularly assesses the credit worthiness of its customers. As of October 26, 2025, and October 27, 2024, one customer accounted for more than 10 percent of net accounts receivable.
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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Management
Management’s Responsibility for Financial Statements
The accompanying financial statements were prepared by the management of Hormel Foods Corporation, which is responsible for their integrity and objectivity. These statements have been prepared in accordance with U.S. generally accepted accounting principles appropriate in the circumstances and, as such, include amounts that are based on our best estimates and judgments.
Hormel Foods Corporation has developed a system of internal controls designed to assure that the records reflect the transactions of the Company and that the established policies and procedures are adhered to. This system is augmented by well-communicated written policies and procedures, a strong program of internal audit and well-qualified personnel.
These financial statements have been audited by Ernst & Young LLP, an independent registered public accounting firm, and their report is included herein. The audit was conducted in accordance with the standards of the U.S. Public Company Accounting Oversight Board and includes an evaluation of the Company’s accounting and financial controls and tests of transactions.
The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with the independent auditors, management, and the internal auditors to assure that each is carrying out its responsibilities. Both Ernst & Young LLP and our internal auditors have full and free access to the Audit Committee, with or without the presence of management, to discuss the results of their audit work and their opinions on the adequacy of internal controls and the quality of financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Management of Hormel Foods Corporation is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined in Exchange Act Rule 13a–15(f). The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Under the supervision, and with the participation of management, including the Interim Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).
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 26, 2025. Our internal control over financial reporting as of October 26, 2025, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.
/s/ Jeffrey M. Ettinger /s/ Paul R. Kuehneman
Jeffrey M. Ettinger Paul R. Kuehneman
Interim Chief Executive Officer Interim Chief Financial Officer and Controller
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Hormel Foods Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Hormel Foods Corporation’s internal control over financial reporting as of October 26, 2025, 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 26, 2025, 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 consolidated statements of financial position of the Company as of October 26, 2025 and October 27, 2024, 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 26, 2025, and the related notes and financial statement schedule listed in the Index at Item 15 and our report dated December 5, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
December 5, 2025
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Hormel Foods Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Hormel Foods Corporation (the Company) as of October 26, 2025 and October 27, 2024, 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 26, 2025, 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 26, 2025 and October 27, 2024, and the results of its operations and its cash flows for each of the three years in the period ended October 26, 2025, 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 26, 2025, 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 5, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Pension Plan Assets
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Indefinite-lived Intangible Asset Impairment Analysis of Planters Trade Name
/s/ Ernst & Young LLP
We have served as the Company's auditor since 1931.
Minneapolis, Minnesota
December 5, 2025
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Consolidated Statements of Operations
Fiscal Year Ended
October 26, October 27, October 29,
Net Earnings Per Share:
Weighted-average Shares Outstanding:
See Notes to the Consolidated Financial Statements
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Consolidated Statements of Comprehensive Income
Fiscal Year Ended
October 26, October 27, October 29,
Other Comprehensive Income (Loss), Net of Tax:
See Notes to the Consolidated Financial Statements
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Consolidated Statements of Financial Position
October 26, October 27,
In thousands, except share and per share amounts 2025 2024
Assets
Prepaid Expenses and Other Current Assets 73,187 35,265
Liabilities and Shareholders’ Investment
Current Maturities of Long-term Debt 6,646 7,813
Shareholders’ Investment
See Notes to the Consolidated Financial Statements
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Consolidated Statements of Changes in Shareholders’ Investment
Hormel Foods Corporation Shareholders
share amounts Shares Amount Shares Amount
Contribution from Noncontrolling Interest 6,508 6,508
Contribution from Noncontrolling Interest 4,969 4,969
See Notes to the Consolidated Financial Statements
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Consolidated Statements of Cash Flows
Fiscal Year Ended
October 26, October 27, October 29,
Operating Activities
Adjustments to Reconcile to Net Cash Provided by (Used in) Operating Activities:
Loss (Gain) on Sale of Business 10,800 (4,399) —
Changes in Operating Assets and Liabilities, Net of Divestitures:
Increase (Decrease) in Pension and Postretirement Benefits 31,760 24,350 18,272
Investing Activities
Net Sale (Purchase) of Securities (6,936) (6,088) (42)
Proceeds from Sales of Property, Plant, and Equipment 132 474 5,322
Financing Activities
Payment of Debt Issuance Costs — (1,105) —
Repayments of Long-term Debt and Finance Leases (7,830) (959,017) (8,827)
Share Repurchase — — (12,303)
Proceeds from Noncontrolling Interest 4,969 6,508 —
Effect of Exchange Rate Changes on Cash (3,866) 5,614 (3,814)
Supplemental Non-cash Financing and Investing Activities:
See Notes to the Consolidated Financial Statements
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Notes to the Consolidated Financial Statements
Note A
Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements include the accounts of Hormel Foods Corporation (the Company) and all its majority-owned subsidiaries after elimination of intercompany accounts, transactions, and profits. Financial information from certain foreign subsidiaries is reported on a one-month lag.
Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Rounding: Certain amounts in the consolidated financial statements and associated notes may not foot due to rounding. All percentages have been calculated using unrounded amounts.
Fiscal Year: The Company’s fiscal year ends on the last Sunday in October. Fiscal 2025, 2024, and 2023 consisted of 52 weeks. Fiscal 2026 will consist of 52 weeks.
Reclassifications: Certain prior year amounts have been reclassified to conform to the current year presentation.
•Consolidated Statements of Operations: Interest and Investment Income has been separated into Interest Income and Other Income (Expense), Net.
•Consolidated Statements of Financial Position: The major classes of Property, Plant, and Equipment are now disclosed in Note F - Property, Plant, and Equipment.
•Consolidated Statements of Cash Flows: The prior year Loss (Gain) on Sale of Business, previously included in Other Non-cash, Net, is now presented separately.
Cash and Cash Equivalents: The Company considers all investments with an original maturity of three months or less on their acquisition date to be cash equivalents. The Company’s cash equivalents as of October 26, 2025, and October 27, 2024, consisted primarily of bank deposits, money market funds, or other highly liquid investment accounts. The net asset value (NAV) of the Company’s money market funds is based on the market value of the securities in the portfolio.
Fair Value Measurements: Pursuant to the provisions of Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, the Company measures certain assets and liabilities at fair value or discloses the fair value of certain assets and liabilities recorded at cost in the consolidated financial statements. Fair value is calculated as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). ASC 820 establishes a fair value hierarchy which requires assets and liabilities measured at fair value to be categorized into one of three levels based on the inputs used in the valuation. The Company classifies assets and liabilities in their entirety based on the lowest level of input significant to the fair value measurement. The three levels are defined as follows:
Level 1 Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Observable inputs, other than those included in Level 1, based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets.
Level 3 Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances.
See additional discussion regarding the Company’s fair value measurements in Note G - Derivatives and Hedging, Note H - Pension and Other Postretirement Benefits, and Note J - Fair Value Measurements.
Deferred Compensation and Other Trading Securities: The Company maintains a rabbi trust to fund certain supplemental executive retirement plans and deferred compensation plans. The rabbi trust is reflected in Other Assets and deferred compensation liabilities in Other Long-term Liabilities. The assets held by the rabbi trust are classified as trading securities. Therefore, unrealized gains and losses associated with these investments are included in Other Income (Expense), Net.
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Inventories: Inventories are stated at the lower of cost or net realizable value. Cost is determined principally under the average cost method. Adjustments to the Company’s lower of cost or net realizable value inventory reserve are reflected in Cost of Products Sold.
Property, Plant, and Equipment: Property, Plant, and Equipment are stated at cost and the Company recognizes depreciation using the straight-line method over the estimated useful life of the assets. Costs associated with software developed or obtained for internal use, including third-party development fees incurred during the application development stage, are capitalized and amortized on a straight-line basis. Depreciation has been computed principally using asset lives of 20 to 40 years for buildings and 3 to 14 years for software and equipment.
Leases: The Company determines if an arrangement contains a lease at inception. Right-of-use assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at the commencement date. Leases with an initial term of twelve months or less are not recorded on the Consolidated Statements of Financial Position. The Company combines lease and non-lease components together in determining the minimum lease payments for all leases.
The length of the lease term used in recording right-of-use assets and lease liabilities is based on the contractually required lease term adjusted for any options to renew, early terminate, or purchase the lease that are reasonably certain of being exercised. Most leases include one or more options to renew or terminate. The exercise of lease renewal and termination options is at the Company’s discretion and generally is not reasonably certain at lease commencement. The Company’s lease agreements typically do not contain material residual value guarantees. The Company has one lease with an immaterial residual value guarantee that is included in the minimum lease payments.
Certain lease agreements include rental payment increases over the lease term that can be fixed or variable. Fixed payment increases and variable payment increases based on an index or rate are included in the initial lease liability using the index or rate at commencement date. Variable payment increases not based on an index or rate are recognized as incurred.
If the rate implicit in the lease is not readily determinable, the Company used its periodic incremental borrowing rate, based on the information available at commencement date, to determine the present value of future lease payments. Leases and right-of-use assets that existed prior to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842) were valued using the incremental borrowing rate on October 28, 2019.
Impairment of Long-lived Assets and Definite-lived Intangible Assets: Long-lived and definite-lived intangible assets are amortized over their estimated useful lives. The Company reviews long-lived assets and definite-lived intangible assets for impairment annually, or more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the assets, the carrying value is reduced to the estimated fair value.
During the fourth quarter of fiscal 2025, the Company completed its annual impairment testing of long-lived assets by performing qualitative assessments. The Company recorded no material impairment charges for long-lived assets in fiscal years 2025, 2024, or 2023. See additional discussion regarding the Company’s definite-lived intangible asset impairment testing in Note C - Goodwill and Intangible Assets.
Goodwill and Other Indefinite-Lived Intangibles: Indefinite-lived intangible assets are originally recorded at their estimated fair values at the date of acquisition. Goodwill is the residual after allocating the purchase price to net assets acquired. Acquired goodwill and other indefinite-lived intangible assets are allocated to reporting units that will receive the related benefits. Goodwill and indefinite-lived intangible assets are tested annually for impairment during the fourth quarter or more frequently if impairment indicators arise. Goodwill and intangible impairment charges, when applicable, are reflected as Goodwill and Intangible Impairment in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows. The impairment charges are reflected in the segment with primary ownership of the asset.
See additional discussion regarding the Company’s goodwill and indefinite-lived intangible assets in Note C - Goodwill and Intangible Assets.
Goodwill
In conducting the annual impairment test for goodwill, the Company has the option to first assess qualitative factors to determine whether it is more likely than not (> 50 percent likelihood) the fair value of any reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines an impairment is more likely than not, the Company is required to perform a quantitative impairment test. Otherwise, no further analysis is required. Alternatively, the Company may elect to proceed directly to the quantitative impairment test.
In conducting a qualitative assessment, the Company analyzes actual and projected growth trends for net sales, gross margin, and segment profit for each reporting unit, as well as historical performance versus plan and the results of prior quantitative tests. Additionally, the Company assesses factors that may impact the reporting unit’s financial results such as
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macroeconomic conditions and the related impact, market-related exposures, plans to market for sale all or a portion of the business, competitive changes, new or discontinued product lines, and changes in key personnel.
If completed, the quantitative goodwill impairment test is performed at the reporting unit level. First, the fair value of each reporting unit is compared to its corresponding carrying value, including goodwill. The fair value of each reporting unit is estimated using discounted cash flow valuations (Level 3), which incorporate assumptions regarding future growth rates, terminal values, and discount rates. The estimates and assumptions used consider historical performance and are consistent with the assumptions used in determining future profit plans for each reporting unit, which are approved by the Company’s Board of Directors. If the quantitative assessment results in the carrying value exceeding the fair value of any reporting unit, the results from the quantitative analysis will be relied upon to determine both the existence and amount of goodwill impairment. An impairment loss will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit.
Indefinite-Lived Intangibles
In conducting the annual impairment test for its indefinite-lived intangible assets, the Company first performs a qualitative assessment to determine whether it is more likely than not (> 50 percent likelihood) an indefinite-lived intangible asset is impaired. If the Company concludes this is the case, a quantitative test for impairment must be performed. Otherwise, the Company does not need to perform a quantitative test.
In conducting the qualitative assessment, the Company analyzes growth rates for historical and projected net sales and the results of prior quantitative tests. Additionally, each operating segment assesses items that may impact the value of their intangible assets or the applicable royalty rates to determine if impairment may be indicated.
If performed, the quantitative impairment test compares the fair value and carrying amount of the indefinite-lived intangible asset. The fair value of indefinite-lived intangible assets is primarily determined on the basis of estimated discounted value using the relief from royalty method (Level 3), which incorporates assumptions regarding future sales projections, royalty rates, and discount rates. If the carrying amount exceeds fair value, the indefinite-lived intangible asset is considered impaired, and an impairment charge is recorded for the difference. Even if not required, the Company may elect to perform the quantitative test in order to gain further assurance in the qualitative assessment.
Pension and Other Postretirement Benefits: The Company has elected to use the corridor approach to recognize expenses related to its defined benefit pension and other postretirement benefit plans. Under the corridor approach, actuarial gains or losses resulting from experience and changes in assumptions are deferred and amortized over future periods. For the defined benefit pension plans, the unrecognized gains and losses are amortized when the net gain or loss exceeds 10 percent of the greater of the projected benefit obligation or the fair value of plan assets at the beginning of the year. For the other postretirement plans, the unrecognized gains and losses are amortized when the net gain or loss exceeds 10 percent of the accumulated pension benefit obligation at the beginning of the year. For plans with primarily active participants, net gains or losses in excess of the corridor are amortized over the average remaining service period of participating employees expected to receive benefits under those plans. For plans with primarily inactive participants, net gains or losses in excess of the corridor are amortized over the average remaining life of the participants receiving benefits under those plans. These non-service cost components of net pension and postretirement benefit cost are recorded within Other Income (Expense), Net.
Contingent Liabilities: The Company may be subject to investigations, legal proceedings, or claims related to the ongoing operation of its business, including claims both by and against the Company. Such proceedings typically involve claims related to product liability, contract disputes, antitrust regulations, wage and hour laws, employment practices, or other actions brought by employees, consumers, competitors, government agencies, or suppliers. The Company establishes accruals for its potential exposure for claims when losses become probable and reasonably estimable. Where the Company is able to reasonably estimate a range of probable losses, but no amount within the range is more likely than another, the Company records the amount at the low end of the range. The Company also discloses the nature of claims against the Company when losses are reasonably possible and material; in this situation, the Company also discloses an estimate of the possible loss, range of loss, or that an estimate cannot be made.
Foreign Currency Translation: Assets and liabilities denominated in foreign currency are translated at the current exchange rate as of the date of the Consolidated Statements of Financial Position. Amounts in the Consolidated Statements of Operations are translated at the average monthly exchange rate. Translation adjustments resulting from fluctuations in exchange rates are recorded as a component of Accumulated Other Comprehensive Loss.
When calculating foreign currency translation, the Company has deemed its foreign investments to be permanent in nature and has not provided for taxes on currency translation adjustments arising from converting the investment in a foreign currency to U.S. dollars.
Derivatives and Hedging Activity: The Company uses derivative instruments to manage its exposure to commodity prices and interest rates. Hedge accounting is used for cash flow and fair value hedging programs that qualify in accordance with ASC 815, Derivatives and Hedging. The Company has determined its designated hedging programs to be highly effective in offsetting the
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changes in fair value or cash flows generated by the items hedged. Effectiveness testing is performed on a quarterly basis to ascertain a high level of effectiveness for cash flow and fair value hedging programs. If the requirements of hedge accounting are no longer met, hedge accounting is discontinued immediately and any future changes to fair value are recorded directly through earnings.
The derivative instruments are recorded at fair value on the Consolidated Statements of Financial Position. The Company nets the derivative assets and liabilities for each of its commodity hedging programs, including cash collateral when a master netting arrangement exists between the Company and the counterparty to the derivative contract. The amount and timing of cash collateral balances may impact the classification of the commodity derivative on the Consolidated Statements of Financial Position. The net balance for commodity derivatives is included in Prepaid Expenses and Other Current Assets or Accounts Payable, as appropriate. The cash flow impacts from the derivative instruments are included in Operating Activities in the Consolidated Statements of Cash Flows.
Equity Method Investments: The Company has a number of investments for which its voting interests are in excess of 20 percent but not greater than 50 percent and for which there are no other indicators of control. The Company accounts for such investments under the equity method of accounting and its underlying share of each investee’s equity, along with any balances due to or from affiliates and the effect of foreign currency translation on the carrying value, is reported in Investments in Affiliates. The Company records its interest in the net earnings of its equity method investments, along with adjustments for unrealized profits on intra-entity transactions, within Equity in Earnings of Affiliates. Basis differences associated with definite-lived assets are amortized through Equity in Earnings of Affiliates over the associated useful lives. Financial results for certain entities are reported on a 30- to 90-day lag.
The Company uses the cumulative earnings approach to determine the cash flow presentation of distributions from equity method investments. Distributions received are reflected in Operating Activities in the Consolidated Statements of Cash Flows unless the cumulative distributions exceed the portion of the cumulative equity in earnings of the equity method investment. Distributions in excess of the cumulative equity in earnings are deemed to be returns of the investment and classified as Investing Activities in the Consolidated Statements of Cash Flows.
The Company regularly monitors and evaluates the fair value of its equity method investments. If events and circumstances, such as ongoing or projected decreases in earnings or significant business disruptions, indicate that a decline in the fair value of these assets has occurred and is other than temporary, the Company records an impairment charge in Equity in Earnings of Affiliates and reduces the carrying value in Investments in Affiliates.
See additional information pertaining to the Company’s equity method investments in Note D - Investments in Affiliates.
Revenue Recognition: The Company’s customer contracts predominantly contain a single performance obligation to fulfill customer orders for the purchase of specified products. Revenue from product sales is primarily identified by purchase orders (contracts), which in some cases are governed by a master sales agreement. The purchase orders in combination with the invoice typically specify quantity and product(s) ordered, shipping terms, and certain aspects of the transaction price including discounts. Contracts are at standalone pricing or governed by pricing lists or brackets. The Company’s revenue is recognized at the point in time when performance obligations have been satisfied and control of the product has transferred to the customer. This is typically once the ordered product is received or picked up by the customer. Revenue is recognized at the net consideration the Company expects to receive in exchange for the goods. The amount of net consideration recognized includes estimates of variable consideration, including costs for trade promotion programs, consumer incentives, allowances and discounts associated with distressed or potentially unsaleable products, returns, and other costs.
A majority of the Company’s revenue is short-term in nature with shipments within one year from order date. The Company’s payment terms generally range between seven to 60 days and vary by sales channel and other factors. The Company accounts for shipping and handling costs as contract fulfillment costs and excludes taxes imposed on and collected from customers in revenue producing transactions from the transaction price. The Company does not have significant deferred revenue or unbilled receivable balances as a result of transactions with customers. Costs to obtain contracts with a duration of one year or less are expensed and included in Selling, General, and Administrative.
The Company promotes products through advertising, consumer incentives, and trade promotions. These promotional programs include, but are not limited to, discounts, slotting fees, coupons, rebates, and in-store display incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to revenue and a corresponding accrued liability based on amounts estimated as variable consideration.
The Company discloses revenue by reportable segment and class of similar product in Note Q - Segment Reporting.
Allowance for Doubtful Accounts: The Company estimates the Allowance for Doubtful Accounts based on a combination of factors, evaluations, and historical data while considering current and future economic conditions.
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Advertising Expenses: Advertising costs are included in Selling, General, and Administrative and expensed when incurred. Advertising expenses include all media advertising but exclude the costs associated with samples, demonstrations, and market research. Advertising costs for fiscal 2025, 2024, and 2023 were $147.9 million, $163.3 million, and $160.1 million, respectively.
Shipping and Handling Costs: The Company’s shipping and handling expenses are included in Cost of Products Sold.
Research and Development Expenses: Research and development costs are expensed as incurred and are primarily included in Selling, General, and Administrative. Research and development expenses incurred for fiscal 2025, 2024, and 2023 were $35.2 million, $36.1 million, and $33.7 million, respectively.
Income Taxes: The Company records income taxes in accordance with the liability method of accounting. Deferred taxes are recognized for the estimated taxes ultimately payable or recoverable based on enacted tax law. Changes in enacted tax rates are reflected in the tax provision as they occur. The Company has elected to treat global intangible low-taxed income (GILTI) as a period cost.
In accordance with ASC 740, Income Taxes, the Company recognizes a tax position in its financial statements when it is more likely than not that the position will be sustained upon examination based on the technical merits of the position. That position is then measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Unrecognized tax benefits, including interest and penalties, are primarily recorded in Other Long-term Liabilities.
Stock-based Compensation: The Company records stock-based compensation expense in accordance with ASC 718, Compensation – Stock Compensation. The Company recognizes stock-based compensation expense ratably over the shorter of the vesting period or the grantee’s retirement eligibility date. These costs are primarily included in Selling, General, and Administrative. The Company estimates forfeitures at the time of grant based on historical experience and revises in subsequent periods if actual forfeitures differ.
Share Repurchases: The Company may purchase shares of its common stock through open-market and privately negotiated transactions pursuant to share repurchase authorizations approved by the Company's Board of Directors and at prices deemed appropriate by management. The timing and amount of repurchase transactions under the repurchase authorization depend on market conditions as well as corporate and regulatory considerations.
Supplemental Cash Flow Information: Non-cash Investment Activities presented in the Consolidated Statements of Cash Flows primarily consist of unrealized gains or losses on the Company’s rabbi trust. Changes in the value of these investments are presented in Other Income (Expense), Net.
Accounting Changes and Recent Accounting Pronouncements:
New Accounting Pronouncements Recently Adopted
Fiscal 2025
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and allows the disclosure of additional measures of a segment’s profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The Company adopted ASU 2023-07 in fiscal 2025. Refer to Note Q - Segment Reporting for the updated disclosures.
Fiscal 2024
No new accounting standards were adopted during fiscal 2024.
Fiscal 2023
No new accounting standards were adopted during fiscal 2023.
New Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The update is intended to enhance transparency and decision usefulness of annual income tax disclosures. The ASU updates income tax disclosure requirements by requiring specific categories and greater disaggregation within the rate reconciliation and disaggregation of income taxes paid by jurisdiction. The ASU is effective for the Company's fiscal year ending October 25, 2026. The Company is currently assessing the impact of adopting the updated provisions.
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In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. Subsequently, in January 2025, the FASB issued ASU 2025-01 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The new guidance is intended to provide investors more detailed disclosures around specific types of expenses. The new disclosures require certain details for expenses presented on the face of the Consolidated Statements of Operations as well as selling expenses to be presented in the notes to the financial statements. As clarified by ASU 2025-01, the guidance is effective for the Company's fiscal year ending October 29, 2028, and subsequent interim periods thereafter. The disclosure updates are required to be applied prospectively with the option for retrospective application. The Company is currently assessing the impact of adopting the updated guidance.
In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The new guidance is intended to modernize the accounting for internal-use software costs and better align recognition practices. The update introduces principles-based criteria entities must consider to begin capitalizing costs based on management authorization and project completion probability. The guidance is effective for the Company's fiscal year ending October 28, 2029, and subsequent interim periods thereafter, with early adoption permitted. Several transition approaches are available including prospective, retrospective, and a modified transition approach. The Company is currently assessing the impact, transition approach, and timing of adoption.
Recently issued accounting standards or pronouncements not disclosed have been excluded as they are currently not relevant to the Company.
Note B
Acquisitions and Divestitures
Divestitures: On October 18, 2024, the Company sold its equity interests in Hormel Health Labs, LLC (Hormel Health Labs) and related assets to Lyons Health Labs Holdco, LLC for $24.5 million. The divestiture resulted in a pre-tax gain of $3.9 million, net of transaction costs, which was recognized in Selling, General, and Administrative. Results of operations for Hormel Health Labs were reflected within the Foodservice segment through the date of divestiture.
On November 18, 2024, the Company sold its equity interests in a non-core sow operation, Mountain Prairie, LLC, and related assets to Chaparral Ranches, LLC for $13.6 million. The divestiture resulted in a pre-tax loss of $11.3 million, including transaction costs, which was recognized in Selling, General, and Administrative. Results of operations for Mountain Prairie, LLC were primarily reflected within the Retail segment through the date of divestiture.
Subsequent to the end of the fiscal year, the Company announced a definitive agreement to sell a 51% controlling position in the Justin’s®business to Forward Consumer Partners, LLC based on a preliminary enterprise value of $125 million. The transaction is subject to customary closing conditions and is expected to be completed during the first quarter of fiscal 2026.
Note C
Goodwill and Intangible Assets
Goodwill: The change in the carrying amount of goodwill for the fiscal years ended October 26, 2025, and October 27, 2024, is:
In thousands Retail Foodservice International Total
Foreign Currency Translation — — (2,738) (2,738)
Foreign Currency Translation — — 600 600
The goodwill sold during fiscal 2024 was due to the divestiture of Hormel Health Labs.
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Intangible Assets:The Company's intangible assets by type are:
Definite-lived Intangible Assets
Indefinite-lived Intangible Assets
Other Indefinite-lived Intangibles — 184
Foreign Currency Translation (6,437) (6,655)
Amortization expense on intangible assets for the last three fiscal years is as follows:
In thousands AmortizationExpense
Estimated annual amortization expense on intangible assets for the five fiscal years after October 26, 2025, is as follows:
In thousands AmortizationExpense
Impairment Testing: During the fourth quarter of fiscal 2025, 2024, and 2023, the Company completed its annual impairment tests of goodwill, indefinite-lived intangible assets, and definite-lived intangible assets. Useful lives of intangible assets were also reviewed during this process with no material changes identified. See Note A - Summary of Significant Accounting Policies for additional information on the Company's impairment testing procedures.
Goodwill
During the fourth quarter of fiscal 2025, the Company elected to complete its annual goodwill impairment tests by performing quantitative assessments. No goodwill impairment was indicated in the annual assessments in fiscal 2025, 2024, and 2023.
Indefinite-lived Intangible Assets
During the fourth quarter of fiscal 2025, the Company elected to complete its annual indefinite-lived intangible impairment tests by performing quantitative assessments. The assessments indicated an impairment for the Planters® trade name, resulting in an impairment charge of $59.1 million in the Retail segment, which reduced the remaining carrying value to $615.9 million. Since the production disruption in fiscal 2024, the Company has monitored the brand’s impairment status through quarterly qualitative assessments. While the brand has shown signs of recovery, including operational stabilization and improved revenue, the updated projections provided in the fourth quarter of fiscal 2025 reflect long-term revenue growth lagging previous expectations leading to the impairment.
Additionally in the fourth quarter of fiscal 2025, impairment was indicated for the Chi-Chi's® trade name, resulting in an impairment charge of $2.9 million in the Retail segment, which reduced the remaining carrying value to $13.1 million. The impairment was driven by lower long-term forecasts influenced by recent performance trends.
In fiscal 2023, qualitative assessments indicated that the Justin’s®trade name was more likely than not impaired, prompting a quantitative impairment test. As a result of the quantitative impairment test, an impairment charge was recognized in the Retail segment of $28.4 million.
No other indefinite-lived intangible impairments were indicated in the fiscal 2025, 2024, and 2023 assessments.
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Definite-lived Intangible Assets
During the fourth quarter of fiscal 2025, the Company completed its annual definite-lived intangible asset impairment tests by performing qualitative assessments. The assessment indicated impairment of a private label customer relationship acquired in the purchase of Columbus Manufacturing, Inc., which resulted in an impairment charge of $8.8 million in the Retail segment, and representing the full carrying value of the asset. The impairment was driven by recent performance results and the Company's intent to shift strategic focus to Columbus® branded products.
No other definite-lived intangible impairments were indicated in fiscal 2025, 2024, or 2023.
Note D
Investments in Affiliates
Ownership: As of October 26, 2025, the Company's equity method investments include:
Segment Ownership Percentage
MegaMex Foods Retail 50%
The Purefoods-Hormel Company, Inc. International 40%
PT Garudafood Putra Putri Jaya Tbk. (Garudafood) International 30%
Okinawa Hormel LTD International 26%
Corporate Venturing Investments n/a 26% - 43%
Equity in Earnings: The Company's share of earnings from its equity method investments is presented in the Consolidated Statements of Operations as Equity in Earnings of Affiliates and further disclosed in Note Q - Segment Reporting. Equity in earnings from corporate venturing investments is not included in any of the reportable segments' measure of segment profit.
Distributions: Distributions received from equity method investees consists of:
In thousands Fiscal Year Ended
Basis Difference: The initial and unamortized basis differences as of October 26, 2025, are:
In thousands Initial Basis Difference Unamortized Basis Difference
(1) The Garudafood remaining unamortized basis difference balance includes the impact of foreign currency translation and impairment.
Fair Value: Based on quoted market prices, the fair value of the common stock held in Garudafood was $243.9 million as of October 24, 2025. The Company's other equity method investments do not have readily determinable fair values.
Impairment Charges: Based on an assessment in the fourth quarter of fiscal 2025 and in connection with the preparation of the Company's consolidated financial statements, the Company initiated an impairment review of its investment in Garudafood and concluded that the decline in fair value was no longer believed to be temporary. While the investment has provided positive equity in earnings and the Company continues to consider Garudafood a long-term strategic partner, performance has lagged original expectations and the business has experienced a sustained decline in market price. As a result, the Company recorded a $163.7 million impairment charge to reduce the carrying amount to estimated fair value. Fair value was determined using Garudafood's unadjusted quoted market price, a Level 1 input. The impairment charge is reflected in Equity in Earnings of Affiliates within the International segment. The remaining carrying value of the Garudafood investment is $247.1 million.
In fiscal 2023, the Company recorded a $7.0 million impairment charge related to a corporate venturing investment to recognize a decline in fair value not believed to be temporary. The impairment charge is reflected in Equity in Earnings of Affiliates.
The Company determined that no other-than-temporary impairment existed for its other equity method investments as of October 26, 2025.
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Note E
Inventories
Principal components of inventories are:
Note F
Property, Plant, and Equipment
Property, plant, and equipment consists of the following:
Note G
Derivatives and Hedging
The Company uses hedging programs to manage risk associated with various commodity purchases and interest rates. These programs utilize futures, swaps, and options contracts to manage the Company’s exposure to market fluctuations.
Cash Flow Commodity Hedges: The Company uses futures, swaps, and options contracts to offset price fluctuations in the Company’s future purchases of grain, lean hogs, natural gas, and diesel fuel. These contracts are designated as cash flow hedges; therefore, the related gains or losses are reported in Accumulated Other Comprehensive Loss (AOCL) and reclassified into earnings, through Cost of Products Sold, in the periods in which the hedged transactions affect earnings. The Company typically does not hedge its grain, natural gas, or diesel fuel exposure beyond two fiscal years and its lean hog exposure beyond one fiscal year.
Fair Value Commodity Hedges: The Company designates the futures it uses to minimize the price risk assumed when fixed forward priced contracts are offered to the Company’s lean hog and grain suppliers as fair value hedges. The programs are intended to make the forward priced commodities cost nearly the same as cash market purchases at the date of delivery. Changes in the fair value of the futures contracts and the offsetting gain or loss on the hedged purchase commitment are marked-to-market through earnings and recorded as a Current Asset and Current Liability, respectively. Gains or losses related to these fair value hedges are recognized through Cost of Products Sold in the periods in which the hedged transactions affect earnings.
Cash Flow Interest Rate Hedges: In the second quarter of fiscal 2021, the Company designated two separate interest rate locks as cash flow hedges to manage interest rate risk associated with anticipated debt transactions. The total notional amount of the Company’s locks was $1.25 billion. In the third quarter of fiscal 2021, the associated unsecured senior notes were issued with tenors of seven and 30 years and both locks were lifted (See Note M - Long-term Debt and Other Borrowing Arrangements).
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Mark-to-market gains and losses on these instruments were deferred as a component of AOCL. The resulting gain in AOCL is reclassified to Interest Expense in the period in which the hedged transactions affect earnings.
Fair Value Interest Rate Hedge: In the first quarter of fiscal 2022, the Company entered into an interest rate swap to protect against changes in the fair value of a portion of previously issued senior unsecured notes attributable to the change in the benchmark interest rate. The hedge specifically designated the last $450 million of the $950 million aggregate principal amount of the Company's 0.650% notes due June 2024 (the 2024 Notes). The Company terminated the swap in the fourth quarter of fiscal 2022. The loss related to the swap was recorded as a fair value hedging adjustment to the hedged debt and amortized through Interest Expense over the remaining life of the debt. In the third quarter of fiscal 2024, the fair value hedging adjustment was completely amortized to correspond with the payment of the 2024 Notes upon maturity.
Other Derivatives: The Company holds certain futures and swap contracts to manage the Company’s exposure to fluctuations in grain and pork commodity markets for which it has not applied hedge accounting. Activity related to derivatives not designated for hedge accounting was immaterial to the consolidated financial statements during fiscal 2025, 2024, and 2023.
Volume:The Company’s outstanding contracts related to its commodity hedging programs include:
Natural Gas 3.6 MMBtu 4.2 MMBtu
Diesel Fuel 7.5 gallons 4.0 gallons
Fair Value of Derivatives:The gross fair values of the Company’s derivative instruments designated as hedges are:
In thousands Assets Liabilities Assets Liabilities
(1) Per the terms of the Company's master netting arrangements, the gross fair value of the Company's commodity contracts was offset by the right to reclaim net cash collateral of $4.5 million (including cash payable of $5.5 million and $10.1 million of realized gain) as of October 26, 2025, and the right to reclaim net cash collateral of $10.9 million (including cash receivable of $26.5 million and $15.6 million of realized loss) as of October 27, 2024.
Fair Value Hedge - Assets (Liabilities): The carrying amount of the Company’s fair value hedged assets (liabilities) are:
Commodity Contracts Accounts Payable(1) $ (157) $ (2,902)
(1) Represents the carrying amount of fair value hedged assets and liabilities, which are offset by other assets included in master netting arrangements described above.
Accumulated Other Comprehensive Loss Impact: As of October 26, 2025, the Company included in AOCL pre-tax hedging gains of $5.4 million on commodity contracts and gains of $10.5 million related to interest rate settled positions. The Company expects to recognize the majority of the gains on commodity contracts over the next twelve months. Gains on interest rate contracts offset the hedged interest payments over the tenor of the associated debt instruments.
The pre-tax gains (losses) recognized in AOCL related to the Company’s derivative instruments are:
In thousands Fiscal Year Ended
(1) Represents the time value of commodity options excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in AOCL.
The pre-tax gains (losses) reclassified from AOCL into earnings related to the Company’s derivative instruments are:
In thousands Location on Consolidated Statements of Operations Fiscal Year Ended
Commodity Contracts Cost of Products Sold $ 5,341 $ (26,445)
Interest Rate Contracts Interest Expense 988 988
See Note I - Accumulated Other Comprehensive Loss for the after-tax impact of these gains or losses on Net Earnings.
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Consolidated Statements of Operations Impact: The effect on the Consolidated Statements of Operations for pre-tax gains (losses) related to the Company’s derivative instruments are:
Fiscal Year Ended
Cash Flow Hedges - Commodity Contracts
Amortization of Excluded Component from Options (877) (2,774) (5,835)
Fair Value Hedges - Commodity Contracts
Total Gain (Loss) on Commodity Contracts $ 6,813 $ (22,957) $ (3,955)
Cash Flow Hedges - Interest Rate Contracts
Gain (Loss) Reclassified from AOCL 988 988 988
Fair Value Hedge - Interest Rate Contracts
Total Gain (Loss) on Interest Rate Contracts $ 988 $ (6,463) $ (11,511)
(1) Represents gains or losses on commodity contracts designated as fair value hedges that were closed during the year, which were offset by a corresponding gain or loss on the underlying hedged purchase commitment. Additional gains or losses related to changes in the fair value of open commodity contracts, along with the offsetting gain or loss on the hedged purchase commitment, are also marked-to-market through earnings with no impact on a net basis.
(2) Represents the fair value hedging adjustment amortized through earnings.
Note H
Pension and Other Postretirement Benefits
The Company maintains several defined benefit pension plans for eligible employees. Benefits under defined benefit pension plans for certain bargaining unit employees are based on stated amounts for each year of service. For certain non-bargaining unit hourly and salaried employees, defined benefit plan provisions are determined using one of the following approaches: (i) a formula based on final average compensation, age, and years of service; (ii) a cash balance plan design; or (iii) a combination of both.
The Company sponsors several defined contribution benefit plans for eligible employees. Total costs associated with the Company’s defined contribution benefit plans in fiscal 2025, 2024, and 2023 were $42.7 million, $42.5 million, and $41.0 million, respectively.
Certain groups of employees are eligible for postretirement health or welfare benefits. Benefits for retired employees vary for each group depending on respective retirement dates and applicable plan coverage in effect. Contribution requirements for retired employees are governed by the Company's Retiree Health Care Payment Program and may change each year as the cost to provide coverage is determined.
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Net periodic cost of defined benefit plans included the following for fiscal years ending:
Pension Benefits Postretirement Benefits
Special Termination Benefits(1) 12,696 — — — — —
(1) As part of the corporate restructuring plan, the Company approved a voluntary early retirement program for eligible participants of the non-bargaining unit pension plan. The program included a one-time benefit enhancement based upon years of service, subject to minimum and maximum limits.
Actuarial gains and losses and any adjustments resulting from plan amendments are deferred and amortized over periods ranging from 8.3 to 10.9 years for pension benefits and from 12.2 to 12.8 years for postretirement benefits. The following amounts have not been recognized in net periodic pension cost and are included in Accumulated Other Comprehensive Loss:
Pension Benefits Postretirement Benefits
Unrecognized Prior Service (Cost) Credit $ (612) $ (8,435) $ 513 $ 525
The following is a reconciliation of the beginning and ending balances of the benefit obligation, fair value of plan assets, and funded status of the plans as of the measurement dates:
Pension Benefits Postretirement Benefits
Change in Benefit Obligation:
Special Termination Benefits 12,696 — — —
Participant Contributions — — 1,774 2,001
Medicare Part D Subsidy — — 212 110
(1) Actuarial losses in fiscal 2024 were primarily due to the change in the discount rate assumptions utilized in measuring plan obligations.
Pension Benefits Postretirement Benefits
Change in Plan Assets:
Fair Value of Plan Assets at Beginning of Year $ 1,327,760 $ 1,185,672 $ — $ —
Participant Contributions — — 1,774 2,001