UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~Form~~FORM 10-Q

~~[ X ]~~



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~April 28, 2019~~January 26, 2020

~~[ ]~~



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________________________ to ________________________________________

Commission File Number: 1-2402

HORMEL FOODS CORPORATION

(Exact name of registrant as specified in its charter)



Delaware		41-0319970
(State or other jurisdiction of incorporation or organization)		~~41-0319970~~ (I.R.S. Employer Identification No.)

1 Hormel Place



~~1 Hormel Place~~ ~~Austin, Minnesota~~ ~~(Address of principal executive offices)~~		~~55912-3680~~ ~~(Zip Code)~~

Austin, MN55912

~~(507) 437-5611~~(Address of Principal Executive Office, including zip code)

(507) 437-5611

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X ~~YES~~ ☒ Yes ☐ NONo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). X ☒ ~~YES~~Yes ☐ NONo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer X	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes X ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



~~Class~~	~~Outstanding at June 2, 2019~~
~~Common Stock~~	~~$.01465 par value~~	~~533,844,537~~
~~Common Stock Non-Voting~~	~~$.01 par value~~	~~–0–~~

TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION

Item 1.		Financial Statements
	~~CONSOLIDATED STATEMENTS OF FINANCIAL POSITION~~Consolidated Statements of Financial Position - ~~April 28, 2019~~January 26, 2020 and October ~~28, 2018~~
~~CONSOLIDATED STATEMENTS OF OPERATIONS - Three and Six Months Ended April 28, 2019 and April 29, 2018~~
~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - Three and Six Months Ended April 28, 2019 and April 29, 2018~~
~~CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ INVESTMENT - Three and Six Months Ended April 29, 2018 and Three and Six Months Ended April 28,~~27, 2019
	~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~Consolidated Statements of Operations - ~~Six~~Three Months Ended ~~April 28,~~January 26, 2020 and January 27, 2019 ~~and April 29, 2018~~
	~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Consolidated Statements of Comprehensive Income - Three Months Ended January 26, 2020 and January 27, 2019
	Consolidated Statements of Changes in Shareholders' Investment - Three Months Ended January 26, 2020 and January 27, 2019
	Consolidated Statements of Cash Flows - Three Months Ended January 26, 2020 and January 27, 2019
	Notes to Consolidated Financial Statements

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations
	~~CRITICAL ACCOUNTING POLICIES~~Critical Accounting Policies
	~~RESULTS OF OPERATIONS~~Results of Operations
		Overview
		Consolidated Results
		Segment Results
		Related Party Transactions
	~~LIQUIDITY AND CAPITAL RESOURCES~~Liquidity and Capital Resources
	~~FORWARD-LOOKING STATEMENTS~~Forward-looking Statements

Item 3.		Quantitative and Qualitative Disclosures About Market Risk

Item 4.		Controls and Procedures

PART II - OTHER INFORMATION

Item 1.		Legal Proceedings

Item 1A.		Risk Factors

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.		Exhibits

SIGNATURES

PART I – FINANCIAL INFORMATION

Item 1. ~~Financial Statements~~FINANCIAL STATEMENTS

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands, except share and per share amounts)



	April 28, 2019			October 28, 2018			January 26, 2020			October 27, 2019
	(Unaudited)						(Unaudited)
Assets
Current Assets
Cash and Cash Equivalents	$	639,327		$	459,136		$	724,419		$	672,901
Short-term Marketable Securities	6,675			—			14,808			14,736
Accounts Receivable	537,447			600,438			562,483			574,396
Inventories	1,030,574			963,527			1,057,277			1,042,362
Income Taxes Receivable	293			3,995			187			19,924
Prepaid Expenses	24,219			16,342			24,817			22,637
Other Current Assets	12,132			6,662			10,976			14,457
Total Current Assets	2,250,667			2,050,100			2,394,967			2,361,413

Goodwill	2,486,635			2,714,116			2,484,088			2,481,645

Other Intangibles	1,040,392			1,207,219			1,031,804			1,033,862

Pension Assets	205,229			195,153			141,892			135,915

Investments in and Receivables from Affiliates	276,478			273,153
Investments In and Receivables From Affiliates							290,777			289,157

Other Assets	181,777			189,951			251,353			177,901

Property, Plant and Equipment
Land	49,642			50,332			54,450			49,758
Buildings	1,011,242			956,260			1,138,514			1,083,902
Equipment	1,851,640			1,863,020			1,990,262			1,965,478
Construction in Progress	259,683			332,205			275,498			256,190
Less: Allowance for Depreciation	(1,677,640		)	(1,689,217		)	(1,763,497		)	(1,726,217		)
Net Property, Plant and Equipment	1,494,567			1,512,600			1,695,228			1,629,111

Total Assets	$	7,935,745		$	8,142,292		$	8,290,109		$	8,109,004

~~See Notes to Consolidated Financial Statements~~

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands, except share and per share amounts)



	April 28, 2019			October 28, 2018			January 26, 2020			October 27, 2019
	(Unaudited)						(Unaudited)
Liabilities and Shareholders' Investment
Current Liabilities
Accounts Payable	$	523,673		$	618,830		$	490,042		$	590,033
Accrued Expenses	59,144			48,298			64,702			62,031
Accrued Workers Compensation	24,935			24,594			27,116			24,272
Accrued Marketing Expenses	126,252			118,887			110,093			96,305
Employee Related Expenses	182,720			224,736			164,933			213,515
Taxes Payable	22,154			2,490			30,489			6,208
Interest and Dividends Payable	112,798			101,079			127,452			112,685
Current Maturities of Long-term Debt							8,259			—
Total Current Liabilities	1,051,676			1,138,914			1,023,085			1,105,049

Long-term Debt–Less Current Maturities	250,000			624,840			308,972			250,000

Pension and Post-retirement Benefits	488,479			477,557			539,972			536,490

Other Long-term Liabilities	101,378			99,070			145,923			115,356

Deferred Income Taxes	142,428			197,093			176,113			176,574

Shareholders' Investment
Preferred Stock, Par Value $.01 a Share–
Authorized 160,000,000 Shares; Issued–None
Common Stock, Non-voting, Par Value $.01 a Share–
Authorized 400,000,000 Shares; Issued–None
Common Stock, Par Value $.01465 a Share–	7,854			7,825			7,873			7,830
Authorized 1,600,000,000 Shares;
Issued 536,092,537 Shares April 28, 2019
Issued 534,135,484 Shares October 28, 2018
Issued 537,414,897 Shares January 26, 2020
Issued 534,488,746 Shares October 27, 2019
Additional Paid-in Capital	163,980			106,528			230,529			184,921
Accumulated Other Comprehensive Loss	(278,135		)	(243,498		)	(393,278		)	(399,500		)
Retained Earnings	6,003,637			5,729,956			6,246,641			6,128,207
Hormel Foods Corporation Shareholders' Investment	5,897,336			5,600,811			6,091,764			5,921,458
Noncontrolling Interest	4,448			4,007			4,281			4,077
Total Shareholders' Investment	5,901,784			5,604,818			6,096,045			5,925,535

Total Liabilities and Shareholders' Investment	$	7,935,745		$	8,142,292		$	8,290,109		$	8,109,004

See Notes to Consolidated Financial ~~Statements~~Statements

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended
	April 28, 2019			April 29, 2018 *			April 28, 2019			April 29, 2018			January 26, 2020			January 27, 2019
Net Sales	$	2,344,744		$	2,330,568		$	4,705,099		$	4,661,861		$	2,384,434		$	2,360,355
Cost of Products Sold	1,875,595			1,837,765			3,747,616			3,670,762			1,916,014			1,872,021
Gross Profit	469,149			492,803			957,483			991,099			468,421			488,334

Selling, General and Administrative	170,076			204,549			363,620			424,421			195,521			193,544
Equity in Earnings of Affiliates	13,291			13,486			24,749			37,017			7,588			11,458

Operating Income	312,364			301,740			618,612			603,695			280,488			306,248

Other Income and Expense:
Interest and Investment Income	11,297			2,144			18,171			10,083			13,251			6,874
Interest Expense	(5,615		)	(7,001		)	(11,762		)	(11,730		)	(3,577		)	(6,147		)

Earnings Before Income Taxes	318,046			296,883			625,021			602,048			290,162			306,975

Provision for Income Taxes	35,410			59,361			100,866			61,315			47,209			65,456

Net Earnings	282,636			237,522			524,155			540,733			242,953			241,519
Less: Net Earnings Attributable to Noncontrolling Interest	207			138			301			242
Less: Net Earnings (Loss) Attributable to Noncontrolling Interest													81			94
Net Earnings Attributable to Hormel Foods Corporation	$	282,429		$	237,384		$	523,854		$	540,491		$	242,872		$	241,425

Net Earnings Per Share
Basic	$	0.53		$	0.45		$	0.98		$	1.02		$	0.45		$	0.45
Diluted	$	0.52		$	0.44		$	0.96		$	1.00		$	0.45		$	0.44

Weighted-average Shares Outstanding
Basic	535,480			529,799			534,988			529,626			535,075			534,495
Diluted	546,330			542,811			546,724			543,146			544,815			547,118

*Adjusted due to the adoption of Accounting Standards Update (ASU) 2017-07, ~~Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715). See Note A - General.~~

See Notes to Consolidated Financial Statements

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)



	Three Months Ended					Six Months Ended					Three Months Ended
	April 28, 2019		April 29, 2018			April 28, 2019		April 29, 2018			January 26, 2020			January 27, 2019
Net Earnings	$	282,636	$	237,522		$	524,155	$	540,733		$	242,953		$	241,519
Other Comprehensive Income, Net of Tax:
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation	5,901		4,796			7,747		9,008			7,937			1,846
Pension and Other Benefits	1,770		2,487			5,209		4,973			3,512			3,439
Deferred Hedging	6,707		(613		)	6,346		(1,263		)	(5,103		)	(361		)
Total Other Comprehensive Income	14,378		6,670			19,302		12,718
Total Other Comprehensive Income (Loss)											6,346			4,924
Comprehensive Income	297,014		244,192			543,457		553,451			249,299			246,443
Less: Comprehensive Income Attributable to Noncontrolling Interest	378		385			441		638
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest											205			63
Comprehensive Income Attributable to Hormel Foods Corporation	$	296,636	$	243,807		$	543,016	$	552,813		$	249,094		$	246,380

See Notes to Consolidated Financial Statements

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ INVESTMENT

(in thousands, except per share amounts)

(Unaudited)

Three Months Ended April 29, 2018

Hormel Foods Corporation Shareholders

Common
Stock

Treasury
Stock

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Non-
controlling
Interest

Total
Shareholders’
Investment
Shares Amount Shares Amount
Balance at January 28, 2018 529,988
$ 7,764
—
$ —
$ 19,242
$ 5,366,501
$ (242,176 ) $ 4,043
$ 5,155,374
Net Earnings 237,384
138
237,522
Other Comprehensive Income 6,423
247
6,670
Purchases of Common Stock (593 ) (19,542 ) (19,542 )
Stock-based Compensation Expense 1
4,051
4,052
Exercise of Stock Options/Restricted Shares 738
9
7,212
7,221
Shares Retired (593 ) (8 ) 593
19,542
(19,534 ) —
Declared Cash Dividends – $0.1875 Per Share (99,664 ) (99,664 )
Balance at April 29, 2018 530,133
$ 7,766
—
$ —
$ 10,971
$ 5,504,221
$ (235,753 ) $ 4,428
$ 5,291,633

Three Months Ended April 28, 2019

Hormel Foods Corporation Shareholders
Common
Stock Treasury
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
(Loss) Income Non-
controlling
Interest Total
Shareholders’
Investment
Shares Amount Shares Amount
Balance at January 27, 2019 534,170
$ 7,826
—
$ —
$ 130,196
$ 5,856,029
$ (292,342 ) $ 4,070
$ 5,705,779
Net Earnings 282,429
207
282,636
Other Comprehensive Income 14,207
171
14,378
Purchases of Common Stock (562 ) (22,813 ) (22,813 )
Stock-based Compensation Expense 1
5,567
5,568
Exercise of Stock Options/Restricted Shares 2,485
35
28,390
28,425
Shares Retired (562 ) (8 ) 562
22,813
(173 ) (22,632 ) —
Declared Cash Dividends – $0.21 per share (112,189 ) (112,189 )
Balance at April 28, 2019 536,093
$ 7,854
—
$ —
$ 163,980
$ 6,003,637
$ (278,135 ) $ 4,448
$ 5,901,784

~~HORMEL FOODS CORPORATION~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ INVESTMENT~~

~~(in thousands, except per share amounts)~~

~~(Unaudited)~~


	Six Months Ended April 29, 2018

			Hormel Foods Corporation Shareholders
	Common Stock					Treasury Stock					Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss) Income				Non- controlling Interest				Total Shareholders’ Investment
	Shares		Amount			Shares		Amount
Balance at October 29, 2017	528,424		$	7,741		—		$	—					$	13,670			$				5,162,571									$	(248,075	)		$	3,790			$	4,939,697
Net Earnings															540,491								242				540,733
Other Comprehensive Income																			12,322				396				12,718
Purchases of Common Stock						(1,331	)	(44,741		)																	(44,741		)
Stock-based Compensation Expense			1								11,390																11,391
Exercise of Stock Options/Restricted Shares	3,040		43								30,633																30,676
Shares Retired	(1,331	)	(19		)	1,331		44,741			(44,722		)														—
Declared Cash Dividends – $0.375 Per Share															(198,841		)										(198,841		)
Balance at April 29, 2018	530,133		$	7,766		—		$	—		$	10,971			$	5,504,221			$	(235,753	)		$	4,428			$	5,291,633

	Six Months Ended April 28, 2019																													Three Months Ended January 27, 2019

			Hormel Foods Corporation Shareholders																														Hormel Foods Corporation Shareholders
	Common Stock					Treasury Stock					Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss) Income				Non- controlling Interest				Total Shareholders’ Investment			Common Stock							Treasury Stock							Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss) Income				Non- controlling Interest				Total Shareholders’ Investment
	Shares		Amount			Shares		Amount										Shares								Amount					Shares			Amount
Balance at October 28, 2018	534,135		$	7,825		—		$	—					$	106,528			$		5,729,956			$	(243,498	)				$	4,007			$	5,604,818		534,135			$	7,825			—			$	—			$	106,528			$	5,729,956			$	(243,498	)		$	4,007		$	5,604,818
Net Earnings															523,854								301				524,155																					241,425								94				241,519
Other Comprehensive Income																			19,162				140				19,302
Other Comprehensive Income (Loss)																																																				4,955				(31		)		4,924
Purchases of Common Stock						(1,627	)	(67,622		)																	(67,622		)								(1,065	)		(44,809		)																		(44,809		)
Stock-based Compensation Expense			1								13,513																13,514																	7,946																7,946
Exercise of Stock Options/Restricted Shares	3,585		52								44,371																44,423			1,100			17											15,981																15,998
Shares Retired	(1,627	)	(24		)	1,627		67,622			(432		)		(67,166		)										—			(1,065	)		(16		)		1,065			44,809				(259		)		(44,534		)										—
Cumulative Effect Adjustment from Adoption of:
Cumulative Effect Adjustment from the Adoption of:
ASU 2016-16															(10,475		)										(10,475		)																			(10,475		)										(10,475		)
ASU 2017-12															21				(21		)						—																					21				(21		)						—
ASU 2018-02															52,342				(53,778		)						(1,436		)																			52,342				(53,778		)						(1,436		)
Declared Cash Dividends – $0.42 Per Share															(224,895		)										(224,895		)
Balance at April 28, 2019	536,093		$	7,854		—		$	—		$	163,980			$	6,003,637			$	(278,135	)		$	4,448			$	5,901,784
Declared Cash Dividends – $0.21 per Share																																																(112,706		)										(112,706		)
Balance at January 27, 2019																														534,170			$	7,826			—			$	—			$	130,196			$	5,856,029			$	(292,342	)		$	4,070			$	5,705,779

																														Three Months Ended January 26, 2020

																																	Hormel Foods Corporation Shareholders
																														Common Stock							Treasury Stock							Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss) Income				Non- controlling Interest				Total Shareholders’ Investment
																														Shares			Amount				Shares			Amount
Balance at October 27, 2019																														534,489			$	7,830			—			$	—						$	184,921			$	6,128,207			$	(399,500	)		$	4,077			$	5,925,535
Net Earnings																																																242,872								81				242,953
Other Comprehensive Income (Loss)																																																				6,222				124				6,346
Purchases of Common Stock																																																												—
Stock-based Compensation Expense																																												9,298																9,298
Exercise of Stock Options/Restricted Shares																														2,926			43											36,310																36,353
Shares Retired																																																												—
Declared Cash Dividends – $0.2325 per Share																																																(124,438		)										(124,438		)
Balance at January 26, 2020																														537,415			$	7,873			—			$	—			$	230,529			$	6,246,641			$	(393,278	)		$	4,281			$	6,096,045

See Notes to Consolidated Financial Statements

HORMEL FOODS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Six Months Ended						Three Months Ended
	April 28, 2019			April 29, 2018			January 26, 2020			January 27, 2019
Operating Activities
Net Earnings	$	524,155		$	540,733		$	242,953		$	241,519
Adjustments to Reconcile to Net Cash Provided by Operating Activities:
Depreciation	74,458			74,081			41,194			36,848
Amortization of Intangibles	6,285			6,235
Amortization							8,135			3,170
Equity in Earnings of Affiliates	(24,749		)	(37,017		)	(7,588		)	(11,458		)
Distribution from Equity Method Investees	10,000			10,024			10,000			—
(Benefit) Provision for Deferred Income Taxes	(37,940		)	(74,486		)
Loss (Gain) on Property/Equipment Sales and Plant Facilities	458			(1,384		)
Gain on Sale of Business	(16,469		)	—
Provision for Deferred Income Taxes							49			125
(Gain) Loss on Property/Equipment Sales and Plant Facilities							(23		)	450
Non-cash Investment Activities	(17,632		)	(8,451		)	(12,761		)	(9,516		)
Stock-based Compensation Expense	13,514			11,391			9,298			7,946
Changes in Operating Assets and Liabilities, Net of Acquisitions:
Decrease (Increase) in Accounts Receivable	32,634			87,141			11,492			36,262
(Increase) Decrease in Inventories	(111,601		)	(59,094		)	(14,915		)	(30,901		)
(Increase) Decrease in Prepaid Expenses and Other Current Assets	(7,198		)	(3,926		)	(5,451		)	(5,625		)
Increase (Decrease) in Pension and Post-retirement Benefits	6,380			1,525			647			4,237
(Decrease) Increase in Accounts Payable and Accrued Expenses	(108,347		)	(122,847		)	(135,988		)	(147,318		)
Increase (Decrease) in Net Income Taxes Payable	21,645			19,416			41,376			61,686
Net Cash Provided by Operating Activities	365,593			443,341			188,418			187,425

Investing Activities
Net (Purchase) Sale of Securities	(6,664		)	—			(16		)	—
Proceeds from Sale of Business	473,885			—
Acquisitions of Businesses/Intangibles	—			(857,673		)
Purchases of Property/Equipment	(87,621		)	(141,160		)	(58,211		)	(39,430		)
Proceeds from Sales of Property/Equipment	31,167			6,439			1,114			30,305
(Increase) Decrease in Investments, Equity in Affiliates, and Other Assets	(110		)	2,906			(4,509		)	7,302
Proceeds from Company-owned Life Insurance	14,170			3,028			1,118			144
Net Cash Provided by (Used in) Investing Activities	424,827			(986,460		)
Net Cash (Used in) Provided by Investing Activities							(60,504		)	(1,679		)

Financing Activities
Net Proceeds from Short-term Debt	—			185,000
Proceeds from Long-term Debt	—			375,000
Repayments of Long-term Debt	(374,840		)	(237		)
Repayments of Long-term Debt and Finance Leases							(2,019		)	38
Dividends Paid on Common Stock	(212,287		)	(189,139		)	(112,249		)	(100,125		)
Share Repurchase	(67,622		)	(44,741		)	—			(44,809		)
Proceeds from Exercise of Stock Options	44,277			29,978			36,353			15,997
Net Cash (Used in) Provided by Financing Activities	(610,472		)	355,861			(77,915		)	(128,899		)

Effect of Exchange Rate Changes on Cash	243			4,707			1,519			(3,294		)
Increase (Decrease) in Cash and Cash Equivalents	180,191			(182,551		)	51,518			53,553
Cash and Cash Equivalents at Beginning of Year	459,136			444,122			672,901			459,136
Cash and Cash Equivalents at End of Quarter	$	639,327		$	261,571		$	724,419		$	512,689

See Notes to Consolidated Financial Statements

HORMEL FOODS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE A - ~~GENERAL~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accompanying unaudited consolidated financial statements of Hormel Foods Corporation (the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year. The Consolidated Statement of Financial Position at October ~~28, 2018,~~27, 2019, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended October ~~28, 2018.~~

~~Investments:~~ 27, 2019. The ~~Company maintains a rabbi trust~~significant accounting policies used in preparing these Consolidated Financial Statements are consistent with those described in Note A - Summary of Significant Accounting Policies to ~~fund certain supplemental executive retirement plans and deferred income plans. Under~~ the plans, the participants can defer certain types of compensation and elect to receive a return on the deferred amounts based on the changes in fair value of various investment options, primarily a variety of mutual funds. The Company has corporate-owned life insurance policies on certain participantsConsolidated Financial Statements in the ~~deferred compensation plans. The cash surrender value~~Form 10-K with the exception of the policies is included in Other Assets on the Consolidated Statements of Financial Position. The securities held by the trust are classified as trading securities. Therefore, unrealized gains and losses associated with these investments are includednew requirements adopted in the ~~Company’s earnings. Securities held by the trust generated gains~~first quarter of $4.8 million and $6.2 million for the second quarter and six months ended April 28, 2019, compared to losses of $2.2 million and gains of $1.2 million for the second quarter and six months ended April 29, 2018.fiscal 2020.

~~Supplemental Cash Flow Information:~~ Rounding:Non-cash investment activities presented on the Consolidated Statements of Cash Flows primarily consist of unrealized gains or losses on the Company’s rabbi trust. The noted investments are included in Other Assets on the Consolidated Statements of Financial Position. Changes in the value of these investments are included in the Company’s Net Earnings and are presented Certain amounts in the Consolidated Financial Statements ~~of Operations as Interest~~ and ~~Investment Income.~~

~~Guarantees:~~ The Company enters into various agreements guaranteeing specified obligations of affiliated parties. The Company’s guarantees either terminate in one year or remain in place until such time as the Company revokes the agreement. The Company currently provides revocable standby letters of credit totaling $2.4 millionassociated notes may not foot due to guarantee obligations that may arise under workers compensation claims of an affiliated party. This potential obligation is not reflected in the Company’s Consolidated Statements of Financial Position.

~~Reclassifications:~~ ~~Certain reclassifications of previously reported amounts~~rounding. All percentages have been made to conform to the current year presentation. The reclassifications had no impact on Net Earnings or Operating Income, other than those related to the adoption of ASU 2017-07 as described within the new accounting pronouncements adopted in the current fiscal year.calculated using unrounded amounts.

Accounting Changes and Recent Accounting Pronouncements:

New Accounting Pronouncements Adopted in Current Fiscal Year

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606). This topic converges the guidance within U.S. GAAP and international financial reporting standards and supersedes ASC 605,~~ ~~Revenue Recognition~~. The new standard requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard will also result in enhanced disclosures about revenue, provide guidance for transactions which were not previously addressed comprehensively, and improve guidance for multiple-element arrangements. The new guidance is effective for annual reporting periods beginning after December 15, 2017. The updated guidance is to be applied either retrospectively or by using a cumulative effect adjustment. The Company adopted the provisions of the new standard using the full retrospective method at the beginning of fiscal 2019. The Company made the following policy elections upon adoption: to account for shipping and handling costs as contract fulfillment costs and to exclude taxes imposed on and collected from customers in revenue producing transactions (e.g., sales, use, and value added taxes) from the transaction price. The Company will account for variable consideration using the expected value method. The Company also applied the practical expedient to not capitalize contract costs to obtain contracts with a duration of one year or less, which are expensed and included in the Consolidated

~~Statements of Operations. The Company did not have a cumulative effect adjustment as a result of adoption. Adoption of the new standard did not~~ have a material impact on the Company’s results of operations. Additional qualitative disclosures have been provided in Note B - Revenue Recognition and further disaggregation of revenues provided in Note N - Segment Reporting.

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory (Topic 740)~~. The updated guidance requires the recognition of the income tax consequences of an intra-entity asset transfer, other than transfers of inventory, when the transfer occurs. For intra-entity transfers of inventory, the income tax effects will continue to be deferred until the inventory has been sold to a third party. The updated guidance is effective for reporting periods beginning after December 15, 2017, with early adoption permitted only within the first interim period of a fiscal year. The guidance is required to be applied on a modified retrospective basis through a cumulative effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted the updated provisions at the beginning of fiscal 2019, resulting in a reclassification from prepaid tax assets to deferred tax assets. In addition, due to the impact of the lower tax rate on deferred tax balances resulting from the Tax Cuts and Jobs Act (Tax Act), the Company recognized a cumulative effect adjustment to Retained Earnings of $10.5 million.

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715)~~. The updated guidance requires an employer to report the service cost component of net periodic pension cost and net periodic post-retirement benefit cost in the same line item as other compensation costs. Other components of net periodic pension cost and net periodic post-retirement benefit cost must be presented in the income statement separately from the service cost component and outside income from operations. Additionally, only the service cost component is eligible for capitalization. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The updated guidance should be applied retrospectively for the presentation of components of net benefit cost and prospectively, for the capitalization of the service cost component of net benefit cost. The Company adopted the updated provisions at the beginning of fiscal 2019. The Company elected to utilize a practical expedient which allows the Company to use historical amounts disclosed in the Pension and Other Post-retirement Benefits footnote as an estimation basis for retrospectively applying the requirements to separately report the other components in the income statement. Due to the retrospective adoption, the Company reclassified $4.6 million and $9.2 million of non-service cost components of net periodic benefit costs out of Operating Income to Interest and Investment Income on the Consolidated Statements of Operations for the three months and six months ended April 29, 2018.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities (Topic 815)~~. The updated guidance expands an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. Entities will apply the amendments to cash flow and net investment hedge relationships that exist on the date of adoption using a modified retrospective approach. The presentation and disclosure requirements apply prospectively. The updated guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted in any interim or annual period. The Company early adopted the updated guidance at the beginning of fiscal 2019, therefore eliminating the requirement to separately measure and report hedge ineffectiveness. The Company applied the amendment to cash flow hedge relationships existing on the date of adoption using a modified retrospective approach.

~~Presentation and disclosure requirements were applied on a prospective basis. The adoption resulted in an immaterial adjustment from Retained Earnings to Accumulated Other Comprehensive Loss.~~

~~In February 2018, the FASB issued ASU 2018-02,~~ ~~Income Statement - Reporting Comprehensive Income (Topic 220).~~ The updated guidance allows entities to reclassify stranded income tax effects resulting from the Tax Act from accumulated other comprehensive income to retained earnings in their consolidated financial statements. Under the Tax Act, deferred taxes were adjusted to reflect the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate, which left the tax effects on items within accumulated other comprehensive income stranded at an inappropriate tax rate. The updated guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted in any interim period and should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The Company early adopted the updated provisions at the beginning of fiscal 2019, resulting in a reclassification of $53.8 million to Accumulated Other Comprehensive Loss.

~~In August 2018, the FASB issued ASU No. 2018-15,~~ ~~Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (Topic 350).~~ The amendments in the update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments are effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years and is to be applied either retrospectively or prospectively to all implementation costs incurred after the adoption date. Early adoption is permitted, including adoption in any interim period. The Company early adopted the updated provisions on a prospective basis at the beginning of fiscal 2019. The impact related to adoption was immaterial in the first six months of fiscal 2019, but the Company will continue to evaluate in future quarters.

~~New Accounting Pronouncements Not Yet Adopted~~

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12twelve months. Recognition, measurement, and presentation of expenses will depend on the classification as a finance or operating lease. The update also requires ~~certain~~expanded quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. In July 2018, the FASB issued ASU 2018-11, which provides an optional transition method in addition to the existing modified retrospective transition method allowing entities to recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The requirements of the new standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company ~~will adopt~~adopted the provisions of this new accounting standard at the beginning of fiscal ~~2020~~2020. For transition purposes, the Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification, and isinitial direct costs. The Company elected the comparative periods practical expedient, and as a result, the Company did not adjust its comparative period financial information or make the new required lease disclosures for periods before the effective date. Upon adoption, the Company recognized right-of-use assets of $112.7 million and lease liabilities of $114.1 million in the ~~process~~Consolidated Statements of ~~evaluating~~Financial Position as of October 28, 2019. The new standard did not have a material impact on the ~~impact~~Consolidated Statements of ~~adoption on its consolidated financial statements and related disclosures.~~Operations or the Consolidated Statements of Cash Flows.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic ~~958)~~326). The update provides guidance on the measurement of credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The amendment replaces the current incurred loss impairment ~~methodology~~approach with a methodology to reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The updated guidance is to be applied on a modified retrospective approach and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, and interim periods therein. The Company will adopt the provisions of this new accounting standard at the beginning of fiscal 2021 and is in the process of evaluating the ~~impact of adopting the updated provisions.~~impact.

~~In July 2018, the FASB issued ASU 2018-09,~~ ~~Codification Improvements~~. This amendment makes changes to a variety of topics to clarify, correct errors in, or make minor improvements to the Accounting Standards Codification (ASC). The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments do not require transition guidance and will be effective upon issuance of ASU 2018-09. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018. The Company is currently assessing the impact of adoption on its consolidated financial statements, results of operations, and cash flows.

In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance~~improves~~ requires entities to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. Amendments in this guidance also require disclosure of transfers into and out of Level 3 of the fair value hierarchy, purchases and issues of Level 3 assets and liabilities, and clarify that the measurement uncertainty disclosure is as of the reporting date. The guidance removes requirements onto disclose the amounts and reasons for transfers between Level 1 and Level 2, policy for timing between of transfers between levels, and the valuation processes for Level 3 fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company will adopt the provisions of this new accounting standard at the beginning of fiscal 2021 and is ~~currently assessing~~in the ~~timing and impact~~process of ~~adopting~~evaluating the ~~updated provisions.~~impact.

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans (Topic 715). The updated guidance ~~improves~~requires additional disclosures of weighted-average interest crediting rates for cash balance plans and an

explanation of the reasons for significant gains and losses related to changes in the benefit obligation. Amendments in the guidance also clarify the requirement to disclose the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets. The same disclosure is needed for the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. The guidance removes certain previous disclosure requirements no longer considered cost beneficial. The amendments are effective for ~~employers who sponsor defined benefit pension or other postretirement plans.~~fiscal years ending after December 15, 2020, with early adoption permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.

In December 2019, the FASB issued ASU 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740). The updated guidance simplifies the accounting for income taxes by removing certain exceptions in Topic 740 and clarifying and amending existing guidance. The amendments are effective for fiscal years ending after December 15, 2020, with early adoption permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.

~~Any other recently~~

Recently issued accounting standards or pronouncements not disclosed above have been excluded as they ~~either~~ are not relevant to the ~~Company, or they are not expected to have a material effect on its business practices, financial condition, results of operations, or disclosures.~~

~~NOTE B - REVENUE RECOGNITION~~

~~Revenue from Contracts with Customers:~~ ~~Effective October 29, 2018, the Company adopted ASC 606,~~ ~~Revenue from Contracts with Customers~~ using the full retrospective adoption method. The impact of adopting this guidance was immaterial to the Company’s financial statements and related disclosures. Under ASC 606, a contract with a customer is an agreement which both parties have approved, that creates enforceable rights and obligations, has commercial substance, where payment terms are identified, and collectability is probable. The Company’s customer contracts predominantly contain a single performance obligation to fulfill customer orders for the purchase of specified products. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. 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. Revenue is recognized as control of the promised good transfers to the customer in an amount reflective of the consideration the Company expects to receive in exchange for those goods. The Company’s revenue is recognized at a point in time when obligations under the terms of the agreement are satisfied once the shipped product is received or picked up by the customer. Revenues are 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, and allowances and discounts associated with distressed or potentially unsaleable products.

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 7 to 45 days and vary by sales channel and other factors.

The Company promotes products through advertising, consumer incentives, and trade promotions. These programs include discounts, slotting fees, coupons, rebates, and in-store display incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the sale price based on amounts estimated as variable consideration. The Company estimates variable consideration at the expected value method to determine the total consideration which the Company expects to be entitled. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available.

The Company elected to account for shipping and handling costs as contract fulfillment costs, and exclude taxes imposed on and collected from customers in revenue producing transactions (e.g., sales, use, and value added taxes) from the transaction price.

~~Disaggregation of Revenue:~~ ~~The Company discloses revenue by reportable segment. A reconciliation of these disaggregated revenues is provided in Note N - Segment Reporting.~~

~~Contract Balances:~~ ~~The Company does not have significant deferred revenue or unbilled receivable balances as a result of transactions with customers.~~

~~Contract Costs:~~ The Company elected to apply the practical expedient to not capitalize contract costs to obtain contracts with duration of one year or less, which are expensed and included in the Consolidated Statements of Operations.

Company.

NOTE CB - ACQUISITIONS AND DIVESTITURES

Divestiture: On April 15, 2019, the Company completed the sale of CytoSport, Inc. (CytoSport), which includes the Muscle Milk^® and Evolve^® brands, to PepsiCo, Inc., and received final proceeds of ~~$473.9 million, subject to working capital adjustments.~~$479.8 million. The divestiture resulted in a ~~pre-tax~~pretax gain of ~~approximately~~ $16.5 million recognized in Selling, General and Administrative expense and a tax benefit of $17.0 million recognized within the Provision for Income Taxes on the Consolidated Statements of Operations.

CytoSport's results of operations through the date of divestiture are included within Earnings Before Income Taxes in the Consolidated Statements of Operations and are reported within the Grocery Products and International & Other segments (See Note N - Segment Reporting).

~~Acquisition:~~ On November 27, 2017, the Company acquired Columbus Manufacturing, Inc. (Columbus), an authentic premium deli meat and salami company, from Chicago-based Arbor Investments for a final purchase price of $857.4 million. The transaction was funded with cash on hand and by borrowing $375.0 million under a term loan facility and $375.0 million under a revolving credit facility.

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

The acquisition was accounted for as a business combination using the acquisition method. The Company obtained an independent appraisal and completed purchase accounting for the acquisition in the fourth quarter of fiscal 2018. A final allocation of the purchase price to the acquired assets, liabilities, and goodwill is presented in the table below.

(in thousands)
Accounts receivable $ 21,199
Inventory 32,817
Prepaid and other assets 881
Other assets 936
Property, plant and equipment 83,662
Intangible assets 223,704
Goodwill 610,602
Current liabilities (21,366 )
Deferred taxes (95,077 )
Purchase price $ 857,358

Goodwill is calculated as the excess of the purchase price over the fair value of the net assets recognized. The $610.6 million of goodwill recorded as part of the acquisition primarily reflects the value of the potential to expand presence in the deli channel and serves as the catalyst for uniting all of the Company's deli businesses into one customer-facing organization. The goodwill balance is not expected to be deductible for income tax purposes. The goodwill and intangible assets have been allocated to the Refrigerated Foods segment.

~~Operating results for this acquisition have been included in the Company’s Consolidated Statements of Operations from the date of acquisition and are reflected in the Refrigerated Foods segment.~~

NOTE DC - INVENTORIES

Principal components of inventories are:

(in thousands) April 28,
2019 October 28,
2018
Finished products $ 586,427
$ 525,628
Raw materials and work-in-process 261,663
247,495
Operating supplies 117,956
126,644
Maintenance materials and parts 64,528
63,760
Total $ 1,030,574
$ 963,527



(in thousands)	January 26, 2020		October 27, 2019
Finished Products	$	628,124	$	604,035
Raw Materials and Work-in-Process	249,954		255,474
Operating Supplies	111,781		116,981
Maintenance Materials and Parts	67,419		65,872
Total	$	1,057,277	$	1,042,362

NOTE ED - GOODWILL AND INTANGIBLE ASSETS

Goodwill: The changes in the carrying amounts of goodwill for the three ~~and six~~ months ended ~~April 28, 2019,~~January 26, 2020, are presented in the table below. The reduction in goodwill for the quarter is due to the divestiture of CytoSport on April 15, 2019. Beginning balances have been reclassified to conform to the current year presentation between segments. See Note N - Segment Reporting and Note C - Acquisitions and Divestitures for additional information.as follows:

(in thousands) Grocery
Products Refrigerated
Foods JOTS International
& Other Total
Balance at January 27, 2019 $ 857,373
$ 1,458,692
$ 176,628
$ 224,057
$ 2,716,750
Goodwill sold (225,072 ) —
—
(4,945 ) (230,017 )
Foreign currency translation —
—
—
(98 ) (98 )
Balance at April 28, 2019 $ 632,301
$ 1,458,692
$ 176,628
$ 219,014
$ 2,486,635

(in thousands)
Grocery
Products

Refrigerated
Foods
JOTS
International
& Other
Total
Reported balance at October 28, 2018 $ 882,582
$ 1,406,897
$ 203,214
$ 221,423
$ 2,714,116
Segment reclassification (25,209 ) 51,795
(26,586 ) —
—
Adjusted balance at October 28, 2018 857,373
1,458,692
176,628
221,423
2,714,116
Goodwill sold (225,072 ) —
—
(4,945 ) (230,017 )
Foreign currency translation —
—
—
2,536
2,536
Balance at April 28, 2019 $ 632,301
$ 1,458,692
$ 176,628
$ 219,014
$ 2,486,635



(in thousands)	Grocery Products		Refrigerated Foods		Jennie-O Turkey Store		International & Other		Total
Balance at October 27, 2019	$	632,301	$	1,458,692	$	176,628	$	214,024	$	2,481,645
Foreign Currency Translation	—		—		—		2,443		2,443
Balance at January 26, 2020	$	632,301	$	1,458,692	$	176,628	$	216,467	$	2,484,088

Intangible Assets: ~~The reduction in indefinite and definite-lived intangible assets for fiscal year 2019 is due to the divestiture of CytoSport.~~

The carrying amounts for indefinite-lived intangible assets are ~~presented in the table below.~~as follows:

(in thousands) April 28,
2019 October 28,
2018
Brands/tradenames/trademarks $ 959,400
$ 1,108,122
Other intangibles 184
184
Foreign currency translation (3,083 ) (3,484 )
Total $ 956,501
$ 1,104,822



(in thousands)	January 26, 2020			October 27, 2019
Brands/Tradenames/Trademarks	$	953,190		$	959,400
Other Intangibles	184			184
Foreign Currency Translation	(3,393		)	(3,803		)
Total	$	949,981		$	955,781

The gross carrying amount and accumulated amortization for definite-lived intangible assets are ~~presented in the table below.~~as follows:

April 28, 2019 October 28, 2018
(in thousands)
Gross Carrying
Amount

Accumulated
Amortization

Gross Carrying
Amount

Accumulated
Amortization
Customer lists/relationships $ 113,739
$ (32,088 ) $ 137,039
$ (36,367 )
Other intangibles 6,957
(2,172 ) 6,155
(1,547 )
Foreign currency translation —
(2,545 ) —
(2,883 )
Total $ 120,696
$ (36,805 ) $ 143,194
$ (40,797 )



	January 26, 2020					October 27, 2019
(in thousands)	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Customer Lists/Relationships	$	113,739	$	(39,057	)	$	113,739	$	(36,744	)
Tradenames/Trademarks	10,536		(1,911		)	4,326		(1,589		)
Other Intangibles	2,631		(1,324		)	2,631		(1,228		)
Foreign Currency Translation	—		(2,791		)	—		(3,054		)
Total	$	126,906	$	(45,083	)	$	120,696	$	(42,615	)

Amortization expense was ~~$3.1~~$2.7 million and ~~$6.3~~$3.2 million for the ~~second quarter and six~~three months ended ~~April 28,~~January 26, 2020 and January 27, 2019, ~~respectively, compared to $3.0 million and $6.2 million for the second quarter and six months ended April 29, 2018.~~respectively.

Estimated annual amortization expense for the five fiscal years after October ~~28, 2018,~~27, 2019, is as follows:


(in millions)
2019	$11.7
(in thousands)
2020	10.7	$	11,700
2021	10.7	12,000
2022	10.4	11,644
2023	9.5	10,739
2024		8,921

NOTE FE - PENSION AND OTHER POST-RETIREMENT BENEFITS

Net periodic benefit cost for pension and other post-retirement benefit plans consists of the following:

Pension Benefits
Three Months Ended Six Months Ended
(in thousands) April 28,
2019 April 29,
2018 April 28,
2019 April 29,
2018
Service cost $ 6,511
$ 7,903
$ 13,021
$ 15,806
Interest cost 15,095
14,049
30,192
28,098
Expected return on plan assets (23,121 ) (24,771 ) (46,246 ) (49,541 )
Amortization of prior service cost (699 ) (617 ) (1,397 ) (1,234 )
Recognized actuarial loss 3,701
4,540
7,402
9,079
Curtailment loss (gain) —
—
2,825
—
Net periodic cost $ 1,487
$ 1,104
$ 5,797
$ 2,208



	Pension Benefits
	Three Months Ended
(in thousands)	January 26, 2020			January 27, 2019
Service Cost	$	8,896		$	6,510
Interest Cost	13,410			15,097
Expected Return on Plan Assets	(25,321		)	(23,125		)
Amortization of Prior Service Cost	(542		)	(698		)
Recognized Actuarial Loss	5,596			3,701
Curtailment Loss (Gain)	—			2,825
Net Periodic Cost	$	2,039		$	4,310

Post-retirement Benefits
Three Months Ended Six Months Ended
(in thousands) April 28,
2019 April 29,
2018 April 28,
2019 April 29,
2018
Service cost $ 173
$ 321
$ 347
$ 641
Interest cost 3,009
2,832
6,174
5,664
Amortization of prior service cost (669 ) (711 ) (1,338 ) (1,421 )
Recognized actuarial loss —
45
—
89
Curtailment loss (gain) —
—
(620 ) —
Net periodic cost $ 2,513
$ 2,487
$ 4,563
$ 4,973



	Post-retirement Benefits
	Three Months Ended
(in thousands)	January 26, 2020			January 27, 2019
Service Cost	$	195		$	174
Interest Cost	2,460			3,165
Amortization of Prior Service Cost	(663		)	(669		)
Recognized Actuarial Loss	275			—
Curtailment Loss (Gain)	—			(620		)
Net Periodic Cost	$	2,267		$	2,050

Non-service cost components of net pension and postretirement benefit cost are presented within ~~interest~~Interest and ~~investment income~~Investment Income on the Consolidated Statements of Operations.

Curtailments ~~were~~ recognized in the first quarter of fiscal 2019 were due to the sale of the Fremont, Nebraska, production facility.

NOTE GF - DERIVATIVES AND HEDGING

The Company uses hedging programs to manage price risk associated with commodity purchases. These programs utilize futures and options contracts to manage the Company’s exposure to price fluctuations in the commodities markets. The Company has determined its designated hedging programs to be highly effective in offsetting the 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.

Cash Flow Hedges: The Company designates corn and lean hog futures and options used to offset price fluctuations in the Company’s future direct grain and hog purchases as cash flow hedges. Effective gains or losses related to these cash flow hedges are reported in ~~accumulated other comprehensive loss~~Accumulated Other Comprehensive Loss (AOCL) and reclassified into earnings, through ~~cost~~Cost of ~~products sold,~~Products Sold, in the period or periods in which the hedged transactions affect earnings. The Company typically does not hedge its grain exposure beyond the next two upcoming fiscal years and its hog exposure beyond the next fiscal year.

Fair Value 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 commodity suppliers as fair value hedges. The intent of the program is 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, along with the gain or loss on the hedged purchase commitment, are marked-to-market through earnings and recorded on the Consolidated Statements of Financial Position as a ~~current asset~~Current Asset and ~~liability,~~Liability, respectively. Effective gains or losses related to these fair value hedges are recognized through ~~cost~~Cost of ~~products sold~~Products Sold in the period or periods in which the hedged transactions affect earnings.

Other Derivatives: The Company holds certain futures and options contract positions as part of a merchandising program and to manage the Company’s exposure to fluctuations in commodity markets. The Company has not applied hedge accounting to these positions. Activity related to derivatives not designated as hedges is immaterial to the consolidated financial statements.

Volume: As of ~~April 28, 2019,~~January 26, 2020, and October ~~28, 2018,~~27, 2019, the Company had the following outstanding commodity futures and options contracts related to its hedging programs:



	Volume
Commodity Contracts	~~April 28, 2019~~January 26, 2020	October ~~28, 2018~~27, 2019
Corn	~~21.3~~25.3 million bushels	~~23.0~~30.4 million bushels
Lean ~~hogs~~Hogs	~~299.6~~182.0 million pounds	~~56.9~~187.3 million pounds

Fair Value of Derivatives: The fair values of the Company’s derivative instruments ~~(in thousands)~~ as of ~~April 28, 2019,~~

January 26, 2020, and October ~~28, 2018,~~27, 2019, were as follows:


		Fair Value (1)						Fair Value ⁽¹⁾
(in thousands)							Location on Consolidated Statements of Financial Position	January 26, 2020			October 27, 2019
Derivatives Designated as Hedges:	Location on Consolidated Statements of Financial Position	April 28, 2019		October 28, 2018
Commodity contracts	Other Current Assets	$	3,221	$	(30	)
Commodity Contracts							Other Current Assets	$	(921	)	$	6,405

⁽¹⁾ Amounts represent the gross fair value of derivative assets and liabilities. The Company nets the derivative assets and liabilities for each of its hedging programs, including cash collateral, when a master netting arrangement exists between the Company and the counterparty to the derivative contract. The amount or timing of cash collateral balances may impact the classification of the derivative in the Consolidated Statements of Financial Position. See Note LK - Fair Value Measurements for a discussion of these net amounts as reported in the Consolidated Statements of Financial Position.

Fair Value Hedge - ~~Assets(Liabilities)~~Assets (Liabilities): The carrying amount of the Company's fair value hedge assets (liabilities) ~~(in thousands)~~ as of ~~April 28, 2019,~~January 26, 2020, and October ~~28, 2018,~~27, 2019, were as follows:


Location on Consolidated Statements of Financial Position	Carrying Amount of the Hedged Assets/(Liabilities)			Carrying Amount of the Hedged Assets/(Liabilities)
	April 28, 2019	October 28, 2018
(in thousands)				January 26, 2020			October 27, 2019
Accounts Payable	1,976	(594	)	$	(2,347	)	$	(2,805	)

~~AOCL~~Accumulated Other Comprehensive Loss Impact: ~~In fiscal 2019, the Company adopted the amended guidance of ASC 815,~~ ~~Derivatives and Hedging~~. As a result, hedge ineffectiveness related to effective relationships is now deferred in AOCL until the hedged item impacts earnings. Prior to fiscal 2019, gains or losses on the derivative instrument in excess of the cumulative change in the cash flows of the hedged item, if any (i.e, the ineffective portion) were recognized in the Consolidated Statements of Operations during the current period. As of ~~April 28, 2019,~~January 26, 2020, the Company has included in ~~AOCL,~~Accumulated Other Comprehensive Loss hedging ~~gains~~losses of ~~$0.1~~$3.6 million, ~~(before tax)~~before tax, relating to its positions. The Company expects to recognize the majority of these gains over the next 12twelve months.

The effect of ~~AOCL~~Accumulated Other Comprehensive Loss for gains or losses (before ~~tax, in thousands)~~tax) related to the Company's derivative instruments for the three months ended ~~April 28,~~January 26, 2020, and January 27, 2019, ~~and April 29, 2018,~~ were as follows:


	Gain/(Loss) Recognized in AOCL (1)					Location on Consolidated Statements of Operations		Gain/(Loss) Reclassified from AOCL into Earnings (1)							Gain/(Loss) Recognized in Earnings (Ineffective Portion)						Gain/(Loss) Recognized in AOCL ⁽¹⁾							Location on Consolidated Statements of Operations		Gain/(Loss) Reclassified from AOCL into Earnings ⁽¹⁾
	Three Months Ended						Three Months Ended							Three Months Ended						Three Months Ended									Three Months Ended
(in thousands)																				January 26, 2020				January 27, 2019					January 26, 2020				January 27, 2019
Cash Flow Hedges:	April 28, 2019		April 29, 2018				Location on Consolidated Statements of Operations		April 28, 2019			April 29, 2018				April 28, 2019		April 29, 2018
Commodity Contracts	$	505	$	(862	)			$	(532	)	$	(40	)		$	—	$	(271	)		$	(8,626	)		$	(843	)	Cost of Products Sold		$	(1,875	)		$	(1,243	)
Excluded Component (2)	$	5,930																			—				(687		)

~~The effect of AOCL for gains or losses (before tax, in thousands) related to the Company's derivative instruments for the six months ended April 28, 2019, and April 29, 2018, were as follows:~~

Gain/(Loss)
Recognized
in AOCL (1) Location on
Consolidated
Statements
of Operations Gain/(Loss)
Reclassified from
AOCL into Earnings (1) Gain/(Loss)
Recognized in
Earnings
(Ineffective Portion)
Six Months Ended Six Months Ended Six Months Ended
Cash Flow Hedges: April 28, 2019 April 29, 2018 April 28, 2019 April 29, 2018 April 28, 2019 April 29, 2018
Commodity Contracts $ (337 ) $ (1,249 ) Cost of Products Sold $ (1,775 ) $ 568
$ —
$ (361 )
Excluded Component (2) $ 5,243

~~(1)~~ ~~See Note I - Accumulated Other Comprehensive Loss for the after-tax impact of these gains or losses on Net Earnings.~~

~~(2)~~ ~~Represents the time value amount of lean hog options excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in AOCL.~~


⁽¹⁾	See Note H - Accumulated Other Comprehensive Loss for the after-tax impact of these gains or losses on Net Earnings.


⁽²⁾	Represents the time value amount of lean hog options excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in AOCL.

Consolidated Statements of Operations Impact: The effect on the Consolidated Statements of Operations for gains or losses (before ~~tax, in thousands)~~tax) related to the Company's derivative instruments for the three months ended January 26, 2020, and ~~six months ended April 28,~~January 27, 2019, ~~and April 29, 2018,~~ were as follows:

Cost of Products Sold
Three Months Ended Six Months Ended
April 28, 2019 April 29, 2018 April 28, 2019 April 29, 2018
Consolidated Statements of Operations $ 1,875,595
$ 1,837,765
$ 3,747,616
$ 3,670,762

Cash Flow Hedges - Commodity Contracts
   Gain (loss) reclassified from AOCL (532 ) (40 ) (1,775 ) 568
   Amortization of excluded component from options (1,110 ) —
(2,468 ) —
   Gain (loss) due to ineffectiveness —
(271 ) —
(361 )

Fair Value Hedges - Commodity Contracts
   Gain (loss) on commodity futures (1)
705
1,224
1,637
1,781
   Gain (loss) due to ineffectiveness —
(23 ) —
(272 )

Total gain (loss) recognized in earnings $ (937 ) $ 890
$ (2,606 ) $ 1,716



	Cost of Products Sold
	Three Months Ended
(in thousands)	January 26, 2020			January 27, 2019
Consolidated Statements of Operations	$	1,916,014		$	1,872,021

Cash Flow Hedges - Commodity Contracts
Gain (Loss) Reclassified from AOCL	(1,875		)	(1,243		)
Amortization of Excluded Component from Options	—			(1,358		)

Fair Value Hedges - Commodity Contracts
Gain (Loss) on Commodity Futures ⁽¹⁾	3,186			932
Total Gain (Loss) Recognized in Earnings	$	1,311		$	(1,669	)

~~(1)Amounts represent losses on commodity contracts designated as fair value hedges that were closed during the~~


⁽¹⁾	Amounts represent losses on commodity contracts designated as fair value hedges that were closed during the

quarter, which were offset by a corresponding gain 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.

NOTE HG - INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES

The Company accounts for its majority-owned operations under the consolidation method. Investments in which the Company owns a minority interest, and for which there are no other indicators of control, are accounted for under the equity or cost method. These investments, along with any related receivables from affiliates, are included in the Consolidated Statements of Financial Position as ~~investments in~~Investments In and ~~receivables from affiliates.~~Receivables From Affiliates.

Investments inIn and ~~receivables from affiliates~~Receivables From Affiliates consist of the following:


(in thousands)	Segment	% Owned	April 28, 2019		October 28, 2018		Segment	% Owned	January 26, 2020		October 27, 2019
MegaMex Foods, LLC	Grocery Products	50%	$	206,480	$	205,148	Grocery Products	50%	$	211,535	$	218,592
Foreign Joint Ventures	International & Other	Various (26-40%)	69,998		68,005
Other Joint Ventures							International & Other	Various (20-40%)	79,242		70,565
Total			$	276,478	$	273,153			$	290,777	$	289,157

Equity in ~~earnings~~Earnings of ~~affiliates~~Affiliates consists of the following:


		Three Months Ended					Six Months Ended					Three Months Ended
(in thousands)	Segment	April 28, 2019			April 29, 2018		April 28, 2019		April 29, 2018		Segment	January 26, 2020			January 27, 2019
MegaMex Foods, LLC	Grocery Products	$	13,479		$	12,934	$	23,981	$	32,522	Grocery Products	$	9,461		$	10,502
Foreign Joint Ventures	International & Other	(188		)	552		768		4,495
Other Joint Ventures											International & Other	(1,873		)	956
Total		$	13,291		$	13,486	$	24,749	$	37,017		$	7,588		$	11,458

For the ~~second quarter and six~~three months ended ~~April 28, 2019,~~January 26, 2020, $10.0 million of dividends were received from affiliates, compared to ~~$10.0 million of~~0 dividends received for ~~both~~ the ~~second quarter and six~~three months ended ~~April 29, 2018.~~January 27, 2019.

The Company recognized a basis difference of $21.3 million associated with the formation of MegaMex Foods, LLC, of which ~~$13.2~~$12.5 million is remaining as of ~~April 28, 2019.~~January 26, 2020. This difference is being amortized through Equity in Earnings of Affiliates.

NOTE IH - ACCUMULATED OTHER COMPREHENSIVE LOSS

Components of ~~accumulated other comprehensive loss~~Accumulated Other Comprehensive Loss are as follows:

(in thousands) Foreign
Currency
Translation Pension &
Other
Benefits Deferred
Gain (Loss) -
Hedging Accumulated
Other
Comprehensive
Loss
Balance at January 27, 2019 $ (42,977 ) $ (247,952 ) $ (1,413 ) $ (292,342 )
Unrecognized gains (losses)
Gross 5,730
1
6,435
12,166
Tax effect —
—
(133 ) (133 )
Reclassification into Net Earnings
Gross —
2,333
(1) 532
(2) 2,865
Tax effect —
(564 ) (127 ) (691 )
Net of tax amount 5,730
1,770
6,707
14,207
Balance at April 28, 2019 $ (37,247 ) $ (246,182 ) $ 5,294
$ (278,135 )



(in thousands)	Foreign Currency Translation			Pension & Other Benefits				Deferred Gain (Loss) - Hedging				Accumulated Other Comprehensive Loss
Balance at October 27, 2019	$	(52,996	)	$	(348,877	)		$	2,373			$	(399,500	)
Unrecognized Gains (Losses)
Gross	7,812			(10		)		(8,626		)		(824		)
Tax Effect	—			—				2,105				2,105
Reclassification into Net Earnings
Gross	—			4,666			⁽¹⁾	1,875			⁽²⁾	6,541
Tax Effect	—			(1,143		)		(457		)		(1,600		)
Net of Tax Amount	7,812			3,513				(5,103		)		6,222
Balance at January 26, 2020	$	(45,184	)	$	(345,364	)		$	(2,730	)		$	(393,278	)

(in thousands)
Foreign
Currency
Translation

Pension &
Other
Benefits

Deferred
Gain (Loss) -
Hedging

Accumulated
Other
Comprehensive
Loss
Reported balance at October 28, 2018 $ (44,854 ) $ (197,613 ) $ (1,031 ) $ (243,498 )
Impact of adoption of ASU
ASU 2017-12 —
—
(21 ) (3) (21 )
ASU 2018-02 —
(53,778 ) (3) —
(53,778 )
Adjusted balance at October 28, 2018 (44,854 ) (251,391 ) (1,052 ) (297,297 )
Unrecognized gains (losses)
Gross 7,607
2,204
4,926
14,737
Tax effect —
(533 ) 71
(462 )
Reclassification into Net Earnings
Gross —
4,667
(1) 1,775
(2) 6,442
Tax effect —
(1,129 ) (426 ) (1,555 )
Net of tax amount 7,607
5,209
6,346
19,162
Balance at April 28, 2019 $ (37,247 ) $ (246,182 ) $ 5,294
$ (278,135 )

~~(1) Included in the computation of net periodic cost. See Note F~~


⁽¹⁾	Included in the computation of net periodic cost. See Note E - Pension and Other Post-Retirement Benefits ~~for additional details.~~ ~~(2)~~ ~~Included in Cost of Products Sold in the Consolidated Statements of Operations.~~ ~~(3)Cumulative effect from the adoption of Accounting Standards Update. See Note A - General~~ for additional details.


⁽²⁾	Included in Cost of Products Sold in the Consolidated Statements of Operations.

NOTE JI - INCOME TAXES

The Company's tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. The effects of tax legislation are recognized in the period in which the law is enacted. The deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years the related temporary differences are anticipated to reverse.

On December 22, 2017, the United States (U.S.) enacted comprehensive tax legislation into law, H.R. 1, commonly referred to as the Tax Act. Except for certain provisions, the Tax Act is effective for tax years beginning on or after January 1, 2018. As a fiscal year U.S. taxpayer, the majority of the provisions, such as eliminating the domestic manufacturing deduction, creating new taxes on certain foreign sourced income, and introducing new limitations on certain business deductions, ~~apply~~applied to the Company in fiscal 2019. ~~In addition, for~~For fiscal 2019 and ~~effective in the first quarter,~~future periods, the U.S. federal corporate income tax rate ~~was reduced from a blended rate of 23.4 percent for fiscal 2018, to~~is 21.0 ~~percent in fiscal 2019 and beyond.~~

The Company's effective tax rate for the second quarter and first six months of fiscal 2019 was 11.1 percent and 16.1 percent, respectively, compared to 20.0 percent and 10.2 percent for the respective periods last year. The lower effective tax rate in the current quarter resulted from the net tax benefits generated from the CytoSport divestiture and equity based compensation. The Company expects a full-year effective tax rate between 17.5 percent and 19.5 percent for fiscal 2019.percent.

In March 2018, the FASB issued ASU 2018-05, Income Taxes: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (Topic 740), allowing~~, which provides guidance for companies related to the Tax Act. This ASU allows for~~ a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts.Based on current interpretation of the Tax Act, the Company made reasonable estimates to record provisional adjustments during fiscal 2018, as described above. The Company continued to evaluate such amounts within the first quarter of fiscal 2019 and determined no adjustments were required within the remaining portion of the measurement period. As of January 27, 2019, the Company ~~has~~ completed the accounting for the tax effects of the Tax Act.

During fiscal 2018, the Company provisionally recorded the transition tax on its foreign earnings. Those foreign earnings have been deemed repatriated for U.S. federal tax purposes. The Company maintains all earnings are permanently reinvested. Accordingly, no additional income taxes have been provided for withholding tax, state tax, or other taxes.

The Company's effective tax rate for the first three months of fiscal 2020 was 16.3 percent compared to 21.3 percent for the respective period last year. The lower rate in the first three months of fiscal 2020 was impacted by a large volume of stock option exercises. The Company expects a full-year effective tax rate between 20.5 percent and 22.5 percent for fiscal 2020.

The amount of unrecognized tax benefits, including interest and penalties, is recorded in ~~other long-term liabilities.~~Other Long-term Liabilities. If recognized as of ~~April 28,~~January 26, 2020, and January 27, 2019, ~~and April 29, 2018, $27.7~~$23.3 million and ~~$24.6~~$27.2 million, respectively, would impact the Company’s effective tax rate. The Company includes accrued interest and penalties related to uncertain tax positions in ~~income tax expense.~~Income Tax Expense. Interest and penalties included in ~~income tax expense~~Income Tax Expense was immaterial for the ~~second quarter and~~ first ~~six~~three months of fiscal ~~2019, compared to $0.2 million~~2020 and ~~$0.4 million for the respective periods in~~ fiscal ~~2018.~~2019. The amount of accrued interest and penalties at ~~April 28,~~January 26, 2020, and January 27, 2019, ~~and April 29, 2018,~~ associated with unrecognized tax benefits was ~~$6.7 million and $6.8 million, respectively.~~$6.5 million.

The Company is regularly audited by federal and state taxing authorities. The United States Internal Revenue Service (I.R.S.) concluded its examination of fiscal 2017 in the second quarter of fiscal 2019. The Company has elected to participate in the Compliance Assurance Process (CAP) for fiscal years 2018 through ~~2020.~~2021. The objective of CAP is to contemporaneously work with the I.R.S. to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. The Company may elect to continue participating in CAP for future tax years. The Company may withdraw from the program at any time.

The Company is in various stages of audit by several state taxing authorities on a variety of fiscal years, ~~as far~~dating back asto 2011. While it is reasonably possible that one or more of these audits may be completed within the next 12 months and the related unrecognized tax benefits may change, based on the status of the examinations it is not possible to reasonably estimate the effect of any amount of such change to previously recorded uncertain tax positions.

NOTE KJ - STOCK-BASED COMPENSATION

The Company issues stock options, restricted stock units, and restricted shares as part of its stock incentive plans for employees and non-employee directors. During the ~~second quarter and six~~three months ended ~~April 28, 2019,~~January 26, 2020, stock-based compensation expense was ~~$5.6~~$9.3 million, ~~and $13.5 million, respectively,~~ compared to ~~$4.1 million and $11.4~~$7.9 million for the ~~second quarter and six~~three months ended ~~April 29, 2018, respectively.~~January 27, 2019. The Company recognizes stock-based compensation expense ratably over the shorter of the vesting period or the individual's retirement eligibility date. The fair value of stock-based compensation granted to retirement-eligible individuals is expensed at the time of grant.

At ~~April 28, 2019,~~January 26, 2020, there was ~~$35.3~~$32.5 million of total unrecognized compensation expense from stock-based compensation arrangements granted under the plans. This compensation is expected to be recognized over a weighted-average period of approximately ~~3.0~~2.6 years. During the ~~second quarter and six~~three months ended ~~April 28, 2019,~~January 26, 2020, cash received from stock option exercises was ~~$28.3~~$36.4 million, ~~and $44.3 million, respectively,~~ compared to ~~$6.5 million and $30.0~~$16.0 million for the ~~second quarter and six~~three months ended ~~April 29, 2018, respectively.~~January 27, 2019.

Shares issued for option exercises, restricted stock units, and restricted shares may be either authorized but unissued shares or shares of treasury ~~stock acquired in the open market or otherwise.~~stock.

Stock Options: The Company’s policy is to grant options with the exercise price equal to the market price of the common stock on the date of grant. Options typically vest over four years and expire ten years after the date of the grant. ~~The~~

Effective with fiscal 2020 grants, the Company ~~recognizes stock-based compensation expense ratably over~~has determined the ~~shorter of the requisite service period or vesting period. The fair~~equity award value ~~of stock-based compensation granted to retirement-eligible individuals is expensed at the time of grant.~~for eligible employees will be delivered 50 percent in stock options as described above and 50 percent in time-vested restricted stock units with a three-year cliff vesting.

During the third quarter of fiscal 2018, the Company made a one-time grant of 200 stock options to each active, full-time employee and 100 stock options to each active, part-time employee of the Company on April 30, 2018. The options vest in five years and expire ten years after the grant date.

A reconciliation of the number of options outstanding and exercisable (in thousands) as of ~~April 28, 2019, and changes during the six months then ended,~~January 26, 2020 is as follows:


	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value		Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at October 28, 2018	29,536	$	23.55
Outstanding at October 27, 2019							25,994	$	26.49
Granted	1,809	44.37					1,004	45.54
Exercised	3,521	12.58					3,059	13.87
Forfeited	527	36.27					65	36.56
Outstanding at April 28, 2019	27,297	26.10		5.6	$	386,180
Exercisable at April 28, 2019	19,036	$	21.00	4.2	$	360,893
Outstanding at January 26, 2020							23,874	28.88		5.6	$	438,098
Exercisable at January 26, 2020							16,670	$	24.51	4.3	$	378,778

The weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised (in thousands) during the ~~second quarter and~~ first ~~six~~three months of fiscal years ~~2019~~2020 and ~~2018,~~2019 are as ~~follows:~~ follows.

Three Months Ended Six Months Ended
April 28,
2019 April 29,
2018 April 28,
2019 April 29,
2018
Weighted-average grant date fair value $ 8.21
$ 6.49
$ 9.24
$ 6.86
Intrinsic value of exercised options $ 75,545
$ 15,512
$ 107,786
$ 71,814



	Three Months Ended
	January 26, 2020		January 27, 2019
Weighted-average Grant Date Fair Value	$	7.67	$	9.48
Intrinsic Value of Exercised Options	97,946		32,241

The fair value of each option award is calculated on the date of grant using the Black-Scholes valuation model utilizing the following weighted-average assumptions:

Three Months Ended Six Months Ended
April 28,
2019 April 29,
2018 April 28,
2019 April 29,
2018
Risk-free interest rate 2.6 % 2.7 % 2.8 % 2.3 %
Dividend yield 2.0 % 2.2 % 1.9 % 2.1 %
Stock price volatility 19.0 % 19.0 % 19.0 % 19.0 %
Expected option life 8 years
8 years
8 years
8 years



	Three Months Ended
	January 26, 2020		January 27, 2019
Risk-free Interest Rate	1.7	%	2.9	%
Dividend Yield	2.0	%	1.9	%
Stock Price Volatility	19.0	%	19.0	%
Expected Option Life	8 years		8 years

As part of the annual valuation process, the Company reassesses the appropriateness of the inputs used in the valuation models. The Company establishes the risk-free interest rate using ~~stripped~~ U.S. Treasury yields as of the grant ~~date where the remaining term is approximately the expected life of the option.~~date. The dividend yield is ~~set~~ based on the dividend rate approved by the Company’s Board of Directors and the stock price on the grant date. The expected volatility assumption is ~~set~~ based primarily on historical volatility. As a reasonableness test, implied volatility from exchange traded options is also examined to validate the volatility range obtained from the historical analysis. The expected life assumption is ~~set~~ based on an analysis of past exercise behavior by option holders. In performing the valuations for option grants, the Company has not stratified option holders as exercise behavior has historically been consistent across all ~~employee and non-employee director groups.~~

employees.

Restricted Stock Units: Restricted stock units are valued equal to the market price of the common stock on the date of grant and vest after three years. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant.

A reconciliation of the restricted stock units (in thousands) as of January 26, 2020 is as follows:



	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Restricted Units at October 27, 2019	—	$	—
Granted	169	45.54
Restricted Units at January 26, 2020	169	$	45.54	2.9	$	7,980

The weighted-average grant date fair value of restricted stock units granted and the total fair value (in thousands) of restricted stock units granted during the first three months of fiscal years 2020 and 2019 are as follows:



	Three Months Ended
	January 26, 2020		January 27, 2019
Weighted-average Grant Date Fair Value	$	45.54	$	—
Fair Value of Restricted Stock Units Granted	7,695		—

Restricted Shares: Restricted shares awarded to non-employee directors annually on February 1 are subject to a restricted period which expires the date of the Company’s next annual stockholders meeting. Newly elected directors receive a prorated award of restricted shares of the Company's common stock, which expires on the date of the Company's second succeeding annual stockholders meeting. A reconciliation of the restricted shares (in thousands) as of ~~April 28, 2019, and changes during the six months then ended,~~January 26, 2020 is as follows:

Shares
Weighted-
Average Grant
Date Fair Value
Restricted at October 28, 2018 52
$ 34.08
Granted 51
42.23
Vested 52
34.08
Restricted at April 28, 2019 51
$ 42.23

The weighted-average grant date fair value of restricted shares granted and the total fair value (in thousands) of restricted shares granted ~~and the fair value (in thousands) of shares that have vested~~ during the first ~~six~~three months of fiscal years ~~2019~~2020 and ~~2018,~~2019 are as follows:

Six Months Ended
April 28,
2019 April 29,
2018
Weighted-average grant date fair value $ 42.23
$ 34.08
Fair value of restricted shares granted 2,134
1,760
Fair value of shares vested 1,760
2,053



	Three Months Ended
	January 26, 2020		January 27, 2019
Weighted-average Grant Date Fair Value	$	42.76	$	34.33
Fair Value of Restricted Shares Granted	53		53

NOTE LK - FAIR VALUE MEASUREMENTS

Pursuant to the provisions of ASC 820, Fair Value Measurements and Disclosures (ASC 820), 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.

The Company’s financial assets and liabilities carried at fair value on a recurring basis as of ~~April 28, 2019,~~January 26, 2020, and October ~~28, 2018,~~27, 2019, and their level within the fair value hierarchy, are ~~presented in the tables below.~~as follows:


	Fair Value Measurements at April 28, 2019								Fair Value Measurements at January 26, 2020
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at Fair Value
Cash and cash equivalents (1)	$	639,327	$	630,947	$	8,380	$	—
Short-term marketable securities (2)	6,675		2,332		4,343		—
Other trading securities (3)	155,068		—		155,068		—
Commodity derivatives (4)	10,123		4,860		5,263		—
Cash and Cash Equivalents ⁽¹⁾									$	724,419	$	721,216	$	3,203	$	—
Short-term Marketable Securities ⁽²⁾									14,808		5,533		9,275		—
Other Trading Securities ⁽³⁾									170,302		—		170,302		—
Commodity Derivatives ⁽⁴⁾									9,133		9,133		—		—
Total Assets at Fair Value	$	811,193	$	638,139	$	173,054	$	—	$	918,662	$	735,882	$	182,780	$	—
Liabilities at Fair Value
Deferred compensation (3)	$	61,265	$	—	$	61,265	$	—
Deferred Compensation ⁽³⁾									$	64,356	$	—	$	64,356	$	—
Total Liabilities at Fair Value	$	61,265	$	—	$	61,265	$	—	$	64,356	$	—	$	64,356	$	—


	Fair Value Measurements at October 28, 2018								Fair Value Measurements at October 27, 2019
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets at Fair Value
Cash and cash equivalents (1)	$	459,136	$	459,136	$	—	$	—
Other trading securities (3)	137,311		—		137,311		—
Commodity derivatives (4)	4,611		4,611		—		—
Cash and Cash Equivalents ⁽¹⁾									$	672,901	$	672,458	$	443	$	—
Short-term Marketable Securities ⁽²⁾									14,736		5,186		9,550		—
Other Trading Securities ⁽³⁾									157,526		—		157,526		—
Commodity Derivatives ⁽⁴⁾									12,882		12,882		—		—
Total Assets at Fair Value	$	601,058	$	463,747	$	137,311	$	—	$	858,045	$	690,526	$	167,519	$	—
Liabilities at Fair Value
Deferred compensation (3)	$	60,181	$	—	$	60,181	$	—
Deferred Compensation ⁽³⁾									$	62,373	$	—	$	62,373	$	—
Total Liabilities at Fair Value	$	60,181	$	—	$	60,181	$	—	$	62,373	$	—	$	62,373	$	—

The following methods and assumptions were used to estimate the fair value of the financial assets and liabilities above:


⁽¹⁾	The Company’s cash equivalents considered Level 1 consist primarily of bank deposits, money market funds rated AAA, or other highly liquid investment accounts, and have a maturity date of three months or less. Cash equivalents considered Level 2 are funds holding agency bonds or securities ~~booked~~recognized at amortized cost.

⁽²⁾

The Company holds securities as part of a portfolio maintained to generate investment income and to provide cash for operations of the Company, if necessary. The portfolio is managed by a third party who is responsible for daily trading activities, and all assets within the portfolio are highly liquid. The cash, U.S. government securities, and money market funds rated AAA held by the portfolio are classified as Level 1. The current investment portfolio also includes corporate bonds and other asset backed securities for which there is an active, quoted market. Market prices are obtained from a variety of industry providers, large financial institutions, and other third-party sources to calculate a representative daily market value, and therefore, these securities are classified as Level 2.

⁽³⁾

AThe Company maintains a rabbi trust to fund certain supplemental executive retirement plans and deferred compensation plans. Under the plans, the participants can defer certain types of compensation and elect to receive a return on the deferred amounts based on the changes in fair value of various investment options, primarily a variety of mutual funds. The majority of the funds held in the rabbi trust relate to the supplemental executive retirement plans and have been invested in fixed income funds managed by a third party. The declared rate on these funds is set based on a formula using the yield of the general account investment portfolio supporting the fund, adjusted for expenses and other charges. The rate is guaranteed for one year at issue and may be reset annually on the policy anniversary, subject to a guaranteed minimum rate. As the value is based on adjusted market rates and the fixed rate is only reset on an annual basis, these funds are classified as Level 2. The ~~funds held in the rabbi trust are included in Other Assets on the Consolidated Statements of Financial Position. The~~ remaining funds held are also managed by a third-party insurance policy, the values of which represent their cash surrender value based on the fair value of the underlying investments in the account and include equity securities, money market accounts, bond funds, or other portfolios for which there is an active quoted market. Therefore, these policies are also classified as Level 2. The related deferred compensation liabilities are included in ~~other long-term liabilities~~Other Long-Term Liabilities on the Consolidated Statements of Financial Position with investment options generally mirroring those funds held by the rabbi trust. Therefore, these investment balances are classified as Level 2. The Company also offers a fixed rate investment option to participants. The rate earned on these investments is adjusted annually based on a specified percentage of the I.R.S. applicable federal rates. These balances are classified as Level 2.

by the rabbi trust. These balances are classified as Level 2. The Company also offers a fixed rate investment option to participants. The rate earned on these investments is adjusted annually based on a specified percentage of the I.R.S. applicable federal rates. These balances are classified as Level 2. Securities held by the trust are classified as trading securities. Therefore, unrealized gains and losses associated with these investments are included in the Company's earnings. Securities held by the trust generated gains of $5.2 million for the three months ended January 26, 2020, compared to gains of $1.4 million for the three months ended January 27, 2019.

⁽⁴⁾

The Company’s commodity derivatives represent futures contracts and options used in its hedging or other programs to offset price fluctuations associated with purchases of corn ~~soybean meal,~~ and hogs, and to minimize the price risk assumed when forward priced contracts are offered to the Company’s commodity suppliers. The Company’s futures contracts for corn are traded on the Chicago Board of Trade, while futures contracts for lean hogs are traded on the Chicago Mercantile Exchange. These are active markets with quoted prices available, and these contracts are classified as Level 1. All derivatives are reviewed for potential credit risk and risk of nonperformance. The net balance for each program is included in Other Current Assets or Accounts Payable, as appropriate, in the Consolidated Statements of Financial Position. As of January 26, 2020, the Company has recognized the right to reclaim net cash collateral of $10.0 million from various counterparties (including $13.3 million of realized gains on closed positions offset by cash owed of $3.3 million). As of October 27, 2019, the Company had recognized the right to reclaim net cash collateral of $6.5 million from various counterparties (including $10.5 million of realized gains on closed positions offset by cash owed of $4.0 million).

contracts are offered to the Company’s commodity suppliers. The Company’s futures contracts for corn and soybean meal are traded on the Chicago Board of Trade, while futures contracts for lean hogs are traded on the Chicago Mercantile Exchange. These are active markets with quoted prices available, and these contracts are classified as Level 1. Over-the-counter (OTC) derivative instruments are valued using discounted cashflow models, observable market inputs, and other mathematical pricing models. The Company’s lean hog option contracts are OTC instruments whose value is calculated using the Black-Scholes pricing model, lean hog future prices quoted from the Chicago Mercantile Exchange, and other adjustments to inputs that are observable in active markets. As the value of these instruments is driven by observable prices in active markets they are classified as Level 2. All derivatives are reviewed for potential credit risk and risk of nonperformance. The Company nets the derivative assets and liabilities for each of its hedging programs, including cash collateral, when a master netting arrangement exists between the Company and the counterparty to the derivative contract. The net balance for each program is included in other current assets or accounts payable, as appropriate, in the Consolidated Statements of Financial Position. As of April 28, 2019, the Company has recognized the right to reclaim net cash collateral of $6.9 million from various counterparties (including $7.9 million of realized gains on closed positions offset by cash owed of $1.0 million). As of October 28, 2018, the Company had recognized the right to reclaim net cash collateral of $4.6 million from various counterparties (including cash of $4.7 million less $0.1 million of realized losses).

The Company’s financial assets and liabilities include accounts receivable, accounts payable, and other liabilities, for which carrying value approximates fair value. The Company does not carry its long-term debt at fair value in its Consolidated Statements of Financial Position. Based on borrowing rates available to the Company for long-term financing with similar terms and average maturities, the fair value of long-term debt, utilizing discounted cash flows (Level 2), was ~~$257.1~~$259.6 million as of ~~April 28, 2019,~~January 26, 2020, and ~~$631.3~~$257.7 million as of October ~~28, 2018.~~27, 2019.

In accordance with the provisions of ASC 820, the Company measures certain nonfinancial assets and liabilities at fair value, which are recognized or disclosed on a nonrecurring basis (e.g. goodwill, intangible assets, and property, plant and equipment). During the ~~six~~three months ended ~~April 28,~~January 26, 2020, and January 27, 2019, ~~and April 29, 2018,~~ there were no material remeasurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

NOTE L - LEASES

The Company has operating leases for manufacturing facilities, office space, warehouses, transportation equipment, and miscellaneous real estate and equipment contracts. Finance leases primarily include turkey growing facilities and an aircraft. The Company's lessor portfolio consists primarily of immaterial operating leases of farm land to third parties.

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 1 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 1 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. For the initial implementation of ASU 2016-02, Leases (Topic 842) the incremental borrowing rate on October 28, 2019, was used to determine the present value of existing operating right-of-use assets and lease liabilities.

Supplemental balance sheet information related to leases as of January 26, 2020, are as follows:



(in thousands)	Location on Consolidated Statements of Financial Position	January 26, 2020
Right-of-Use Assets
Operating	Other Assets	$	60,226
Finance	Net Property, Plant and Equipment	67,126
Total Right-of-Use Assets		$	127,352
Liabilities
Current
Operating	Accrued Expenses	$	13,728
Finance	Current Maturities of Long-Term Debt	8,259
Noncurrent
Operating	Other Long-Term Liabilities	48,561
Finance	Long-Term Debt - Less Current Maturities	58,972
Total Lease Liabilities		$	129,520

Lease expenses for the three months ended January 26, 2020, are as follows:



(in thousands)	January 26, 2020
Operating Lease Cost ⁽¹⁾	$	5,124
Finance Lease Cost
Amortization of Right-of-Use Assets	1,999
Interest on Lease Liabilities	605
Variable Lease Cost ⁽²⁾	102,668
Net Lease Cost	$	110,396


⁽¹⁾	Includes short-term lease costs, which are immaterial.

⁽²⁾

ASC 842 - Leases requires disclosure of payments related to agreements with an embedded lease that are not otherwise reflected on the balance sheet. The Company's variable lease costs primarily include inventory related expenses, such as materials, labor, and overhead, from manufacturing and service agreements that contain embedded leases. Variability of these costs is determined based on usage or output and may vary for other reasons such as changes in material prices.

The weighted-average remaining lease term and discount rate for lease liabilities included in the Consolidated Statements of Financial Position as of January 26, 2020, are as follows:



	January 26, 2020
Weighted Average Remaining Lease Term
Operating Leases	7.57 years
Finance Leases	8.83 years
Weighted Average Discount Rate
Operating Leases	2.30	%
Finance Leases	3.58	%

Supplemental cash flow and other information related to leases for the three months ended January 26, 2020, are as follows:



(in thousands)	January 26, 2020
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating Cash Flows from Operating Leases	$	3,057
Operating Cash Flows from Finance Leases	605
Financing Cash Flows from Finance Leases	2,019

The maturity of the Company's lease liabilities as of January 26, 2020, are as follows:



(in thousands)	Operating Leases ⁽¹⁾		Finance Leases ⁽²⁾		Total
2020 (nine months remaining)	$	11,691	$	7,891	$	19,582
2021	11,653		10,338		21,991
2022	9,139		9,934		19,072
2023	8,157		9,738		17,895
2024	5,730		9,612		15,341
2025	3,396		8,117		11,513
2026 and beyond	18,644		21,192		39,836
Total Lease Payments	$	68,410	$	76,821	$	145,231
Less: Imputed Interest	6,120		9,591		15,711
Present Value of Lease Liabilities	$	62,290	$	67,230	$	129,520


⁽¹⁾	Operating lease payments exclude $3.6 million of legally binding minimum lease payments for leases signed but not yet commenced.


⁽²⁾	Over the life of the lease contracts, finance lease payments include $8.9 million related to purchase options which are reasonably certain of being exercised.

NOTE M - EARNINGS PER SHARE DATA

The reported net earnings attributable to the Company were used when computing basic and diluted earnings per share. The following table sets forth the shares used as the denominator for those computations:


	Three Months Ended		Six Months Ended		Three Months Ended
(in thousands)	April 28, 2019	April 29, 2018	April 28, 2019	April 29, 2018	January 26, 2020	January 27, 2019
Basic weighted-average shares outstanding	535,480	529,799	534,988	529,626	535,075	534,495
Dilutive potential common shares	10,850	13,012	11,736	13,520	9,740	12,623
Diluted weighted-average shares outstanding	546,330	542,811	546,724	543,146	544,815	547,118

Antidilutive potential common shares					2,734	1,070

For the second quarter and six months ended April 28, 2019, a total of 2.1 million and 1.6 million weighted-average stock options, respectively, were not included in the computation of dilutive potential common shares since their inclusion would have had an antidilutive effect on earnings per share, compared to 6.8 million and 6.1 million, respectively, for the second quarter and six months ended April 29, 2018.

NOTE N - SEGMENT REPORTING

The Company develops, processes, and distributes a wide array of food products in a variety of markets. The Company reports its results in the following ~~four~~4 segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. At the beginning of fiscal 2019, the Hormel Deli Solutions division combined all deli businesses, including the Jennie-O Turkey Store deli division, into one division within the Refrigerated Foods segment. In addition, the ingredients business was realigned from the Grocery Products segment to the Refrigerated Foods segment. Fiscal 2018 segment results have been adjusted to reflect these changes.

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

The Refrigerated Foods segment consists primarily of the processing, marketing, and sale of branded and unbranded pork, beef, and poultry products for retail, foodservice, deli, and commercial customers.

The Jennie-O Turkey Store segment consists primarily of the processing, marketing, and sale of branded and unbranded turkey products for retail, foodservice, and fresh product customers.

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

Intersegment sales are recorded at prices that approximate cost and are eliminated in the Consolidated Statements of Operations. The Company does not allocate investment income, interest expense, ~~and~~or interest income 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 noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes.

Sales and operating profits for each of the Company’s reportable segments and reconciliation to ~~earnings before income taxes~~Earnings Before Income Taxes are set forth below. The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent these segments, if operated independently, would report the profit and other financial information shown below.


	Three Months Ended						Six Months Ended						Three Months Ended
(in thousands)	April 28, 2019			April 29, 2018			April 28, 2019			April 29, 2018			January 26, 2020			January 27, 2019
Sales to Unaffiliated Customers
Grocery Products	$	635,319		$	621,492		$	1,242,144		$	1,225,069		$	540,626		$	606,825
Refrigerated Foods	1,257,884			1,245,066			2,536,631			2,499,703			1,351,790			1,278,747
Jennie-O Turkey Store	305,256			303,875			626,490			626,635			330,128			321,234
International & Other	146,285			160,135			299,834			310,454			161,890			153,549
Total	$	2,344,744		$	2,330,568		$	4,705,099		$	4,661,861		$	2,384,434		$	2,360,355

Intersegment Sales
Grocery Products	$	—		$	10		$	22		$	14		$	7		$	22
Refrigerated Foods	3,273			1,386			5,451			3,550			5,803			2,178
Jennie-O Turkey Store	30,050			25,539			58,861			50,228			27,842			28,811
International & Other	—			—			—			—			—			—
Total	33,323			26,935			64,334			53,792			33,652			31,011
Intersegment elimination	(33,323		)	(26,935		)	(64,334		)	(53,792		)
Intersegment Elimination													(33,652		)	(31,011		)
Total	$	—		$	—		$	—		$	—		$	—		$	—

Net Sales
Grocery Products	$	635,319		$	621,502		$	1,242,166		$	1,225,083		$	540,633		$	606,847
Refrigerated Foods	1,261,157			1,246,452			2,542,082			2,503,253			1,357,593			1,280,925
Jennie-O Turkey Store	335,306			329,414			685,351			676,863			357,970			350,045
International & Other	146,285			160,135			299,834			310,454			161,890			153,549
Intersegment elimination	(33,323		)	(26,935		)	(64,334		)	(53,792		)
Intersegment Elimination													(33,652		)	(31,011		)
Total	$	2,344,744		$	2,330,568		$	4,705,099		$	4,661,861		$	2,384,434		$	2,360,355

Segment Profit
Grocery Products	$	104,499		$	93,206		$	199,796		$	190,751		$	68,435		$	95,297
Refrigerated Foods	158,088			166,920			320,681			324,451			167,343			162,593
Jennie-O Turkey Store	17,749			32,073			55,653			69,797			38,551			37,904
International & Other	14,325			20,850			39,303			45,505			19,952			24,978
Total segment profit	294,661			313,049			615,433			630,504
Net unallocated expense	(23,178		)	16,304			(9,287		)	28,698
Noncontrolling interest	207			138			301			242
Total Segment Profit													294,280			320,772
Net Unallocated Expense													4,199			13,891
Noncontrolling Interest													81			94
Earnings Before Income Taxes	$	318,046		$	296,883		$	625,021		$	602,048		$	290,162		$	306,975

Revenue has been disaggregated into the categories below to show how sales channels affect the nature, amount, timing, and uncertainty of revenue and cash ~~flows~~flows. The amount of total revenues contributed by sales channel for the ~~second quarter and~~ first ~~six~~three months of fiscal 2020 and 2019 ~~and 2018.~~are as follows:


	Three Months Ended				Six Months Ended				Three Months Ended
(in thousands)	April 28, 2019		April 29, 2018		April 28, 2019		April 29, 2018		January 26, 2020		January 27, 2019
U.S. Retail	$	1,255,507	$	1,257,474	$	2,508,822	$	2,557,146	$	1,226,430	$	1,253,315
U.S. Foodservice	716,407		674,244		1,406,312		1,331,347		709,106		689,905
U.S. Deli	212,715		220,478		463,991		431,475		260,638		251,276
International	160,115		178,372		325,974		341,893		188,260		165,859
Total	$	2,344,744	$	2,330,568	$	4,705,099	$	4,661,861	$	2,384,434	$	2,360,355

The Company’s products primarily consist of meat and other food products. The amount of total revenues contributed by classes of similar products for the first three months of fiscal 2020 and 2019 are as follows:



	Three Months Ended
(in thousands)	January 26, 2020		January 27, 2019
Perishable	$	1,400,195	$	1,341,152
Poultry	459,083		441,392
Shelf-stable	450,704		436,897
Miscellaneous	74,452		140,914
Total	$	2,384,434	$	2,360,355

Perishable includes fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamole, and bacon (excluding ~~JOTS~~Jennie-O Turkey Store products). Shelf-stable includes canned luncheon meats, peanut butter, chilies, shelf-stable microwaveable meals, hash, stews, meat spreads, flour and corn tortillas,

salsas, tortilla chips, and other items that do not require refrigeration. The Poultry category is composed primarily of ~~JOTS~~Jennie-O Turkey Store products. The Miscellaneous category primarily consists of nutritional food products and supplements, dessert and drink mixes, and industrial gelatin products. The ~~amount~~reduction in the Miscellaneous category during fiscal 2020 is due to the divestiture of ~~total revenues contributed by classes of similar products for the second quarter and first six months of fiscal 2019 and 2018 are as follows:~~

Three Months Ended Six Months Ended
(in thousands) April 28, 2019 April 29, 2018 April 28, 2019 April 29, 2018
Perishable $ 1,317,455
$ 1,304,008
$ 2,658,607
$ 2,622,881
Shelf-stable 444,831
444,748
881,728
869,341
Poultry 427,663
427,669
869,055
871,111
Miscellaneous 154,795
154,143
295,709
298,528
Total $ 2,344,744
$ 2,330,568
$ 4,705,099
$ 4,661,861

CytoSport on April 15, 2019.

NOTE O - SUBSEQUENT EVENTS

Subsequent to the end of the quarter, the Company announced a definitive agreement to acquire Sadler's Smokehouse for $270.0 million. The transaction closed on March 2, 2020.

Item 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

There have been no material changes in the Company’s Critical Accounting Policies as disclosed in its Annual Report on Form 10-K for the fiscal year ended October ~~28, 2018.~~27, 2019.

RESULTS OF OPERATIONS

Overview

The Company is a global manufacturer and marketer of branded food products. It operates in four reportable segments as described in Note N - Segment Reporting in the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

The Company reported net earnings per diluted share of ~~$0.52~~$0.45 for the ~~second~~first quarter of fiscal ~~2019,~~2020, compared to $0.44 per diluted share in the ~~second~~first quarter of fiscal ~~2018.~~2019. Significant factors impacting the quarter were:

~~The Company delivered~~Pretax earnings ~~growth. Net earnings benefited from one-time gains associated with~~declined, driven primarily by the divestiture of CytoSport ~~Inc. (CytoSport),~~last year. Net earnings increased as a lower ~~SG&A,~~effective tax rate for the quarter and ~~a strong quarter~~profit growth from ~~Grocery Products.~~

~~Three~~Refrigerated Foods and Jennie-O Turkey Store more than offset the impact of the ~~Company's four segments delivered volume~~CytoSport divestiture and ~~net sales growth.~~lower earnings in the Grocery Products and International & Other segments.

Refrigerated Foods segment profit ~~declined as growth in value-added profits did not fully offset a steep decline in commodity profits. Higher operational expenses related to capacity expansion projects also impacted profitability.~~

~~Grocery Products profit~~ increased primarily due to improved commodity profits while higher ~~volume and margin across many product categories.~~raw material costs pressured the value-added businesses.

~~JOTS segment~~Grocery Products profit was negatively impacted by ~~higher-than-expected plant startup~~the divestiture of CytoSport, higher raw material costs, lower contract manufacturing profits, and decreased volumes.

Jennie-O Turkey Store segment profit increased due to higher ~~feed costs,~~commodity profits and ~~lower retail sales.~~operational improvements.

International & Other profit ~~decreased primarily due~~declined, driven by significantly higher pork raw material costs for the Company's businesses in Brazil, China, and other Asian countries such as South Korea and the Philippines.

Subsequent to the ~~continued impact~~end of ~~tariffs~~the quarter, the Company announced a definitive agreement to acquire Sadler's Smokehouse for $270.0 million. The transaction closed on ~~fresh pork exports along with higher freight costs.~~

The Company completed the sale of CytoSport to PepsiCo, Inc., on April 15, 2019. The Company received $473.9 million in cash, subject to working capital adjustments, and used the proceeds to pay off the remaining debt from the Columbus Manufacturing, Inc. (Columbus) acquisition.March 2, 2020.

Consolidated Results

Volume, Net Sales, Earnings, and Diluted Earnings per Share

Three Months Ended Six Months Ended
(in thousands, except per share amounts) April 28, 2019 April 29, 2018
%
Change
April 28, 2019 April 29, 2018
%
Change
Volume (lbs.) 1,180,007
1,171,401
0.7 2,376,900
2,361,993
0.6
Net sales $ 2,344,744
$ 2,330,568
0.6 $ 4,705,099
$ 4,661,861
0.9
Net earnings 282,429
237,384
19.0 $ 523,854
$ 540,491
(3.1 )
Diluted earnings per share 0.52
0.44
18.2 0.96
1.00
(4.0 )
Adjusted net earnings 248,988
⁽¹⁾
237,384
4.9 490,413
⁽¹⁾
540,491
(9.3 )
Adjusted diluted earnings per share 0.46
⁽¹⁾
0.44
4.5 0.90
⁽¹⁾
1.00
(10.0 )



	Three Months Ended
(in thousands, except per share amounts)	January 26, 2020		January 27, 2019		% Change
Volume (lbs.)	1,186,987		1,196,893		(0.8	)
Organic Volume ⁽¹⁾	1,186,987		1,161,059		2.2
Net Sales	$	2,384,434	$	2,360,355	1.0
Organic Net Sales ⁽¹⁾	2,384,434		2,295,201		3.9
Net Earnings	242,872		241,425		0.6
Diluted Earnings per Share	0.45		0.44		2.3

⁽¹⁾The non-GAAP adjusted financial measurements are presented to provide investors additional information to facilitate the comparison of past and present operations. The ~~company~~Company believes these non-GAAP financial measurements provide useful information to investors because they are measurements used to evaluate performance on a comparable year-over-year basis. These non-GAAP measurements are not in accordance with accounting principles generally accepted in the United States (GAAP) nor intended to be a substitute for ~~U.S.~~ GAAP measurements in analyzing financial performance. These non-GAAP measurements ~~are not in accordance with generally accepted accounting principles and~~ may be different from ~~non-GAAP~~ measures used by other companies.

~~Adjusted~~Organic net ~~earnings~~sales and ~~diluted earnings per share~~organic volume are defined as net sales and volume, excluding the impact of acquisitions and divestitures. Organic net sales and organic volume exclude the ~~one-time gain associated with the divestiture~~impacts of the CytoSport ~~business, which was recognized~~divestiture (April 2019) in ~~Net Unallocated Expense~~the Grocery Products and ~~Provision for Income Taxes.~~International & Other segments. The ~~tax benefit was driven by the sale of shares of the CytoSport legal entity. The table~~tables below ~~shows~~show the calculations to reconcile from the GAAP measures to the non-GAAP adjusted measures toin the ~~GAAP measure in both the second~~first quarter ~~and first six months~~ of fiscal 2019.

Second Quarter
2019 Non-GAAP Adjusted Earnings Gain on CytoSport Sale 2019 GAAP Earnings
Grocery Products $ 104,499
$ —
$ 104,499
Refrigerated Foods 158,088
—
158,088
Jennie-O Turkey Store 17,749
—
17,749
International & Other 14,325
—
14,325
   Total segment profit $ 294,661
$ —
$ 294,661
Net Unallocated Expense (6,709 ) (16,469 ) (23,178 )
Noncontrolling interest 207
—
207
   Earnings Before Income Taxes $ 301,577
$ 16,469
$ 318,046
Provision for income taxes 52,382
(16,972 ) 35,410
   Net Earnings $ 249,195
$ 33,441
$ 282,636
Less: Net earnings attributable to noncontrolling interest 207
—
207
   Net Earnings attributable to Hormel Foods Corporation $ 248,988
$ 33,441
$ 282,429

   Diluted Earnings Per Share $ 0.46
$ 0.06
$ 0.52

First Six Months
2019 Non-GAAP Adjusted Earnings Gain on CytoSport Sale 2019 GAAP Earnings
Grocery Products $ 199,796
$ —
$ 199,796
Refrigerated Foods 320,681
—
320,681
Jennie-O Turkey Store 55,653
—
55,653
International & Other 39,303
—
39,303
   Total segment profit $ 615,433
$ —
$ 615,433
Net Unallocated Expense 7,182
(16,469 ) (9,287 )
Noncontrolling interest 301
—
301
   Earnings Before Income Taxes $ 608,552
$ 16,469
$ 625,021
Provision for income taxes 117,838
(16,972 ) 100,866
   Net Earnings $ 490,714
$ 33,441
$ 524,155
Less: Net earnings attributable to noncontrolling interest 301
—
301
   Net Earnings attributable to Hormel Foods Corporation $ 490,413
$ 33,441
$ 523,854

   Diluted Earnings Per Share $ 0.90
$ 0.06
$ 0.96



Reconciliation of Non-GAAP Measures

	First Quarter
	Fiscal 2020		Fiscal 2019
(in thousands)	Reported GAAP		Reported GAAP		Divestitures			Organic (Non-GAAP)		Organic % Change
Volume (lbs.)
Grocery Products	292,919		338,743		(34,807		)	303,936		(3.6	)
Refrigerated Foods	605,608		589,356		—			589,356		2.8
Jennie-O Turkey Store	197,200		182,159		—			182,159		8.3
International & Other	91,260		86,635		(1,027		)	85,608		6.6
Total Volume	1,186,987		1,196,893		(35,834		)	1,161,059		2.2

Net Sales
Grocery Products	$	540,626	$	606,825	$	(63,172	)	$	543,653	(0.6	)
Refrigerated Foods	1,351,790		1,278,747		—			1,278,747		5.7
Jennie-O Turkey Store	330,128		321,234		—			321,234		2.8
International & Other	161,890		153,549		(1,982		)	151,567		6.8
Total Net Sales	$	2,384,434	$	2,360,355	$	(65,154	)	$	2,295,201	3.9

The increase in net sales for the ~~second~~first quarter of fiscal ~~2019~~2020 was primarily related to ~~increased whole bird~~higher sales ~~at JOTS,~~of commodity items in Refrigerated Foods and Jennie-O Turkey Store along with strong growth from brands such as ~~Herdez~~Hormel^®Black Label^® ~~salsas and sauces,~~bacon, Hormel^®Gatherings^®party trays, Hormel^® ~~Natural Choice~~Cure 81^® ~~products,~~ham, and ~~Hormel~~Applegate^®~~Bacon 1~~^TM~~cooked bacon, and~~ ~~Wholly~~^®~~guacamoledips. Partially offsetting these gains were declines in fresh pork retail and export sales and lean ground turkey sales at JOTS.~~

~~For the first six months of 2019, the increase in net sales was primarily related to growth from value-added products such as~~ ~~Columbus~~^® ~~branded items,~~ ~~Herdez~~^® ~~salsas and sauces,~~ ~~Hormel~~^® ~~pepperoni,~~ ~~Hormel~~^® ~~Natural Choice~~^® ~~products, and~~ ~~Wholly~~^® ~~guacamole dips~~. These increases more than ~~offsetting declines in fresh pork retail and export sales and lean ground turkey sales at JOTS.~~offset the impact from the CytoSport divestiture.

Cost of Products Sold


	Three Months Ended					Six Months Ended					Three Months Ended
(in thousands)	April 28, 2019		April 29, 2018		% Change	April 28, 2019		April 29, 2018		% Change	January 26, 2020		January 27, 2019		% Change
Cost of products sold	$	1,875,595	$	1,837,765	2.1	$	3,747,616	$	3,670,762	2.1
Cost of Products Sold											$	1,916,014	$	1,872,021	2.4

Cost of products sold for the ~~second~~first quarter ~~and first six months~~ of fiscal ~~2019 were~~2020 increased, driven by higher ~~as a result of increased input costs, operational expenses,~~pork and ~~per-unit freight expenses.~~beef raw material costs.

Gross Profit

Three Months Ended Six Months Ended
(in thousands) April 28, 2019 April 29, 2018
%
Change
April 28, 2019 April 29, 2018
%
Change
Gross profit $ 469,149
$ 492,803
(4.8 ) $ 957,483
$ 991,099
(3.4 )
Percentage of net sales 20.0 % 21.1 % 20.3 % 21.3 %



	Three Months Ended
(in thousands)	January 26, 2020			January 27, 2019			% Change
Gross Profit	$	468,421		$	488,334		(4.1	)
Percentage of Net Sales	19.6		%	20.7		%

Gross profit as a percentage of net sales declined for the ~~second~~first quarter. ~~Margins in Grocery Products increased in the second quarter of fiscal 2019 due to higher margins across many categories, while Refrigerated Foods, JOTS,~~Higher pork and ~~International & Other declined compared to the prior year. Margins in Refrigerated Foods were negatively~~beef raw material costs impacted by lower commodity profits and higher operational expenses. JOTS declined on higher-than-expected plant startup expenses, higher feed costs, and lower retail sales. International & Other was negatively impacted by lower fresh pork exports and higher freight costs.

For the first six months of 2019, gross profit as a percentage of net sales declined due to lower pork commodity profits, higher freight expenses, higher operational expenses, and lower fresh pork exports.

~~Looking to the second half of fiscal 2019, the Company expects~~ the Refrigerated Foods, Grocery Products, and International & Other ~~segments to experience periods of margin compression~~segments. Grocery Products was further impacted by a weaker sales mix due to ~~rising~~the divestiture of CytoSport and ~~volatile~~lower Skippy^® peanut butter pricing. International & Other saw pork ~~markets as a result~~costs for its multinational and affiliated businesses increase significantly over the first quarter of fiscal 2019 due to supply shortages caused by African swine fever. Jennie-O Turkey Store declined on lower retail and foodservice sales.

Looking ahead to the second quarter of fiscal 2020, the Company expects the value-added businesses in Refrigerated Foods and continued improvement at Jennie-O Turkey Store to help offset declines in the International & Other and Grocery Products segments. The divestiture of the CytoSport business and lower Skippy^® peanut butter pricing will continue to impact ofGrocery Products in the second quarter.

African swine fever in China. Additionally, pork export margins could remain challenged due to tariffs and global trade uncertainty. Lost lean ground turkey distribution is expected to negatively impact JOTS.

Selling, General and Administrative (SG&A)


	Three Months Ended								Six Months Ended								Three Months Ended
(in thousands)	April 28, 2019			April 29, 2018			% Change		April 28, 2019			April 29, 2018			% Change		January 26, 2020			January 27, 2019			% Change
SG&A	$	170,076		$	204,549		(16.9	)	$	363,620		$	424,421		(14.3	)	$	195,521		$	193,544		1.0
Percentage of net sales	7.3		%	8.8		%			7.7		%	9.1		%
Percentage of Net Sales																	8.2		%	8.2		%

For the ~~second~~first quarter of fiscal ~~2019,~~2020, SG&A expenses ~~decreased~~increased primarily due to a one-time ~~gain resulting~~benefit from a legal settlement in fiscal 2019.

Due to the CytoSport divestiture, ~~and lower selling expenses. For~~advertising investments in the first six months of fiscal 2019, SG&A expenses declined due to the gain from the CytoSport divestiture, a legal settlement, and lapping Columbus acquisition costs from the prior year. Selling expenses have also been favorable.

quarter declined. Advertising investments ~~declined moderately from~~for the ~~prior~~full year ~~in the second quarter and first six months of fiscal 2019 and~~ are expected to be ~~modestly lower compared to~~in line with the prior ~~year due to the CytoSport divestiture.~~year.

Equity in Earnings of Affiliates


	Three Months Ended						Six Months Ended						Three Months Ended
(in thousands)	April 28, 2019		April 29, 2018		% Change		April 28, 2019		April 29, 2018		% Change		January 26, 2020		January 27, 2019		% Change
Equity in earnings of affiliates	$	13,291	$	13,486	(1.4	)	$	24,749	$	37,017	(33.1	)
Equity in Earnings of Affiliates													$	7,588	$	11,458	(33.8	)

~~Results for the second quarter of fiscal 2019 were in-line with last year. For the first six months of fiscal 2019, equity~~Equity in earnings of affiliates for the first quarter of fiscal 2020 was ~~negatively~~lower as the Company's international affiliates were impacted by ~~the effect of a non-operating tax benefit in the Company's MegaMex joint venture in fiscal 2018 and lower international joint venture earnings.~~higher pork raw material costs due to African swine fever.

Effective Tax Rate

Three Months Ended Six Months Ended
April 28, 2019 April 29, 2018 April 28,
2019 April 29,
2018
Effective tax rate 11.1 % 20.0 % 16.1 % 10.2 %



	Three Months Ended
	January 26, 2020		January 27, 2019
Effective Tax Rate	16.3	%	21.3	%

The Company's effective tax rates for the second quarter and first six months of fiscal 2019 of 11.1 percent and 16.1 percent, respectively, versus 20.0 percent and 10.2 percent for the respective periods last year. The lower effective tax rate in fiscal 2020 was impacted by a large volume of stock option exercises during the ~~current quarter resulted from the net tax benefits generated by the CytoSport divestiture and equity based compensation.~~first quarter. The Company still expects a full-year effective tax rate between ~~17.5~~20.5 and ~~19.5~~22.5 percent for fiscal ~~2019.~~2020. For further information, refer to Note JI - Income Taxes.

Segment Results

Net sales and operating profits for each of the Company’s reportable segments are set forth below. The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent these segments, if operated independently, would report the operating profit and other financial information shown below. At the beginning of fiscal 2019, the Hormel Deli Solutions division combined all deli businesses, including the Jennie-O Turkey Store deli division, into one division within the Refrigerated Foods segment. In addition, the ingredients business was realigned from the Grocery Products segment to the Refrigerated Foods segment. Fiscal 2018 segment results have been adjusted to reflect these changes. Additional segment financial information can be found in Note N - Segment Reporting of the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q.


	Three Months Ended							Six Months Ended							Three Months Ended
(in thousands)	April 28, 2019			April 29, 2018		% Change		April 28, 2019			April 29, 2018		% Change		January 26, 2020		January 27, 2019		% Change
Net Sales
Grocery Products	$	635,319		$	621,492	2.2		$	1,242,144		$	1,225,069	1.4		$	540,626	$	606,825	(10.9	)
Refrigerated Foods	1,257,884			1,245,066		1.0		2,536,631			2,499,703		1.5		1,351,790		1,278,747		5.7
Jennie-O Turkey Store	305,256			303,875		0.5		626,490			626,635		—		330,128		321,234		2.8
International & Other	146,285			160,135		(8.6	)	299,834			310,454		(3.4	)	161,890		153,549		5.4
Total	$	2,344,744		$	2,330,568	0.6		$	4,705,099		$	4,661,861	0.9		$	2,384,434	$	2,360,355	1.0

Segment Profit
Grocery Products	$	104,499		$	93,206	12.1		$	199,796		$	190,751	4.7		$	68,435	$	95,297	(28.2	)
Refrigerated Foods	158,088			166,920		(5.3	)	320,681			324,451		(1.2	)	167,343		162,593		2.9
Jennie-O Turkey Store	17,749			32,073		(44.7	)	55,653			69,797		(20.3	)	38,551		37,904		1.7
International & Other	14,325			20,850		(31.3	)	39,303			45,505		(13.6	)	19,952		24,978		(20.1	)
Total segment profit	294,661			313,049		(5.9	)	615,433			630,504		(2.4	)
Net unallocated expense	(23,178		)	16,304		(242.2	)	(9,287		)	28,698		(132.4	)
Noncontrolling interest	207			138		50.0		301			242		24.4
Earnings before income taxes	$	318,046		$	296,883	7.1		$	625,021		$	602,048	3.8
* FY18 segment results have been adjusted to reflect the changes in the Grocery Products, Refrigerated Foods and Jennie-O Turkey Store segments.
Total Segment Profit															294,280		320,772		(8.3	)
Net Unallocated Expense															4,199		13,891		(69.8	)
Noncontrolling Interest															81		94		(13.8	)
Earnings Before Income Taxes															$	290,162	$	306,975	(5.5	)

Grocery Products

~~Results for the Grocery Products segment compared to the prior year are as follows:~~


	Three Months Ended					Six Months Ended					Three Months Ended
(in thousands)	April 28, 2019		April 29, 2018		% Change	April 28, 2019		April 29, 2018		% Change	January 26, 2020		January 27, 2019		% Change
Volume (lbs.)	340,602		329,424		3.4	679,345		658,731		3.1	292,919		338,743		(13.5	)
Net sales	$	635,319	$	621,492	2.2	$	1,242,144	$	1,225,069	1.4
Segment profit	104,499		93,206		12.1	199,796		190,751		4.7
Net Sales											$	540,626	$	606,825	(10.9	)
Segment Profit											68,435		95,297		(28.2	)

Net sales for the ~~second~~first quarter of fiscal ~~2019 increased on~~2020 decreased due to the CytoSport divestiture and lower Skippy^® peanut butter sales. These declines more than offset growth from the SPAM^® family of products, Justin's^® branded items, Wholly^® guacamole dips, and Herdez^® salsas and ~~sauces,~~ ~~Wholly~~^®~~guacamole dips, and~~ ~~Skippy~~^® peanut butter, partially offset by lower sales of CytoSport products. For the first six months of fiscal 2019, net sales growth from the Company's MegaMex joint venture and other key brands more than offset declines at CytoSport.sauces.

For the ~~second~~first quarter, segment profit ~~increased~~declined primarily due to the divestiture of CytoSport, higher ~~volume~~raw material costs, lower contract manufacturing profits, and ~~margin across many categories and lower expenses for CytoSport. Segment profit increased for the first six months of fiscal 2019 as higher volumes and margins and~~decreased volumes. Grocery Products also benefited from a legal settlement ~~more than offset the effect of a non-operating tax benefit in the Company's MegaMex joint venture~~ in fiscal ~~2018.~~2019.

The Company anticipates lower volume ~~sales,~~ and ~~profit declines~~sales in the second ~~half~~quarter due to the divestiture of CytoSport ~~the potential for higher input costs due to African swine fever,~~ and ~~a price decline~~lower prices on Skippy^® peanut butter ~~products driven by competitive pressures.~~products. Segment profit is also expected to decline, primarily due to the impact from the divestiture of CytoSport.

Refrigerated Foods



	Three Months Ended
(in thousands)	January 26, 2020		January 27, 2019		% Change
Volume (lbs.)	605,608		589,356		2.8
Net Sales	$	1,351,790	$	1,278,747	5.7
Segment Profit	167,343		162,593		2.9

~~Refrigerated Foods~~

~~Results for the Refrigerated Foods segment compared to the prior year are as follows:~~

Three Months Ended Six Months Ended

(in thousands)
April 28, 2019 April 29, 2018
%
Change
April 28, 2019 April 29, 2018
%
Change
Volume (lbs.) 578,795
577,394
0.2
1,168,151
1,170,170
(0.2 )
Net sales $ 1,257,884
$ 1,245,066
1.0
$ 2,536,631
$ 2,499,703
1.5
Segment profit 158,088
166,920
(5.3 ) 320,681
324,451
(1.2 )

~~Second~~First quarter volume and net sales increases were led by ~~foodservice products such as~~ ~~Hormel~~^®~~Bacon 1~~^TM ~~cooked bacon,~~ ~~Hormel~~^®~~Fire Braised~~^TMstrong demand for value-added products and ~~Austin Blues~~^® ~~authentic barbeque products. Retail products such as~~higher commodity sales. Branded sales growth was led by Hormel^® Black Label^® bacon and Hormel^®Cure 81^® ham in retail, Hormel^® ~~Natural Choice~~pizza toppings and Fontanini^® ~~products,~~ ~~Hormel~~^® ~~pepperoni,~~items in foodservice, and Hormel^® ~~prepared foods products for~~Gatherings^® party trays in deli. Applegate^® branded items in retail and foodservice also contributed to sales growth.

Refrigerated Foods segment profit increased as higher raw material costs across the ~~deli also showed excellent growth. Branded~~ value-added sales growth was offset by a double-digit decline in commodity sales as the Company converts commodity pork to value-added products. For the first six months of 2019, growth from many value-added productsbusinesses were more than offset ~~declines in~~by increased commodity ~~sales.~~profits.

Refrigerated Foods profit for the quarter declined as growth in value-added profits did not fully offset a steep decline in commodity profits and higher operational expenses related to capacity expansion projects. Segment profit for the first six months declined due to reduced commodity profits, increased freight expenses, and higher operational expenses.

Looking ahead to the second ~~half,~~quarter, Refrigerated Foods is expected to grow volume, sales, and ~~earnings~~segment profit due to ~~strength in the~~strong demand for value-added ~~portfolio. Higher input costs due to the~~products. The impact of African swine fever ~~present a risk. This~~and the outbreak of coronavirus in China could ~~lead~~create market volatility which presents risk to ~~short-term margin compression as branded value-added pricing actions lag~~ input ~~cost increases.~~costs.

Jennie-O Turkey Store

~~Results for the JOTS segment compared to the prior year are as follows:~~


	Three Months Ended						Six Months Ended						Three Months Ended
(in thousands)	April 28, 2019		April 29, 2018		% Change		April 28, 2019		April 29, 2018		% Change		January 26, 2020		January 27, 2019		% Change
Volume (lbs.)	175,611		172,705		1.7		357,770		355,765		0.6		197,200		182,159		8.3
Net sales	$	305,256	$	303,875	0.5		$	626,490	$	626,635	—
Segment profit	17,749		32,073		(44.7	)	55,653		69,797		(20.3	)
Net Sales													$	330,128	$	321,234	2.8
Segment Profit													38,551		37,904		1.7

For the ~~second~~first quarter, sales ~~were flat as improved results in whole bird and foodservice sales were offset by declines in retail sales~~increased due to ~~the lingering impact of two voluntary product recalls. Net sales for the first six months of fiscal 2019 were flat, as improved foodservice,~~higher commodity and ~~whole bird sales offset a decline in retail sales.~~whole-bird volume and pricing. Jennie-O^®lean ground tray pack volume increased as incremental distribution was regained during the quarter.

Segment profit for the ~~second~~first quarter increased due to higher commodity profits and ~~first six months of fiscal 2019 was lower, impacted by higher-than-expected plant startup expenses, higher feed costs, and lower retail sales.~~operational improvements.

~~JOTS~~Jennie-O Turkey Store anticipates anincreased volume, sales, and earnings ~~decline~~ in the second ~~half~~quarter compared to last year driven by ~~lower retail sales~~higher prices of ~~lean ground turkey.~~commodity items and significant improvements in operations.

International & Other

~~Results~~



	Three Months Ended
(in thousands)	January 26, 2020		January 27, 2019		% Change
Volume (lbs.)	91,260		86,635		5.3
Net Sales	$	161,890	$	153,549	5.4
Segment Profit	19,952		24,978		(20.1	)

Volume and sales for the first quarter increased, driven by higher fresh pork export volume and strong demand in China.

Segment profit for the quarter decreased due to significantly higher pork raw material costs for our businesses in Brazil, China, and other Asian countries such as South Korea and the Philippines.

Due to the recent outbreak of coronavirus, International & Other ~~segment compared~~anticipates a difficult second quarter. The impact for the remainder of the year is currently unknown as it will depend on how swiftly the outbreak is contained, the sales pipeline is refilled, and plants return to ~~the prior year are as follows:~~

Three Months Ended Six Months Ended
(in thousands) April 28, 2019 April 29, 2018
%
Change
April 28, 2019 April 29, 2018
%
Change
Volume (lbs.) 84,999
91,878
(7.5 ) 171,634
177,327
(3.2 )
Net sales $ 146,285
$ 160,135
(8.6 ) $ 299,834
$ 310,454
(3.4 )
Segment profit 14,325
20,850
(31.3 ) 39,303
45,505
(13.6 )

Volume, net sales, and segment profit decreases in the second quarter and first six months of fiscal 2019 were primarily due to the continued impact of tariffs on fresh pork exports and higher freight expenses. This weakness more than offset strong results from the China business, which increased sales of branded value-added products such as ~~SPAM~~^® ~~luncheon meat and~~ ~~Skippy~~^® ~~peanut butter.~~

~~The Company anticipates volume and sales growth while earnings are expected to decline due to lower margins on fresh pork exports. Pork exports remain a risk due to global trade uncertainty.~~full capacity.

Unallocated Income and Expenses

The Company does not allocate investment income, interest expense, or interest income to its segments when measuring performance. The Company also retains various other income and unallocated expenses at the corporate level. Equity in earnings of affiliates is included in segment profit; however, earnings attributable to the Company’s noncontrolling interests are excluded. These items are included in the segment table for the purpose of reconciling segment results to earnings before income taxes.

Three Months Ended Six Months Ended
(in thousands) April 28,
2019 April 29,
2018 April 28,
2019 April 29,
2018
Net unallocated expense (23,178 ) 16,304
(9,287 ) 28,698
Noncontrolling interest earnings 207
138
301
242



	Three Months Ended
(in thousands)	January 26, 2020		January 27, 2019
Net Unallocated Expense	$	4,199	$	13,891
Noncontrolling Interest Earnings	81		94

For the second quarter of fiscal 2019, net unallocated expense decreased primarily due to a one-time gain resulting from the CytoSport divestiture, lower selling expenses, higher interest and investment income.

Net unallocated expense declined for the first ~~six months~~quarter of fiscal 2020 driven by higher investment income. Expenses incurred in fiscal 2019 ~~decreased due to a one-time gain resulting from~~associated with the ~~CytoSport divestiture,~~sale of the Fremont plant offset the benefit from a legal settlement ~~and lower selling expenses.~~last year.

Related Party Transactions

There has been no material change in the information regarding Related Party Transactions as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October ~~28, 2018.~~27, 2019.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were ~~$639.3~~$724.4 million at the end of the ~~second~~first quarter of fiscal ~~2019~~2020 compared to ~~$261.6~~$512.7 million at the end of the comparable fiscal ~~2018~~2019 period.

Cash provided by operating activities was ~~$365.6~~$188.4 million in the first ~~six~~three months of fiscal ~~2019~~2020 compared to ~~$443.3~~$187.4 million in the same period of fiscal ~~2018.~~2019. Cash flows from operating activities continue to provide the Company with its principal source of liquidity. The ~~decrease is due~~Company does not anticipate a significant risk to ~~higher levels of working capital primarily~~cash flows from ~~inventory~~this source in the ~~first six months of fiscal 2019 compared to~~foreseeable future because the ~~prior year.~~Company operates in a relatively stable industry and has strong brands across many product lines.

Cash ~~provided by~~used in investing activities was ~~$424.8~~$60.5 million in the first ~~six~~three months of fiscal ~~2019~~2020 compared to ~~cash used in investing activities of $986.5~~$1.7 million in the same period of fiscal 2018. In the second quarter of fiscal 2019, the Company received proceeds of $473.9 million for the sale of CytoSport. In fiscal 2018, the Company spent $857.6 million on the acquisition of Columbus.2019. Capital expenditures in the first ~~six~~three months of fiscal ~~2019 decreased~~2020 increased to ~~$87.6~~$58.2 million from ~~$141.2~~$39.4 million in the comparable period of fiscal ~~2018.~~2019. The Company currently estimates its fiscal ~~2019~~2020 capital expenditures to be approximately ~~$310.0~~$360.0 million. Key projects for the full year include ~~capacity increases in~~an expansion of the Company's ~~Nevada, Iowa, pizza toppings facility, an expansion at the Fontanini~~Burke Corporation pizza-toppings facility in ~~McCook, Ill,~~Nevada, Iowa; a new dry sausage production facility in Nebraska; Project Orion; and ~~multiple~~ other projects ~~designed~~ to ~~increase value-added capacity.~~support growth of branded products. Fiscal 2019 included $30.6 million of proceeds from the sale of the Fremont, Nebraska, production facility.

Cash used in financing activities was ~~$610.5~~$77.9 million in the first ~~six~~three months of fiscal ~~2019~~2020 compared to ~~cash provided by financing activities of $355.9~~$128.9 million in the same period of fiscal 2018. In the first six months of fiscal 2019, the Company repaid $374.8 million of debt related to the purchase of Columbus in the prior year. The higher cash provided in fiscal 2018 is related to the purchase of Columbus as the Company borrowed $375.0 million under a term loan facility and $375.0 million under a revolving credit facility to fund the purchase, with $190.0 million paid down during the first six months.2019. The Company repurchased ~~$67.6 million~~no shares of ~~its~~ common stock in the first ~~six~~three months of fiscal ~~2019~~2020 compared to ~~$44.7~~$44.8 million repurchased

during the same period of the prior year. For additional information pertaining to the Company’s share repurchase plans or programs, see Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds.

Cash dividends paid to the Company’s shareholders continue to be an ongoing financing activity for the Company. Dividends paid in the first ~~six~~three months of fiscal ~~2019~~2020 were ~~$212.3~~$112.2 million compared to ~~$189.1~~$100.1 million in the comparable period of fiscal ~~2018.~~2019. For fiscal ~~2019,~~2020, the annual dividend rate was increased to ~~$0.84~~$0.93 per share, representing the ~~53rd~~54th consecutive annual dividend increase. The Company has paid dividends for ~~363~~366 consecutive quarters and expects to continue doing so.

The Company is required by certain covenants in its debt agreements to maintain specified levels of financial ratios and financial position. At the end of the ~~second~~first quarter of fiscal ~~2019,~~2020, the Company was in compliance with all of these debt covenants.

Cash flows from operating activities continue to provide the Company with its principal source of liquidity. The Company does not anticipate a significant risk to cash flows from this source in the foreseeable future because the Company operates in a relatively stable industry and has strong brands across many product lines.

The Company is dedicated to returning excess cash flow to shareholders through dividend payments. Growing the business through innovation and evaluating opportunities for strategic acquisitions ~~remains~~remain a focus for the Company. Reinvestments in the business to ensure employee and food safety are a top priority for the Company. Capital spending to enhance and expand current operations will also be a significant cash outflow for fiscal ~~2019.~~2020.

Contractual Obligations and Commercial Commitments

The Company records income taxes in accordance with the provisions of ASC 740, Income Taxes. The Company is unable to determine its contractual obligations by year related to this pronouncement, as the ultimate amount or timing of settlement of its reserves for income taxes cannot be reasonably estimated. The total liability for unrecognized tax benefits, including interest and penalties, at ~~April 28, 2019,~~January 26, 2020, was ~~$27.7~~$23.3 million.

There have been no other material changes to the information regarding the Company’s future contractual financial obligations previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October ~~28, 2018.~~27, 2019.

Off-Balance Sheet Arrangements

As of ~~April 28, 2019,~~January 26, 2020, and October ~~28, 2018,~~27, 2019, the Company had ~~$45.6~~$45.3 million and ~~$45.5~~$44.8 million, respectively, 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. ~~However, that~~This amount includes ~~$2.4~~$2.7 million as of ~~April 28,~~January 26, 2020, and October 27, 2019, ~~and $2.4 million as of October 28, 2018,~~ of revocable standby letters of credit for obligations of an affiliated party that may arise under workers compensation claims. Letters of credit are not reflected in the Company’s Consolidated Statements of Financial Position.

Trademarks

References to the Company’s brands or products in italics within this report represent valuable trademarks owned or licensed by Hormel Foods, LLC or other subsidiaries of Hormel Foods Corporation.

FORWARD-LOOKING STATEMENTS

This report contains “forward-looking” information within the meaning of the federal securities laws. The “forward-looking” information may include statements concerning the Company’s outlook for the future as well as other statements of beliefs, future plans, strategies, or anticipated events and similar expressions concerning matters that are not historical facts.

The Private Securities Litigation Reform Act of 1995 (the Reform Act) provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information. The Company is filing this cautionary statement in connection with the Reform Act. When used in this Quarterly Report on Form 10-Q, the Company’s Annual Report to Stockholders, other filings by the Company with the Securities and Exchange Commission (the Commission), the Company’s press releases, and oral statements made by the Company’s representatives, the words or phrases “should result,” “believe,” “intend,” “plan,” “are expected to,” “targeted,” “will continue,” “will approximate,” “is anticipated,” “estimate,” “project,” or similar expressions are intended to identify forward-looking statements within the meaning of the Reform Act. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those anticipated or projected.

In connection with the “safe harbor” provisions of the Reform Act, the Company is identifying risk factors that could affect financial performance and cause the Company’s actual results to differ materially from opinions or statements expressed with respect to future periods. The discussion of risk factors in Part II, Item 1A of this Quarterly Report on Form 10-Q contains certain cautionary statements regarding the Company’s business, which should be considered by investors and others. Such risk factors should be considered in conjunction with any discussions of operations or results by the Company or its representatives, including any forward-looking discussion, as well as comments contained in press releases, presentations to securities analysts or investors, or other communications by the Company.

In making these statements, the Company is not undertaking, and specifically declines to undertake, any obligation to address or update each or any factor in future filings or communications regarding the Company’s business or results, and is not undertaking to address how any of these factors may have caused changes to discussions or information contained in previous filings or communications. Though the Company has attempted to list comprehensively these important cautionary risk factors, the Company wishes to caution investors and others that other factors may in the future prove to be important in affecting the Company’s business or results of operations.

The Company cautions readers not to place undue reliance on forward-looking statements, which represent current views as of the date made. Forward-looking statements are inherently at risk to any changes in the national and worldwide economic environment, which could include, among other things, economic conditions, political developments, currency exchange rates, interest and inflation rates, accounting standards, taxes, and laws and regulations affecting the Company and its markets.

Item 3. ~~Quantitative and Qualitative Disclosures About Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Hog Markets: The Company’s earnings are affected by fluctuations in the live hog market. To minimize the impact on earnings, and to ensure a steady supply of quality hogs, the Company has entered into contracts with producers for the purchase of hogs at formula-based prices over periods of up to 10 years. Hogs purchased under contract accounted for 93 percent and 96 percent of the total hogs purchased by the Company during the first ~~six~~three months of fiscal years 2020 and 2019, ~~and 2018.~~respectively. The majority of these contracts use market-based formulas based on hog futures, hog primal values, or industry reported hog markets. Other contracts use a formula based on the cost of production, which can fluctuate independently from hog markets. The Company’s value-added branded portfolio helps mitigate changes in hog and pork market prices. Therefore, a hypothetical 10 percent change in the cash hog market would have had an immaterial effect on the Company’s results of operations.

~~To reduce the Company's exposure to changes in lean hog markets, the~~The Company utilizes a hedge program to reduce exposure and offset the fluctuations in the Company's future direct hog purchases. The program utilizes lean hog futures which are accounted for under cash flow hedge accounting. The fair value of the Company's open futures contracts in this program as of ~~April 28, 2019~~January 26, 2020 was ~~$2.8~~$0.4 million, before tax, compared to ~~$0.7~~$5.8 million, before tax, as of October ~~28, 2018.~~27, 2019. The Company measures its market risk exposure on its lean hog futures contracts using a sensitivity analysis, which considers a hypothetical 10 percent change in the market prices for lean hogs. A 10 percent decrease in the market price for lean hogs would have negatively impacted the fair value of the Company's ~~April 28, 2019,~~January 26, 2020, open lean hog contracts by ~~$1.7~~$12.2 million, which in turn would lower the Company's future cost on purchased hogs by a similar amount.

Turkey Production Costs: The Company raises or contracts for live turkeys to meet the majority of its raw material supply requirements. Production costs in raising turkeys are subject primarily to fluctuations in feed prices, and to a lesser extent, fuel costs. Under normal, long-term market conditions, changes in the cost to produce turkeys are offset by proportional changes in the turkey market.

~~To reduce the~~

The Company’s ~~exposure to changes in grain prices, the Company~~ utilizes a hedge program to reduce exposure and offset the fluctuation in the ~~Company’s~~Company's future direct grain purchases. This program utilizes corn futures for ~~JOTS,~~Jennie-O Turkey Store, and these contracts are accounted for under cash flow hedge accounting. The fair value of the Company’s open futures contracts as of ~~April 28, 2019,~~January 26, 2020, was ~~$(2.8)~~$(3.7) million, before tax, compared to ~~$(1.3)~~$(2.2) million, before tax, as of October ~~28, 2018.~~27, 2019. The Company measures its market risk exposure on its grain futures contracts using a sensitivity analysis, which considers a hypothetical 10 percent change in the market prices for grain. A 10 percent decrease in the market price for grain would have negatively impacted the fair value of the Company’s ~~April 28, 2019,~~January 26, 2020, open grain contracts by ~~$5.9~~$7.9 million, which in turn would lower the Company’s future cost on purchased grain by a similar amount.

Other Input Costs: The costs of raw materials, packaging materials, freight, fuel, and energy may cause the Company's results to fluctuate significantly. To manage input cost volatility, the Company pursues cost saving measures, forward pricing, derivatives, and pricing actions when necessary.

~~Long-Term Debt:~~ A principal market risk affecting the Company is the exposure to changes in interest rates on the Company’s fixed-rate, long-term debt. Market risk for fixed-rate, long-term debt is estimated as the potential increase in fair value, resulting from a hypothetical 10 percent decrease in interest rates, and amounts to approximately $1.3 million. The fair value of the Company’s long-term debt was estimated using discounted future cash flows based on the Company’s incremental borrowing rate for similar types of borrowing arrangements.

Investments: 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. As of ~~April 28, 2019,~~January 26, 2020, the balance of these securities totaled ~~$155.1~~$170.3 million compared to ~~$137.3~~$157.5 million as of October ~~28, 2018.~~27, 2019. A majority of these securities represent fixed income funds. The Company is subject to market risk due to fluctuations in the value of the remaining investments, as unrealized gains and losses associated with these securities are included in the Company’s net earnings on a mark-to-market basis. A 10 percent decline in the value of the investments not held in fixed income funds would have a negative impact to the Company’s pretax earnings of approximately ~~$6.8~~$8.2 million, while a 10 percent increase in value would have a positive impact of the same amount.

International Assets: The fair values of certain Company assets are subject to fluctuations in foreign currencies. The Company's net asset position in foreign currencies as of ~~April 28, 2019~~January 26, 2020 was ~~$529.3~~$566.8 million, compared to ~~$687.7~~$543.8 million as of October ~~28, 2018,~~27, 2019, with most of the exposure existing in Chinese yuan and Brazilian real. Changes in currency exchange rates impact the fair values of the Company assets either currently through the Consolidated Statements of Operations ~~as currency gains/losses~~within Interest and Investment Income or through the Consolidated Statements of Financial Position within ~~other comprehensive loss.~~Accumulated Other Comprehensive Loss.

The Company measures its foreign currency exchange risk by using a 10 percent sensitivity analysis on the Company's primary foreign net asset position, the Chinese yuan and Brazilian real, as of ~~April 28, 2019.~~January 26, 2020. A 10 percent strengthening in the value of the Chinese yuan relative to the U.S. dollar would result in other comprehensive income of approximately ~~$33.4~~$35.9 million pretax. A 10 percent weakening in the value of the Chinese yuan relative to the U.S. dollar would result in other comprehensive loss of approximately ~~$27.3~~$29.4 million pretax. A 10 percent strengthening in the value of the Brazilian real relative to the U.S. dollar would result in other comprehensive income of approximately ~~$13.4~~$13.7 million pretax. A 10 percent weakening in the value of the Brazilian real relative to the U.S. dollar would result in other comprehensive loss of approximately ~~$11.0~~$11.2 million pretax.

Item 4. ~~Controls and Procedures~~CONTROLS AND PROCEDURES


(a)	Disclosure Controls and Procedures.

As of the end of the period covered by this report (the Evaluation Date), the Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information the Company is required to disclose in reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Commission rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.


(b)	Internal Controls.

The Company is in the midst of a multi-year transformation project (Project Orion) to achieve better analytics, customer service, and process efficiencies through the use of Oracle Cloud Solutions. During the ~~second~~first quarter of fiscal ~~2019,~~2020, the Company completed the implementation of certain human resources and payroll solutions. Additional phases will be implemented over the next several years. Emphasis has been on the maintenance of effective internal controls throughout development and deployment of all phases. The Company evaluated and concluded the first phase of Project Orion has not materially affected the Company's internal control over financial reporting. Based on this evaluation there has been no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the first quarter of fiscal 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. ~~Legal Proceedings~~LEGAL PROCEEDINGS

The Company is a party to various legal proceedings related to the ongoing operation of its business, including claims both by and against the Company. At any time, such proceedings typically involve claims related to product liability, labeling, contract disputes, intellectual property, competition laws, employment practices, or other actions brought by employees, consumers, competitors, or suppliers. The Company establishes accruals for its potential exposure, as appropriate, for claims against the Company when losses become probable and reasonably estimable. However, future developments or settlements are uncertain and may require the Company to change such accruals as proceedings progress. ~~Resolution~~Resolutions of any currently known matters, either individually or in the aggregate, isare not expected to have a material effect on the Company’s financial condition, results of operations, or liquidity.

Item 1A. ~~Risk Factors~~RISK FACTORS

Risk Factors

The Company’s operations are subject to the general risks of the food industry.

The food products manufacturing industry is subject to the risks posed by:


▪	food spoilage;


▪	food contamination caused by disease-producing organisms or pathogens, such as Listeria monocytogenes, Salmonella, and pathogenic EE. coli.;


▪	food allergens;


▪	nutritional and health-related concerns;


▪	federal, state, and local food processing controls;


▪	consumer product liability claims;


▪	product tampering; and


▪	the possible unavailability and/or expense of liability insurance.

The pathogens ~~which~~that may cause food contamination are found generally in livestock and in the environment and thus may be present in our products. These pathogens also can be introduced to our products as a result of improper handling by customers or consumers. We do not have control over handling procedures once our products have been shipped for distribution. If one or more of these risks were to materialize, the Company’s brand and business reputation could be negatively impacted. In addition, revenues could decrease, costs of doing business could increase, and the Company’s operating results could be adversely affected.

Deterioration of economic conditions could harm the Company’s business.

The Company's business may be adversely affected by changes in national or global economic conditions, including inflation, interest rates, availability of capital, energy availability and costs (including fuel surcharges), and the effects of governmental initiatives to manage economic conditions. Decreases in consumer spending rates and shifts in consumer product preferences could also negatively impact the Company.

Volatility in financial markets and the deterioration of national and global economic conditions could impact the Company’s operations as follows:


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


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

The Company utilizes hedging programs to manage its exposure to various commodity market risks, which qualify for hedge accounting for financial reporting purposes. Volatile fluctuations in market conditions could cause these instruments to become ineffective, which could require any gains or losses associated with these instruments to be reported in the Company’s earnings

each period. These instruments may limit the Company’s ability to benefit from market gains if commodity prices become more favorable than those secured under the Company’s hedging programs.

Additionally, if a highly pathogenic human disease outbreak developed in the United States or internationally, it may negatively impact the national or global economy, demand for Company products, supplies to the Company, the Company's production processes, and/or the Company’s workforce availability, and the Company’s financial results could suffer. Most recently, the Company is monitoring the coronavirus outbreak and its impact on China operations. The Company has developed contingency

plans to address infectious disease scenarios and the potential impact on its operations, and will continue to update these plans as necessary. There can be no assurance given, however, that these plans will be effective in eliminating the negative effects of any such diseases on the Company’s operating results.

Outbreaks of disease among livestock and poultry flocks could harm the Company’s revenues and operating margins.

The Company is subject to risks associated with the outbreak of disease in pork and beef livestock, and poultry flocks, including African swine fever (ASF), Bovine Spongiform Encephalopathy (BSE), pneumo-virus, Porcine Circovirus 2 (PCV2), Porcine Reproduction & Respiratory Syndrome (PRRS), Foot-and-Mouth Disease (FMD), Porcine Epidemic Diarrhea Virus (PEDv), and Highly Pathogenic Avian Influenza (HPAI). The outbreak of ~~disease~~such diseases could adversely affect the Company’s supply of raw materials, increase the cost of production, reduce utilization of the Company’s harvest facilities, and reduce operating margins. Additionally, the outbreak of disease may hinder the Company’s ability to market and sell products both domestically and internationally.

~~Most recently,~~According to the Ministry of Agriculture and Rural Affairs of the People's Republic of China, as of November 2019, the outbreak of ASF in China has ~~started~~eliminated over 40 percent of the country's hog herd compared to ~~impact total global supply.~~the prior year. The disease has also spread to additional countries in Asia and Europe. If an outbreak of ASF were to occur in the United States, the Company's supply of hogs and pork could be materially impacted.

The Company has developed business continuity plans for various disease scenarios and will continue to update these plans as necessary. There can be no assurance given, however, that these plans will be effective in eliminating the negative effects of any such diseases on the Company’s operating results.

Fluctuations in commodity prices and availability of pork, poultry, beef, feed grains, avocados, peanuts, energy, and whey could harm the Company’s earnings.

The Company’s results of operations and financial condition are largely dependent upon the cost and supply of pork, poultry, beef, feed grains, avocados, peanuts, and whey as well as energy costs and the selling prices for many of our products, which are determined by constantly changing market forces of supply and demand.

The live hog industry has evolved to large, vertically-integrated operations using long-term supply agreements. This has resulted in fewer hogs being available on the cash spot market. Consequently, the Company uses long-term supply contracts based on market-based formulas or the cost of production to ensure a stable supply of raw materials while minimizing extreme fluctuations in costs over the long-term. This may result, in the short-term, in higher live hog costs compared to the cash spot market depending on the relationship of the cash spot market to contract prices. Market-based pricing on certain product lines, and lead time required to implement pricing adjustments, may prevent all or part of these cost increases from being recovered, and these higher costs could adversely affect our short-term financial results.

~~JOTS~~Jennie-O Turkey Store raises turkeys and contracts with turkey growers to meet its raw material requirements for whole birds and processed turkey products. Results in these operations are affected by the cost and supply of feed grains, which fluctuate due to climate conditions, production forecasts, and supply and demand conditions at local, regional, national, and worldwide ~~levels.~~markets. The Company attempts to manage some of its short-term exposure to fluctuations in feed prices by forward buying, using futures contracts, and pursuing pricing advances. However, these strategies may not be adequate to overcome sustained increases in market prices due to alternate uses for feed grains or other changes in these market conditions.

The ~~supply~~supplies of natural and organic proteins may impact the Company’s ability to ensure a continuing supply of these products. To mitigate this risk, the Company ~~enters into long-term agreements~~partners with multiple long-term suppliers.

International trade barriers and other restrictions could result in less foreign demand and increased domestic supply of proteins, thereby potentially lowering prices. The Company occasionally utilizes in-country production to limit this exposure.

Market demand for the Company’s products may fluctuate.

The Company faces competition from other producers of ~~alternative protein sources, including~~proteins such as pork, beef, turkey, chicken, and fish, as well as providers of alternative proteins such as nut butters, whey, and plant-based proteins. The ~~bases~~factors on which the Company competes include:


▪	price;


▪	product quality and attributes;


▪	brand identification;


▪	breadth of product line; and


▪	customer service.

Demand for the Company’s products is also affected by competitors’ promotional spending, the effectiveness of the Company’s advertising and marketing programs, and consumer perceptions. Failure to identify and react to changes in food trends such as

sustainability of product sources and animal welfare could lead to, among other things, reduced demand for the Company’s brands and products. The Company may be unable to compete successfully on any or all of these ~~bases~~factors in the future.

The Company’s operations are subject to the general risks associated with acquisitions and divestitures.

The Company has made several acquisitions and divestitures in recent years, most recently the acquisition of Sadler's Smokehouse, that align with the Company’s strategic initiative ~~of delivering~~to deliver long-term value to ~~shareholders, most recently the acquisition of Columbus and the divestiture of CytoSport.~~shareholders. The Company regularly reviews strategic opportunities to grow through acquisitions and to divest non-strategic assets. Potential risks associated with these transactions include ~~the~~ the inability to consummate a transaction on favorable terms, the diversion of management's attention from other business concerns, the potential loss of key employees and customers of current or acquired companies, the inability to integrate or divest operations successfully, the possible assumption of unknown liabilities, potential disputes with buyers or sellers, potential impairment charges if purchase assumptions are not achieved or market conditions decline, and the inherent risks in entering markets or lines of business in which the Company has limited or no prior experience. Any or all of these risks could impact the Company’s financial results and business reputation. In addition, acquisitions outside the United States may present unique challenges and increase the Company's exposure to the risks associated with foreign operations.

The Company is subject to disruption of operations at co-packers or other suppliers.

Disruption of operations at co‑packers or other suppliers may impact the Company’s product or raw material supply, which could have an adverse effect on the Company’s financial results. Additionally, actions taken to mitigate the impact of any potential disruption, including increasing inventory in anticipation of a potential production or supply interruption, may adversely affect the Company’s financial results.

The Company’s operations are subject to the general risks of litigation.

The Company is involved on an ongoing basis in litigation arising in the ordinary course of business. Trends in litigation may include class actions involving employees, consumers, competitors, suppliers, shareholders, or injured persons, and claims relating to product liability, contract disputes, intellectual property, advertising, labeling, wage and hour laws, employment practices, or environmental matters. Litigation trends and the outcome of litigation cannot be predicted with certainty and adverse litigation trends and outcomes could ~~adversely~~negatively affect the Company’s financial results.

The Company is subject to the loss of a material contract.

The Company is a party to several supply, distribution, contract packaging, and other material contracts. The loss of a material contract could adversely affect the Company’s financial results.

Government regulation, present and future, exposes the Company to potential sanctions and compliance costs that could adversely affect the Company’s business.

The Company’s operations are subject to extensive regulation by the U.S. Department of Homeland Security, the U.S. Department of Agriculture, the U.S. Food and Drug Administration, federal and state taxing authorities, and other federal, state, and local authorities who oversee workforce immigration laws, laws regulating the protection of personal information, cyber-security regulations, tax regulations, animal welfare, food safety standards, and the processing, packaging, storage, distribution, advertising, and labeling of the Company’s products. The Company’s manufacturing facilities and products are subject to continuous inspection by federal, state, and local authorities. Claims or enforcement proceedings could be brought against the Company in the future. The availability of government inspectors due to a government furlough could also cause disruption to the Company’s manufacturing facilities. Additionally, the Company is subject to new or modified laws, regulations, and accounting standards. The Company’s failure or inability to comply with

such requirements could subject the Company to civil remedies, including fines, injunctions, recalls, or seizures, as well as potential criminal sanctions.

The Company is subject to stringent environmental regulation and potentially subject to environmental litigation, proceedings, and investigations.

The Company’s past and present business operations and ownership and operation of real property are subject to stringent federal, state, and local environmental laws and regulations pertaining to the discharge of materials into the environment and the handling and disposition of wastes (including solid and hazardous wastes) or otherwise relating to protection of the environment. Compliance with these laws and regulations, ~~and the ability to comply with~~as well as any modifications, ~~to these laws and regulations,~~ is material to the Company’s business. ~~New matters or sites may be identified in the future requiring additional investigation, assessment, or expenditures. In addition, some~~Some of the Company’s facilities have been in operation for many years and, over time, the Company and other prior operators of these facilities may have generated and disposed of wastes that now may be considered hazardous. Future discovery of contamination of property underlying or in the vicinity of the Company’s present or former properties or manufacturing facilities and/or waste disposal sites could require the Company to incur additional ~~expenses.~~expenses related to additional investigation, assessment or other requirements. The occurrence of any of these events, the implementation of new laws and regulations, or ~~stricter~~updated interpretation of existing laws or regulations could adversely affect the Company’s financial results.

The Company’s foreign operations pose additional risks to the Company’s business.

The Company operates its business and markets its products internationally. The Company’s foreign operations are subject to the risks described above, as well as risks related to fluctuations in currency values, foreign currency exchange controls, compliance with foreign laws, compliance with applicable U.S. laws, including the Foreign Corrupt Practices Act, and other economic or political uncertainties. International sales are subject to risks related to general economic conditions, imposition of tariffs, quotas, trade barriers and other restrictions, enforcement of remedies in foreign jurisdictions and compliance with applicable foreign laws, and other economic and political uncertainties. All of these risks could result in increased costs or decreased revenues, which could adversely affect the Company’s financial results.

The Company may be adversely impacted if the Company is unable to protect information technology systems against, or effectively respond to, cyber-attacks or security ~~breaches, interruptions or other failures.~~breaches.

Information technology systems are an important part of the Company’s business operations. Attempted cyber-attack and other cyber incidents are occurring more frequently and are being made by groups and individuals with a wide range of motives and expertise.

In addition, the Company is in the ~~initial planning stage for~~midst of a ~~process~~multi-year transformation project (Project Orion) to achieve better analytics, customer service, and process efficiencies through the use of Oracle Cloud Solutions. This project is expected to improve the efficiency and effectiveness of certain financial and business transaction processes and the underlying systems environment. ~~Implementation is~~The Company implemented human resources and payroll functionality in December 2019. Additional integrations are expected to ~~occur in phases~~take place throughout fiscal 2020 and over the next ~~several~~few years. Such an implementation is a major undertaking from a financial, management, and personnel perspective. The implementation of the enterprise resource planning system may prove to be more difficult, costly, or time consuming than expected, and there can be no assurance that this system will be beneficial to the extent anticipated.

In an attempt to mitigate these risks, the Company has implemented and continues to evaluate security initiatives and business continuity plans.

Deterioration of labor relations or increases in labor costs could harm the Company’s business.

As of ~~April 28, 2019,~~January 26, 2020, the Company had approximately ~~18,500~~18,700 employees worldwide, of which approximately ~~3,210~~3,220 were represented by labor unions, principally the United Food and Commercial Workers Union. A significant increase in labor costs or a deterioration of labor relations at any of the Company’s facilities or contracted hog processing facilities resulting in work slowdowns or stoppages could harm the Company’s financial results. Union contracts at the Company's facilities in Algona, Iowa; Atlanta, Georgia; Austin, Minnesota; and Beloit, Wisconsin will expire during fiscal 2019, covering approximately 2,300 employees. Negotiations have not yet been initiated.

Item 2. ~~Unregistered Sales of Equity Securities and Use of Proceeds~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Issuer Purchases~~There were no issuer purchases of ~~Equity Securities~~equity securities in the ~~Second Quarter~~first quarter of ~~Fiscal 2019~~

Period
Total
Number of
Shares
Purchased¹

Average
Price Paid
Per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs¹

Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs¹
January 28, 2019 –
    March 3, 2019
113,408 $ 41.75
113,408 7,889,121
March 4, 2019 –
    March 31, 2019
— —
— 7,889,121
April 1, 2019 –
    April 28, 2019
449,400 40.23
449,400 7,439,721
Total 562,808 $ 40.53
562,808

¹fiscal 2020. The maximum number of shares that may yet be purchased under the plans or programs as of January 26, 2020 is 4,758,235. On January ~~31,~~29, 2013, the ~~Company announced its~~Company's Board of Directors ~~had~~ authorized the repurchase of 10,000,000 shares

of its common stock with no expiration date. ~~The repurchase program was authorized at a meeting of the Company’s Board of Directors on~~On January ~~29, 2013. On November 23, 2015,~~26, 2016, the Board of Directors ~~authorized~~approved a two-for-one split of the Company’s common ~~stock.~~stock to be effective January 27, 2016. As part of the ~~resolution to approve the~~ stock split resolution, the number of shares remaining to be repurchased was adjusted proportionately. The stock split was subsequently approved by stockholders at the Company’s Annual Meeting on January 26, 2016, and effected January 27, 2016. All numbers in the table above reflect the impact of this stock split.proportionately

Item 6. ~~Exhibits~~EXHIBITS



31.1	Certification Required Under Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification Required Under Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~101.INS~~101	~~XBRL Instance Document~~The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended January 26, 2020, formatted in Inline XBRL: (i) Consolidated Statements of Financial Position, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders' Investment, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

~~101.SCH~~104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended January 26, 2020, formatted in Inline XBRL ~~Taxonomy Extension Schema Document~~

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~	~~XBRL Taxonomy Extension Labels Linkbase Document~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~(included as Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		HORMEL FOODS CORPORATION
		(Registrant)


Date: ~~June 4, 2019~~March 3, 2020	By	/s/ JAMES N. SHEEHAN
		JAMES N. SHEEHAN
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

Date: ~~June 4, 2019~~March 3, 2020	By	/s/ JANA L. HAYNES
		JANA L. HAYNES
		Vice President and Controller
		(Principal Accounting Officer)

4336



	Three Months Ended April 29, 2018

			Hormel Foods Corporation Shareholders
	Common Stock					Treasury Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Non- controlling Interest		Total Shareholders’ Investment
	Shares		Amount			Shares		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Non- controlling Interest		Total Shareholders’ Investment
Balance at January 28, 2018	529,988		$	7,764		—		$	—		$	19,242		$	5,366,501		$	(242,176	)	$	4,043	$	5,155,374
Net Earnings														237,384						138		237,522
Other Comprehensive Income																	6,423			247		6,670
Purchases of Common Stock						(593	)	(19,542		)												(19,542		)
Stock-based Compensation Expense			1								4,051											4,052
Exercise of Stock Options/Restricted Shares	738		9								7,212											7,221
Shares Retired	(593	)	(8		)	593		19,542			(19,534		)									—
Declared Cash Dividends – $0.1875 Per Share														(99,664		)						(99,664		)
Balance at April 29, 2018	530,133		$	7,766		—		$	—		$	10,971		$	5,504,221		$	(235,753	)	$	4,428	$	5,291,633

	Three Months Ended April 28, 2019

			Hormel Foods Corporation Shareholders
	Common Stock					Treasury Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Non- controlling Interest		Total Shareholders’ Investment
	Shares		Amount			Shares		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Non- controlling Interest		Total Shareholders’ Investment
Balance at January 27, 2019	534,170		$	7,826		—		$	—		$	130,196		$	5,856,029		$	(292,342	)	$	4,070	$	5,705,779
Net Earnings														282,429						207		282,636
Other Comprehensive Income																	14,207			171		14,378
Purchases of Common Stock						(562	)	(22,813		)												(22,813		)
Stock-based Compensation Expense			1								5,567											5,568
Exercise of Stock Options/Restricted Shares	2,485		35								28,390											28,425
Shares Retired	(562	)	(8		)	562		22,813			(173		)	(22,632		)						—
Declared Cash Dividends – $0.21 per share														(112,189		)						(112,189		)
Balance at April 28, 2019	536,093		$	7,854		—		$	—		$	163,980		$	6,003,637		$	(278,135	)	$	4,448	$	5,901,784



(in thousands)
Accounts receivable	$	21,199
Inventory	32,817
Prepaid and other assets	881
Other assets	936
Property, plant and equipment	83,662
Intangible assets	223,704
Goodwill	610,602
Current liabilities	(21,366		)
Deferred taxes	(95,077		)
Purchase price	$	857,358



	Shares	Weighted- Average Grant Date Fair Value
Restricted at October 28, 2018	52	$	34.08
Granted	51	42.23
Vested	52	34.08
Restricted at April 28, 2019	51	$	42.23



	Second Quarter
	2019 Non-GAAP Adjusted Earnings			Gain on CytoSport Sale			2019 GAAP Earnings
Grocery Products	$	104,499		$	—		$	104,499
Refrigerated Foods	158,088			—			158,088
Jennie-O Turkey Store	17,749			—			17,749
International & Other	14,325			—			14,325
Total segment profit	$	294,661		$	—		$	294,661
Net Unallocated Expense	(6,709		)	(16,469		)	(23,178		)
Noncontrolling interest	207			—			207
Earnings Before Income Taxes	$	301,577		$	16,469		$	318,046
Provision for income taxes	52,382			(16,972		)	35,410
Net Earnings	$	249,195		$	33,441		$	282,636
Less: Net earnings attributable to noncontrolling interest	207			—			207
Net Earnings attributable to Hormel Foods Corporation	$	248,988		$	33,441		$	282,429

Diluted Earnings Per Share	$	0.46		$	0.06		$	0.52



	First Six Months
	2019 Non-GAAP Adjusted Earnings		Gain on CytoSport Sale			2019 GAAP Earnings
Grocery Products	$	199,796	$	—		$	199,796
Refrigerated Foods	320,681		—			320,681
Jennie-O Turkey Store	55,653		—			55,653
International & Other	39,303		—			39,303
Total segment profit	$	615,433	$	—		$	615,433
Net Unallocated Expense	7,182		(16,469		)	(9,287		)
Noncontrolling interest	301		—			301
Earnings Before Income Taxes	$	608,552	$	16,469		$	625,021
Provision for income taxes	117,838		(16,972		)	100,866
Net Earnings	$	490,714	$	33,441		$	524,155
Less: Net earnings attributable to noncontrolling interest	301		—			301
Net Earnings attributable to Hormel Foods Corporation	$	490,413	$	33,441		$	523,854

Diluted Earnings Per Share	$	0.90	$	0.06		$	0.96



Period	Total Number of Shares Purchased¹	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs¹	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs¹
January 28, 2019 – March 3, 2019	113,408	$	41.75	113,408	7,889,121
March 4, 2019 – March 31, 2019	—	—		—	7,889,121
April 1, 2019 – April 28, 2019	449,400	40.23		449,400	7,439,721
Total	562,808	$	40.53	562,808

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock ~~$0.01465~~

New York Stock Exchange