DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 3 Months Ended | |
Jan. 26, 2020 | Mar. 01, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jan. 26, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-2402 | |
Entity Registrant Name | HORMEL FOODS CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 41-0319970 | |
Entity Address, Address Line One | 1 Hormel Place | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55912 | |
City Area Code | 507 | |
Local Phone Number | 437-5611 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | HRL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Smaller Reporting Company | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0000048465 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-25 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 537,776,130 | |
Common Stock Non-Voting | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 0 |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands | Jan. 26, 2020 | Oct. 27, 2019 |
Current Assets | ||
Cash and Cash Equivalents | $ 724,419 | $ 672,901 |
Short-term Marketable Securities | 14,808 | 14,736 |
Accounts Receivable | 562,483 | 574,396 |
Inventories | 1,057,277 | 1,042,362 |
Income Taxes Receivable | 187 | 19,924 |
Prepaid Expenses | 24,817 | 22,637 |
Other Current Assets | 10,976 | 14,457 |
Total Current Assets | 2,394,967 | 2,361,413 |
Goodwill | 2,484,088 | 2,481,645 |
Other Intangibles | 1,031,804 | 1,033,862 |
Pension Assets | 141,892 | 135,915 |
Investments In and Receivables From Affiliates | 290,777 | 289,157 |
Other Assets | 251,353 | 177,901 |
Property, Plant and Equipment | ||
Land | 54,450 | 49,758 |
Buildings | 1,138,514 | |
Buildings | 1,083,902 | |
Equipment | 1,990,262 | |
Equipment | 1,965,478 | |
Construction in Progress | 275,498 | 256,190 |
Less: Allowance for Depreciation | (1,763,497) | |
Less: Allowance for Depreciation | (1,726,217) | |
Net Property, Plant and Equipment | 1,695,228 | |
Net Property, Plant and Equipment | 1,629,111 | |
Total Assets | 8,290,109 | 8,109,004 |
Current Liabilities | ||
Accounts Payable | 490,042 | 590,033 |
Accrued Expenses | 64,702 | 62,031 |
Accrued Workers Compensation | 27,116 | 24,272 |
Accrued Marketing Expenses | 110,093 | 96,305 |
Employee Related Expenses | 164,933 | 213,515 |
Taxes Payable | 30,489 | 6,208 |
Interest and Dividends Payable | 127,452 | 112,685 |
Current Maturities of Long-term Debt | 8,259 | 0 |
Total Current Liabilities | 1,023,085 | 1,105,049 |
Long-term Debt–Less Current Maturities | 308,972 | 250,000 |
Pension and Post-retirement Benefits | 539,972 | 536,490 |
Other Long-term Liabilities | 145,923 | 115,356 |
Deferred Income Taxes | 176,113 | 176,574 |
Shareholders' Investment | ||
Common stock, issued shares, value | 7,873 | 7,830 |
Additional Paid-in Capital | 230,529 | 184,921 |
Accumulated Other Comprehensive Loss | (393,278) | (399,500) |
Retained Earnings | 6,246,641 | 6,128,207 |
Hormel Foods Corporation Shareholders' Investment | 6,091,764 | 5,921,458 |
Noncontrolling Interest | 4,281 | 4,077 |
Total Shareholders' Investment | 6,096,045 | 5,925,535 |
Total Liabilities and Shareholders' Investment | $ 8,290,109 | $ 8,109,004 |
CONSOLIDATED STATEMENTS OF FI_2
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (PARENTHETICAL) - USD ($) | Jan. 26, 2020 | Oct. 27, 2019 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares (in shares) | 160,000,000 | 160,000,000 |
Preferred stock, issued shares (in shares) | 0 | 0 |
Preferred stock, issued shares, value | $ 0 | $ 0 |
Common stock, issued shares, value | $ 7,873,000 | $ 7,830,000 |
Common Stock Non-Voting | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 400,000,000 | 400,000,000 |
Common stock, issued shares (in shares) | 0 | 0 |
Common stock, issued shares, value | $ 0 | $ 0 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01465 | $ 0.01465 |
Common stock, authorized shares (in shares) | 1,600,000,000 | 1,600,000,000 |
Common stock, issued shares (in shares) | 537,414,897 | 534,488,746 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Income Statement [Abstract] | ||
Net Sales | $ 2,384,434 | $ 2,360,355 |
Cost of Products Sold | 1,916,014 | 1,872,021 |
Gross Profit | 468,421 | 488,334 |
Selling, General and Administrative | 195,521 | 193,544 |
Equity in Earnings of Affiliates | 7,588 | 11,458 |
Operating Income | 280,488 | 306,248 |
Other Income and Expense: | ||
Interest and Investment Income | 13,251 | 6,874 |
Interest Expense | (3,577) | (6,147) |
Earnings Before Income Taxes | 290,162 | 306,975 |
Provision for Income Taxes | 47,209 | 65,456 |
Net Earnings | 242,953 | 241,519 |
Less: Net Earnings (Loss) Attributable to Noncontrolling Interest | 81 | 94 |
Net Earnings Attributable to Hormel Foods Corporation | $ 242,872 | $ 241,425 |
Net Earnings Per Share | ||
Basic (in dollars per share) | $ 0.45 | $ 0.45 |
Diluted (in dollars per share) | $ 0.45 | $ 0.44 |
Weighted-average Shares Outstanding | ||
Basic (in shares) | 535,075 | 534,495 |
Diluted (in shares) | 544,815 | 547,118 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net Earnings | $ 242,953 | $ 241,519 |
Other Comprehensive Income (Loss), Net of Tax: | ||
Foreign Currency Translation | 7,937 | 1,846 |
Pension and Other Benefits | 3,512 | 3,439 |
Deferred Hedging | (5,103) | (361) |
Total Other Comprehensive Income (Loss) | 6,346 | 4,924 |
Comprehensive Income | 249,299 | 246,443 |
Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interest | 205 | 63 |
Comprehensive Income Attributable to Hormel Foods Corporation | $ 249,094 | $ 246,380 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Jan. 26, 2020 | Jan. 27, 2019 | Oct. 29, 2018 | |
Increase (Decrease) in Shareholders' Investment | |||
Beginning balance | $ 5,925,535 | $ 5,604,818 | |
Net Earnings | 242,953 | 241,519 | |
Other Comprehensive Income (Loss) | 6,346 | 4,924 | |
Purchases of Common Stock | 0 | (44,809) | |
Stock-based Compensation Expense | 9,298 | 7,946 | |
Exercise of Stock Options/Restricted Shares | 36,353 | 15,998 | |
Shares Retired | 0 | 0 | |
Declared Cash Dividends | (124,438) | (112,706) | |
Ending balance | $ 6,096,045 | $ 5,705,779 | |
ASU 2016-16 | |||
Increase (Decrease) in Shareholders' Investment | |||
Cumulative Effect Adjustment from Adoption of ASU | $ (10,475) | ||
ASU 2018-02 | |||
Increase (Decrease) in Shareholders' Investment | |||
Cumulative Effect Adjustment from Adoption of ASU | (1,436) | ||
Common Stock | |||
Increase (Decrease) in Shareholders' Investment | |||
Beginning balance (in shares) | 534,489 | 534,135 | |
Beginning balance | $ 7,830 | $ 7,825 | |
Stock-based Compensation Expense | |||
Exercise of Stock Options/Restricted Shares (in shares) | 2,926 | 1,100 | |
Exercise of Stock Options/Restricted Shares | $ 43 | $ 17 | |
Shares Retired (in shares) | (1,065) | ||
Shares Retired | $ (16) | ||
Ending balance (in shares) | 537,415 | 534,170 | |
Ending balance | $ 7,873 | $ 7,826 | |
Treasury Stock | |||
Increase (Decrease) in Shareholders' Investment | |||
Beginning balance (in shares) | 0 | 0 | |
Beginning balance | $ 0 | $ 0 | |
Purchases of Common Stock (in shares) | (1,065) | ||
Purchases of Common Stock | $ (44,809) | ||
Shares Retired (in shares) | (1,065) | ||
Shares Retired | $ 44,809 | ||
Ending balance (in shares) | 0 | 0 | |
Ending balance | $ 0 | $ 0 | |
Additional Paid-in Capital | |||
Increase (Decrease) in Shareholders' Investment | |||
Beginning balance | 184,921 | 106,528 | |
Stock-based Compensation Expense | 9,298 | 7,946 | |
Exercise of Stock Options/Restricted Shares | 36,310 | 15,981 | |
Shares Retired | (259) | ||
Ending balance | 230,529 | 130,196 | |
Retained Earnings | |||
Increase (Decrease) in Shareholders' Investment | |||
Beginning balance | 6,128,207 | 5,729,956 | |
Net Earnings | 242,872 | 241,425 | |
Shares Retired | (44,534) | ||
Declared Cash Dividends | (124,438) | (112,706) | |
Ending balance | 6,246,641 | 5,856,029 | |
Retained Earnings | ASU 2016-16 | |||
Increase (Decrease) in Shareholders' Investment | |||
Cumulative Effect Adjustment from Adoption of ASU | (10,475) | ||
Retained Earnings | ASU 2017-12 | |||
Increase (Decrease) in Shareholders' Investment | |||
Cumulative Effect Adjustment from Adoption of ASU | 21 | ||
Retained Earnings | ASU 2018-02 | |||
Increase (Decrease) in Shareholders' Investment | |||
Cumulative Effect Adjustment from Adoption of ASU | 52,342 | ||
Accumulated Other Comprehensive (Loss) Income | |||
Increase (Decrease) in Shareholders' Investment | |||
Beginning balance | (399,500) | (243,498) | |
Other Comprehensive Income (Loss) | 6,222 | 4,955 | |
Ending balance | (393,278) | (292,342) | |
Accumulated Other Comprehensive (Loss) Income | ASU 2017-12 | |||
Increase (Decrease) in Shareholders' Investment | |||
Cumulative Effect Adjustment from Adoption of ASU | (21) | ||
Accumulated Other Comprehensive (Loss) Income | ASU 2018-02 | |||
Increase (Decrease) in Shareholders' Investment | |||
Cumulative Effect Adjustment from Adoption of ASU | $ (53,778) | ||
Non- controlling Interest | |||
Increase (Decrease) in Shareholders' Investment | |||
Beginning balance | 4,077 | 4,007 | |
Net Earnings | 81 | 94 | |
Other Comprehensive Income (Loss) | 124 | (31) | |
Ending balance | $ 4,281 | $ 4,070 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT (PARENTHETICAL) - $ / shares | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Declared Cash Dividends (in dollars per share) | $ 0.2325 | $ 0.21 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Operating Activities | ||
Net Earnings | $ 242,953 | $ 241,519 |
Adjustments to Reconcile to Net Cash Provided by Operating Activities: | ||
Depreciation | 41,194 | 36,848 |
Amortization | 8,135 | 3,170 |
Equity in Earnings of Affiliates | (7,588) | (11,458) |
Distribution from Equity Method Investees | 10,000 | 0 |
Provision for Deferred Income Taxes | 49 | 125 |
(Gain) Loss on Property/Equipment Sales and Plant Facilities | (23) | 450 |
Non-cash Investment Activities | (12,761) | (9,516) |
Stock-based Compensation Expense | 9,298 | 7,946 |
Changes in Operating Assets and Liabilities, Net of Acquisitions: | ||
Decrease (Increase) in Accounts Receivable | 11,492 | 36,262 |
(Increase) Decrease in Inventories | (14,915) | (30,901) |
(Increase) Decrease in Prepaid Expenses and Other Current Assets | (5,451) | (5,625) |
Increase (Decrease) in Pension and Post-retirement Benefits | 647 | 4,237 |
(Decrease) Increase in Accounts Payable and Accrued Expenses | (135,988) | (147,318) |
Increase (Decrease) in Net Income Taxes Payable | 41,376 | 61,686 |
Net Cash Provided by Operating Activities | 188,418 | 187,425 |
Investing Activities | ||
Net (Purchase) Sale of Securities | (16) | 0 |
Purchases of Property/Equipment | (58,211) | (39,430) |
Proceeds from Sales of Property/Equipment | 1,114 | 30,305 |
(Increase) Decrease in Investments, Equity in Affiliates, and Other Assets | (4,509) | 7,302 |
Proceeds from Company-owned Life Insurance | 1,118 | 144 |
Net Cash (Used in) Provided by Investing Activities | (60,504) | (1,679) |
Financing Activities | ||
Repayments of Long-term Debt and Finance Leases | (2,019) | |
Proceeds of Long-term Debt and Finance Leases | 38 | |
Dividends Paid on Common Stock | (112,249) | (100,125) |
Share Repurchase | 0 | (44,809) |
Proceeds from Exercise of Stock Options | 36,353 | 15,997 |
Net Cash (Used in) Provided by Financing Activities | (77,915) | (128,899) |
Effect of Exchange Rate Changes on Cash | 1,519 | (3,294) |
Increase (Decrease) in Cash and Cash Equivalents | 51,518 | 53,553 |
Cash and Cash Equivalents at Beginning of Year | 672,901 | 459,136 |
Cash and Cash Equivalents at End of Quarter | $ 724,419 | $ 512,689 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jan. 26, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 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 27, 2019 . The significant accounting policies used in preparing these Consolidated Financial Statements are consistent with those described in Note A - Summary of Significant Accounting Policies to the Consolidated Financial Statements in the Form 10-K with the exception of new requirements adopted in the first quarter of fiscal 2020. Rounding: Certain amounts in the Consolidated Financial Statements and associated notes may not foot due to rounding. All percentages have been calculated using unrounded amounts. Accounting Changes and Recent Accounting Pronouncements: New Accounting Pronouncements Adopted in Current Fiscal Year 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 twelve months. Recognition, measurement, and presentation of expenses will depend on the classification as a finance or operating lease. The update also requires expanded quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. 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 adopted the provisions of this new accounting standard at the beginning of fiscal 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 initial 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 Consolidated Statements of Financial Position as of October 28, 2019. The new standard did not have a material impact on the Consolidated Statements of 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 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 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. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820) . The updated guidance 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 to 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 in the process of evaluating the impact. In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans (Topic 715) . The updated guidance 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 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. |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 3 Months Ended |
Jan. 26, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS AND DIVESTITURES | 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 $479.8 million . The divestiture resulted in a pretax gain of $16.5 million recognized in Selling, General and Administrative expense and a tax benefit of $17.0 million recognized within the Provision for Income Taxes on the Consolidated Statements of Operations. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Jan. 26, 2020 | |
Inventory, Net [Abstract] | |
INVENTORIES | INVENTORIES Principal components of inventories are: (in thousands) January 26, October 27, 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 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Jan. 26, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill: The changes in the carrying amounts of goodwill for the three months ended January 26, 2020 , are as follows: (in thousands) Grocery Refrigerated Jennie-O Turkey Store International 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 carrying amounts for indefinite-lived intangible assets are as follows: (in thousands) January 26, October 27, 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 as follows: 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 $2.7 million and $3.2 million for the three months ended January 26, 2020 and January 27, 2019 , respectively. Estimated annual amortization expense for the five fiscal years after October 27, 2019 , is as follows: (in thousands) 2020 $ 11,700 2021 12,000 2022 11,644 2023 10,739 2024 8,921 |
PENSION AND OTHER POST-RETIREME
PENSION AND OTHER POST-RETIREMENT BENEFITS | 3 Months Ended |
Jan. 26, 2020 | |
Retirement Benefits [Abstract] | |
PENSION AND OTHER POST-RETIREMENT BENEFITS | 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 (in thousands) January 26, January 27, 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 (in thousands) January 26, January 27, 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 and Investment Income on the Consolidated Statements of Operations. Curtailments recognized in the first quarter of fiscal 2019 were due to the sale of the Fremont, Nebraska, production facility. |
DERIVATIVES AND HEDGING
DERIVATIVES AND HEDGING | 3 Months Ended |
Jan. 26, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVES AND HEDGING | 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 (AOCL) and reclassified into earnings, through Cost of 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 and Liability, respectively. Effective gains or losses related to these fair value hedges are recognized through Cost of 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 January 26, 2020 , and October 27, 2019 , the Company had the following outstanding commodity futures and options contracts related to its hedging programs: Volume Commodity Contracts January 26, 2020 October 27, 2019 Corn 25.3 million bushels 30.4 million bushels Lean Hogs 182.0 million pounds 187.3 million pounds Fair Value of Derivatives: The fair values of the Company’s derivative instruments as of January 26, 2020 , and October 27, 2019 , were as follows: Fair Value (1) (in thousands) Location on Consolidated Statements of Financial Position January 26, October 27, Derivatives Designated as Hedges: 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 K - Fair Value Measurements for a discussion of these net amounts as reported in the Consolidated Statements of Financial Position. Fair Value Hedge - Assets (Liabilities): The carrying amount of the Company's fair value hedge assets (liabilities) as of January 26, 2020 , and October 27, 2019 , were as follows: Location on Consolidated Statements of Financial Position Carrying Amount of the Hedged Assets/(Liabilities) (in thousands) January 26, October 27, 2019 Accounts Payable $ (2,347 ) $ (2,805 ) Accumulated Other Comprehensive Loss Impact: As of January 26, 2020 , the Company has included in Accumulated Other Comprehensive Loss hedging losses of $3.6 million , before tax, relating to its positions. The Company expects to recognize the majority of these gains over the next twelve months. The effect of Accumulated Other Comprehensive Loss for gains or losses (before tax) related to the Company's derivative instruments for the three months ended January 26, 2020 , and January 27, 2019 , were as follows: 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 (in thousands) January 26, 2020 January 27, 2019 January 26, 2020 January 27, 2019 Cash Flow Hedges: Commodity Contracts $ (8,626 ) $ (843 ) Cost of Products Sold $ (1,875 ) $ (1,243 ) Excluded Component (2) — (687 ) (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) related to the Company's derivative instruments for the three months ended January 26, 2020 , and January 27, 2019 , were as follows: 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 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. |
INVESTMENTS IN AND RECEIVABLES
INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES | 3 Months Ended |
Jan. 26, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES | 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 and Receivables From Affiliates. Investments In and Receivables From Affiliates consist of the following: (in thousands) Segment % Owned January 26, October 27, MegaMex Foods, LLC Grocery Products 50% $ 211,535 $ 218,592 Other Joint Ventures International & Other Various (20-40%) 79,242 70,565 Total $ 290,777 $ 289,157 Equity in Earnings of Affiliates consists of the following: Three Months Ended (in thousands) Segment January 26, January 27, MegaMex Foods, LLC Grocery Products $ 9,461 $ 10,502 Other Joint Ventures International & Other (1,873 ) 956 Total $ 7,588 $ 11,458 For the three months ended January 26, 2020 , $10.0 million of dividends were received from affiliates, compared to no dividends received for the three months ended January 27, 2019 . The Company recognized a basis difference of $21.3 million associated with the formation of MegaMex Foods, LLC, of which $12.5 million is remaining as of January 26, 2020 . This difference is being amortized through Equity in Earnings of Affiliates. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 3 Months Ended |
Jan. 26, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS Components of Accumulated Other Comprehensive Loss are as follows: (in thousands) Foreign Pension & Deferred Accumulated 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 ) (1) I ncluded 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. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Jan. 26, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 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, applied to the Company in fiscal 2019. For fiscal 2019 and future periods, the U.S. federal corporate income tax rate is 21.0 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 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. As of January 27, 2019, the Company 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. If recognized as of January 26, 2020 , and January 27, 2019 , $ 23.3 million and $ 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. Interest and penalties included in Income Tax Expense was immaterial for the first three months of fiscal 2020 and fiscal 2019. The amount of accrued interest and penalties at January 26, 2020 , and January 27, 2019 , associated with unrecognized tax benefits was $ 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 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, dating back to 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. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Jan. 26, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | 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 three months ended January 26, 2020 , stock-based compensation expense was $9.3 million, compared to $7.9 million for the three months ended 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 January 26, 2020 , there was $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 2.6 years . During the three months ended January 26, 2020 , cash received from stock option exercises was $36.4 million , compared to $16.0 million for the three months ended 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. 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. Effective with fiscal 2020 grants, the Company has determined the equity award value for eligible employees will be delivered fifty percent in stock options as described above and fifty 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 January 26, 2020 is as follows: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at October 27, 2019 25,994 $ 26.49 Granted 1,004 45.54 Exercised 3,059 13.87 Forfeited 65 36.56 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 first three months of fiscal years 2020 and 2019 are as follows. Three Months Ended January 26, January 27, 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 January 26, January 27, 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 U.S. Treasury yields as of the grant date. The dividend yield is 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 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 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 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, January 27, 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 January 26, 2020 is as follows: Shares Weighted- Average Grant Date Fair Value Restricted at October 27, 2019 51 $ 42.23 Granted 1 42.76 Restricted at January 26, 2020 52 $ 42.24 The weighted-average grant date fair value of restricted shares granted and the total fair value (in thousands) of restricted shares granted during the first three months of fiscal years 2020 and 2019 are as follows: Three Months Ended January 26, January 27, Weighted-average Grant Date Fair Value $ 42.76 $ 34.33 Fair Value of Restricted Shares Granted 53 53 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Jan. 26, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 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 January 26, 2020 , and October 27, 2019 , and their level within the fair value hierarchy, are as follows: 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) Assets at Fair Value 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 $ 918,662 $ 735,882 $ 182,780 $ — Liabilities at Fair Value Deferred Compensation (3) $ 64,356 $ — $ 64,356 $ — Total Liabilities at Fair Value $ 64,356 $ — $ 64,356 $ — 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) Assets at Fair Value 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 $ 858,045 $ 690,526 $ 167,519 $ — Liabilities at Fair Value Deferred Compensation (3) $ 62,373 $ — $ 62,373 $ — Total Liabilities at Fair Value $ 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 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) The 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 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 on the Consolidated Statements of Financial Position with investment options generally mirroring those funds held 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 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 ). 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 $259.6 million as of January 26, 2020 , and $257.7 million as of October 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 three months ended January 26, 2020 , and January 27, 2019 |
LEASES
LEASES | 3 Months Ended |
Jan. 26, 2020 | |
Leases [Abstract] | |
LEASES | 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 one or more options to renew or terminate. The exercise of lease renewal and termination options is at the Company’s discretion and generally is not reasonably certain at lease commencement. The Company’s lease agreements typically do not contain material residual value guarantees. The Company has one lease with an immaterial residual value guarantee that is included in the minimum lease payments. Certain lease agreements include rental payment increases over the lease term that can be fixed or variable. Fixed payment increases and variable payment increases based on an index or rate are included in the initial lease liability using the index or rate at commencement date. Variable payment increases not based on an index or rate are recognized as incurred. If the rate implicit in the lease is not readily determinable, the Company used its periodic incremental borrowing rate, based on the information available at commencement date, to determine the present value of future lease payments. 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 |
LEASES | 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 one or more options to renew or terminate. The exercise of lease renewal and termination options is at the Company’s discretion and generally is not reasonably certain at lease commencement. The Company’s lease agreements typically do not contain material residual value guarantees. The Company has one lease with an immaterial residual value guarantee that is included in the minimum lease payments. Certain lease agreements include rental payment increases over the lease term that can be fixed or variable. Fixed payment increases and variable payment increases based on an index or rate are included in the initial lease liability using the index or rate at commencement date. Variable payment increases not based on an index or rate are recognized as incurred. If the rate implicit in the lease is not readily determinable, the Company used its periodic incremental borrowing rate, based on the information available at commencement date, to determine the present value of future lease payments. 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 |
LEASES | 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 one or more options to renew or terminate. The exercise of lease renewal and termination options is at the Company’s discretion and generally is not reasonably certain at lease commencement. The Company’s lease agreements typically do not contain material residual value guarantees. The Company has one lease with an immaterial residual value guarantee that is included in the minimum lease payments. Certain lease agreements include rental payment increases over the lease term that can be fixed or variable. Fixed payment increases and variable payment increases based on an index or rate are included in the initial lease liability using the index or rate at commencement date. Variable payment increases not based on an index or rate are recognized as incurred. If the rate implicit in the lease is not readily determinable, the Company used its periodic incremental borrowing rate, based on the information available at commencement date, to determine the present value of future lease payments. 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 |
EARNINGS PER SHARE DATA
EARNINGS PER SHARE DATA | 3 Months Ended |
Jan. 26, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE DATA | 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 (in thousands) January 26, January 27, Basic weighted-average shares outstanding 535,075 534,495 Dilutive potential common shares 9,740 12,623 Diluted weighted-average shares outstanding 544,815 547,118 Antidilutive potential common shares 2,734 1,070 |
SEGMENT REPORTING
SEGMENT REPORTING | 3 Months Ended |
Jan. 26, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | 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 segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. 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, 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 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 (in thousands) January 26, January 27, Sales to Unaffiliated Customers Grocery Products $ 540,626 $ 606,825 Refrigerated Foods 1,351,790 1,278,747 Jennie-O Turkey Store 330,128 321,234 International & Other 161,890 153,549 Total $ 2,384,434 $ 2,360,355 Intersegment Sales Grocery Products $ 7 $ 22 Refrigerated Foods 5,803 2,178 Jennie-O Turkey Store 27,842 28,811 International & Other — — Total 33,652 31,011 Intersegment Elimination (33,652 ) (31,011 ) Total $ — $ — Net Sales Grocery Products $ 540,633 $ 606,847 Refrigerated Foods 1,357,593 1,280,925 Jennie-O Turkey Store 357,970 350,045 International & Other 161,890 153,549 Intersegment Elimination (33,652 ) (31,011 ) Total $ 2,384,434 $ 2,360,355 Segment Profit Grocery Products $ 68,435 $ 95,297 Refrigerated Foods 167,343 162,593 Jennie-O Turkey Store 38,551 37,904 International & Other 19,952 24,978 Total Segment Profit 294,280 320,772 Net Unallocated Expense 4,199 13,891 Noncontrolling Interest 81 94 Earnings Before Income Taxes $ 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. The amount of total revenues contributed by sales channel for the first three months of fiscal 2020 and 2019 are as follows: Three Months Ended (in thousands) January 26, January 27, U.S. Retail $ 1,226,430 $ 1,253,315 U.S. Foodservice 709,106 689,905 U.S. Deli 260,638 251,276 International 188,260 165,859 Total $ 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, January 27, 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 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Jan. 26, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 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. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jan. 26, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation: |
Accounting Changes and Recent Accounting Pronouncements | Accounting Changes and Recent Accounting Pronouncements: New Accounting Pronouncements Adopted in Current Fiscal Year 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 twelve months. Recognition, measurement, and presentation of expenses will depend on the classification as a finance or operating lease. The update also requires expanded quantitative and qualitative disclosures. Accounting guidance for lessors is largely unchanged. 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 adopted the provisions of this new accounting standard at the beginning of fiscal 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 initial 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 Consolidated Statements of Financial Position as of October 28, 2019. The new standard did not have a material impact on the Consolidated Statements of 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 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 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. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820) . The updated guidance 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 to 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 in the process of evaluating the impact. In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans (Topic 715) . The updated guidance 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 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. Recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the Company. |
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. |
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 one or more options to renew or terminate. The exercise of lease renewal and termination options is at the Company’s discretion and generally is not reasonably certain at lease commencement. The Company’s lease agreements typically do not contain material residual value guarantees. The Company has one lease with an immaterial residual value guarantee that is included in the minimum lease payments. Certain lease agreements include rental payment increases over the lease term that can be fixed or variable. Fixed payment increases and variable payment increases based on an index or rate are included in the initial lease liability using the index or rate at commencement date. Variable payment increases not based on an index or rate are recognized as incurred. If the rate implicit in the lease is not readily determinable, the Company used its periodic incremental borrowing rate, based on the information available at commencement date, to determine the present value of future lease payments. 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. |
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 segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. 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, 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. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Inventory, Net [Abstract] | |
Principal components of inventories | Principal components of inventories are: (in thousands) January 26, October 27, 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 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amounts of goodwill for the three months ended January 26, 2020 , are as follows: (in thousands) Grocery Refrigerated Jennie-O Turkey Store International 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 |
Schedule of carrying amounts for indefinite-lived intangible assets | The carrying amounts for indefinite-lived intangible assets are as follows: (in thousands) January 26, October 27, Brands/Tradenames/Trademarks $ 953,190 $ 959,400 Other Intangibles 184 184 Foreign Currency Translation (3,393 ) (3,803 ) Total $ 949,981 $ 955,781 |
Schedule of gross carrying amount and accumulated amortization for definite-lived intangible assets | The gross carrying amount and accumulated amortization for definite-lived intangible assets are as follows: 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 ) |
Schedule of estimated annual amortization expense | Estimated annual amortization expense for the five fiscal years after October 27, 2019 , is as follows: (in thousands) 2020 $ 11,700 2021 12,000 2022 11,644 2023 10,739 2024 8,921 |
PENSION AND OTHER POST-RETIRE_2
PENSION AND OTHER POST-RETIREMENT BENEFITS (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of net periodic cost of defined benefit plans | Net periodic benefit cost for pension and other post-retirement benefit plans consists of the following: Pension Benefits Three Months Ended (in thousands) January 26, January 27, 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 (in thousands) January 26, January 27, 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 |
DERIVATIVES AND HEDGING (Tables
DERIVATIVES AND HEDGING (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Derivative [Line Items] | |
Schedule of fair values of derivative instruments | The fair values of the Company’s derivative instruments as of January 26, 2020 , and October 27, 2019 , were as follows: Fair Value (1) (in thousands) Location on Consolidated Statements of Financial Position January 26, October 27, Derivatives Designated as Hedges: 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 K - Fair Value Measurements for a discussion of these net amounts as reported in the Consolidated Statements of Financial Position. |
Schedule of fair value hedge assets (liabilities) | The carrying amount of the Company's fair value hedge assets (liabilities) as of January 26, 2020 , and October 27, 2019 , were as follows: Location on Consolidated Statements of Financial Position Carrying Amount of the Hedged Assets/(Liabilities) (in thousands) January 26, October 27, 2019 Accounts Payable $ (2,347 ) $ (2,805 ) |
Schedule of gains or losses (before tax) related to derivative instruments | The effect of Accumulated Other Comprehensive Loss for gains or losses (before tax) related to the Company's derivative instruments for the three months ended January 26, 2020 , and January 27, 2019 , were as follows: 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 (in thousands) January 26, 2020 January 27, 2019 January 26, 2020 January 27, 2019 Cash Flow Hedges: Commodity Contracts $ (8,626 ) $ (843 ) Cost of Products Sold $ (1,875 ) $ (1,243 ) Excluded Component (2) — (687 ) (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) related to the Company's derivative instruments for the three months ended January 26, 2020 , and January 27, 2019 , were as follows: 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 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. |
Cash Flow Hedges | |
Derivative [Line Items] | |
Schedule of outstanding commodity futures contracts | As of January 26, 2020 , and October 27, 2019 , the Company had the following outstanding commodity futures and options contracts related to its hedging programs: Volume Commodity Contracts January 26, 2020 October 27, 2019 Corn 25.3 million bushels 30.4 million bushels Lean Hogs 182.0 million pounds 187.3 million pounds |
INVESTMENTS IN AND RECEIVABLE_2
INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of investments in, receivables from, and equity in earnings of affiliates | Investments In and Receivables From Affiliates consist of the following: (in thousands) Segment % Owned January 26, October 27, MegaMex Foods, LLC Grocery Products 50% $ 211,535 $ 218,592 Other Joint Ventures International & Other Various (20-40%) 79,242 70,565 Total $ 290,777 $ 289,157 Equity in Earnings of Affiliates consists of the following: Three Months Ended (in thousands) Segment January 26, January 27, MegaMex Foods, LLC Grocery Products $ 9,461 $ 10,502 Other Joint Ventures International & Other (1,873 ) 956 Total $ 7,588 $ 11,458 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of components of accumulated other comprehensive loss | Components of Accumulated Other Comprehensive Loss are as follows: (in thousands) Foreign Pension & Deferred Accumulated 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 ) (1) I ncluded 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. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of reconciliation of the number of options outstanding and exercisable | A reconciliation of the number of options outstanding and exercisable (in thousands) as of January 26, 2020 is as follows: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at October 27, 2019 25,994 $ 26.49 Granted 1,004 45.54 Exercised 3,059 13.87 Forfeited 65 36.56 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 |
Schedule of weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised | The weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised (in thousands) during the first three months of fiscal years 2020 and 2019 are as follows. Three Months Ended January 26, January 27, Weighted-average Grant Date Fair Value $ 7.67 $ 9.48 Intrinsic Value of Exercised Options 97,946 32,241 |
Schedule of weighted-average assumptions used to calculate fair value of each option award | 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 January 26, January 27, 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 |
Schedule of reconciliation of the nonvested shares | 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 January 26, 2020 is as follows: Shares Weighted- Average Grant Date Fair Value Restricted at October 27, 2019 51 $ 42.23 Granted 1 42.76 Restricted at January 26, 2020 52 $ 42.24 |
Schedule of the weighted-average grant date fair value of nonvested shares granted, the total fair value of nonvested shares granted, and the fair value of shares that have vested | The weighted-average grant date fair value of restricted shares granted and the total fair value (in thousands) of restricted shares granted during the first three months of fiscal years 2020 and 2019 are as follows: Three Months Ended January 26, January 27, Weighted-average Grant Date Fair Value $ 42.76 $ 34.33 Fair Value of Restricted Shares Granted 53 53 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, January 27, Weighted-average Grant Date Fair Value $ 45.54 $ — Fair Value of Restricted Stock Units Granted 7,695 — |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The Company’s financial assets and liabilities carried at fair value on a recurring basis as of January 26, 2020 , and October 27, 2019 , and their level within the fair value hierarchy, are as follows: 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) Assets at Fair Value 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 $ 918,662 $ 735,882 $ 182,780 $ — Liabilities at Fair Value Deferred Compensation (3) $ 64,356 $ — $ 64,356 $ — Total Liabilities at Fair Value $ 64,356 $ — $ 64,356 $ — 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) Assets at Fair Value 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 $ 858,045 $ 690,526 $ 167,519 $ — Liabilities at Fair Value Deferred Compensation (3) $ 62,373 $ — $ 62,373 $ — Total Liabilities at Fair Value $ 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 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) The 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 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 on the Consolidated Statements of Financial Position with investment options generally mirroring those funds held 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 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 ). |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Leases [Abstract] | |
Schedule of supplemental balance sheet information | 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 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 |
Schedule of lease expenses and supplemental cash flow and other information related to leases | 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 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. |
Schedule of maturities of financing lease liabilities | 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. |
Schedule of maturities of operating lease liabilities | 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. |
EARNINGS PER SHARE DATA (Tables
EARNINGS PER SHARE DATA (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of denominator for the computation of basic and diluted earnings per share | The following table sets forth the shares used as the denominator for those computations: Three Months Ended (in thousands) January 26, January 27, Basic weighted-average shares outstanding 535,075 534,495 Dilutive potential common shares 9,740 12,623 Diluted weighted-average shares outstanding 544,815 547,118 Antidilutive potential common shares 2,734 1,070 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 3 Months Ended |
Jan. 26, 2020 | |
Segment Reporting [Abstract] | |
Schedule of sales and operating profits for each of the reportable segments and reconciliation to earnings before income taxes | Sales and operating profits for each of the Company’s reportable segments and reconciliation to 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 (in thousands) January 26, January 27, Sales to Unaffiliated Customers Grocery Products $ 540,626 $ 606,825 Refrigerated Foods 1,351,790 1,278,747 Jennie-O Turkey Store 330,128 321,234 International & Other 161,890 153,549 Total $ 2,384,434 $ 2,360,355 Intersegment Sales Grocery Products $ 7 $ 22 Refrigerated Foods 5,803 2,178 Jennie-O Turkey Store 27,842 28,811 International & Other — — Total 33,652 31,011 Intersegment Elimination (33,652 ) (31,011 ) Total $ — $ — Net Sales Grocery Products $ 540,633 $ 606,847 Refrigerated Foods 1,357,593 1,280,925 Jennie-O Turkey Store 357,970 350,045 International & Other 161,890 153,549 Intersegment Elimination (33,652 ) (31,011 ) Total $ 2,384,434 $ 2,360,355 Segment Profit Grocery Products $ 68,435 $ 95,297 Refrigerated Foods 167,343 162,593 Jennie-O Turkey Store 38,551 37,904 International & Other 19,952 24,978 Total Segment Profit 294,280 320,772 Net Unallocated Expense 4,199 13,891 Noncontrolling Interest 81 94 Earnings Before Income Taxes $ 290,162 $ 306,975 |
Schedule of total revenues contributed by sales channels and classes of similar 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, January 27, 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 Three Months Ended (in thousands) January 26, January 27, U.S. Retail $ 1,226,430 $ 1,253,315 U.S. Foodservice 709,106 689,905 U.S. Deli 260,638 251,276 International 188,260 165,859 Total $ 2,384,434 $ 2,360,355 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounting Changes and Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 26, 2020 | Oct. 28, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating | $ 60,226 | |
Lease liabilities | $ 62,290 | |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating | $ 112,700 | |
Lease liabilities | $ 114,100 |
ACQUISITIONS AND DIVESTITURES -
ACQUISITIONS AND DIVESTITURES - Narrative (Details) - USD ($) $ in Thousands | Apr. 15, 2019 | Jan. 26, 2020 | Jan. 27, 2019 |
ACQUISITIONS | |||
Tax benefit | $ (47,209) | $ (65,456) | |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | CytoSport | |||
ACQUISITIONS | |||
Final proceeds | $ 479,800 | ||
Pre-tax gain | 16,500 | ||
Tax benefit | $ 17,000 |
INVENTORIES - Components of Inv
INVENTORIES - Components of Inventories (Details) - USD ($) $ in Thousands | Jan. 26, 2020 | Oct. 27, 2019 |
Inventory, Net [Abstract] | ||
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 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill Rollforward (Details) $ in Thousands | 3 Months Ended |
Jan. 26, 2020USD ($) | |
Changes in the carrying amount of goodwill | |
Balance at the beginning of the period | $ 2,481,645 |
Foreign currency translation | 2,443 |
Balance at the end of the period | 2,484,088 |
Grocery Products | |
Changes in the carrying amount of goodwill | |
Balance at the beginning of the period | 632,301 |
Foreign currency translation | 0 |
Balance at the end of the period | 632,301 |
Refrigerated Foods | |
Changes in the carrying amount of goodwill | |
Balance at the beginning of the period | 1,458,692 |
Foreign currency translation | 0 |
Balance at the end of the period | 1,458,692 |
Jennie-O Turkey Store | |
Changes in the carrying amount of goodwill | |
Balance at the beginning of the period | 176,628 |
Foreign currency translation | 0 |
Balance at the end of the period | 176,628 |
International & Other | |
Changes in the carrying amount of goodwill | |
Balance at the beginning of the period | 214,024 |
Foreign currency translation | 2,443 |
Balance at the end of the period | $ 216,467 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Indefinite Lived Intangible Assets (Details) - USD ($) $ in Thousands | Jan. 26, 2020 | Oct. 27, 2019 |
Carrying amounts for indefinite-lived intangible assets | ||
Carrying amounts for indefinite-lived intangible assets | $ 949,981 | $ 955,781 |
Brands/Tradenames/Trademarks | ||
Carrying amounts for indefinite-lived intangible assets | ||
Carrying amounts for indefinite-lived intangible assets | 953,190 | 959,400 |
Other Intangibles | ||
Carrying amounts for indefinite-lived intangible assets | ||
Carrying amounts for indefinite-lived intangible assets | 184 | 184 |
Foreign Currency Translation | ||
Carrying amounts for indefinite-lived intangible assets | ||
Carrying amounts for indefinite-lived intangible assets | $ 3,393 | $ 3,803 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Definite Lived Intangibles Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 26, 2020 | Jan. 27, 2019 | Oct. 27, 2019 | |
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | $ 126,906 | $ 120,696 | |
Accumulated Amortization | (45,083) | (42,615) | |
Amortization expense | 2,700 | $ 3,200 | |
Estimated amortization expense | |||
2020 | 11,700 | ||
2021 | 12,000 | ||
2022 | 11,644 | ||
2023 | 10,739 | ||
2024 | 8,921 | ||
Customer Lists/Relationships | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | 113,739 | 113,739 | |
Accumulated Amortization | (39,057) | (36,744) | |
Tradenames/Trademarks | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | 10,536 | 4,326 | |
Accumulated Amortization | (1,911) | (1,589) | |
Other Intangibles | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | 2,631 | 2,631 | |
Accumulated Amortization | (1,324) | (1,228) | |
Foreign Currency Translation | |||
Gross carrying amount and accumulated amortization for definite-lived intangible assets | |||
Gross Carrying Amount | 0 | 0 | |
Accumulated Amortization | $ (2,791) | $ (3,054) |
PENSION AND OTHER POST-RETIRE_3
PENSION AND OTHER POST-RETIREMENT BENEFITS - Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Pension Benefits | ||
Net periodic cost of defined benefit plans | ||
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) | 0 | 2,825 |
Net Periodic Cost | 2,039 | 4,310 |
Post-retirement Benefits | ||
Net periodic cost of defined benefit plans | ||
Service Cost | 195 | 174 |
Interest Cost | 2,460 | 3,165 |
Amortization of Prior Service Cost | (663) | (669) |
Recognized Actuarial Loss | 275 | 0 |
Curtailment Loss (Gain) | 0 | (620) |
Net Periodic Cost | $ 2,267 | $ 2,050 |
DERIVATIVES AND HEDGING - Narra
DERIVATIVES AND HEDGING - Narrative (Details) $ in Millions | 3 Months Ended |
Jan. 26, 2020USD ($) | |
Derivative [Line Items] | |
Hedging gains to be recognized within next twelve months | $ 3.6 |
Corn | |
Derivative [Line Items] | |
Maximum length of time to hedge exposure | 2 years |
Lean Hogs | |
Derivative [Line Items] | |
Maximum length of time to hedge exposure | 12 months |
DERIVATIVES AND HEDGING - Outst
DERIVATIVES AND HEDGING - Outstanding Contracts (Details) - Cash Flow Hedges cwt in Millions, bu in Millions | 3 Months Ended | 12 Months Ended |
Jan. 26, 2020cwtbu | Oct. 27, 2019cwtbu | |
Corn | ||
Derivative [Line Items] | ||
Futures contracts, volume (in million bushels) | bu | 25.3 | 30.4 |
Lean Hogs | ||
Derivative [Line Items] | ||
Futures contracts, volume (in million pounds) | cwt | 182 | 187.3 |
DERIVATIVES AND HEDGING - Fair
DERIVATIVES AND HEDGING - Fair Value Of Derivatives (Details) - USD ($) $ in Thousands | Jan. 26, 2020 | Oct. 27, 2019 |
Derivatives designated as hedges | Commodity Contracts | Other Current Assets | ||
Derivatives fair value | ||
Fair values of derivative instruments | $ (921) | $ 6,405 |
DERIVATIVES AND HEDGING - Fai_2
DERIVATIVES AND HEDGING - Fair Value Hedge Liabilities (Details) - USD ($) $ in Thousands | Jan. 26, 2020 | Oct. 28, 2018 |
Accounts Payable | ||
Derivatives fair value | ||
Fair Value Hedge Liabilities | $ (2,347) | $ (2,805) |
DERIVATIVES AND HEDGING - Gains
DERIVATIVES AND HEDGING - Gains And Losses (Details) - Cash Flow Hedges - Derivatives designated as hedges - Commodity Contracts - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Derivative instruments gains or losses (before tax) | ||
Gain/(Loss) Recognized in AOCL | $ (8,626) | $ (843) |
Gain/(Loss) Reclassified from AOCL into Earnings | (1,875) | (1,243) |
Cost of Products Sold | ||
Derivative instruments gains or losses (before tax) | ||
Gain/(Loss) Reclassified from AOCL into Earnings | $ (1,875) | (1,243) |
Gain/(Loss) Recognized in AOCL, Excluded Component | $ (687) |
DERIVATIVES AND HEDGING - State
DERIVATIVES AND HEDGING - Statements of Operations Effect of Gains or Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Derivative [Line Items] | ||
Consolidated Statements of Operations | $ 1,916,014 | $ 1,872,021 |
Fair Value Hedges - Commodity Contracts | ||
Total Gain (Loss) Recognized in Earnings | 1,311 | (1,669) |
Derivatives designated as hedges | Cash Flow Hedges | Commodity Contracts | ||
Cash Flow Hedges - Commodity Contracts | ||
Gain (Loss) Reclassified from AOCL | (1,875) | (1,243) |
Amortization of Excluded Component from Options | 0 | (1,358) |
Derivatives designated as hedges | Fair Value Hedges | Commodity Contracts | ||
Fair Value Hedges - Commodity Contracts | ||
Gain (loss) on commodity futures | $ 3,186 | $ 932 |
INVESTMENTS IN AND RECEIVABLE_3
INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES - Investment and Equity Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 26, 2020 | Jan. 27, 2019 | Oct. 27, 2019 | |
Investments In and Receivables from Affiliates | |||
Investments in and receivables from affiliates | $ 290,777 | $ 289,157 | |
Equity in earnings of affiliates | $ 7,588 | $ 11,458 | |
MegaMex Foods, LLC | |||
Investments In and Receivables from Affiliates | |||
Ownership percentage | 50.00% | ||
Investments in and receivables from affiliates | $ 211,535 | 218,592 | |
Equity in earnings of affiliates | 9,461 | 10,502 | |
Other Joint Ventures | |||
Investments In and Receivables from Affiliates | |||
Investments in and receivables from affiliates | 79,242 | $ 70,565 | |
Equity in earnings of affiliates | $ (1,873) | $ 956 | |
Other Joint Ventures | Minimum | |||
Investments In and Receivables from Affiliates | |||
Ownership percentage | 20.00% | ||
Other Joint Ventures | Maximum | |||
Investments In and Receivables from Affiliates | |||
Ownership percentage | 40.00% |
INVESTMENTS IN AND RECEIVABLE_4
INVESTMENTS IN AND RECEIVABLES FROM AFFILIATES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jan. 26, 2020 | Jan. 27, 2019 | Oct. 26, 2009 | |
Schedule of Equity Method Investments [Line Items] | |||
Dividends received from affiliates | $ 10 | $ 0 | |
MegaMex Foods, LLC | |||
Schedule of Equity Method Investments [Line Items] | |||
Excess of investment over the underlying equity in net assets of the joint venture | $ 12.5 | $ 21.3 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS - Components of AOCL (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 26, 2020 | Jul. 28, 2019 | Jan. 27, 2019 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | $ 5,925,535 | $ 5,604,818 | |
Reclassification into Net Earnings | |||
Total Other Comprehensive Income (Loss) | 6,346 | 4,924 | |
Ending balance | 6,096,045 | 5,705,779 | |
Accumulated Other Comprehensive Loss | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (399,500) | $ (399,500) | (243,498) |
Unrecognized gains (losses) | |||
Gross | (824) | ||
Tax effect | 2,105 | ||
Reclassification into Net Earnings | |||
Gross | 6,541 | ||
Tax effect | (1,600) | ||
Total Other Comprehensive Income (Loss) | 6,222 | 6,222 | 4,955 |
Ending balance | $ (393,278) | (393,278) | $ (292,342) |
Foreign Currency Translation | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (52,996) | ||
Unrecognized gains (losses) | |||
Gross | 7,812 | ||
Tax effect | 0 | ||
Reclassification into Net Earnings | |||
Gross | 0 | ||
Tax effect | 0 | ||
Total Other Comprehensive Income (Loss) | 7,812 | ||
Ending balance | (45,184) | ||
Pension & Other Benefits | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | (348,877) | ||
Unrecognized gains (losses) | |||
Gross | (10) | ||
Tax effect | 0 | ||
Reclassification into Net Earnings | |||
Gross | 4,666 | ||
Tax effect | (1,143) | ||
Total Other Comprehensive Income (Loss) | 3,513 | ||
Ending balance | (345,364) | ||
Deferred Gain (Loss) - Hedging | |||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||
Beginning balance | 2,373 | ||
Unrecognized gains (losses) | |||
Gross | (8,626) | ||
Tax effect | 2,105 | ||
Reclassification into Net Earnings | |||
Gross | 1,875 | ||
Tax effect | (457) | ||
Total Other Comprehensive Income (Loss) | (5,103) | ||
Ending balance | $ (2,730) |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | Oct. 25, 2020 | |
Income Tax Contingency [Line Items] | |||
Effective tax rate | 16.30% | 21.30% | |
Unrecognized tax benefits that would impact effective tax rate | $ 23,300 | $ 27,200 | |
Interest and penalties expenses related to uncertain tax positions | 0 | 0 | |
Accrued interest and penalties associated with unrecognized tax benefits | $ 6,500 | $ 6,500 | |
Forecast | Minimum | |||
Income Tax Contingency [Line Items] | |||
Effective tax rate | 20.50% | ||
Forecast | Maximum | |||
Income Tax Contingency [Line Items] | |||
Effective tax rate | 22.50% |
STOCK-BASED COMPENSATION - Expe
STOCK-BASED COMPENSATION - Expense And Exercises (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock-based compensation expense recognized | $ 9,300 | $ 7,900 |
Stock-based compensation expense unrecognized | $ 32,500 | |
Period for recognition of unrecognized stock-based compensation expense | 2 years 7 months 6 days | |
Cash received from stock option exercises | $ 36,353 | $ 15,997 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Jan. 26, 2020 | Jan. 27, 2019 | Jul. 29, 2018 | |
Active, Full-Time Employees | |||
STOCK-BASED COMPENSATION | |||
Granted (in shares) | 200 | ||
Active, Part-Time Employees as of April 30, 2018 | |||
STOCK-BASED COMPENSATION | |||
Granted (in shares) | 100 | ||
Employee Stock Option | |||
STOCK-BASED COMPENSATION | |||
Vesting period | 4 years | 5 years | |
Stock option expiration period | 10 years | 10 years | |
Shares | |||
Outstanding at the beginning of the period (in shares) | 25,994,000 | ||
Granted (in shares) | 1,004,000 | ||
Exercised (in shares) | 3,059,000 | ||
Forfeited (in shares) | 65,000 | ||
Outstanding at the end of the period (in shares) | 23,874,000 | ||
Exercisable at the end of the period (in shares) | 16,670,000 | ||
Weighted- Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 26.49 | ||
Granted (in dollars per share) | 45.54 | ||
Exercised (in dollars per share) | 13.87 | ||
Forfeited (in dollars per share) | 36.56 | ||
Outstanding at the end of the period (in dollars per share) | 28.88 | ||
Exercisable at the end of the period (in dollars per share) | $ 24.51 | ||
Weighted- Average Remaining Contractual Term (Years) | |||
Outstanding at the end of the period | 5 years 7 months 6 days | ||
Exercisable at the end of the period | 4 years 3 months 18 days | ||
Aggregate Intrinsic Value | |||
Outstanding at the end of the period | $ 438,098 | ||
Exercisable at the end of the period | $ 378,778 | ||
Weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised | |||
Weighted-average grant date fair value (in dollars per share) | $ 7.67 | $ 9.48 | |
Intrinsic Value of Exercised Options | $ 97,946 | $ 32,241 | |
Weighted-average assumptions used to calculate fair value of each ordinary option award | |||
Risk-free Interest Rate | 1.70% | 2.90% | |
Dividend Yield | 2.00% | 1.90% | |
Stock Price Volatility | 19.00% | 19.00% | |
Expected Option Life | 8 years | 8 years | |
Employee Stock Option | Fiscal 2020 And Thereafter | |||
STOCK-BASED COMPENSATION | |||
Equity award deliverable criteria, award type percentage | 50.00% | ||
Restricted Stock Units (RSUs) | |||
STOCK-BASED COMPENSATION | |||
Vesting period | 3 years | ||
Weighted- Average Remaining Contractual Term (Years) | |||
Outstanding at the end of the period | 2 years 10 months 24 days | ||
Aggregate Intrinsic Value | |||
Outstanding at the end of the period | $ 7,980 | ||
Restricted Stock Units (RSUs) | Fiscal 2020 And Thereafter | |||
STOCK-BASED COMPENSATION | |||
Vesting period | 3 years | ||
Equity award deliverable criteria, award type percentage | 50.00% |
STOCK-BASED COMPENSATION - Nonv
STOCK-BASED COMPENSATION - Nonvested Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | ||
Jan. 26, 2020 | Jan. 27, 2019 | Jan. 26, 2020 | |
Restricted Stock Units (RSUs) | |||
STOCK-BASED COMPENSATION | |||
Vesting period (after) | 3 years | ||
Shares | |||
Beginning of the period (in shares) | 0 | ||
Granted (in shares) | 169 | ||
End of the period (in shares) | 169 | ||
Weighted- Average Exercise Price | |||
Beginning of the period (in dollars per share) | $ 0 | ||
Granted (in dollars per share) | 45.54 | ||
End of the period (in dollars per share) | $ 45.54 | ||
Restricted Stock Unit [Abstract] | |||
Weighted- Average Remaining Contractual Term (Years) | 2 years 10 months 24 days | ||
Aggregate Intrinsic Value | $ 7,980 | ||
Weighted-average grant date fair value, the total fair value of nonvested shares granted, and the fair value of shares that have vested | |||
Weighted-average Grant Date Fair Value (in dollars per share) | $ 45.54 | $ 0 | $ 45.54 |
Fair Value of Restricted Stock Units Granted | $ 7,695 | $ 0 | |
Weighted- Average Grant Date Fair Value | |||
End of the period (in dollars per share) | $ 45.54 | $ 0 | |
Restricted Stock | |||
Shares | |||
Beginning of the period (in shares) | 51 | ||
Granted (in shares) | 1 | ||
End of the period (in shares) | 52 | ||
Weighted-average grant date fair value, the total fair value of nonvested shares granted, and the fair value of shares that have vested | |||
Weighted-average Grant Date Fair Value (in dollars per share) | $ 42.24 | $ 42.24 | |
Fair Value of Restricted Stock Units Granted | $ 53 | $ 53 | |
Weighted- Average Grant Date Fair Value | |||
Beginning of the period (in dollars per share) | $ 42.23 | ||
Granted (in dollars per share) | 42.76 | $ 34.33 | |
End of the period (in dollars per share) | $ 42.24 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 26, 2020 | Jan. 27, 2019 | Oct. 27, 2019 | |
Methods and assumptions used to estimate the fair value of the financial assets and liabilities | |||
Recognized right to reclaim net cash collateral | $ 10,000 | $ 6,500 | |
Realized gains (losses) on closed positions | 13,300 | 10,500 | |
Cash owed | 3,300 | 4,000 | |
Fair value, long-term debt | |||
Fair value of long-term debt (including current maturities) | 259,600 | 257,700 | |
Rabbi trust | |||
Methods and assumptions used to estimate the fair value of the financial assets and liabilities | |||
Gains (losses) related to securities held by the trust | 5,200 | $ 1,400 | |
Recurring basis | |||
Assets at Fair Value | |||
Cash and Cash Equivalents | 724,419 | 672,901 | |
Short-term Marketable Securities | 14,808 | 14,736 | |
Other Trading Securities | 170,302 | 157,526 | |
Total Assets at Fair Value | 918,662 | 858,045 | |
Liabilities at Fair Value | |||
Deferred Compensation | 64,356 | 62,373 | |
Total Liabilities at Fair Value | 64,356 | 62,373 | |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Assets at Fair Value | |||
Cash and Cash Equivalents | 721,216 | 672,458 | |
Short-term Marketable Securities | 5,533 | 5,186 | |
Other Trading Securities | 0 | 0 | |
Total Assets at Fair Value | 735,882 | 690,526 | |
Liabilities at Fair Value | |||
Deferred Compensation | 0 | 0 | |
Total Liabilities at Fair Value | 0 | 0 | |
Recurring basis | Significant Other Observable Inputs (Level 2) | |||
Assets at Fair Value | |||
Cash and Cash Equivalents | 3,203 | 443 | |
Short-term Marketable Securities | 9,275 | 9,550 | |
Other Trading Securities | 170,302 | 157,526 | |
Total Assets at Fair Value | 182,780 | 167,519 | |
Liabilities at Fair Value | |||
Deferred Compensation | 64,356 | 62,373 | |
Total Liabilities at Fair Value | 64,356 | 62,373 | |
Recurring basis | Significant Unobservable Inputs (Level 3) | |||
Assets at Fair Value | |||
Cash and Cash Equivalents | 0 | 0 | |
Short-term Marketable Securities | 0 | 0 | |
Other Trading Securities | 0 | 0 | |
Total Assets at Fair Value | 0 | 0 | |
Liabilities at Fair Value | |||
Deferred Compensation | 0 | 0 | |
Total Liabilities at Fair Value | 0 | 0 | |
Recurring basis | Commodity Contracts | |||
Assets at Fair Value | |||
Commodity Derivatives | 9,133 | 12,882 | |
Recurring basis | Commodity Contracts | Quoted Prices in Active Markets for Identical Assets (Level 1) | |||
Assets at Fair Value | |||
Commodity Derivatives | 9,133 | 12,882 | |
Recurring basis | Commodity Contracts | Significant Other Observable Inputs (Level 2) | |||
Assets at Fair Value | |||
Commodity Derivatives | 0 | 0 | |
Recurring basis | Commodity Contracts | Significant Unobservable Inputs (Level 3) | |||
Assets at Fair Value | |||
Commodity Derivatives | $ 0 | $ 0 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) $ in Thousands | 3 Months Ended |
Jan. 26, 2020USD ($)renewal_option | |
Leases [Abstract] | |
Finance lease, number of renewal or termination options | 1 |
Operating lease, number of renewal or termination options | 1 |
Operating lease, number of leases with residual value included in minimum lease payments | 1 |
Operating lease, lease not yet commenced | $ | $ 0 |
Finance lease, lease not yet commenced | $ | $ 0 |
LEASES - Schedule of Supplement
LEASES - Schedule of Supplemental Balance Sheet Information (Details) $ in Thousands | Jan. 26, 2020USD ($) |
Right-of-Use Assets | |
Operating | $ 60,226 |
Finance | 67,126 |
Total Right-of-Use Assets | 127,352 |
Current | |
Operating | 13,728 |
Finance | 8,259 |
Noncurrent | |
Operating | 48,561 |
Finance | 58,972 |
Total Lease Liabilities | $ 129,520 |
LEASES - Schedule of Lease Cost
LEASES - Schedule of Lease Cost (Details) $ in Thousands | 3 Months Ended |
Jan. 26, 2020USD ($) | |
Leases [Abstract] | |
Operating Lease Cost | $ 5,124 |
Finance Lease Cost | |
Amortization of Right-of-Use Assets | 1,999 |
Interest on Lease Liabilities | 605 |
Variable Lease Cost | 102,668 |
Net Lease Cost | $ 110,396 |
LEASES - Schedule of Weighted-A
LEASES - Schedule of Weighted-Average Information (Details) | Jan. 26, 2020 |
Weighted Average Remaining Lease Term | |
Operating Leases | 7 years 6 months 25 days |
Finance Leases | 8 years 9 months 29 days |
Weighted Average Discount Rate | |
Operating Leases | 2.30% |
Finance Leases | 3.58% |
LEASES - Schedule of Suppleme_2
LEASES - Schedule of Supplemental Cash Flow and Other Information Related (Details) $ in Thousands | 3 Months Ended |
Jan. 26, 2020USD ($) | |
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 |
LEASES - Schedule of Maturities
LEASES - Schedule of Maturities (Details) $ in Thousands | Jan. 26, 2020USD ($) |
Operating Leases | |
2020 (nine months remaining) | $ 11,691 |
2021 | 11,653 |
2022 | 9,139 |
2023 | 8,157 |
2024 | 5,730 |
2025 | 3,396 |
2026 and beyond | 18,644 |
Total Lease Payments | 68,410 |
Less: Imputed Interest | 6,120 |
Present Value of Lease Liabilities | 62,290 |
Finance Leases | |
2020 (nine months remaining) | 7,891 |
2021 | 10,338 |
2022 | 9,934 |
2023 | 9,738 |
2024 | 9,612 |
2025 | 8,117 |
2026 and beyond | 21,192 |
Total Lease Payments | 76,821 |
Less: Imputed Interest | 9,591 |
Present Value of Lease Liabilities | 67,230 |
Total | |
2020 (nine months remaining) | 19,582 |
2021 | 21,991 |
2022 | 19,072 |
2023 | 17,895 |
2024 | 15,341 |
2025 | 11,513 |
2026 and beyond | 39,836 |
Total Lease Payments | 145,231 |
Less: Imputed Interest | 15,711 |
Present Value of Lease Liabilities | 129,520 |
Operating lease payments, excluded amount, leases signed but not yet commenced | 3,600 |
Finance lease payments, included amount, purchase asset reasonably certain | $ 8,900 |
EARNINGS PER SHARE DATA - Share
EARNINGS PER SHARE DATA - Shares Used as Denominator and Narrative (Details) - shares shares in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Earnings Per Share [Abstract] | ||
Basic weighted-average shares outstanding (in shares) | 535,075 | 534,495 |
Dilutive potential common shares (in shares) | 9,740 | 12,623 |
Diluted weighted-average shares outstanding (in shares) | 544,815 | 547,118 |
Antidilutive potential common shares (in shares) | 2,734 | 1,070 |
SEGMENT REPORTING - Narrative (
SEGMENT REPORTING - Narrative (Details) | 3 Months Ended |
Jan. 26, 2020segment | |
Segment Reporting [Abstract] | |
Number of reportable business segments | 4 |
SEGMENT REPORTING - Operating P
SEGMENT REPORTING - Operating Profit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Operating profit and other financial information | ||
Net Sales | $ 2,384,434 | $ 2,360,355 |
Segment Profit | 280,488 | 306,248 |
Net Unallocated Expense | 4,199 | 13,891 |
Noncontrolling Interest | 81 | 94 |
Earnings Before Income Taxes | 290,162 | 306,975 |
Intersegment Elimination | ||
Operating profit and other financial information | ||
Net Sales | 33,652 | 31,011 |
Operating Segments | ||
Operating profit and other financial information | ||
Segment Profit | 294,280 | 320,772 |
Grocery Products | ||
Operating profit and other financial information | ||
Net Sales | 540,626 | 606,825 |
Grocery Products | Intersegment Elimination | ||
Operating profit and other financial information | ||
Net Sales | 7 | 22 |
Grocery Products | Operating Segments | ||
Operating profit and other financial information | ||
Net Sales | 540,633 | 606,847 |
Segment Profit | 68,435 | 95,297 |
Refrigerated Foods | ||
Operating profit and other financial information | ||
Net Sales | 1,351,790 | 1,278,747 |
Refrigerated Foods | Intersegment Elimination | ||
Operating profit and other financial information | ||
Net Sales | 5,803 | 2,178 |
Refrigerated Foods | Operating Segments | ||
Operating profit and other financial information | ||
Net Sales | 1,357,593 | 1,280,925 |
Segment Profit | 167,343 | 162,593 |
Jennie-O Turkey Store | ||
Operating profit and other financial information | ||
Net Sales | 330,128 | 321,234 |
Jennie-O Turkey Store | Intersegment Elimination | ||
Operating profit and other financial information | ||
Net Sales | 27,842 | 28,811 |
Jennie-O Turkey Store | Operating Segments | ||
Operating profit and other financial information | ||
Net Sales | 357,970 | 350,045 |
Segment Profit | 38,551 | 37,904 |
International & Other | ||
Operating profit and other financial information | ||
Net Sales | 161,890 | 153,549 |
International & Other | Intersegment Elimination | ||
Operating profit and other financial information | ||
Net Sales | 0 | 0 |
International & Other | Operating Segments | ||
Operating profit and other financial information | ||
Net Sales | 161,890 | 153,549 |
Segment Profit | $ 19,952 | $ 24,978 |
SEGMENT REPORTING - Disaggregat
SEGMENT REPORTING - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 26, 2020 | Jan. 27, 2019 | |
Revenue from External Customer [Line Items] | ||
Total | $ 2,384,434 | $ 2,360,355 |
Perishable | ||
Revenue from External Customer [Line Items] | ||
Total | 1,400,195 | 1,341,152 |
Poultry | ||
Revenue from External Customer [Line Items] | ||
Total | 459,083 | 441,392 |
Shelf-stable | ||
Revenue from External Customer [Line Items] | ||
Total | 450,704 | 436,897 |
Miscellaneous | ||
Revenue from External Customer [Line Items] | ||
Total | 74,452 | 140,914 |
U.S. Retail | ||
Revenue from External Customer [Line Items] | ||
Total | 1,226,430 | 1,253,315 |
U.S. Foodservice | ||
Revenue from External Customer [Line Items] | ||
Total | 709,106 | 689,905 |
U.S. Deli | ||
Revenue from External Customer [Line Items] | ||
Total | 260,638 | 251,276 |
International | ||
Revenue from External Customer [Line Items] | ||
Total | $ 188,260 | $ 165,859 |
SUBSEQUENT EVENTS - Narrative (
SUBSEQUENT EVENTS - Narrative (Details) $ in Millions | Mar. 02, 2020USD ($) |
Subsequent Event | Sadler's Smokehouse | |
Subsequent Event [Line Items] | |
Purchase price | $ 270 |